China’s pharmaceutical market increasingly offers opportunities for UK drugmakers
According to GlaxoSmithKline, China now accounts for 8% of the world’s pharmaceutical sales, putting it second only to the US among the company’s priority markets. Yet China took less than 5% of the UK’s $30 billion in pharmaceutical exports in 2018. As fears about the UK’s future trade with the EU become acute, GSK, AstraZeneca and other UK companies are looking to China to prevent a drop in their sales after Brexit. Fortunately, China – once fairly hostile to foreign drugmakers – is opening up its doors.
There are good reasons for that. Although its pharmaceutical supply chain has until now favoured cheap home-grown generics, China’s government recognises that the country will need more sophisticated medicines to combat the growing burden of chronic disease. Cancer alone now accounts for 23% of deaths in China. In 2015 (latest data) China had an estimated 4.3 million new cancer cases and 2.8 million deaths from cancer. These numbers have risen nearly fivefold in the past 40 years, thanks to population ageing and other factors (including smoking and pollution). In urban areas cancer’s share of deaths had reached 26% by 2017.
Add in other non-communicable diseases (NCDs) and they account for 82% of deaths. Under the Chinese government’s NCD plan, it wants to increase the overall cancer five-year survival rate from 31% in 2017 to 41% by 2025. That is a modest goal compared with the 69% survival rate in the US, but it will require some major changes to the treatment process. Better access to well-trained doctors is vital, but so too is better access to medicines.
In the past couple of years the government has taken some major steps to facilitate that. In 2017 it finally allowed drugmakers to use foreign trial data to support their applications for marketing approval, rather than making them conduct separate trials in China. In May 2018 it dropped import tariffs on certain cancer medicines, and in October it included 17 anti-cancer drugs in the government’s basic medical insurance programmes, taking the total to 34. This year it has started to open up the market for rare disease treatments. Then, in August, it passed legislation that means that people importing medicines for their own use – many buy cheap medicines online – will no longer face harsh penalties for counterfeiting.
However, not all is rosy. Companies still complain that getting marketing approval is difficult. Regulatory crackdowns are common – GSK itself is still paying the price for a bribery investigation that began in 2010 while the finance ministry recently announced plans to audit 77 drug companies. And while it is trying to improve access to medicines, China is bearing down more heavily on prices, partly through more formal, centralised procurement processes. More broadly, the US-China trade war is weighing on the country’s GDP growth, which will have knock-on effects for healthcare.
Still, in 2018, the UK’s pharmaceutical exports to China rose by over 6% while the country’s total pharmaceutical exports dropped by 9%, according to UN data. AstraZeneca is certainly eyeing the potential: China already accounts for 20% of its sales – and the share is rising rapidly. In the second quarter, sales there were up by 34%, with cancer treatments doing particularly well. UK companies could do with more growth markets like that.