Subdued economy dampens multinational pharmas’ growth in China

Opportunities for MNCs exist largely in generics and OTC segments.

The prospects for multinational drugmakers' revenue growth in China is expected to pick up somewhat over the coming quarters, but this will be limited by the expected moderation in growth of the economy through 2021, according to a report from Fitch Solutions.

The report noted that multinational pharmaceutical firms will generally continue to see revenues squeezed in the country over the short term due to the slowing economic growth.

Further, despite a ramp up in social spending in 2020, budgetary constraints will restrict public healthcare funding growth while the consumer environment will be repressed by subsiding income growth. As a result, in the short-term, medicine sales aren’t expected to return to the high single-digit territory expected in growth-driving emerging markets.

China is and will remain a key emerging growth market for a large number of multinational pharmaceutical firms, but opportunities exist almost exclusively within the generic medicines and over-the-counter (OTC)/consumer health care (CHC) segments, Fitch noted.

The country's sizable population presents a significant patient base, however drugmakers will continue to be faced with considerable market access barriers. This is reflected in the make-up of domestic pharmaceutical firms that have a significant presence in the country, which all have a considerable OTC, CHC or generic medicines portfolio.

Still, healthcare reform and investment continue to drive growth in the country. China represents an increasingly attractive investment destination as multinational drugmakers continue to report strong revenue growth in the country, Fitch noted.

“China will continue to expand its universal healthcare scheme and improved access for low and middle-income patients will result in significantly increased demand for medicines, providing an improved outlook for healthcare providers and pharmaceutical firms,” the report stated.