Is China the Next Global Leader in the Pharmaceutical Industry?

An aging population is typically a key indicator of growth in the pharmaceutical and healthcare industries. We’ve seen it in the US, now its China’s turn…

A Value-Added Economy

China is moving towards a more value-added economy. With an aging society (thanks to the decades of a highly regulated one-child policy) and a growing, wealthier middle class thrown in, the country is on the cusp of becoming the global leader in the pharmaceutical market.  Both as a seller and a consumer.

President Xi Jinping recognizes this opportunity as part of the country’s “Made in China 2025” initiative.  The plan is to reinvent their pharmaceutical industry. The focus is to make higher quality products, domestically. The government has promised investment and reform in innovation and R&D in the industry for an end goal of ending reliance on foreign drug imports. President Xi Jinping finds this reliance to be of critical concern.

To further encourage innovation and domestic R&D, restrictions on drug approvals and former tight bureaucracy will be less rigid. Also, the government is offering local pharmaceutical companies tax breaks, more straightforward regulation, and grant funding.  The hope is for more homegrown, higher quality, marketable name-brand drugs.  As a result, Big Whig Western drug companies like AstraZeneca, GlaxoSmithKline, and Pfizer are investing more in research and manufacturing facilities in the country.  But again, the focus is on domestically born companies and products, which should create economies of scale for the nation.  As China generates national companies with a competitive advantage to beat and steal market share away from foreign competitors’ home markets, it can check off all the boxes of the “Made in China 2025” plan.

Still Room to Grow

With healthcare expenditure per capita and as a proportion of GDP still so low compared to developing countries, the growth of the pharmaceutical industry is still in its infancy with so much opportunity for continued evolution.

China is turning their weaknesses and obstacles (aging population, reliance on foreign goods, etc.) into money-making and market grabbing opportunities to become a global giant in the healthcare industry.


Tara Desko