China

Details

  • Industry: Industrial Markets, Pharmaceuticals, Infrastructure, Government and Healthcare, Healthcare
  • Type: Business and industry issue, Press release
  • Date: 6/10/2011

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KPMG China

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A rise in M&A for China's pharmaceutical sector, finds KPMG report 

10 June 2011, Shanghai 

 

Multinationals (MNCs) and large domestic players are set to grab a larger share of the pharmaceutical market in China, as healthcare reforms start to play an increasingly important role.

 

KPMG's latest report, titled China's pharmaceutical industry - poised for the giant leap, notes that while this market is dominated by over-the-counter drugs, it will see a significant increase in demand for prescription medicines. China - the world's third largest drugs market - currently has over 5,000 pharmaceutical companies, about 98 percent of which produce generic drugs.

 

Norbert Meyring, Asia Pacific and China Head, Pharmaceuticals, KPMG, says: "As drug-makers lose some of their sales growth in Europe, and as the US and Japan stalls, makers of both prescription drugs and over-the-counter drugs are targeting new markets, particularly in Asia and Latin America. With its rising middle class, China is an attractive investment option.

 

Multinationals are now looking to acquire generic drug companies to compensate for the loss of income from expiring patents. Chinese majors are also waiting in the wings to snap up the market as patents expire."

 

A large number of international firms vie for space in this market, along with over 5,000 domestic players. The world's top multinational medicine makers have extensive operations in China, including R&D facilities, joint ventures and wholly-owned companies.

 

Foreign companies investing in China are looking to differentiate themselves by cultivating a diverse portfolio, ranging from generics to biotech drugs. Large domestic players on the other hand, have strong distribution networks and in-depth knowledge of the different tiered markets in China. Eager to be major players in the international markets, local companies are also consolidating.

 

The KPMG report also notes increased emphasis on welfare measures, public services and more equitable distribution of wealth, as these form key goals for China's 12th Five-Year Plan.

 

Norbert explains: "We see a shift as China is now turning away from its export-oriented focus. Boosting domestic demand and consumption is now a bigger priority. With an increasing affluent population there are calls for better services and quality of life, and healthcare reforms play a very important role."

 

In response to this, foreign companies are looking to spread their networks into rural areas and second and third-tier cities. Mergers with local companies have become a key strategic focus.

 

Norbert concludes: "This sector has seen a large number of innovative joint ventures, acquisitions and collaboration between multinationals and Chinese firms, largely geared to leverage the formidable reach of the domestic giants. With every big pharmaceutical company focusing on this region, China is likely to play a crucial role in the way drugs are invented, tested and regulated."

 

 

 

- Ends -

 


About KPMG

 

KPMG China has 13 offices (including KPMG Advisory (China) Limited) in Beijing, Shanghai, Shenyang, Nanjing, Hangzhou, Fuzhou, Xiamen, Qingdao, Guangzhou, Shenzhen, Chengdu, Hong Kong and Macau, with around 9,000 professionals.

 

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 150 countries and have 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.