Chinese healthcare spending up 50%

It's not just Big Pharma looking to a fast-growing China for help in growing its own bottom line. Chinese pharmaceutical companies are working toward the same thing. And for both groups, the optimism could be justified.

In fact, Chinese pharma stocks were up yesterday on news out of China's annual meeting of the National People's Congress. At the meeting, officials have reiterated their ambitions for expanding health insurance coverage and improving medical care.

For pharma, the idea is that a.) as the government spends more, spending on drugs will grow commensurately, and b.) that as the government modernizes and improves medical care, more Chinese will forego traditional herbal remedies in favor of prescription drugs. Drugmakers from all over are looking to capitalize on those two movements, beefing up their sales forces in the country and spreading their networks beyond major urban areas, even into the Chinese countryside.

The stats show that they're already spending more: In 2009, the Chinese central government spent $18.75 billion on healthcare up 50 percent year over year. For 2010, spending is forecast at $20.36 billion, which would be an 8.8 percent increase year over year. That's not 50 percent, but it's far more than the growth in mature pharma markets.

- read the Wall Street Journal story

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