China ripe for Big Pharma growth

China's faults may be Big Pharma's boon. Amid news that the FDA has cited two Chinese firms for deliberately shipping contaminated heparin to the U.S.--and in one case, lying about it to regulators--Reuters reports that Chinese consumers don't trust their own drugmakers. Common sense, perhaps, when contaminated heparin is just one example of tainted, Chinese-made drugs. But it's also a powerful affirmation of Big Pharma's push into the Chinese market.

While domestic drugmakers advertise their products with outlandish claims--hepatitis B cure!--foreign drugmakers rarely advertise, because they work directly with hospitals and doctors, a Credit Suisse analyst told the news service. Many domestic companies sell unlicensed drugs, despite fines; in fact, the Chinese FDA found 329,613 cases of unlicensed drugs in 2007. The Chinese government issues one new rule after another, but enforcement is lax.

So China's people turn to Western pharma, observers say. "Nowadays, Chinese people don't trust Chinese medications," Huang Jianshi, Assistant President of the Chinese Academy of Medical Sciences and Peking Union Medical College, told Reuters. "They trust Western brands more as they have a better reputation."

The globe's biggest drugmakers are targeting China (among other emerging markets) for expansion because sales growth in more developed markets is slowing almost to a standstill. AstraZeneca, Novartis, and Abbott Laboratories are only three of the Big Pharmas pouring resources into the country. Provided they run a tight ship in China--to continue distinguishing themselves from lesser-quality Chinese companies--it appears that foreign drugmakers could actually make this strategy work.

- read the Reuters feature
- see the heparin news in the WSJ

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