China Drug List Seen Boosting Western Firms' Sales
Chinese plans to broaden the list of medicines eligible for a rebate from July will benefit Western drugmakers such as AstraZeneca and Sanofi-Aventis, according to Morgan Stanley analysts.
The National Reimbursement Drug List is being updated for the first time since 2004 with many Western drugs added to the category that entitles patients to a rebate of up to 50%. New entrants include Astra's cholesterol fighter Crestor and its heartburn pill Nexium, along with Sanofi's anti-clotting medicine Plavix.
The fact that hospitals dominate dispensing in China and are able to extract higher absolute mark-ups on Western drugs should also drive market share increases, Morgan Stanley said in a report on Monday.
Pharmaceutical spending current accounts for less than 5% of China's GDP but the brokerage expects this to grow by 18% annually, representing a "windfall" for Western manufacturers over the coming three to five years.
"Our previous calculation of around 10% percent uplift to EPS in 2015 from emerging markets could be conservative in timing and magnitude," the analysts concluded.
Emerging markets are a growing focus for Big Pharma as growth in Western markets stalls, and companies are racing to do deals in key markets like China, India, Brazil, Russia and Turkey.
AstraZeneca - which is already the market leader in China among Western drugmakers with a share of just under 2% -is held an investor day on Tuesday highlight the potential of China and other emerging markets. It follows a similar initiative by GlaxoSmithKline in December.
The Anglo-Swedish company is followed in Chinese market share by Pfizer, Bayer and Sanofi.
