Reforms in the Chinese healthcare system may be to blame for a drop in multinationals’ second-quarter earnings, experts report. Some claim that this could indicate a “new normal” in one of the world’s fastest expanding pharmaceutical markets.
The government has kicked off a series of reforms aimed at improving the quality and affordability of certain drugs in the country. Enacted by President Xi Jingpin, who rose to power in 2014, the reforms include:
- Universal insurance coverage for serious illness
- Removal of retail drug price caps
- Higher drug safety and quality regulations
- Elimination of a 15% markup in prices charged by hospitals
Experts say these initiatives could strengthen domestic pharmaceutical players in competition with multinational corporations, which had previously enjoyed the upper hand because of safety concerns about Chinese products. If domestic drugs start meeting higher quality standards, they could gain an edge in the booming business with the government.
Even if this does indicate a “new normal,” foreign pharmaceuticals show no signs of giving up their designs on the Chinese drug market. And for good reason: spending is projected to rise from $511 billion in 2013 to $892 billion by 2018.