Kang Lida New York's Archives
A. Challenges U.S. Pharmaceutical Manufactures Face When Entering China Market
According to the 2016 ITA Pharmaceuticals Top Markets Report issued by International Trade Administration, U.S. Department of Commerce, U.S. pharmaceutical companies are facing a plethora of challenges when entering foreign markets. China’s unique regulatory, marketing and healthcare environments are drastically different from that of the U.S. The most common challenges U.S. pharmaceutical companies face include obtaining regulatory approval and patent approval, price control, distribution and tariff barrier.
Giving statistics in 2.1.1, U.S. pharmaceuticals stopped by these challenges from entering China market are losing an immense market.
B. High Cost of U.S. Pharmaceutical’s Domestic Research and Development.
According to the 2016 ITA Pharmaceuticals Top Markets Report (Attachment 4), pharmaceutical sector is one of the most R & D intensive industries. However, the R & D performed in the United States “has become increasingly expensive relative to emerging economies in Asia, such as China and Singapore”. The report also stated that “In the United States, more than 90% of biopharmaceutical companies do not earn a profit.”
On the contrary, Chinese government has enacted policies to attract foreign investment. Research, Development and Manufacture conducted in China enjoys a much lower cost. By the year 2010, the world’s top 20 pharmaceutical companies have set up joint venture or wholly owned facilities in China, including Bayer, Pfizer, GSK, Merck, Novartis, Johnson & Johnson and Abbott Laboratories. Several foreign pharmaceutical companies have enjoyed promising growths in China after localization. AstraZeneca, for example, reported 10% sales growth at constant exchange rate in the country to more than $2.6 billion in 2016. It continues to build on a Joint Venture to develop in China a treatment for autoimmune and inflammatory diseases. Novo Nordisk’s sales in the country grew about 5.9% in 2016 to more than $1.5 billion.
It is evidential that U.S. pharmaceutical companies’ China localization will continue despite the challenges they may face, when cutting the R & D cost is such an urgent issue.