China is a key market in the heart of the Asia Pacific region with a population of approximately 1.3 billion people. In 2004, the Chinese market grew by 28% to US$9.5bn (IMS audited: hospital and retail) and was ranked ninth in the world. Although the scale and pace of change may vary in the future, China is set to become one of the world's largest economies.
Shanghai is the most populous urban centre in mainland China, with a population of over 15 million. It is the country's commerical hub with a high disposable income compared to the rest of the country.
Beijing, the capital of China, is located in the southern part of the North China Plain. The city is the political, cultural, scientific and educational hub of the country. Beijing city has a population of over 10.8 million.
China has become one of the most exciting areas for foreign investment. The Open Door policy to foreign investment has encouraged many of the world's leading pharmaceutical manufacturers to expand their business in this market of 1.2 billion people.
China's healthcare system is hospital-led, administered by local or regional governments, with the central government playing a relatively minor role. The central government has gradually reduced funding, leading to differences in approaches to healthcare provision and wide disparities in the availability and quality of healthcare. Hospital restructuring, with a focus on reform of administrative and management systems, will be given high priority. Tender purchasing will be the main tool employed to contain costs and it will be expanded to cover the majority of commonly used drugs. In an effort to reduce pressure on state funds and raise overall levels of coverage, the government has embarked on a programme of health insurance reform. This includes attempts to resurrect co-operative healthcare schemes, which are the major source of cover for China's rural population, and moves to merge the Free Health Insurance and Labour Health Insurance programmes in urban areas.
On the pricing side, hospital tendering and mandatory price cuts remain controversial and continue to pressure margins for some companies. At the same time, government efforts to provide healthcare insurance through Urban Employee's Basic Medical Insurance program are rapidly gaining a client base.
Hospital pharmacies are the dominant source of drug supplies for both inpatients and outpatients. Outpatient visits account for more than 90% of all hospital visits, according to Ministry of Public Health (MoPH) statistics.
