by Alberto Forchielli* (Il Sole 24 Ore Radiocor) – Milan, 05 August
It is not only the strength of numbers that leads the pharmaceutical industries to China. The most populous country in the world has other features that make it attractive: economic growth, growing urbanization, the age of the population, diseases related to industrialization. The economic synthesis is simple in the coldness of the numbers: the sector is growing more than the GDP and therefore represents a growing fraction of it. In 5 years, health expenditures have more than doubled and have gone from 5 to 7% of GDP. They mark the transition from a peasant society to a more mature one, where diseases are diagnosed and treatments more accurate. The one-child policy has grayed Chinese citizens, who need assistance and medicines. The typical diseases of high-income countries - such as diabetes and cholesterol - are now at danger levels; at the same time industrialization, which has included the violation of the environment, has led to more cases of cancer and nervous diseases. This panorama has an important economic value, which lends itself to two conflicting assessments. On the one hand there are the absolute values that now project China into second place in the world in 2020, after the United States, for health expenditure. On the other hand, per capita consumption remains at still low levels, a legacy of a past where traditional medicine and the peasant structure of society imposed non-industrialized remedies. Both of these assessments stimulate the interest of companies, both multinational and Chinese. In fact, all the largest and most successful companies in the sector have production and research plants in China. Competition to attract consumption is strong and multinationals still boast an unassailable position, based on the quality and reputation they have built among consumers. The government is trying to put the legislation in order and to start a sectoral improvement, considering it instrumental to a more ambitious project: the construction of a basic free, efficient, cost-effective healthcare system. This is one of the riskiest challenges for the new leadership. In fact, the Chinese industry shows a series of delays and inconsistencies. The first is a constant in the Chinese economy: the excessive fragmentation of sectors. Nearly 4,000 producers operate in the country. They don't have the skills and financial resources to support the necessary R&D costs which prelude the launch of the products on the market. The risk margins in imagining new products that can pierce the patent wall of foreign giants are also excessive. Often, therefore, Chinese companies carve out some niches for survival, or look for the easy shortcuts of intellectual property infringement. The scarce protection offered in the country is not only complained of by foreign companies, but also prevents the emergence of national ones that can be repaid for their investments without having to go bankrupt due to the reduced protection of their discoveries.
