China’s ambitious campaign to expand healthcare coverage and access to innovative drugs is making its pharmaceutical market an increasingly key source of growth for foreign firms. But even as the more than $135 billion pharmaceutical markets in the Asian giant surpasses that of Japan, its government-run healthcare system is slashing what it pays for many widely used drugs, squeezing profit margins of pharmaceutical companies.
The price cuts hit investors unevenly. The Chinese government is accelerating spending cuts on generic medications but paying more in some cases for innovative drugs that are in demand by its growing middle class.