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Hong Kong Pharmaceuticals and Healthcare Report Q3 2012 Published: June 2012

No. of Pages: 90

Price: US $ 1175

Despite an increasingly ageing population (consequently increasing burden of no communicable diseases), Hong Kong will only be moderately attractive to investors given its small market size. While the dominance of patented medicines is set to continue in the medium term, costcontainment measures will increasingly prioritise the use of generic drugs in the public sector. We also note that the anticipation of a year of the dragon baby boom can bring about short-term opportunities for pharmaceutical companies with infant care products as part of their portfolios. Headline Expenditure Projections Pharmaceuticals: HKD8.66bn (US$1.11bn) in 2011 to HKD9.32bn (US$1.20bn) in 2012; +7.6% in local currency terms and +7.8% in US dollar terms. Healthcare: HKD86.24bn (US$11.08bn) in 2011 to HKD89.68bn (US$11.53bn) in 2012; +4.0% in local currency terms and +4.1% in US dollar terms. Medical devices: HKD4.22bn (US$542mn) in 2011 to HKD4.37bn (US$562mn) in 2012; +3.5% in local currency terms and +3.6% in US dollar terms. Risk/Reward Ratings: Hong Kong’s composite score in Q312 remains 60.2 out of 100, which again places it seventh of the 18 markets surveyed in BMI’s proprietary Risk/Reward Ratings (RRRs) matrix. The special administrative region (SAR)’s rewards profile, dragged down by market maturity and small population numbers, remains considerably less attractive than its risk environment. We expect Hong Kong’s position in the table to be increasingly challenged by emerging markets in the Asia Pacific region. Key Trends And Developments In April 2012, health institutions in Hong Kong urged the government to issue guidelines for biosimilars to ensure their safe use. Vivian Lee Wing-yan, associate professor of the School of Pharmacy at the Chinese University of Hong Kong, said industry professionals and the government should collectively issue regulations and guidelines, as well as raising public awareness about biosimilars through education, as they are more complex to manufacture. Lee also asked the government to monitor the efficacy and side-effects of biosimilars after they are registered. In April 2012, Swedish healthcare company Meda opened an affiliate in Hong Kong, following the company’s decision in 2011 to establish an affiliate presence in Beijing. The openings point towards the increasingly important role China will play in the company’s Asian expansion strategy. In May 2012, the World Health Organization (WHO) designated the Chinese Medicine Division (CMD) of the Department of Health (DH) as the Collaborating Centre for Traditional Medicine (CCTM) in Hong Kong. It is the first of its kind in the world as the Centre will focus on assisting the WHO to formulate policies and strategies, as well as setting regulatory standards for traditional medicine. Addressing the inauguration ceremony, the secretary for food and health, Dr York Chow, said that there was a clear trend of increasing demand for Chinese medicine services from the public, and the government has been actively incorporating Chinese medicine services into the public healthcare system including the setting up of 16 Chinese medicine clinics in the territory and the provision of Chinese and Western medicine shared care services in some 20 public hospitals.


BMI Economic View: The recent uptick in Hong Kong’s Q411 real GDP growth is likely to reverse in the first half of 2012. Weakening external demand conditions should see Hong Kong’s exports take a hit. Meanwhile, the correction in the domestic real estate market is likely to gather pace through 2012, having ramifications on consumption and investment spending. Consequently, we have revised our 2012 forecasts and now see real GDP growth slowing to 2.2% from a previous estimate of 3.0%. BMI Political View: Leung Chun-ying won Hong Kong’s 2012 Chief Executive Elections on March 25 with more than double the votes of previous front-runner and Beijing-favourite Henry Tang. However, his public support remains low given his purported political leanings and this is likely to be the main source of concern regarding his tenure going forward. Near term volatility in the business environment is unlikely given that he will have to placate and win over business leaders in order to consolidate support for his administration.

Hong Kong Pharmaceuticals and Healthcare Industry Table of Contents Executive Summary. 5 SWOT Analysis 7 Hong Kong Pharmaceuticals And Healthcare Industry SWOT.. 7 Hong Kong Political SWOT... 8 Hong Kong Economic SWOT. 8 Hong Kong Business Environment SWOT.. 9 Pharmaceutical Risk/Reward Ratings . 10 Rewards ... 11 Risks. 12 Hong Kong – Market Summary 13 Regulatory Regime 14 Regulatory Developments 15 Pharmaceutical Trade Regulations.. 17 Intellectual Property Issues.. 17 Counterfeit Drugs 18 Pricing And Reimbursement Regime 19 Public Procurement Of Medicines ... 20 Industry Trends And Developments 21 Epidemiology ... 21 Non-Communicable Diseases .. 21 Communicable Diseases .. 23 Biotechnology .. 28 Medical Devices... 30 Industry Forecast Scenario .. 33 Overall Market Forecast.. 33 Hong Kong - Economic Activity... 41 Prescription Drug Market Forecast. 42 Patented Drug Market Forecast .. 44 Generic Drug Market Forecast 46 OTC Medicine Market Forecast .. 48 Medical Device Market Forecast. 50 Pharmaceutical Trade Forecast... 52 Other Healthcare Indicators 54 Competitive Landscape 56 Pharmaceutical Industry.. 56 Traditional Chinese Medicine.. 57 Industry Developments. 57


Pharmaceutical Supply Chain.. 58 Retail Pharmacy Sector ... 59 Company Profiles .. 61 Local Companies .. 61 Wuyi International Pharmaceutical . 61 CK Life Sciences .. 63 South Asia Pharmamedic. 66 C&Y Pharmaceutical Investment . 67 Vida Laboratories 68 Multinational Companies.. 70 GlaxoSmithKline.. 70 Pfizer 72 Sanofi... 74 Merck & Co . 76 Novartis ... 78 Demographic Outlook ... 80 BMI Methodology... 86 How We Generate Our Pharmaceutical Industry Forecasts . 86 Pharmaceutical Risk/Reward Ratings Methodology 87 Ratings Overview. 87 Weighting. 89


Hong Kong Pharmaceuticals and Healthcare Report Q3 2012