Foreign Generics Makers Battle for Chinese Market

The participation of foreign companies in the Chinese generics sector has grown notably in recent years, as product lines are often more sophisticated than the vast majority of local "generic" production, mainly limited to basic treatments such as anti-infectives.

The most recent major producer reportedly to enter the sector, leading Israeli generics firm Teva, is now aiming to tap the fast-growing market, via its 45% stake in Tianjin Hualida Biotechnology Co. Ltd., based in the northern Chinese city of Tianjin. Teva acquired the stake following its US$3.4bn purchase of US-based Sicor in February 2004. Meanwhile, Sandoz, the generics unit of Switzerland's Novartis, recently announced that it is to launch six products and study acquisitions in China.

Generics already account for 75% of the US$19bn Chinese market by value, but the drug market's basic nature and rising levels of consumption and prosperity clearly imply that the country is an attractive proposition for generics makers. Despite multinationals' concerns over weak patent laws and widespread copying, the locally based sector is already contracting under competitive pressure from leading foreign drugmakers.