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10 Companies That Will Make A Fortune From China Getting Older
October 19, 2011 · 0 Comments
The effects of China’s one-child policy are starting to show in the country’s demographics. And the effect is that the Chinese are getting old. Fast.
According to The Economist, By 2050 the country will have 2.2 working aged people for every person aged 65.
At the same time, a richer, more Westernized China is experiencing higher incidents of ailments like diabetes and heart disease. So China is also getting sick, but luckily people are getting wealthy enough to pay for their care. And the rising middle class especially, wants the best.
In a recent report, Citigroup has pointed out that the government is noticing this, and providing some serious tailwinds to the healthcare industry. In 2009, they launched a $133.2 billion project to expand healthcare to rural China, and overall, it is expected to become the 2nd largest healthcare market in the world by 2015, worth $100 to $170 billion.
Specifically, Citigroup projects U.S. pharmaceutical group sales alone to grow more than 20% in the next 5 years.
There are, however, some high barriers to entry into the market. Reimbursement for drugs and devices can take 2 to 4 years because it requires the Ministry of Health to update the country’s essential drug list. They are supposed to meet every 2 to 3 years, but they don’t have a fixed schedule.
Also, it should be noted that companies with a manufacturing presence in the country are heavily favored by the government. In other words, gaining ground here takes time.
Novo Nordisk (NVO)
Here’s why:
Diabetes. In 2010 The New England Journal of Medicine estimated that 92 million Chinese adults had diabetes, and 150 million more are showing early symptoms. Novo Nordisk first marketed insulin for commercial use in 1923, invented the first insulin pen, and now has a comprehensive line of insulin products.
Medtronic (MDT)
Here’s why:
Medtronic is a humongous medical technology world wide, and they’ve been in China since 1989. In F2011 they made $500 million in sales there. The company manufactures pacemakers, spinal hardware, endovascular grafts and more. Right now, 4% of their sales are in China and they’re seeing 25% growth there.
Eli Lilly (LLY)
Here’s why:
Expansion, expansion, expansion. Eli Lilly currently sustains a compound annual growth rate of 25% in the Chinese market and has doubled its sales force in the country to 2500. It also now reaches 200 cities.
See the rest of the story at Business Insider
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By Emma Brown
Tags: health