China’s pharmaceutical market is slated to grow 17 percent year on year through 2020 and become the world’s second largest pharmaceutical market, a latest industry report said.

The value of China’s pharmaceutical retail market will jump to 1.9 trillion yuan (US$310 billion) from 600 billion yuan in 2012, McKinsey said in a report co-published with Elsevier Business Intelligence and BayHelix Group yesterday.  

Hospitals, expected to be the main sales channel for drugs, will continue to contribute around 84 percent of overall sales by 2020. Chronic disease and demographic shifts will drive up healthcare spending, the report said.

Multinational drug firms are optimistic about the market’s long-term growth potential as 90 percent of the executives in the report said China is already a top five global strategic priority for their companies.

“Pharmaceutical companies need to formulate new strategies and new business models to capture the growth opportunity,” said Franck Le Deu, partner and leader of McKinsey’s Healthcare Practice in China.

Joshua Berlin, head of emerging markets at Elsevier Business Intelligence, sees more partnerships with local firms to emerge in the next few years which can help speed up developing new drugs for the domestic market.

But 84 percent of respondents cited the lack of reimbursement for innovative drugs as a major barrier for growth.