China Potentially Not The Profitable Centre Once Thought

July 25th, 2013
China Potentially Not The Profitable Centre Once Thought

Since China opened its door to foreign investment, many companies including health care and health insurance firms flooded into the country.

However a recent report from one of Europe’s major financial institutions suggests that China may not be as profitable as many thought. In fact 2 British pharmaceutical companies are thought to have possibly bit off more than it could chew.

The Chinese government decided as far back as 1999 to try and change healthcare provision in that huge nation. However while it wanted the vast majority of people to be able to be covered by health insurance, the government also wanted to keep prices low with regards to pharmaceutical medicines.

This last decision is reportedly putting pharma companies such as GlaxoSmithKline in a financial predicament.

In fact, while on the surface opening the doors to foreign manufacturers is perceived as a good thing, the real beneficiaries have apparently been local firms and not multinationals.

This is what prompted Deutsche Bank to issue its warning to global corporations such as Glaxo and AstraZenica.

According to Deutsche Bank the growth in need for vaccines and other medicines in China is expected to rise from £232 billion to £650 billion by 2020. But foreign investors are thought to only take a fraction of this growth.

And that presumably also refers to health insurance companies investing in China.

With the West in financial meltdown, perhaps China is not the panacea for global corporations after all.

 

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