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January 17, 2014
Abandoning the Chinese Drug Market
Here's one of those stories that makes you wonder: one-off or beginning of a trend? A generic drug company, Actavis, has decided to get out of the Chinese market. Too much hassle for too little money, and that last part is something you don't hear about China all that often. (For centuries, entrepreneurs of all kinds have dreamed about "What if just one out of a thousand of them bought my stuff. . .")
“It is not a business friendly environment,” Bisaro said at the JPMorgan Chase & Co. health-care conference in San Francisco. “If we’re going to allocate capital, we’re going to do so where we can get the most amount of return for the least amount of risk. And China is just too risky.”
. . .Given Actavis’s small presence in China, “it wasn’t worth the aggravation, the frustration or the concern,” he said.
Bisaro said there doesn’t appear to be a level playing field, which makes it hard for companies to compete. “You need a certain consistency in application of rules, and I’m not certain China has achieved that consistency yet.”
Generic profit margins are lower, so you won't see the research-based drug companies coming to this conclusion any time soon. But neither is it impossible. Companies would hate to pass up the Chinese market, but there's a set point for everything.
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