AstraZeneca plc (ADR)(NYSE:AZN) Records Healthy Growth In China Amidst Reforms And Increased Investment

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Sales of AstraZeneca plc (ADR)(NYSE:AZN)’s drugs in China are booming and this has been attributed to additions made in the sales force as well as reforms that have been made in the regulatory system of the world’s second biggest economy. This has sharply contrasted with the fortunes of GlaxoSmithKline plc (ADR)(NYSE:GSK) in China.

In Q3 the revenues of AstraZeneca increased by 12% in China. Revenues from the most populous country in the world now account for about 15% of AstraZeneca’s global product sales. This is a high proportion compared to other pharmaceutical firms.

‘Special place’

“We are in a special place in China. For the next two to three years I can see this growth rate maintained,” Pascal Soriot, the Chief Executive Officer of AstraZeneca, said after presenting the Q3 financial results.

For AstraZeneca’s British rival GlaxoSMithKline, however, sales in China fell by a mid-teen percentage rate during the same quarter. While local market changes have been exploited successfully by AstraZeneca and sales representatives added to reach a wider Chinese market, Glaxo is still struggling to recover from a corruption and bribery scandal which saw the pharmaceutical firm slapped with a huge fine three years ago.

Lucrative market

After the U.S., the world’s most populous country is now the second largest drugs market on the planet. Part of the reason why the United States has a high consumption of pharmaceutical drugs is because it has the world’s highest incidences of diabetes and cancer, which are mainly attributed to unhealthy eating habits, pollution and smoking.

Despite competition from Chinese manufacturers of low cost generic drugs, there exists huge opportunities for drug makers in China. Sector regulator China Food and Drug Administration has also been reformed and new drug approvals now take a shorter time. According to Soriot, a case in point was Tagrisso, a lung cancer drug developed by Astra Zeneca, which got approved in record time.

The funding authorities in China are speeding up the process of agreeing payments with regards to innovative drugs. Right now AstraZeneca boasts of five new drugs added to China’s National Reimbursement Drug List.

On Thursday shares of AstraZeneca Plc edged downwards by 0.66% to close the day at $33.11.

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