I recently received an interesting email from a Jiangsu Province government official:

“Your China Economic Weather Report is interesting. We, at XYZ Economic Development Zone, are tasting the bitterness of global recession. We totally agree with your FDI Forcast for 2009. Some of our clients have decided to postpone or even cancel the investment plan under current economic turmoil. However,the pharmaceutical sector seems less affected by the economic meltdown. Three chemical companies signed investment agreement with us in 2008. We are making adjustment in development strategy to better cope with the downturn. The pressure is there on our shoulder to reach the same or even more amount of FDI in this situation. Hopefully things will get better in the second half of 2009.”

In particular I found the administrator’s observation that pharma was weathering the economic downturn relatively well quite enlightening. In talking with an American expert in the field who visited our office a few days ago, we agreed that Pharma in the West was at a crossroads: R&D has become prohibitively expensive; many blockbuster drugs are reaching their patent-expiry dates, after which low-cost manufacturers will be able to copy the drugs with impunity; and the road to FDA approval (at least, state-side), is fraught with expense and failures aplenty.

The China market – as is the case with so many other industries – has opportunities aplenty for relatively low-cost development as well as consumption. But – again, as is the case with so many industries in China – the market is highly fragmented with little regulation (think “milk”). It will be another few years at least before Big Pharma – and the FDA – will be able to feel comfortable pursuing substantial R&D projects in China, as well as clinical trials.

The allure of one billion pill poppers, though, will eventually transform the obstacles to developing China’s pharmaceuticals market into grand opportunities.