The demand for pharmaceuticals in China is estimated to reach 375 billion yuan (US$46.29 billion) by 2010, with an increase of 13.6 percent annually, according to a recent study from the Freedonia Group, a U.S.-based industry research firm.

It said the western pharmaceuticals are forecast to tap demand of 248 billion yuan in 2010, comprising about two-thirds of this market. Chinese market currently lacks adequate proprietary prescription drugs related to cardiovascular, neurological, cancer and antiviral drugs. Western generic ethical medicines will continue to hold the largest share of the Chinese pharmaceutical market. Growth opportunities for these drugs will emerge in newly off-patent cholesterol-reducing, antipsychotic and second generation antihistamine preparations.

The study said traditional Chinese medicines would continue to form a large segment of China's pharmaceutical industry. However, due to the lack of proprietary products and sharper pricing competition, TCMs will see somewhat slower growth than Western drugs.

The study predicted that regulatory and commercial reforms would open up distribution systems to a wider range of proprietary and generic drugs.The government will lower trade barriers for making available more therapies and increase internal funding for biotechnology research. Western over-the-counter (OTC) medication will increasingly penetrate the Chinese market as the government promotes the expansion of the retail drug sector to improve the accessibility of basic medicines to residents of rural and overcrowded urban areas. New versions of existing prescription antihistamines, analgesics, antifungal agents, cholesterol reducers and acid reducers will generate the strongest growth opportunities based on treatment needs in the population. The expansion of the drug store sector will also create a new distribution channel for widely prescribed ethical drugs such as cephalosporin and quinolone anti-infectives, AIDS/HIV antivirals, and insulin and oral antidiabetic agents.