Academic journal article European Journal of Interdisciplinary Studies

The Key Drivers Behind Novo Nordisk's Growth in the Diabetes Market in China

Academic journal article European Journal of Interdisciplinary Studies

The Key Drivers Behind Novo Nordisk's Growth in the Diabetes Market in China

Article excerpt

1. Diabetes Treatment Market in China

China recently became the world capital of diabetes surpassing the United States for patients diagnosed with either diabetes or pre-diabetes condition. A preliminary study conducted in China by International Diabetes Federation estimates that the number of people with diabetes in China has raised in excess of 92 million. The most prevalent being type 1diabetes but there is an increasing threat of diabetes type 2 due to the major changes the Chinese society has undergone these last 2 decades.

In 2007, China's diabetes epidemic accounted for more than 14 percent of healthcare expenditures and cost the country at least 0.6 percent of GDP in lost productivity, according to the Economist Intelligence Unit (2007). They based their assessment on the assumption that 4.3 percent of Chinese have diabetes, but new estimates place the rate at around 10 percent, meaning that the costs of diabetes on China's economy from productivity losses are probably closer to 1.5 percent of GDP. Atop this, the International Diabetes Federation estimates that in 2010, China directly spent around US$6.9 billion on diabetes treatment (IDF, 2009). China's diabetes problems highlight the twin challenges of chronic diseases stemming from changing consumption habits enabled by China's economic boom and from the greying of its society, which is also a source of substantial healthcare costs (Dong et al., 2011).

As China urbanizes and becomes wealthier, diets are shifting from the traditional rice and vegetables and toward meats, sweets, and processed foods. In the past decade, per capita sugar consumption in China has risen by 48 percent, according to the US Department of Agriculture. As in the U.S. and other countries, sweet beverages are a significant and growing source of sugar consumption. Greater wealth has led to sweeping diet changes, including eating heavily salted foods, fatty meats and sugary snacks - boosting obesity rates, a major risk factor for Type 2 diabetes, which accounts for 90 percent to 95 percent of all diabetes cases among adults.

It is estimated that by 2030, 40 million more will have the condition in China, where diabetes causes 173.4 billion Yuan ($28 billion) a year in medical costs (Yang et al., 2011). Prevalence of Type 2 diabetes has more than tripled in China over the past decade, fuelling 20 percent-a-year growth in drug sales and straining health services.

A key difference is that an average of $194 a year is spent treating each diabetes patient in China, versus more than $5,000 in developed countries such as the United States according to the International Diabetes Federation. Even as China's health spending is forecast to almost triple to $1 trillion over the next eight years, surging rates of diabetes mean China is struggling to detect cases and provide basic care, according to a McKinsey& Company report (McKinsey & Co, 2012).

China's pharmaceuticals market overall will increase 15-to-18 percent a year to reach as much as $165 billion over the same period (Garber, 2012). It's also stoking need for newer, costlier medications from Merck & Co. (MRK), Novo Nordisk A/S (NOVOB) and Sanofi that help avoid blood-sugar spikes and complications such as heart attack and stroke. The mainstay diabetes treatment worldwide is 'Metformin', available free in China through the government's national health insurance program. Doctors want to augment the 50-year-old pill with newer medicines, such as 'Januvia' from Merck, which helps to stabilize blood-sugar, according to an April 2012 paper in the journal Diabetes & Metabolism. 'Victoza', sold by Novo Nordisk, offers 'minimum risk of hypoglycemia', according to company - sponsored research in the Lancet in 2010 (Green et al., 2003).

Merck's 'Januvia' was approved for use in China in 2009 and costs 9.6 Yuan ($1.50) per 100- milligram tablet, typically taken daily. Merck has applied to have the medicine added to China's National Drug Reimbursement List. …

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