In the late 1990s and early 2000s, China's pharmaceutical sector was substantially smaller than it is today, and was dominated by acute care treatments, with the majority of sales occurring at large hospitals. As the country's economy has developed, the sector has experienced year-on-year double-digit growth as the state encouraged the sector's development. Western multinationals have increasingly formed joint ventures with local firms, and smaller domestic players have been eliminated by the imposition of improved manufacturing standards. Consequentially, BMI is forecasting strong growth for China’s pharmaceutical market, which is expected to reach a valuation of US$88.61bn by 2012. Since May 2007, the Chinese yuan:US dollar ratio has decreased from CNY7.65:US$1 to CNY6.94:US$1, a fall of just under 10%.

There are likely to be two main effects of the strengthening yuan: first that Chinese partners in joint ventures with US firms will contribute more, and second that US exports to China will increase. Given that BMI's country risk team expects the ratio to reach CNY6.70:US$1 before the end of 2008, the aforementioned trends are likely to become more pronounced throughout the year. During Q208 and Q308, China's authorities increasingly cracked down on producers and prescribers of anabolic steroids ahead of the 2008 Olympic Games. Manufacturers of these agents have been added to a watch-list, while the Ministry of Health expects medical institutions to check the identity of patients before prescribing anabolic steroids and other hormone-containing drugs.

In July 2008 UK-based GlaxoSmithKline (GSK) announced that it planned to double its R&D capabilities in China. At that time, the company employed 170 research staff and planned to boost this figure to 200 by the end of 2008, and to 350 the next year. It is BMI’s view that more multinationals will be following GSK’s enlightened approach. The prevalence of obesity in China is rising fast as people add more meat and diary products to their diets and urbanisation and the associated trend of more sedentary jobs compound the problem. Latest research shows that of all the developing countries, only Mexico's growth in the proportion of the adult population who are overweight and obese is faster than that of China. Given the consequential health problems that will present over the medium term, BMI expects the frequency and intensity of healthy living campaigns in China to increase.