Overview

OTC refers to those drugs that can be acquired through hospital pharmacies or retail pharmacies without prescriptions or guidance from medical practitioners, and are usually used to alleviate mild symptoms of diseases, or in treating mild diseases.

OTC sales worldwide have seen a dramatic rise since the early 1990s, with an annual growth greater than 30 percent.  Some forecast that the world's average annual growth for OTC in the first decades of the 21st century will maintain 20 percent or above, with the fastest growth rates to be seen in East and Southeast Asia.

Current OTC sales in China represent 10-15 percent of the total synthetic drug market (including imported, JV and domestic products).  The OTC proportion increases to around 30 percent in some of the more affluent regions in China.  Based on the high growth rates over the past decade, averaging at 25 percent a year, it is projected that OTC sales will reach US$4 billion in 2004.

Market Drivers

Government Policy

A classification administrative system was set up by the State Drug Administration (SDA) in 1999 for prescription and OTC drugs.  Since then, the SDA has issued a series of guidelines on interpretation of the new classification system, on labelling, usage instructions, and packaging of OTC products.  The distinction between the two classes of drugs - prescription and OTC - is becoming clearer with time.  At present, there are about 700 OTC drugs classified by the SDA.  The second group of OTC drugs is under consultation with the industry.  According to the SDA's plan, 70% of registered drugs will be classified as OTC.

Economic and Social Development

Awareness is increasing about health care and the importance of self-medication.  The rapid rise in living standards and disposable income has made possible self-medication on a continued basis for a large number of people.  Achievement of satisfactory results though such easy self-health management is winning over an incrasingly large number of people across age groups.

The domestic OTC market is also expanding as a result of rapid growth in OTC taret consumer populations.  Currently, the total number of non-SOE workers (Who aren't covered by state health insurance) has overtaken that of SOE employees.  Increased levels of international exchange and commercial activity have greatly added to the number of tourists and mobile populations, which, compared with other populations, tend to have higher incomes.

Large increases in rural migrant populations in urban areas have also contributed to the rise in OTC consumption, despite their relatively low earnings.  These migrant workers fall outside the public health care insurance system, which is only available to urban SOE employees, and thus have to pay for hospital treatment and medication themselves.  The ongoing and proposed future reforms to the healthcare insurance system will invariably divert more of the population to self-medication and OTC consumption.

Rural areas will become large potential markets for OTC drugs.  The good safety and low toxicity, efficacy, ease of use, non-drug dependency, plus reasonable pricing, make OTC drugs ideal for the rural healthcare market where medical services are scarce and virtually non-existent in remote locations.

Technic