According to Benjamin Schobert, a writer for Forbes, the pharmaceutical company Actavis has decided to pull out its investments in China. This comes as a surprise, since the growing pharmaceutical market in China would suit Actavis’ investments. So why did they decide to pull out of China?
It is addressed that there are possibly two ideas behind the reasoning for Actavis’ decision. First, it could have been a statement in regards to China’s diminishing hospitality towards foreign businesses in general. Secondly, it could have been that Actavis was not in a favorable position for their business to grow in China. The idea that Actavis could not have been profitable in China raises another question: Is there a demand for healthcare goods and services in China? The short answer is yes, but the main concern is whether or not foreign companies can seize the opportunity while still making a sizable profit.
What is holding companies like Actavis and GSK back from making a profit in China? Both companies have come to realize that the government is their biggest customer and also their biggest obstacle. Healthcare in China has become an increasingly political matter and the government is responsible for the funding mechanism that has made the availability and affordability of healthcare for the average Chinese citizen unattainable. Fully understanding the healthcare situation in China, it can be seen why Actavis has begun to pull out of China.