| By Wen Jian, Pharmaceutical Manufacturing News |
| Monday, 05 January 2009 |
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The pharmaceutical industry in China has not been widely impacted by the global financial crisis yet as its status of being a basic consumer necessity is protecting the industry from the direct impact of the ongoing crisis. According to statistics from the National Development and Reform Commission of China, the country's drug price index is stable. The stability as a whole plays an important role in maintaining the steady growth. Combined imports and exports of western medicines for the first half reached US$15.53 billion, up 3.5 percent year-on-year,
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8.3 percentage points higher than the growth rate of a year earlier. As for Chinese medicines, its foreign trade numbers increased to US$839 million, up 15.8 percent, with a favorable trade balance of US$441 million. Exports increased 14 percent to US$640 million while imports grew 22.06 percent to US$199 million.
Statistics from the National Bureau of Statistics of China showed that the growth rate of the country's pharmaceutical manufacturing sector for the first eight months declined slightly when compared with that for the first five months. However, it is still higher than industrial growth as a |
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whole, especially when measured by profits, which is almost 20 percentage points higher than the average level nationwide, ranking fourth among the 39 industrial categories. The sector recorded a year-on-year rise of 39 percent in profits for the first eight months, reaching RMB 50.6 billion (approx US$7.39 billion). Looking forward, the policies and measures put in place by the Chinese government to stimulate domestic demand and promote economic growth are expected to drive the development of China's pharmaceutical market in the year to come.
Competition in generic API market becomes increasingly fierce
As pharmaceutical enterprises are shifting the focus of their market expansion strategy to generic drugs, competition in the generic active pharmaceutical ingredient (API) market has become increasingly fierce.
Global API sales reached US$76 billion in 2005, among which US$31 billion accounted for external sales while the remaining US$45 billion were used as a component to complete manufacturing processes within the same organization. Sales of commercial APIs are expected to grow at a compound annual growth
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rate of 8.2 percent to reach US$46 billion by 2010. China is currently the largest API producing and exporting country in the world. The country recorded exports of approx. US$9.5 billion in 2007, followed by Italy and India, which is expected to become the world’s second largest API producing country thanks to low labour and environmental costs, the size and dynamism of its economy, and incentives provided by the Indian government.
However, Chinese API exports are faced with many challenges, including insufficient investment in research and development. Zhejiang Huahai Pharmaceutical, one of China’s leading API enterprises, typify the situation with the company’s annual R&D expenditure accounting for less than 5 percent of its annual sales revenue. R&D expenditures at other producers are even less.
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