19 Jan 2011 12:24

China's pharma sector making competitive strides - repor

Shanghai. January 17. INTERFAX-CHINA - China's pharma industry has become increasingly competitive on the global stage in the past several years, according to a recent industry report.

The China Pharmaceutical Manufacturing Industry Safety Appraisal Report, drafted by the China Chamber of Commerce for Import Export of Medicines Health Products, rated the competitiveness of the industry at 61.7 out of a possible 100 points. The assessment was based on pharma firms' financial results, research and development (RD) achievements, exports, potential for improvement and inspection pass rates, among other criteria.

Sales revenue of China pharma firms has risen at an average annual rate in excess of 20 percent in recent years. The report said. The proportion of new pharma products in relation to total sales increased from 12.9 percent in 2004 to 14.3 percent in 2009. Profit margins, which averaged 9 percent in 2004, have climbed to 10 percent for the past two years, according to the report.

Research technicians account for approximately four percent of the domestic pharma industry workforce. Though the figure is much lower than the 20 percent seen in developed countries, the report said the number of research technicians is growing. RD expenditure is less than 2 percent of total industry sales revenue, but companies are channeling more funds into RD and the government is increasing financial support.

A growing number of China pharma firms are obtaining current Good Manufacturing Practices (cGMP) certificates in developed countries. "Over 20 domestic pharma companies have obtained cGMP certificates, though most of these provide manufacturing outsourcing services," Tan Shengcai, vice secretary general of the chamber, told Interfax Jan. 17.

Government figures show that regulators are carrying out more pharma-related inspections, with 2.78 million factory visits by inspectors in 2006, rising to 2.86 million in 2007. Industrial waste from the health sector declined from 0.48 percent of total national industrial waste in 2004 to 0.36 percent in 2009. Authorities are continuing to tighten environmental regulations.

Traditional Chinese medicine (TCM) materials have decreased as a percentage of total pharma exports, accounting for five percent of the total in 2004, and three percent in 2009. This suggests domestic companies are increasing their focus on high value-added finished TCM exports.

Access to stock markets has also improved. There were 80 listed pharmaceutical companies in 2004. Today there are 130 listed pharam firms.

Meanwhile, the number of students attending pharmaceutical and medical school is increasing.

The report also stressed the importance of health care reform and government policy under the 12th Five-Year Plan (2011-2015), emphasizing the need to climb the value chain to be globally competitive.

"Domestic companies will continue to rely on exports of generic drugs and active pharmaceutical ingredients (API) in the near term," Tan said. "We will see progress in terms of finished product exports, but more concerted efforts will be required to achieve significant change."

- KZ