7 Aug 2009 09:20

China should incentivize pharma companies to secure overseas drug quality certification

Shanghai. August 7. INTERFAX-CHINA - The Chinese government should provide policy support to encourage pharmaceutical companies to obtain overseas drug quality certification, according to a report recently published on the Chinese Pharmaceutical Enterprises Association's Web site.

Yu Mingde, chairman of the Chinese Pharmaceutical Enterprises Association, was quoted as saying in the report that he expects more than 100 Chinese pharmaceutical companies to secure overseas drug quality certification over the next two to three years and start selling their Western medicines internationally.

Yu suggested that the government should develop preferential policies to encourage more Chinese pharmaceutical companies to obtain overseas drug quality certification, for instance, through handing out subsidies, to push China's generic Western medicine exports over the next five years.

According to Yu, between 2009 and 2014, approximately RMB 820 billion ($120.06 billion) of all drugs sold globally will face expiring patents, as such presenting a good growth opportunity for Chinese generic Western medicine manufacturers.

Presently, China has 19 pharmaceutical companies that hold drug quality certification from the European Union, United States and Japan. About 20 more companies are in the process of applying for overseas drug quality certification, Yu said.

"Due to lower demand in the international market this year, about 50 percent of the generic Western medicines manufactured by the 19 companies are being sold in the domestic market and are subject to price controls by the Chinese government through online drug procurement exercises. This has added cost pressure on the companies since they devoted additional resources in order to obtain overseas certification," Guo Fanli, an analyst with China Investment Consulting, told Interfax.

In addition, Yu suggested that the Chinese government should raise export tax rebates for Western medicines from the current level of 15 percent to 17 percent in order to encourage exports.

"By increasing the export tax rebate rate, companies can lower their product prices and be in a more advantageous position to compete with foreign drug producers," Wu Huifang, an analyst from Healthoo.net, told Interfax.

According to statistics from the China Chamber of Commerce for Import & Export of Medicines & Health Products (CCCMHPIE), the total value of China's Western medicine exports hit $1.11 billion in 2008, up 41.81 percent from the previous year.