China's medical
industry grew at a steady rate in the first eight
months of 2005. It generated 285 billion yuan
(US$35 billion)in total industrial output value in
the period, growing by 25.21% year-on-year; 268
billion yuan in industrial sales value, up 25.01%
year on year; and 102 billion yuan in industrial
value-added, 25.21% more than in the same period
of 2004.
China's medical industry posted a
total sales revenue of 267.65 billion yuan for the
first eight months, up 25.53% year on year, of
which 74.25 billion yuan came from the crude
chemical drugs
sector, up 29.63% year on
year; 72.694 billion yuan from the chemical drug
preparations sector, up 23.13% year on year; 18.11
billion yuan from the biomedical sector, up
32.98%; 56.175 billion yuan from the patent
traditional Chinese medicine (TCM) sector, up
22.01%; and 19.338 billion yuan from the medical
apparatus sector, up 24.24%.
Profits of
the medical industry reached 22.233 billion yuan
in January-August, up 17.97% year on year, of
which 4.149 billion yuan came from the crude
chemical drugs sector, up 18.15% year on year;
7.242 billion yuan from the chemical drug
preparations sector, up 21.59%; 5.464 billion yuan
from the patent TCM sector, up 18.23%; 677 million
yuan from the sanitary materials sector, up
34.83%; 1.941 billion yuan from the biomedical
sector, up 39.37%; and 1.551 billion yuan from the
medical apparatus sector, dropping by 18.39% year
on year. The weight of the chemical drug
preparations sector and biomedical sector in the
profits of the whole industry rose 0.97 and 1.34
percentage points respectively during the
eight-month period, while that of the medical
apparatus sector dropped 3.11 percentage points.
Meanwhile, the sales cost of the medical
industry increased 28.98% year on year to reach
181.45 billion yuan in the January-August period.
Of this amount, 58.8 billion yuan came from the
crude chemical drugs sector, growing by 32.63%
year on year; 42.99 billion yuan from the chemical
drug preparations sector, up 25.1% year on year;
32.785 billion yuan from the patent TCM sector, up
27.4%; 12.19 billion yuan from the biomedical
sector, up 36.37% and; 14.55 billion yuan from the
medical apparatus sector, up 27.21%. All the
sectors saw their sales costs grow at a higher
rate than revenue.
Of the 5,014
pharmaceutical enterprises surveyed, 1,136
enterprises suffered losses, accounting for 22.6%
of the total; and the amount of losses totaled
3.315 billion yuan, up 27% year on year.
The medical industry engaged in US$10.857
billion worth of import and export transactions in
2004, up 20.37% over 2003. These included exports
of US$5.723 billion, up 25.27%; and imports of
$5.134 billion, up 15.35%. The steady growth of
the macroeconomy, accelerated upgrading of the
industrial structure, reduction of tariff and
further expansion of quotas jointly drove the
import of advanced technologies and equipment and
raw materials in short supply. At the same time,
various favorable policies boosted the growth of
exports.
Outlook for the remainder of
2005 China's medical industry is expected
to grow steadily for the rest of 2005, at an
annualized rate a little higher than in 2004.
Despite the optimistic prediction, problems with
the medical industry still remain. High investment
but low output in the area of pharmaceutical
R&D is limiting the development of the
industry; most new medicines tested have failed to
pass the key test of phase-III clinical
experiments; the market monopoly time (ie, the
amount of time a drug can only be produced by its
initial developer) has been reduced; and the time
needed for administrative examination and approval
has increased.
There are also
opportunities in China's pharmaceutical market in
2005: expansion of the coverage of the national
medical insurance scheme will bring new
opportunities to many pharmaceutical enterprises,
while in the State Catalogue of Basic Medicines
for Medical Insurance published in September 2004,
the number of traditional Chinese medicines
increased by 98%, from 415 to 823; while the
number of approved Western medicines has grown
42%, increasing from 725 to 1,031.
Key
indicators
Chemical medicine
production, Jan-Aug 2005 (unit: 1,000 tons)
Current
month
Cumulative
total
Cumulative
change y-o-y
(%)
Jan
101.3
101.3
24.1
Feb
129.9
229.4
16.4
Mar
125.9
364.4
11.8
Apr
104.3
400.8
10.6
May
117.6
516.7
14.7
Jun
123.8
641.8
17.2
Jul
101.6
697.3
12.8
Aug
105.7
832.1
18.4
Medicine exports, Jan-Aug
2005
Cumulative
quantity (tons)
Change y-o-y
(%)
Cumulative
value (US$m)
Change y-o-y
(%)
Jan
32,158
31.0
292.028
29.1
Feb
60,147
24.7
553.345
22.2
Mar
94,434
21.8
879.635
19.3
Apr
127,647
19.0
1,207.851
18.0
May
160,834
17.4
1,502.448
16.6
Jun
195,544
15.2
1,831.086
15.3
Jul
229,919
15.2
2,150.328
15.6
Aug
263,812
15.9
2,465.231
17.2
Medicine imports, Jan-Aug
2005
Cumulative
quantity (tons)
Change y-o-y
(%)
Cumulative
value (US$m)
Change y-o-y
(%)
Jan
3,486
37.2
170.927
39.1
Feb
5,542
12.6
304.872
11.6
Mar
8,811
23.2
505.002
17.5
Apr
11,937
21.1
732.045
21.2
May
14,674
24.7
905.591
22.0
Jun
17,890
29.0
1,130.171
26.1
Jul
20,335
27.6
1,337.267
27.0
Aug
23,158
26.2
1,543.421
27.0
Major
players, government policies There are now
more than 5,000 enterprises in China's medical and
medical industry. The industry's total employment
reached 1.17 million by the end of April 2005.
The State Food and Drug Administration
(SFDA), China's watchdog for the drug and food
processing industry, has issued rules subjecting
medical institutions to registration management
for making prescription preparations. According to
the registration rules, which took effect as of
August 1, 2005, applicants for making prescription
preparations not available on the market for their
own clinical use shall be limited to those with
business licenses and preparation-making permits
for this purpose. Those without such permits or
licenses may register to subcontract the making of
preparations to other medical institutions that do
have the requisite permits and licenses, or
certified pharmaceutical enterprises.
But
no applications shall be filed by medical
institutions for preparations in the following
categories: preparations that are available on the
open market; preparations with active ingredients
not approved by the SFDA; bio-preparations other
than allergens; traditional Chinese medicine
injections; compound preparations with both TCM
and chemical ingredients; narcotic, psychoactive,
poisonous and radioactive preparations; and any
other preparations not in conformity with
applicable state regulations.
China's
Ministry of Health is taking firm measures to curb
soaring pharmaceutical prices. The ministry has
decided to ban hospitals from raising drug prices
and requiring patients to pay the added costs, and
this policy will be implemented soon. The Chinese
government formerly granted subsidies to hospitals
according to the number of patients they received.
Later, instead of getting subsidies, hospitals
were allowed to raise drug prices by 15% above
cost before selling them to patients in order to
make a reasonable profit.
However, the
latter policy resulted in soaring prices for
medicines, and doctors sometimes sold to patients
medicines that were either unnecessary or
needlessly expensive. In recent years, the profits
from drug sales have reached 60% of total annual
profits at some large hospitals. For small and
medium-sized hospitals, the percentage is even
higher. In China, many medicines are sold for 10
times the out-of-factory price.
China
plans to introduce CGMPs (current good
manufacturing practices) for the manufacturing of
drugs, following the success of the application of
GMPs (Good Manufacturing Practice regulations).
CGMP rules, based on GMP regulations, will improve
the quality and consistency of Chinese drugs.
China has already set a timetable for the GMP
certification of TCM drinks and tablets, medical
gases, and outside-the-body diagnostic agents; now
domestic medicine manufacturers will have to face
more stringent standards. Incomplete statistics
show that 3,700 drug manufacturers had obtained
GMP certification by the end of October 2004.
(Sources include the State Food and Drug
Administration, the State Development and Reform
Commission, the National Bureau of Statistics and
the General Administration of Customs.)
