20 June 2018

Overview on pharmaceutical manufacturing industry in China

Overview on pharmaceutical manufacturing industry in China

By 2017, the pharmaceutical manufacturing industry in China is expected to increase its revenue at an annualized rate of 22.1% and reach $78.8 billion and the growth is mainly due to the rise in market demand along with the rise in customer’s income levels, according to the data given by IBIS World.

Between the years 2007-2017, growth in the global pharmaceutical manufacturing industry is forecast to have an annualized growth rate of 15.6% which is high as compared to 9% of the China’s GDP growth during the same period. There were around 1,360 pharmaceutical manufacturing industry enterprises, employing around 567,816 people with a payroll of about $5.0 billion in 2012 and the revenue generated in this industry is forecast to be increased to $78.8 billion, as compared to 16.3% in 2011. Hence, the annualized growth rate since 2007 is around 22.1% and between the years 2007-2012, the industry’s revenue is continuously increased from 10.2% to 10.8% respectively.

Policies is been implemented by the Chinese government in order to reduce the medicine prices, and also allow more consumers to purchase medicine when required. Because of these policies, the demand for pharmaceutical manufacturing industry in China will have a growth.

Currently, hospitals are the main distribution channel for medicines in the pharmaceutical industry, but in the near future healthcare reforms will allow drugstores to go beyond hospitals as the major distribution channel for pharmaceuticals in China.

In 2001, China became a member of World Trade Organization and in the same year there were a lot of mergers and acquisitions that have occurred in pharmaceutical manufacturing industry. Recently, in the global pharmaceutical industry, major players of the industry have merged to reduce the cost of R&D, minimize development times and increase global marketing power. But, in the pharmaceutical manufacturing industry of China, the revenue generated by the top four players accounted to be 15.0% of total industry revenue in 2012 which is considered to be low.

In 2004, the Chinese government had imposed good manufacturing practice reforms on firms in pharmaceutical manufacturing industry, where the companies must follow certain production and quality-control standards. Since, some of the smaller companies were unable to afford the associated costs, these firms started to merge with larger firms.

Source: sfgate.com

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