CHINA HEALTH SCIENCES NEWSLETTER
Vol. 3 , No.13 - June 12, 2002
TOPICS THIS ISSUE:
- Artificial Skin Developed in China Approved for Domestic Market
- Hospital Reforms to Cut Costs
- More Foreigners Trust China's Medical Care System
- Analysis of the Internal and External Environment of China's Pharmaceutical Industry
- China's 24 Major Pharmaceutical Manufactures Report Increases in Profits
- Foreign Pharmaceutical Enterprises Expand Investments
Artificial Skin Developed in China Approved for Domestic Market
The State Drug Administration recently approved the production and marketing of a domestically developed artificial skin. Produced by Shandong Greenleaf Pharmaceutical Co., the artificial skin is said to be the first of its kind in the world.
A Shandong Greenleaf spokesman said the artificial skin, which is manufactured using a special cream in conjunction with living marine material, would be used in the treatment of patients with skin injuries such as scalds, burns and scars.
(Source: People's Daily)
Hospital Reforms to Cut Costs
In an attempt to lower the high cost of medicines available through in-hospital pharmacies, an experimental program will be tested in an attempt to delineate hospitals roles as care providers and medicine dispensers. The program is planned to get underway in Beijing this year.
The State Drug Administration announced the plan saying if successful, the trials would later be implement in other major cities, adding, "the separation must be launched in China because patients have long complained about high medical costs, especially the high price of medicine."
Typically, an in-hospital pharmacy accounts for approximately 50% of a hospital's revenue and in many circumstance is the primary source of income for a hospital. This dependence on in-hospital medicine sales has resulted in some facilities taking commissions from pharmaceutical suppliers in return for selling their products and to the prescription of unnecessarily expensive drugs.
(Source: eastday.com)
More Foreigners Trust China's Medical Care System
An ever-increasing percentage of foreigners living or visiting in China are happy to receive medical care provided by Chinese hospitals instead of returning to their home countries for treatment, a recent study has concluded.
Nearly all major foreign-funded companies or institutes in China are members of International SOS, the largest international medical organization in the world. The organization provides a range of services in China from telephone medical advice to an air ambulance evacuation service.
International SOS, which co-ordinates with 165 hospitals throughout China recently opened its first recommended Shanghai clinic, the Huanyu Health Care Center located in Huashan Hospital.
(Source: Xinhua News Agency)
Analysis of the Internal and External Environment of China's Pharmaceutical Industry
Policy Environment
Presently, China produces 1,350 types of basic drugs in 24 categories. However, 97 % of the drugs produced are imitations and without patent protection. To date, China has only developed two innovative drugs, arteannuin and sodium dimercaptosuccinate, which have received international approval.
In an attempt to encourage innovation and protect new drug developments, the central government revised the "Measures to Examine and Approve New Drugs". The revised measures extend the period of protection for the top five grades of new drugs. During the period of protection, only licensed enterprises can produce and sell such drugs helping to ensure healthier profits and greater research incentives for those enterprises. Other policy initiatives include:
- Limiting the amount of drug duplication;
- Formulating standards and enforcing GMP certification;
- Improving distribution channels, introducing a classified management system and independent operations for medical service organizations and pharmacies;
- Purchasing drugs through open bidding to reduce prices.
International Environment
China's crude drug output ranks second only to that of the U.S., however it faces several challenges if it is to maintain or improve its performance internationally. Some of the issues faced by Chinese medicine producers internationally are:
- The slow development of new drugs, and;
- No international outlet for patented Chinese medicines that have entered the European and American markets under the name of "food additives" and are still plagued by such problems as pesticides remnants and excessive metallic content.
The challenges faced by China's pharmaceutical industry after its WTO entry
The challenges faced by China's pharmaceutical industry following its WTO accession are mainly in the areas of tariffs and intellectual property rights.
After WTO entry, the average tariff duty on medicine and reagents should be reduced from the present 9% percent to 4.2%. This tariff reduction is expected to have little impact on the market price for imported medicines and reagents for the following reasons:
- The supply of ordinary drugs on the domestic market continues to exceed demand;
- Fierce market competition has resulted in slim profit margins, and;
- The high cost of production overseas results in no price advantage for drugs manufactured outside the country.
As a requirement of accession into the WTO, China had to undertake several reforms in the area of intellectual property protection and has already accepted international practices relating to drug patents.
Under a memorandum of understanding concerning intellectual property rights between China and the United States, a 7 and 1/2 year administrative protection period exists on patented new drugs released on foreign markets, however this protection is limited to products that have not been released on the China market. Therefore, Chinese pharmaceutical enterprises must stop producing copied drugs patented in China but may continue the production of new drugs that have not been patented in China or imitation drugs that have not been patented in China after 1993.
(Source: Xinhua Economic News Service)
China's 24 Major Pharmaceutical Manufactures Report Increases in Profits
According to recently released State Economic and Trade Commission data, China's 24 major pharmaceutical industrial enterprises reported increases in production, sales and profits in the first four months of this year.
In the first four months of this year, the Chinese pharmaceutical industrial sector was valued at RMB 29.79 billion (US $3.59 billion), an increase of 19.7% over the same period the year before. Current estimates have the industry's present growth rate at 0.4% higher than for the same time last year.
Business income in the industry was RMB 27.22 billion, up 13% and the pharmaceutical sales rate reached 92.5% of production. Profits also climbed to RMB 1.34 billion, up 17%, and 4% higher than the same period last year.
(Source: Asia Pulse)
Foreign Pharmaceutical Enterprises Expand Investments
Since the beginning of this year, foreign pharmaceutical enterprises have been actively investing in China's pharmaceutical market and are expected to have a positive effect on China's pharmaceutical market in the near future.
In March this year, the Boehringer Ingelheim International Group, the world's largest private medicine manufacturer began construction on Asia's second largest pharmaceutical plant in Pudong, China. With a combined investment of US$ 41 million, the plant will be equipped with the latest technology and production techniques.
Novo Nordisk Co., a leader in the treatment of diabetes has set up a research and development center in China, the first for the company outside of Denmark. In May this year, the company also expects to expand its plant in Tianjin in an attempt to have this years sales in China surpass those of its operations in India and next years sales to surpass those in Australia.
Glaxo Smith Kline Co, which at the beginning of this year was the first multinational pharmaceutical company to establish a research and development center in China, sees an increase in its China market share as an integral part of its strategy to obtain 7% of the international pharmaceutical market. Its investment in China is its largest in the Asian and Pacific region, and the largest for the company in the pharmaceutical area in the past five years. The company has so far invested over US $10million in the research and development of Chinese medicine.
With statistics showing that 18 of the world's top 20 international pharmaceutical enterprises have already invested in China and that the value of China's pharmaceutical market is expected to reach US $60 billion by 2010 and US $120 billion by 2020 exceeding the United States to become the largest market in the world, many foreign pharmaceutical companies are closely monitoring the Chinese market.
(Source: Xinhua News Agency)
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The China Health Sciences Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
