Leading Chinese Drugmakers Report Slowing Sales

April 8, 2005

According to the Chinese government, the country's 23 leading state-run drugmakers have reported a decline in the pace of annual sales growth. The rate decreased from 10.6% to 9.8% in the first two months of 2005, with combined turnover reaching CNY19bn (US$2.30bn). Costs also escalated in the period by 10.6% to CNY15.19bn (US$1.84bn), but profit rose 23.9% to CNY780mn (US$94.24mn).

Officials attributed the strong profit rise to lower operating expenses and management costs, but the results — assuming they are reliable — also highlight the ongoing process of consolidation in China's drug sector. Many major domestic firms, such as Hayao, have actively sought foreign investment in order to finance modernisation and attract technological expertise. Meanwhile, the consolidation process will only gather momentum in the near future, and the many local companies reliant on standardised, basic drugs face a very difficult period.