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CHINA CLAIMS DRUG OUTPUT GROWING RAPIDLY

September 6, 2005

According to state media, China's drug industry recorded CNY212.5bn (US$26.26bn) in output value in H105, an increase of 23% compared to the same period last year. Meanwhile, sales rose 24% y-o-y to reach CNY197.5bn (US$24.41bn). Profits stood at CNY17bn (US$2.1bn), up 21%, although the number of drug firms slipping into debt also grew, with total losses in the industry increasing by 19%, to CNY1.8bn (US$222.54mn).

China's drug industry is developing rapidly. A large population, low drug consumption and government encouragement for foreign investment are the key drivers of progress. Domestic drug producers are increasingly seeking finance in order to modernise and expand manufacturing facilities.

In the domestic market, profitability has been hit by growing competition, amid rising demand from hospitals and the fast-growing drug retail sector. The Chinese government has recently expanded reimbursement coverage for drugs and ordered a series of price cuts.

Official statistics also claim China's drug imports stood at US$3.0bn in H105, a rise of 13%, but these were outpaced by exports, which were 24% higher year-on-year at US$3.8bn. Strong export growth has been driven by modernisation, as well as strong global demand led by U.S. economic liberalisation and China's accession to the WTO.