September 13, 2005

According to official data, China's top 100 drug companies registered sales of CNY93.63bn (US$11.57bn) in H105, representing 47.4% of the industry total. Pharmaceutical sales were 24% higher year-on-year in the first six months of 2005.

The growing share of sales by leading producers implies that modernisation and consolidation is taking its toll, as surplus capacity in basic medicines continues to threaten the survival of many smaller state-owned firms.

The impact of foreign investment in recent years is also a key feature. Of the leading 100 drugmakers in the period, 54 were joint stock firms, with combined revenues of CNY61.3bn (US$7.58bn). Meanwhile, 29 were foreign-controlled (including companies based in Hong Kong and Macao), with sales of CNY15.17bn (US$1.87bn), and 10 producers in full state control recorded sales of CNY13.55bn (US$1.67bn). The remainder of the sector — which is mainly in government hands — reportedly accounted for sales of CNY3.24bn (US$400.38mn) last year.

The statistics are also testimony to the continued concentration of production in eastern China, close to wealthy coastal markets and seaports. The data suggests that Jiangsu Province's drugmakers had profits of CNY2.95bn (US$364.54mn) in H105, the highest in the country. Sales in neighbouring Shandong Province increased 49.8%, compared to the same period last year, reaching CNY24.67bn (US$3.05bn). Jiangsu, Shandong and Zheijang provinces together accounted for 10% of total drug sales in China.