Drug firms need new pre­scrip­tion for ex­port suc­cess

China Daily (Hong Kong) - - BUSINESS DIGEST - By YAO JING yao­jing@chi­nadaily.com.cn

The over­all slow­down in China’s for­eign trade is af­fect­ing the phar­ma­ceu­ti­cal in­dus­try as well, even as the sec­tor faces the task of mov­ing up the tech­nol­ogy lad­der and fend­ing off com­pe­ti­tion from other global pro­duc­ers.

The na­tion’s first-half ex­ports of phar­ma­ceu­ti­cals and med­i­cal equip­ment in­creased 7.1 per­cent to $25.14 bil­lion, while im­ports reached $18.09 bil­lion, up 15 per­cent. “In the past six months, to­tal for­eign trade in­volv­ing phar­ma­ceu­ti­cals rose 10.28 per­cent, en­ter­ing a long pe­riod of sta­ble, slow growth,” said Xu Ming, vice-chair­man of the China Cham­ber of Com­merce for Im­ports & Ex­ports of Medicine and Health Prod­ucts, on Thurs­day.

Al­though trade in phar­ma­ceu­ti­cal prod­ucts is still grow­ing faster than the na­tion’s to­tal for­eign trade, it is fac­ing pres­sures such as the weak­en­ing econ­omy, fall­ing for­eign de­mand, ris­ing pro­duc­tion costs and in­creas­ing trade fric­tion, Xu said.

He said that the sec­tor’s to­tal for­eign trade will edge up this year as emerg­ing mar­kets boom and tra­di­tional mar­kets sta­bi­lize.

Emerg­ing mar­kets, in­clud­ing Africa, Rus­sia and South Amer­ica, are driv­ing ex­ports of Chi­nese-made medicines and health prod­ucts. Ship­ments to th­ese mar­kets rose al­most 11.4 per­cent last year, ac­count­ing for 24.5 per­cent of to­tal ex­ports for this sec­tor, ac­cord­ing to statis­tics from the cham­ber, an in­dus­try as­so­ci­a­tion un­der the Min­istry of Com­merce.

But ex­ports to Europe, the United States, Ja­pan and other tra­di­tional mar­kets rose just 3.3 per­cent, ac­count­ing for about 55.3 per­cent of the sec­tor’s to­tal ex­ports, a drop of 2 per­cent­age points from 2012.

China’s ex­ports of ac­tive phar­ma­ceu­ti­cal in­gre­di­ents, mean­while, grew 11.2 per­cent. The ma­jor mar­kets were In­dia, the US, the Euro­pean Union, Ja­pan and South Korea, tak­ing more than 80 per­cent of all ex­ports.

“With the re­struc­tur­ing of the in­dus­try and a sat­u­rated mar­ket for ac­tive phar­ma­ceu­ti­cal in­gre­di­ents, a num­ber of Chi­nese firms are shift­ing to Western medicine prepa­ra­tions,” said Xu.

Ex­ports of the sec­tor reached $1.36 bil­lion in the first half, up 7.9 per­cent. “The sec­tor will fur­ther speed up in sec­ond half,” said Xu.

Still, as for the health­care in­dus­try as a whole in China, pro­duc­ers and in­vestors face chal­leng­ing times, for many rea­sons.

The cen­tral govern­ment is in­ves­ti­gat­ing the prac­tices of both for­eign and do­mes­tic com­pa­nies. Med­i­cal re­forms are con­tin­u­ing. In­dian drug com­pa­nies are grab­bing more global mar­ket share, while Chi­nese pro­duc­ers are los­ing price com­pet­i­tive­ness. And it’s get­ting harder to ex­pand in ma­ture mar­kets, which im­pose strict rules on drug qual­ity and regis­tra­tion.

“The ex­port per­for­mance of phar­ma­ceu­ti­cals is less af­fected by chang­ing world eco­nomic con­di­tions and more by the qual­ity of medicine and equip­ment,” Cai Qian, pro­ject man­ager of the bio-medicine in­dus­try depart­ment in Yizhuang, which is in the Bei­jing Dax­ing In­dus­trial De­vel­op­ment Zone, told China Daily in an ear­lier in­ter­view.

In gen­eral, Cai said cheap and low val­ueadded ac­tive phar­ma­ceu­ti­cal in­gre­di­ents, not re­fined medicines, ac­count for most of China’s phar­ma­ceu­ti­cal ex­ports.

There are more than 500 phar­ma­ceu­ti­cal and med­i­cal equip­ment com­pa­nies in the Bei­jing Eco­nomic-Tech­no­log­i­cal De­vel­op­ment Area, which is un­der the man­age­ment of Cai’s of­fice. “But only a few of them are pro­duc­ing au­then­tic high-end patented medicines,” she said.

Ex­ports of tra­di­tional Chi­nese medicines and med­i­cal de­vices from the area have in­creased steadily over the past three years, reach­ing about $600 mil­lion in 2012.

How­ever, the ex­port des­ti­na­tions are still con­cen­trated in eas­ily ac­ces­si­ble mar­kets, such as South­east Asia, South Amer­ica and Africa, ac­cord­ing to Cai.

To move fur­ther into mar­kets with stricter stan­dards, such as Europe and the US will re­quire much im­prove­ment and years of work for Chi­nese pro­duc­ers.

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