China to Reform Medicine Distribution SystemChina's medicine distribution system is expected to undergo fundamental reforms, with chain stores and delivery centers being set up to cut marketing cost, today's Economic Information Daily reported.Yu Mingde, director of the drug department under the State Economic and Trade Commission (SETC), said that China has not yet established a comprehensive, efficient drug circulation system due to the slow pace of reforms. The Chinese government has decided to focus on the sector's reform in developing multiple ownership and introducing a modern distribution system and marketing methods, Yu said. China encourages entrepreneurs to establish joint-stock medicine companies or companies with limited liabilities to facilitate the formation of "an open and orderly" drug circulation system. "Hopefully, in the next four or five years, a number of large domestic drug company groups with international competitiveness will emerge on the global market," Yu said. For years China depended on state-owned wholesale outlets at various levels to distribute medicine nationwide. Currently, there are 16,000 such outlets, but only less than 400 of them reported annual sales of over 20 million yuan. The average profit margin of drug trading firms was less than one percent in 1999, yet their marketing cost was over 12 percent. |
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