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Pharmaceutical Giants Target Chinese Market
In recent years, China's enormous market has been targeted by global pharmaceutical companies. Medicines from foreign countries and joint ventures now occupy more and more of the Chinese market, accounting for one-third of the Chinese pharmaceutical market.
According to the latest issue of Beijing Review, in large and mid-size cities, foreign medicines occupy half the market. In the city of Guangzhou, imported medicine has made up two-thirds of the market.
According to Customs statistics, during the first eight months of last year, China imported 15,000 tons of medicine, 42 percent more than the year before. These drugs were valued at US$530 million, 114 percent more. Up to the end of last year, China had issued nearly 2,000 import licenses, even though half of the foreign medicine on the market entered China illegally.
Meanwhile, many large foreign pharmaceutical firms advanced into the Chinese market by establishing joint ventures. The first joint venture to produce medicine appeared in 1980, and since then 1,790 joint ventures with contractual foreign investment of more than US$200 million have been founded, with actual investment reaching US$150 million.
At present, 20 of the 25 largest transnational pharmaceutical companies have established a presence in China, and the Chinese people have become familiar with many world-famous brands.
Forty percent of Chinese medicine enterprises have cooperative projects with foreign makers. Among the top 500 foreign-funded enterprises in China, there are 14 pharmaceutical companies, of which 13 are controlled by foreign funds. These enterprises are aimed at the Chinese domestic market and seldom export their products.
A survey tells us that of the 50 most popular medicines in China, 40 are foreign. The profit rate for joint ventures in this field is as high as 20 percent. The reasons why foreign medicines are so popular are: much more powerful advertising than domestic medicines; and hospitals like to buy expensive medicines because 70 percent of Chinese hospitals' revenue comes from selling medicine.
With the lowering of tariff rates, China will import more medicine. Foreign research also says that if the Chinese Government doesn't interfere in the market, transnational companies will control it within five years. It is reported that China is accelerating the making of new policies for foreign investment absorption by the pharmaceutical sector.
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