Pharmaceutical Industry Focuses on Three Sectors

Growth points of the pharmaceutical industry are changing.
Experts point out that tumor, cardiovascular and anti-infection
sectors have huge market volume, rich product variety and
concentrated patent products. It is therefore easy to find and
create new growth points and large pharmaceutical companies will
most likely be formed in these three mainstream markets.

Product price in these three markets makes an increase

The market growth finally comes from the quantity increase or
the price rise. Due to the sustained efforts made by the
government in price reduction, it seems that the market growth
could only come from the quantity increase. It is however not
true. Research shows that in spite of the price reduction time
and again from 2004 to the first half of 2006, the average price
of prescription drugs (total value/total quantity) in the market
of tumor, cardiovascular and anti-infection still increased by
nearly 20%.
   It is reported that before the government made readjustments
to the ex-factory prices of drugs, it had conducted field surveys
in various pharmaceutical companies and made comprehensive
consideration of factors such as production cost, profit rate
and other inputs. Due to factors such as R&D input and process
renovation, prices of some anti-tumor drugs have had an increase
instead of reduction.

Production scale helps subsistence

A research of the prescription drug market shows that many
anti-infection drugs in China have become conventional
varieties and the profit has almost touched the bottom line. From
2004 to 2006, however, a growth of the anti-infection drug market
was achieved by increasing the total quantity by 40%.
   Many anti-infection drug producers are extending their
markets towards medium/small cities and rural areas. The sales
amount is further promoted.
   Besides, new drugs in the anti-infection drug sector are
being developed and great quantities of substitutes have been
put in the market. "Facts prove that when the profit margin is
being squeezed, the production scale can still create profit,"
said experts.
   Yangtze River Pharmaceutical Group owns 20 anti-infection
drugs. Harbin Pharmaceutical Group has a capacity of 3 500 t/a
antibiotics and intermediates and 2.1 billion pieces/a powder
injections. Shanghai Pharmaceutical Group also owns nearly 50
antibiotic varieties.

Advantageous products support the growth

Due to the increase in the incidence of high blood pressure, high
blood fat and heart diseases, the cardiovascular sector has
become the second major market only next to the anti-infection
sector. The market volume reaches RMB15.0 billion a year.
   Research shows that the consumption of drugs in this sector
has not increased remarkably. The weighted average price has
however had a sustained increase of 40%. The fundamental cause
is the increase in the application proportion of high and
medium-end drugs.
   According to the data from the Ministry of Public Health, the
population with high blood pressure in China has reached 160
million, but only 14% of them have got real medical care.
   Most of successful companies in this market have no
large-scale production lines. They have managed to get sustained
growth by relying on one or two advantageous products.

New drugs promote profit growth

The fat profit of new anti-tumor drugs has stimulated
pharmaceutical companies to expand markets by developing new
products. Since 2004, the weighted average price in the
anti-tumor drug market has increased by 60%.
   Experts point out that in pharmaceutical products anti-tumor
drugs have relatively small fluctuations in revenue. As this
sector has more stable returns compared with other sectors, some
pharmaceutical companies devote themselves to the research and
development of new anti-tumor drugs.
   According to the projection made by Boston Consultants Group
of the United States, the prescription drug market volume in
China will be doubled in 2010 and China will become the fifth
major country in the world for the consumption of prescription
drugs. Experts say that this projection is very optimistic but
there is something in it.