Pharmaceutical Industry Annual Report of 2009 on Injury Early Warning   

The Bureau of Industry Injury Investigation of China's Ministry of Commerce, jointly with China Chamber of Commerce for Import & Export of Medicines & Health Products (CCCMHPIE) recently set up an Industry Injury Early Warning Mechanism for the Pharmaceutical Industry that issued its first report in early January 2010.
   Found primarily in production, management, imports and exports, marketing and influence to domestic pharmaceutical industry, the Industry Injury Early Warning Mechanism on Pharmaceutical Industry tracks and monitors the operation performance, market development change, and corporation operation conditions in the pharmaceutical industry via related warning model and specialist system, analyzes and compares operation conditions between domestic companies and oversea corporations of same sort, issues the early warning information timely to the domestic pharmaceutical companies and associations, and provide decision support for related administrative departments to take relevant measures, explained Xu Ming, a director of CCCMHPIE.
   The report says that China's pharmaceutical industry maintained rapid growth in 2009 because of the accelerating development of national economy, and its growing speed was higher than the growing speed of national economy. The pharmaceutical industry suffered certain fluctuations due to the impact of global financial crisis, but leveraging a higher growing speed in general impelled by significant favorable policies of medical reform program. Three sections are described in the report as follows.

A. Operation Outline for China's Pharmaceutical Industry in 2009

1. The pharmaceutical industry performed well in the first three quarters of 2009

According to statistics of the Ministry of Industry and Information Technology (MIIT), the gross industrial production value in China's pharmaceutical industry reached RMB618.4 billion in the first three quarters of 2009, representing a year-on-year growth of 17.3%, higher than 2.97% - the average growth rate of all China's industries, and the full-year growth rate of 2008 was 28.9%. The year-on-year growth of the industrial added value was 13.3% in the first three quarters of 2009, which was higher than the average rate (8.1%) of the national industries in the same period. In the first three quarters of 2009, sales revenue reached RMB586.5 billion, representing a year-on-year growth of 17.5%, and the growth rate in the same period of 2008 was 30%. Total accumulated profits were RMB56.99 billion, up 16.0% year-on-year, and the growth rate in the same period of 2008 was 39.3%. The growth in 2009 presented a declining situation quarter by quarter. However, the growing trend of economic benefit of China's pharmaceutical industry was sound, compared with 10.6% - the average declining rate of national industries in the same period of 2009. The average ratio of sales/production of the entire industry was 94.9%, while that in the same period of 2008 was 95.03%. The sales profit ratio was 9.81%, slight higher over 2008.
   The growth of China's pharmaceutical industry is still fraught with many difficulties, as evidenced by lingering overcapacity, twisting profitability of companies, correspondingly lower investment speed, declining investment amount in the whole industry, slowing growth in total assets, weak innovation ability and impotent competitiveness in the international market, serious environmental pollution, and high energy consumption.

2. The imports and exports for the pharmaceutical industry maintained steady growth in the first eleven months of 2009

From January to November of 2009, the imports and exports for pharmaceutical industry combined to reach US$47.39 billion, a year-on-year increase of 7.2%. Of that, the imports reached US$18.05 billion, up 19.2%; and the exports US$29.33 billion, up 0.94%. The trade surplus was US$11.3 billion, down 23% compared with the same period of 2008.
   In the same period, China exported US$17.19 of medicines, down 3.8% over one year earlier, accounting for 58.6% of China's total exports in pharmaceutical industry. China's exports of medical apparatus and instruments were US$10.85 billion, up 8.23% year-on-year, taking up 37% in the total. The remainder was for traditional Chinese medicines.
   As for the imports, China imported US$475 million of traditional Chinese medicine products, an increase of 17.2% year-on-year, and accounting for 2.63% of the total imports; US$12.18 billion of medicines, up 20.6% over the same period of 2008, and accounting for 67.5% of the total; US$5.4 billion of medical apparatus and instruments, up 16.5%, and accounting for 29.9%.
   By main categories, the biochemical medicines, medical auxiliaries, and plant extracts increased significantly in both import and export. The exports for biochemical medicines were US$1.247 billion, up 55.36%, leading the export growth, and the imports were US$914 million, up 31.8%. Dental equipment and materials exports rose 24.4% over one year earlier to US$220 million, and imports increased 29.56% to US$114 million. The plant extracts exports rose 24.1% over one year earlier to US$590 million, and imports skyrocketed by 114.5% to US$140 million, leading the import growth ranking. In addition, medical dressings and medicine formulations performed remarkably. From January to November of 2009, the total exports of the former was US$3.61 billion, up 27.6 % over the same period of 2008, ranking first in the exports of medical apparatus and instruments category. The medicine formulations' imports increased by 22.8% to US$4.42 billion, ranking the second in import value only next to the pharmaceutical active ingredients.
    Affected by the financial crisis, the exports of partial pharmaceutical products presented a falling tendency. Among which, the pharmaceutical active ingredients stand in the breach with a decline of 7.35% year-on-year to US$14.87 billion, ranking first in export decline range. The import and export trade of Chinese traditional medicines shrunk, seeing a fall of 4% in export and 7% in import. The exports of health care and recovery products registered US$1.95 billion with a decrease of 6.72% year-on-year, and the imports saw a decline of 4.4% to US$71 million.
    The imports and exports for major traditional pharmaceutical products including hospital diagnosis, therapy equipment and disposable medical consumables saw a relatively steady operation in 2009.
   On the whole, both import and export of national pharmaceutical products mixed with growth and decline in 2009, and it really was hard-earned that general foreign trade index was equivalent to that of 2008, despite the national foreign trade total dropped dramatically.

The foreign trade of medicines and health products in the period January to November 2009 is mainly characterized by the followings:

1.  Soaring imports

The imports of medicines and health products saw a robust recovery in the first eleven months of 2009, serving as the main engine of pharmaceuticals foreign trade growth in 2009. The cumulative imports increased by US$2.9 billion compared with the same period of 2008, with the overall situation presenting an increase by quantity but decrease by price. The imports amount (by weight) increased by 34.1% whilst the import price fell 11.1%. Of which, the import amount of biochemical medicines posted the biggest change as a result of a 791.9% increase in quantity while 85.2% decline in price. By category, high value-added products such as pharmaceutical active ingredients, medicine formulations, and diagnosis and therapy equipment still maintained the leading