Revenue of China’s Pharmaceutical Industry Up 13% in 2014

Enterprises with sales of RMB20 million or above in the domestic pharmaceutical industry accomplished a main-business revenue of RMB2 455.316 billion in 2014, an increase of 13.05% over the previous year. Revenue growth in herbal decoction pieces, health materials and medical supplies, medical instruments, equipment and apparatuses, biological drugs and Chinese patent medicines was higher than the average.
Enterprises with sales of RMB20 million or above in the domestic pharmaceutical industry earned a combined profit of RMB246.069 billion in 2014, an increase of 12.26% over the previous year, but growth was 5.34 percentage point lower. Compared with the previous year, the profit rate in main-business revenue was slightly higher for chemical drug APIs and chemical drug formulations and lower in all other subsectors.

Table 1    Main-business revenue of pharmaceutical industry in China, 2014

Sector    Main-business revenue (RMB billion)    YoY Growth (%)    Proportion of the total (%)     Growth in 2013 (%)
Manufacture of chemical drug APIs    424.035    11.35    17.27    13.7
Manufacture of chemical drug formulations    630.371    12.03    25.67    15.8
Processing of herbal decoction pieces    149.563    15.72    6.09    26.9
Manufacture of Chinese patent medicines    580.646    13.14    23.65    21.1
Manufacture of biological drugs    274.977    13.95    11.20    17.5
Manufacture of health materials and medical supplies    166.232    15.48    6.77    21.8
Manufacture of pharmaceutical machinery    15.886    11.02    0.65    22.3
Manufacture of medical instruments, equipment and apparatuses    213.607    14.63    8.70    17.2
Pharmaceutical industry    2 455.316    13.05    100    17.9


Enterprises with sales of RMB20 million or above in the domestic pharmaceutical industry accomplished a total export value of RMB174.081 billion in 2014, an increase of 6.63% over the previous year; growth was 0.83 percentage point faster than in 2013. According to import and export data from customs, the export value of pharmaceutical products was US$54.96 billion in 2014, an increase of 7.38% over the previous year, with 0.54 percentage point faster growth. Of the total, the export value of chemical drug APIs was US$25.86 billion, an increase of 9.57% over the previous year, with 6.93 percentage point faster growth. The export value of medical apparatuses was US$20.02 billion, an increase of 3.56% over the previous year; growth was 6.36 percentage point slower.
The pharmaceutical industry completed fixed-asset investment of RMB520.5 billion in 2014, an increase of 15.1% over the previous year, much lower than the 26.5% of the previous year.
Major factors influencing the industry’s financial performance:

(1) Growth of terminal demand for medicines was stable

It is estimated that the total terminal sales volume of medicines in the entire pharmaceutical system, including hospitals, grass-root medical and health units and retail drug stores, in 2014 was around 14% higher than in the previous year.

Table 2  Profit of the pharmaceutical industry in China, 2014

Sector    Total profit (RMB billion)    YoY growth (%)    Profit rate (%)     Profit rate in 2013 (%)
Manufacture of chemical drug APIs     31.182    12.32    7.35    7.29
Manufacture of chemical drug formulations    73.392    16.07    11.64    11.24
Processing of herbal decoction pieces    10.525    8.36    7.04    7.52
Manufacture of Chinese patent medicines    59.793    9.29    10.30    10.66
Manufacture of biological drugs    32.184    11.82    11.70    11.93
Manufacture of health materials and medical supplies    15.239    10.51    9.17    9.58
Manufacture of pharmaceutical machinery    1.826    5.17    11.49    12.13
Manufacture of medical instruments, equipment and apparatuses    21.929    12.57    10.27    10.45
Pharmaceutical industry    246.069    12.26    10.02    10.09


Table 3    Medicines that completed examination in 2014 and were recommended to be put on the market

Category of registration    New drug    Modified dosage form    Generic drug    Imported drug    Total
Chemical drug    128    26    256    68    478
Traditional Chinese medicine    11    0    0    0    11
Biological product    10    2    12
Total     501


(2) Prices of chemical drug APIs recovered

As a result of production suspension or production restriction in some pharmaceutical factories, prices of some medicines whose prices have been kept low for many years such as 6-APA, amoxicillin, 7-ACA, cephalosporin antibiotics, vitamin C and pantothenic acid increased by different degrees. Data from customs show that the average export price of chemical drug APIs in 2014 was 3% higher than in the previous year. The price restoration brought a higher growth in both profit rate and export volume to the chemical drug API sector.

The pharmaceutical industry in China made advances in innovation and M&A

(1) Innovation

The number of registration applications for new drugs increased drastically from the previous year. Among medicines that were put on the market, new drugs accounted for nearly 30%.
Some new drugs with strong innovative features have been approved for clinical use or commercial sales. One of the biological products, Sabin strain inactivated poliovirus vaccine (Sabin IPV), which completed examination in 2014, is safer than the attenuated live vaccines used today.

(2) M&A

There were more than 250 M&As in the pharmaceutical industry of China in 2014, involving over RMB60.0 billion. Big deals included the following: Shanghai RAAS acquired a 90% stake in TONROL with RMB4.76 billion; Bayer acquired Dianhong Pharmaceutical with RMB3.6 billion; Luye Pharma acquired a 58% stake in Jialin Pharmaceutical.
With the resumption of IPOs in the domestic stock market, some pharmaceutical enterprises with good growth achieved financing through listing in the stock market. Eleven enterprises in the pharmaceutical industry were newly listed in the stock market in 2014, raising combined capital of nearly RMB5.0 billion.