Drug firms need new prescription to boost export

The overall slowdown in China's foreign trade is affecting the pharmaceutical industry as well, even as the sector faces the task of moving up the technology ladder and fending off competition from other global producers.

The nation's first-half exports of pharmaceuticals and medical equipment increased 7.1 percent to $25.14 billion, while imports reached $18.09 billion, up 15 percent.

"In the past six months, total foreign trade involving pharmaceuticals rose 10.28 percent, entering a long period of stable, slow growth," said Xu Ming, vice-chairman of the China Chamber of Commerce for Imports & Exports of Medicine and Health Products, on Thursday.

Although trade in pharmaceutical products is still growing faster than the nation's total foreign trade, it is facing pressures such as the weakening economy, falling foreign demand, rising production costs and increasing trade friction, Xu said.

He said that the sector's total foreign trade will edge up this year as emerging markets boom and traditional markets stabilize.

Emerging markets, including Africa, Russia and South America, are driving exports of Chinese-made medicines and health products. Shipments to these markets rose almost 11.4 percent last year, accounting for 24.5 percent of total exports for this sector, according to statistics from the chamber, an industry association under the Ministry of Commerce.

But exports to Europe, the United States, Japan and other traditional markets rose just 3.3 percent, accounting for about 55.3 percent of the sector's total exports, a drop of 2 percentage points from 2012.

China's exports of active pharmaceutical ingredients, meanwhile, grew 11.2 percent. The major markets were India, the US, the European Union, Japan and South Korea, taking more than 80 percent of all exports.

"With the restructuring of the industry and a saturated market for active pharmaceutical ingredients, a number of Chinese firms are shifting to Western medicine preparations," said Xu.

Exports of the sector reached $1.36 billion in the first half, up 7.9 percent. "The sector will further speed up in second half," said Xu.

Still, as for the healthcare industry as a whole in China, producers and investors face challenging times, for many reasons.

The central government is investigating the practices of both foreign and domestic companies. Medical reforms are continuing. Indian drug companies are grabbing more global market share, while Chinese producers are losing price competitiveness. And it's getting harder to expand in mature markets, which impose strict rules on drug quality and registration.

"The export performance of pharmaceuticals is less affected by changing world economic conditions and more by the quality of medicine and equipment," Cai Qian, project manager of the bio-medicine industry department in Yizhuang, which is in the Beijing Daxing Industrial Development Zone, told China Daily in an earlier interview.

In general, Cai said cheap and low value-added active pharmaceutical ingredients, not refined medicines, account for most of China's pharmaceutical exports.

There are more than 500 pharmaceutical and medical equipment companies in the Beijing Economic-Technological Development Area, which is under the management of Cai's office. "But only a few of them are producing authentic high-end patented medicines," she said.

Exports of traditional Chinese medicines and medical devices from the area have increased steadily over the past three years, reaching about $600 million in 2012.

However, the export destinations are still concentrated in easily accessible markets, such as Southeast Asia, South America and Africa, according to Cai.

To move further into markets with stricter standards, such as Europe and the US will require much improvement and years of work for Chinese producers.