The pharmaceutical industry is one of the leading industries in the People's Republic of China, covering synthetic chemicals and drugs, prepared Chinese medicines, medical devices, apparatus and instruments, hygiene materials, packing materials, and pharmaceutical machinery. China has the second-largest pharmaceutical market in the world as of 2017 which is worth US$110 billion. China accounts for 20% of the world's population but only a small fraction of the global drug market. China's changing health-care environment is designed to extend basic health insurance to a larger portion of the population and give individuals greater access to products and services. Following the period of change, the pharmaceutical industry is expected to continue its expansion. China, as of 2007, has around 3,000 to 6,000 domestic pharmaceutical manufacturers and around 14,000 domestic pharmaceutical distributors. The most often-cited adverse factors in the marketplace include a lack of protection of intellectual property rights, a lack of visibility for drug approval procedures, a lack of effective governmental oversight, poor corporate support for drug research, and differences in the treatment in China that are accorded to local and foreign firms. Research and development are increasing, with Shanghai becoming one of the most important global drug research centers. Most notably, Novartis is expected to establish a large Research and development base in Shanghai that will be a pillar of its drug development. China's thousands of domestic companies account for 70% of the market, the top 10 companies about 20%, according to Business China. In contrast, the top 10 companies in most developed countries control about half the market. Since 30 June 2004, the State Food and Drug Administration (SFDA) has been closing down manufacturers that do not meet the new GMP standards. Foreign players account for 10% to 20% of overall sales, depending on the types of medicines and ventures included in the count. However, sales at the top-tier Chinese companies are growing faster than at Western ones.
Overview
China has established a pharmaceutical industry structure, and has become one of the largest pharmaceutical producers in the world. However, the industry is still small-scale with a scattered geographical layout, duplicated production processes, and outdated manufacturing technology and management structures. The Chinese pharmaceutical industry also has a low market concentration and weak international trading competitiveness, coupled with a lack of patented domestically-developed pharmaceuticals. (Barnet Siu; 2010) Investment conditions in China have improved due to the vast consumer demand for pharmaceuticals, the lower labor costs and the changes resulting from the reform and opening up. Changes to the patenting laws in full compliance with the requirement of the Agreement on Trade-Related Aspects of Intellectual Property Rights (or "TRIPS Agreement") and the lack of Chinese pharmaceutical R&D have also left gaps in the market. The domestic pharmaceutical industry has been a key contributor to the country's impressive economic growth. As one of the world's major producers of pharmaceuticals, the sector achieved an annual compound growth rate of 16.7% between 1978 and 2003. Both far outpaced other economies in the world, making China the world's fastest growing pharmaceutical market. Although China has enjoyed the benefits of an expansive market for pharmaceutical production and distribution, the industry is suffering from minimal innovation and investment in R&D and new product development. The sector's economies of scale have yet to be achieved. Most domestic manufacturers in the pharmaceutical industry lack the autonomic intellectual property and financial resources to develop their own brand products. Most manufacturers rely on the repetitive production of low value added bulk pharmaceuticals and imitation drugs.
Quality
The Quality of drugs and Active Pharmaceutical Ingredients (API) made by Chinese pharmaceutical companies is often poor. In the past three years 2015–2017, there were 35 FDA warning letters to Chinese pharmaceutical companies citing serious Data Integrity issues, including data deletion or manipulation or fabrication of test results, see "An Analysis of 2017 FDA Warning Letters on Data Integrity" By Barbara Unger, Unger Consulting Inc. An Analysis Of 2017 FDA Warning Letters On Data Integrity See the long list of Chinese pharmaceutical companies which have been placed on Import Alert by the FDA due to serious noncompliance with Good Manufacturing Procedures Import Alert 66-40 See the European Medicines Agency EudaGMDP Noncompliance Reports based on Inspections of companies that revealed serious noncompliance with Good Manufacturing Procedures: Eudra GMP - Public Layout See FDA Warning Letters detailing serious noncompliance with Good Manufacturing Procedures: Warning Letters
Structure and trends
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