China Pharmaceutical Industry

China is the world's second largest pharmaceutical market after the US. Healthcare is one of the three greatest economic burdens in China, along with housing and education. Reform of the healthcare system has been a major priority of the Chinese government to make it more affordable.

History

Before the 1990s, most of companies and factories in China were state owned and their employees could reimburse all medical bills. Today, that system no longer exists and medical bills are paid by social medical insurance, which is contributed by individuals and employers on a monthly basis, and/or commercial medical insurance, which individuals buy from insurance companies.

Medical Resources

China had 961,830 medical institutions (23,005 hospitals) with 5.57 million beds (4.03 million in hospitals) and 6.5 million medical staff (2.52 medical doctors) as of the end of 2012. The vast majority of these medical resources are available in cities. More than 6.27 billion visits were made to medical institutions in China in 2011, of which 153 million inpatients visits.

Healthcare Spending and Funding

China's urban per capita healthcare spending increased 3.1 times to RMB2,695 in 2011 from RMB872 in 2000; rural per capita healthcare spending increased 3.8 times to RMB814 in 2011 from RMB215 in 2000. The Chinese government's expenditure on healthcare increased 10.4 times to RMB737.89 billion in 2011 from RMB70.95 billion in 2000; government healthcare spending as a percentage of total medical bills climbed to 30.4% in 2011 from 15.5% in 2000.

NRCMCS

The New Rural Cooperative Medical Care System was introduced in 2005 to cut medical costs for China's rural residents. Under the system, the annual cost of medical coverage is RMB50 per person. Of that amount, RMB20 is paid in by the central government, RMB20 by the provincial government and RMB10 by the patient. If patients go to a small local hospital or clinic, the system will cover roughly 70-80% of their bill. If the patient visits a county clinic, the percentage of the cost being covered falls to 60%. If the patient requires a specialist in a city hospital, the plan would cover 30% of the bill. The system has boosted medical insurance coverage to 95% in China.

Pharmaceutical Industry

In 2012, output from the pharmaceutical industry grew 21.7% to RMB1.82 trillion; revenue from the industry grew 20.1% to RMB1.8 trillion; profits from the industry grew 20.4% to RMB183.3 billion; the industry exported $47.6 billion worth of drugs and imported $33.4 billion worth of drugs, up 6.9% and 15.9% respectively from 2011; investment in the pharmaceutical industry grew 34.6% to RMB356.5 billion.

In 2011, the State Food and Drug Administration approved the registration of 718 drugs, including 644 domestic drugs and 74 imported drugs. Of the 644 domestic drugs, 569 were chemical drugs, 50 were traditional Chinese medicine and 25 were biomedicine. Of the 74 imported drugs, 68 were chemical drugs, 2 were traditional Chinese medicine and 4 were biomedicine.

Pharmaceutical Companies

As of the end of 2009, China had 6,807 pharmaceutical companies; the top 3 pharmaceutical companies captured a 20% market share (compared to 90% in the US and 73% in Japan) wholly foreign owned or Chinese-foreign pharmaceutical companies accounted for 30% of total number and 27% of total revenue. By the end of 2015, China hopes to have five pharmaceutical companies that post RMBB50 billion or more in annual revenues and 100 pharmaceutical companies that post RMBB10 billion or more in annual revenues, and the top 100 pharmaceutical companies are expected to be responsible for 50% of industry revenue.

Drugstore Chains in China

China's rapid aging population has fueled the growth of drugstore chains. The 100 biggest drugstore operators posted a combined RMB59.6 billion in revenues in 2011, accounting for 39.7% of total drug retail sales. As of the end of 2011, China had 3,012 drugstore

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