Pharmaceuticals

Thu, 04/01/2010 - 16:32

China's pharmaceutical market is growing fast due to rising standards of living and the ongoing health care reform. We recently spoke with Li Shaoming, the chairman and chief executive officer (CEO) of Renhuang Pharmaceuticals Inc. on his company's growth strategy.

Li Shaoming

Shanghai. April 1. INTERFAX-CHINA - Renhuang Pharmaceuticals Inc. will bank on its rich resources, marketing and research efforts to reach its long-term goal of becoming China's top maker of botanical drugs for the treatment of the nervous system, Li Shaoming, the chairman and chief executive officer of Renhuang Pharma, told Interfax.

Fiscal year 2010 revenue forecast for Renhuang Pharma, a Heilongjiang-based developer, manufacturer and distributor of botanical drugs for the nervous system and biopharmaceuticals, currently stands at between $54.7 million and $55.6 million, which potentially represents a 26 percent to 28 percent increase over its 2009 total revenue of $43.4 million.

"The fast growth will be achieved through our continued focus on higher-margin product offerings and expanded direct sales efforts," Li said.

The majority of Renhuang Pharma's products have been included in the updated national essential drug list released in August last year, which allows patients to obtain reimbursements for certain medicine under government medical insurance schemes. In addition, the company raised the ex-factory price of its Siberian ginseng products by 30 percent from October 2009, which contributed about half of the company's sales revenue in 2009.

Siberian ginseng products are the only type of single-ingredient botanic medicine that can be used to treat depression and modulate functions of the nervous system.

"Our move to raise Siberian ginseng product prices was justified as the Chinese market for Siberian ginseng products is growing, with supply falling behind demand," Li said.

The price increase in October 2009 somewhat affected sales but the volume of sales should rebound and grow in the future, according to Li.

Renhuang Pharma's Siberian ginseng plantations account for 70 percent of China's total while its Siberian ginseng products have a market share of more than 40 percent in China.

At present, the company is applying to the State Food and Drug Administration for Good Agricultural Practice (GAP) certification. "By raising the quality of raw materials, we can improve the quality of Siberian ginseng products especially as the existing standards in China are still lower than those in developed countries," he said.

In a bid to obtain a greater share of the rural market, Renhuang Pharma is currently cooperating with more prefecture- and city-level pharmaceutical distributors, in addition to working with provincial pharmaceutical distributors.

According to Li, the company will also continue to place an emphasis on research and development (R & D) to expand its product portfolio.

Over the past several years, the company invested three to five percent of its total sales revenue towards R & D, hoping to make a breakthrough in Siberian ginseng products. For instance, Renhuang Pharma is working on drafting national standards for product made from Siberian ginseng.

To date, Renhuang Pharma has developed Siberian ginseng lyophilized powder for injection after separating botanical bioactive ingredient syringin from Siberian ginseng extracts. "We are in the midst of conducting pre-clinical trials. As lyophilized injections tend to be more stable than liquid injections, this product has a strong growth potential," Li said. The project has already received government backing.

Differences between China's traditional Chinese medicine (TCM) standards and drug standards of developed countries as well as the lack of public and private sector R & D investments have presented obstacles to the development of China's TCM industry.

According to Li, China-produced lyophilized TCM injections whose efficacy is based on a single ingredient is quite similar to Western medicines.

"Renhuang Pharma will apply to conduct clinical trials for its TCMs in developed countries. Single-ingredient TCMs have fewer side effects than Western medicines and we see a great potential globally for single-ingredient TCMs to treat depression and modulate nervous system functions," Li said.

The company also aims to develop more biopharmaceuticals as well as new dosage forms including controlled release drugs, soft capsules and dripping pills for heat relief products such as over-the counter ban lan gen granules and compound honeysuckle granules, according to Li.

The company is now working closely with Harbin Medical University, Heilongjiang University of Chinese Medicine and Northeast Forestry University on drug development and the cultivation of Chinese medicinal materials.

Renhuang Pharma is also in talks with raw traditional Chinese medicinal material producers and finished TCM manufacturers on potential mergers and acquisitions, so as to more quickly expand its market share, he added.