Tue, 07/06/2010 - 15:14
China's pharma industry consolidation, concentration on the rise
by Karl Zhong
Shanghai. July 2. INTERFAX-CHINA - Government statistics show the concentration of the pharmaceutical industry in China continued to rise in 2009 due to the increasing competitiveness of manufacturers and the consolidation of distributors.
The figures from Southern Medicine Economic Research Institute (SMERI), an affiliate of the State Food and Drug Administration (SFDA), show aggregate 2009 sales revenue for the top 100 pharmaceutical manufacturers at RMB 339.3 billion ($50.22 million), up 25.1 percent from 2008. They accounted for 42.02 percent of total sales revenue across the industry, a year-on-year increase of 1.43 percent. Sales revenue across the industry was up 20.80 percent from a year earlier.
The statistics show that the scale of production of the top 100 manufacturers is also growing. In 2009, the sales of the top company, Harbin Pharma, exceeded RMB 10 billion ($1.48 billion), up from only RMB 7.27 billion ($1.07 billion) in 2006.
The top five manufacturers in 2009 were Harbin Pharmaceutical Group Co. Ltd., Shijiazhuang Pharmaceutical Group Co. Ltd., Shanghai Pharmaceutical (Group) Co. Ltd., Xiuzheng Pharmaceutical Group Co. Ltd., and Yangtze River Pharmaceutical Group Co. Ltd. Sales of the top four each exceeded RMB 10 billion ($1.48 billion).
"Top manufacturers are increasing their competitiveness," the deputy director of SMERI, Tao Jianhong, said last month at an industry conference in Hangzhou City, Zhejiang Province.
Harbin Pharma is currently expanding its portfolio of high tech products with the development of thymosin, sustained released preparations and innovative anti-tumor drugs. Last month, the company announced the purchase of Pfizer's China animal vaccine arm.
Shijiazhuang Pharma, number two on the list, is relying on innovation as a growth driver. The company expects to achieve sales revenue of RMB 20 billion ($2.95 billion) in 2015, and RMB 50 billion ($7.39 billion) in 2020. Its medicine for cerobro-vascular diseases, En Bi Pu, generated sales revenue of over RMB 200 million ($29.54 million) in 2009, double that of the previous year, after slow sales from 2004 to 2007. The company invested RMB 350 million ($51.70 million) in the development of the drug, which entered the market in 2004.
Distributors have also seen robust growth. Late last month, the China Association of Pharmaceutical Distributors released a list of the top 100 distributors for 2009. Revenue from the companies accounted for 67 percent to 70 percent of the industry total, exhibiting an upward trend. Threshold for inclusion on the list rose to RMB 850 million ($125.55 million) in 2009, up from RMB 740 million ($109.31 million) the previous year.
The top five distributors were China National Pharmaceutical Group Corp, Shanghai Pharmaceutical (Group) Co. Ltd., Jointown Pharmaceutical Group Co. Ltd., Nanjing Pharmaceutical Co. Ltd. and Guangzhou Pharmaceutical Co. Ltd.
According to Tao, the SMERI deputy, mergers and acquisitions (M & A) were a key factor driving the increase in concentration ratio among distributors. "Recent M & As suggest China's pharmaceutical distributors will expand from providing logistics services only to providing integrated services."
Shanghai Pharma moved up to number two on the list after acquiring Shanghai Industrial Pharmaceutical Investment Co. Ltd. and Shanghai Zhongxi Pharmaceutical Co. Ltd. through a share swap in the second half of last year.
"In a decade, industrial concentration will be further improved after large companies accelerate their M & As, fuelled by abundant capital," Lin Jianning, director of the SMERI, said last month.
"Sino-foreign joint venture (JV) pharmaceutical manufacturers, large pharmaceutical companies, small and medium-sized niche companies, and private companies with good management will see faster development in the future," Tao said.
