Top-100 Drug Companies in China Double Their Growth Rate

The 2007 growth rate revealed by SMERI, which is part of China's State Food and Drug Administration's (SFDA), is 10.17 percentage points higher than the 10.08% growth rate registered in 2006. According to Interfax, the top-100 list was headed by Harbin Pharmaceutical (China), whose sales in 2007 reached over 8 billion yuan. The other two biggest companies in terms of sales were Shijiazhuang Pharmaceutical and Shanghai Pharmaceutical, each of which achieved a turnover in excess of 7 billion yuan.

Combined sales of the top-100 companies accounted for 39.62% of China's overall pharmaceutical market, compared with 39.09% in 2006. The top-10 companies together accounted for as much as 13.14% of the market, compared with a 12.7% share in 2006.

Xian Janssen Heads List of Foreign Companies

SMERI's figures revealed that Xian-Janssen (which is majority owned by U.S. company Johnson & Johnson—J&J) was the top foreign company in terms of sales, although it ranked only 11th in the overall list of leading companies. The other biggest foreign companies were Bayer Schering (Germany) in 15th place, and Shanghai Roche (Switzerland) in 23rd. Overall, 12 foreign companies featured among the top 100.

Bayer Schering also featured in SMERI's list of the top-five pharmaceutical companies in terms of growth, managing to feature in fourth place on the list, with its dynamism fuelled by the integration of its constituent companies, Bayer and Schering. In descending order, the other fastest-growing companies—all of which were Chinese—were North China Pharmaceutical, Buchang Group, Shandong Luoxin Pharmacy Stock, and Hebei Yiling Pharmaceutical. North China Pharmaceutical's rapid growth was attributed to a heavy increase in the price of penicillin G. Meanwhile, the other three companies all specialise in traditional Chinese medicine (TCM), and performed particularly well in the cardiovascular therapeutic category.

SMERI also highlighted five companies which it predicted would grow strongly over the next few years, with its predictions based on criteria such as sales growth, profits and overall assets. The companies on this list included Yangtze River, Shandong Qilu, Hebei Shineway, Simcere and Shenzhen Zhijun. SMERI noted that these five companies, in addition to the five most dynamic companies in 2007, all made strong progress in terms of their sales to hospitals. Notably, Shandong Luoxin's hospital sales were up by as much as 188.42%.

Outlook and Implications

SMERI's latest figures confirm that heavy consolidation is continuing to take place in China's pharmaceutical market, albeit the market still has a long way to go before it reaches the levels of consolidation that exist in developed markets in the West. At the same time, domestic Chinese companies are increasing their presence in the crucially important hospital market, despite the fact that these companies continue to rely almost exclusively on generics; significantly, the Chinese pharmaceutical industry spent a paltry US$500 million on R&D in 2005, corresponding to just 1.02% of overall turnover.

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