Abstract

AbstractThis chapter provides a three-prong investigation framework on Chinese pharmaceutical industry, namely, policy structure, market structure and IP (patent-based) structure. The Chinese pharmaceutical industry has been developing fast in market size and revenue volumes. However, the scale of Chinese pharmaceutical companies is relatively small, and the market concentration is low. Therefore, local pharmaceutical companies with higher R&D input are generally less profitable. Although there is increase in the number of patented drugs in the pharmaceutical industry in China, patents have made relatively low contribution to the industrial values, and IP held by Chinese firms is less competitive compared with that of foreign companies. Most of the pharmaceutical enterprises in China still focus on generic drugs. Market regulation of the pharmaceutical industry in China is relatively strict, especially market entry and price control. A detailed comparison between Chinese and Indian industry is given by this chapter.

Highlights

  • We provide a three-prong investigation framework on Chinese pharmaceutical industry, namely, policy structure, market structure and intellectual property (IP) structure in the industries

  • Prong 3 focuses on IP resource structure in Chinese pharmaceutical industries and market. This three-prong investigation framework is much relevant in the Chinese context, since Chinese economies have been continually developed by policy and market, where foreign investment and multinational enterprises are especially significant in pharmaceutical industry

  • There is a huge increase in the number of patented drugs granted to Chinese pharmaceutical companies, patents have made low contribution to the industrial values, and IP held by Chinese firms is less competitive compared with foreign companies

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Summary

Expansion of Total Industrial Scale According to the China Statistical

The output of China’s pharmaceutical industry has been increasing year by year, from RMB 137.27 billion in 1998 to RMB 944.33 billion in 2009. The market concentration level was low (share of top 10 pharma companies accounted only 15–18% of the market), which indicates larger proportion of medium and smaller companies aAPIs are pharmaceutical raw materials, according to CHI (International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use) Q7A, APIs are any substance or material that can be used in pharmaceutical manufacturing, provided that the substance can be one of active composition, being pharmacologically effective in diagnostic procedure, medical treatment, and symptom release of certain disease, or influential to function or structure of human body manufacturing industry in overall GDP dropped slightly in 2004, the industry was still showing a minor growth, from 1.63% in 1998 to 2.77% in 2009 (Liu 2012) It had been showing significant increase from 2006 to 2010, the average annual growth rate of China’s pharmaceutical industry amounted to 23.9%, the fastest growing in the world. According to Zhang (2009), who applied the C-D Production Function and Solow/Romer’s model on empirical investigation over industrial competitive advantages in Chinese medicine manufacturing sectors, the industry was still on production factor-oriented session, which revealed that technological innovation was one of the key factors in upgrading pharmaceutical industries in China

Improvement in Industrial Capacity
High Degree of Market Opening Up, Strong Market Shares by Foreign-Funded Enterprises
Administration of Pharmaceutical Industries in China
Low R&D Investment in Pharmaceutical Companies
Vehicle for New Drugs R&D Is Research Institutions, Not Enterprises
Lack of Advanced Technology and IP Rights by Chinese Pharmaceutical Companies
Small-Scale
Increasing but Low Export of Traditional Chinese Medicine Traditional
Approval of New Drugs
The Generic Drug Application Procedure and Its Incentive System
Drug Pricing Policies
Government-guided pricing
Government pricing
Regulatory Policies on Industrial Structure and Layout
The High Expenditure Rate Under China’s Medicare System
The Dominant Mode of Monopoly by Hospitals
The “Hospitals Supported by Medicines” Phenomenon Provides Hospitals with Monopoly Power
Drug Management Policies Conducive to Monopoly
The Supply and Demand Characteristics of the Medical Industry Conducive to Monopoly
Generic Drugs Occupy the Drug Markets
The Opportunities upon Patent Expiration
The Demand for Drugs Against Infectious Diseases Relies on Patented Drugs
Patented Drugs Are More Profitable Than Generic Drugs
National Drug Price Negotiations Increased the Sales of Patented Drugs
Strict restrictions on the registration of generic drugs
Imperfect patent information registration requirements
Single dispute resolution approach
Domestic Patented Drugs Far Fewer Than Imported Patented Drugs
Polymorphic Drug Patents
Botanical Drug Patents
Similarities and Differences
Summary
Findings
Conclusion
Full Text
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