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
Summary
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
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