Hu Kun Ping, Vice President, Reed Sinopharm Exhibitions Makes The Case For Doing Business In China
In an interview with Pharmaceutical Processing, Hu Kun Ping, Vice President, Reed Sinopharm Exhibitions, discusses key trends, opportunities and challenges in the Chinese pharmaceutical market, while citing important regulatory and economic changes taking place in the country. In making the case for doing business in China, Hu Kun Ping describes the benefits of participating in API China & INTERPHEX China conference and exhibition and highlights what new features and events the Spring 2008 edition will offer.
Can you provide details on the pharmaceutical market dynamics in China?
According to industry publication, Medicine Economic News, China is the hot spot for the global bulk pharmaceutical market with 22 percent world market share, a growth rate exceeding 15% with annual sales of approximately USD 70 billion, and export turnover of USD 600 million. It is the second largest market for active pharmaceutical ingredients.
The rising middle class and living standards in China have resulted in an enormous demand for pharmaceutical products1. The Economist Intelligence Unit reports that China’s total pharmaceutical sales will be doubled to USD 28.3 billion by 20102. Surging global demand for better quality yet cost-effective pharmaceutical solutions is making foreign direct investors eager to tap into China’s extensive labor market and profit from this bullish economy2.
According to the latest report released by the China Pharmaceutical Industry Association (CPIA), almost half of the top 100 drug-manufacturing enterprises (based on sales figures) are foreign-invested entities or Chinese-foreign joint venture organizations. Of the Top 10, seven companies are foreign-invested enterprises while only three are domestic manufacturers3. This clearly demonstrates the fact that international players are taking up a bigger piece of the Chinese pharmaceutical market pie.
What are the plus points of the Chinese pharmaceutical market??
China offers international pharmaceutical conglomerates a rich plethora of cost-effective and quality raw materials, and an opportunity to leverage the country’s rapidly growing biotechnology, natural ingredients, CRO (Clinical Research Organization), and outsourcing sectors. Because China boasts strong manufacturing capabilities and a highly-skilled workforce, an increasing number of multinationals are setting up research and development centers in the region. In addition, the market outlook for formulations exports is positive and will be one of the major trends shaping this industry.
Can you throw some light on the pharmaceutical R&D scenario in China? Can lack of regulatory rules and IPR pose as a major problem?
The growth of multinationals has helped fuel China’s economy and raised the bar for manufacturing quality. The Chinese government has taken active steps to calibrate domestic research and development capabilities with world-class standards. Starting 1 July 2004, China’s State Food and Drug Administration (SFDA) imposed a regulation for all pharmaceutical manufacturers to observe Good Manufacturing Practices (GMPs)4. As a result, companies that could not meet these criteria were eliminated, while reputable large organizations saw their production capacity increase dramatically. In addition, three national laws were passed to protect intellectual property rights in China, and the country has strengthened its legal framework to be consistent with the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)2. The State Council of the People’s Republic of China announced in their 11th Five-Year plans that they will be devoting significant amount of resources into developing frontier technologies, particularly in sectors such as biology and advanced manufacturing technology. By 2020, investments in research and development are expected to be 2.5% of the country’s GDP5
Please share your thoughts on India and China’s emerging pharmaceutical markets.
Both India and China show tremendous economic prospects and increasingly, we are seeing greater interdependence. CPIA reports that India is the largest importer of Chinese pharmaceutical products3. Demand from India continues to grow rapidly, up by 61.2% in the first three quarters of 20073. Chinese exports to India have exceeded those of the United States (which is ranked second) by more than US$100 million3.
To strengthen bilateral exchanges, Reed Sinopharm has held two editions of the Sino-Indian Pharmaceutical Co-operation Forum at API China. Hot topics addressed at the conference included collaborative efforts between the two regions for meeting global API demand, and creating successful business models for foreign exporters.
Reed Sinopharm organizes one of the largest and most reputable pharmaceutical trade event in China, API China and INTERPHEX China. Please tell us more about this event.?
The API China and INTERPHEX China shows truly offer comprehensive a business platform. The essence of both shows is to provide a one-stop business destination for international and domestic buyers and sellers of ingredients, intermediates, fine and specialty chemicals, excipients, raw materials, packaging materials, processing and packaging machinery to trade, source and network.
API China’s 43-year history in China and INTERPHEX’s worldwide brand equity combine to provide international companies with a unique opportunity to network and trade in the Chinese pharmaceutical market. Also, as co-located shows they provide an ideal venue for global organizations to connect with Chinese decision-makers and uncover new business opportunities. ?China is one of the world’s largest producers of a wide range of high-quality and cost-effective pharmaceutical products, and big international players recognize this. That is why we are seeing an increasing number of foreign bellwether organizations such as Pall Life Sciences, Honeywell, Colorcon, Novasep Process, and United Industries among others, exhibiting at the event. Top executives and key decision-makers make it a high priority to personally attend these shows.
At the autumn 2007 show, we invited a group of pharmaceutical engineers and technical experts to encourage peer-to-peer exchange of market innovations and technical know-how. We hope to see a greater pool of these industry professionals at our event in 2008. This year we also plan to expand its global outreach efforts by introducing innovative marketing strategies, which focus on educating the international community on the tangible benefits of connecting with Chinese decision-makers at a trusted venue like API China.
Reed Sinopharm will be celebrating API China’s 60th edition anniversary in May 2008. What can we look forward to at this event?
2008 is a critical year for China, largely due to the Olympics being staged in Beijing. As such, we will be planning several initiatives to help domestic firms leverage these exciting internationalization opportunities. With the world’s focus on China in 2008, we see the need to constantly outdo ourselves and break into new frontiers. As part of our extensive international media hosting program, we’ll be inviting a group of prominent international trade media to attend the show and participate in exclusive interviews with key exhibitors. We are also planning several commemorative events and high-profile networking sessions to bring together the industry’s luminaries. You can look forward to additional updates as the events draw closer.
For more information about Reed Sinopharm and its services, visit www.reed-sinopharm.com.??
1. Judy Zakreski, September – October 2001, The China Business Review, “Reaching China’s Middle Class Through Retail Pharmacies”??2. PricewaterhouseCoopers, June 2007, “Gearing up for a global gravity shift: growth, risk & learning in the Asia pharmaceutical market”??3. China Pharmaceutical Industry Association, January – August 2007, “Market Analysis on Chemical Pharmaceutical Industry”??4. Eliza Yibing Zhou, June 2006, Contract Pharma, “Biopharma CMOs In China”??5. China.Org.Cn, February 9, 2006, “China Mapping Out The 11th Five-Year Development Guidelines: Sci-Tech Development Guidelines”?