Pharmaceutical Distribution Programme

A Lastest News about Pharmaceuticals in China

Last updated: 29 Jun 2011

The Ministry of Commerce (MOFCOM) has recently released its first-ever Outline for Development of Pharmaceutical Distribution Industry, proposing to have a sound mechanism for market access and exit in place in five years. The number of pharmaceutical enterprises will be kept strictly under control and pharmaceutical distribution enterprises are encouraged to engage in corporate acquisitions and mergers to give the industry a higher concentration ratio.

Analysts pointed out that this move will put an end to long-standing problems of China’s pharmaceutical distribution industry, such as low industry concentration, low development level and low logistics efficiency. The industry is expected to undergo a “major reshuffle”.

According to MOFCOM, there were more than 13,000 wholesale enterprises and over 388,000 retail enterprises in China’s pharmaceutical distribution sector at the end of 2009. Due to various reasons, the sector is characterised by inefficient management and small, loosely-organised and poorly-run operations.

The industry’s top three wholesalers only contribute to about 20% of national sales revenue, whereas the top three wholesalers in the US have a market share of over 90%. The market share of the top three retailers in China’s pharmaceutical market is a mere 5.6%.

“Thus, whether we are looking at it from the angle of international competition or from the perspective of developing unified distribution, reducing intermediate links and lowering the price of drugs, the only way to achieve our goal is to strengthen the management and concentration ratio of the industry,” said Wen Zaixing, deputy director general of MOFCOM’s department of market supervision.

The Outline sets the following targets for the “reshuffling” of China’s pharmaceutical distribution sector: By 2015, there will be one to three large national pharmaceutical distributors with annual sales revenues of over Rmb100 billion and 20 regional drug distributors with annual sales revenues of over Rmb10 billion. The annual sales revenues of the top 100 wholesale drug distributors will have a market share of over 85% while the annual sales revenues of the top 100 retail drug distributors will have a market share of over 60%.

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Posted: 28 June 2011, last updated 29 June 2011

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