Most Influential Pharmaceutical Enterprises of China in 2009
Year:2010 ISSUE:6
Click:338    DateTime:Nov.02,2010
Most Influential Pharmaceutical Enterprises of China in 2009    

Today, China's pharmaceutical industry is at a delicate "crossroads." Every decision and action of influential pharmaceutical enterprises can affect its development direction.

Sinopharm turns into a giant through acquisitions

China National Pharmaceutical Group Corporation (Sinopharm) is a leading national pharmaceutical and medicine distribution enterprise in China, having more than RMB43 billion of capital, and owning two listed companies, namely, China National Medicines Co. Ltd. (CNMC) (SH: 600511) and Shenzhen Accord Pharmaceutical Co., Ltd. (SZ: 000028). It holds a dominant position in China's medicine distribution market. In addition, it owns China's largest medicine retail chain enterprise. In September 2009, Sinopharm acquired China's largest biological products manufacturer - China National Biotech Group (CNBG) (CCR2009 No.30). As a leading medicine distribution enterprise, with this acquisition, Sinopharm has not only put China's largest vaccine and blood product manufacturer into its pocket, but also implemented a promise it made two years ago to strengthen its industrial sector through acquisitions. The integration of Sinopharm with CNBG has greatly reshaped China's pharmaceutical industry. It is predicted that in 3 to 5 years, Sinopharm will achieve a sales revenue of more than RMB100 billion and become China's largest pharmaceutical enterprise.

Shanghai Pharmaceutical grows larger through acquisitions

After six months of lengthy negotiations, on December 25th, 2009, the program of Shanghai Pharmaceutical Co., Ltd. (SH: 600849) to acquire Shanghai Industrial Pharmaceutical Investment Co., Ltd. (SH: 600607) and Shanghai Zhongxi Pharmaceutical Co., Ltd. (SH: 600842) finally gained conditional approval from China Securities Regulatory Commission.
   Shanghai Pharmaceutical holds a considerable market share of East China's medicine distribution market. After the acquisitions, the new Shanghai Pharmaceutical's medicine distribution business will mainly come from its original one. East China is China's largest pharmaceutical market, accounting for 40% of China's total pharmaceutical market. And Shanghai Pharmaceutical has a 16% share of East China's pharmaceutical market. As for its business structure, Shanghai Pharmaceutical's pure trade business accounts for about 70% of its total sales revenue, with a relatively high gross profit margin. At present, Shanghai Pharmaceutical already holds shares of five medicine distribution companies. It also has industrial facilities for the production of traditional Chinese medicines, chemical medicines and health care products. Among its products, 198 have entered China's National Essential Drugs List. It is expected that by 2012, this company will have 35 products which each will achieve a sales revenue of over RMB100 million and the company's total sales revenue will reach RMB50 billion. It is noteworthy that Shanghai Pharmaceutical can hardly achieve endogenous growth. So in the future, it will continue to acquire other companies to achieve its growth strategy.

Harbin Pharmaceutical Group seeks transformation

In order to get rid of its "Generic drugs + Advertising" image, on December 15th, 2009, Harbin Pharmaceutical Group, which has owned two listed companies, officially announced the appointment of Zheng Fengqiang as the consultant of the Group and began trial operation of its direct selling business.
   In fact, like Harbin Pharmaceutical Group, all pharmaceutical companies in China are dependent on advertising for the sale of their medical and health care products. To this end, Harbin Pharmaceutical Group begins to implement strategic upgrading and restructuring to achieve the strategic transformation of its businesses and the expansion of its production scale to become a leading pharmaceutical enterprise that will have a leadership position in China's pharmaceutical industry and also have strong international influence.

North China Pharmaceutical Group restructures its businesses

North China Pharmaceutical Group Co., Ltd. can be called the "cradle" of the new China's pharmaceutical industry. However, since the late 1990s, a number of emerging pharmaceutical companies have developed fast in terms of scale, technology and management, but at same time, North China Pharmaceutical Group has been pulled behind by difficult problems in systems, mechanisms, management, product supply and capital. Seeing these troubles, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) promptly restructured the North China Pharmaceutical Group. In August 2009, this enterprise was wholly acquired by Jizhong Energy Group Co., Ltd. After this restructuring, under the support of the Jizhong Energy Group, various businesses of North China Pharmaceutical Group have begun to develop in an orderly manner. As the new chairman, Wang Sheping, of the North China Pharmaceutical Group, said, the investment of RMB11 billion to build a new industrial park - in particular, the investment of RMB2 billion to build a new cephalosporin project beginning on October 18th, 2009 - have opened the transformation and upgrading of North China Pharmaceutical Group.

Hengrui Medicine emphasizes R & D

In the future market competition, innovation, especially technological innovations in key areas, will become the key to competitiveness. As China's largest research and production base of antitumor drugs, Jiangsu Hengrui Medicine Co., Ltd (SH: 600276) is writing a legend. According to reports, every year Hengrui Medicine invests RMB2 billion in R & D and technological innovation. In recent years, it has been building three research centers in Lianyungang, Shanghai and the United States. The company now has 300 researchers, of which more than 150 hold doctorate or master degrees or have overseas study and work experiences. The company's research centers have been appraised as China's state-level enterprise technical centers and the incubator base for the creation of important new drugs.
   Currently, the company has had 100 new drug certificates of generic drugs and applied for 69 new drug invention patents, including 33 world patents. Its annual export of drugs reaches about RMB120 million. In 2009, the company's sales revenue was RMB3.03 billion, up about 26.6% year on year, and 96.76% of its sales were patent medicine. On July 15th, 2009, Hengrui Medicine applied to the U.S. Food and Drug Administration (FDA) for carrying out clinical trials of new medicine Retagliptin in the United States.
   In the post-economic crisis era, China's new medical reform efforts are drastically revising the industrial layout, structure and rules of China's entire pharmaceutical industry. Consequently, China's listed pharmaceutical companies are all trying to restructure their businesses and strengthen their innovative capability.