BIZCHINA / Medicine
Foreign Investment
Updated: 2006-04-21 14:24
Introduction to Foreign Investment in Medicine
In accordance with the Guiding List Concerning Foreign-Funded Industries,
jointly published by the former State Development Planning Commission
(now the State Development and Reform Commission), the State Trade and
Economic Commission and the MOFTEC foreign investors are encouraged to
invest in the following fields of medicine.
Production of patent material medicines or material medicines protected
by the government and those in need of importation, vitamins (production
of nicotinic acid), amino acid production, production of fever-allaying,
analgesic medicines by using new techniques and equipment, production of
new anti-cancer and cardiovascular medicines, production of new,
efficient and economic contraceptives;
Production of new kinds of medicines by using bioengineering techniques,
anti-AIDS vaccines, anti-HIV vaccines and contraceptive vaccines, etc,
exploitation and production of sea medicine, production of diagnosis
agents of AIDS and radiating immune system diseases, pharmaceutics
(production of new agents and products involving new techniques, such as
slow release, control release, target and skin-penetration), exploitation
and application of new medicinal auxiliaries;
Processing and production of Chinese medicines, their extracts and
medicaments of Chinese origin (except the traditional parching technique
of making small pieces of herbal medicines for decoction), production of
biomedical materials and products, production of antibiotic material
medicines for animals, exploitation and production of new products and
agents of veterinary antibiotics, vermifuges, pesticides and anti-coccus
medicines.
Foreign investment is restricted in the following fields of medicine:
production of nalectin, penicillin G and so on, production of analginum,
paracetamol, vitamins B1 and B2, vitamins C and E, production of
State-planned vaccinum, vaccine, immunotoxin, toxoid (such as BCG and
vaccine for poliomyelitis, measles, epidemic encephalitis B and epidemic
cerebrospinal meningitis, etc), production of addicted anaesthetic and
psychiatric drugs (with the Chinese side holding the share), production
of blood products, production of disposable hypodemic syringe, the
transfusion system, blood transfusion devices and blood containers.
Foreign investment is prohibited in the following fields of medicine:
processing traditional Chinese medicine from the list of State-protected
resources (licorice roots and gunny grass, etc), application of the
processing technique of prepared herbal medicine in small pieces ready
for decoction, and the production of half-processed medicine using a
secret recipe.
It is well known that medicine in China is an industry that opened up
early to foreign capital. One such famous joint venture (JV) is
Xian-Janssen Pharmaceutical Ltd. With China's accession to the World
Trade Orgainzation, the opening-up level of the country's economy stepped
up to a new height, but foreign investment is still urgently needed for
industrial concord and upgrades. Meanwhile, foreign investors think
highly of the industrial prospects of medicine in China and look forward
to increasing investment accordingly. Mergers and acquisitions will
likely be the focus of the public.
At present, 20 of the 25 biggest transnational pharmaceutical
corporations have set up manufacturing enterprises of sole investment or
JVs, and more than 1,800 JVs have been established. The sales of the
foreign-invested enterprises has accounted for 25 percent of total annual
sales in the medicine industry. The medicine produced has accounted for
60 to 65 percent of annual sales in big city hospitals. The facts
indicate that foreign investment has played an important role in China's
medicine industry.
Economic development and huge market potential are the factors attracting
transnational corporations because their performance in the Chinese
market has become a decisive factor for their development in the future.
More and more well-known, transnational corporations realize this.
International corporation groups, such as Johnson, Bristol��Myers
Squibb, Pfizer and Norvatis are expanding their business affairs in China
steadily, and the move to increase input by some transnational
corporations needs special attention.
For example, AstraZeneca, one of the leading five corporations of the
global medicine industry, has set up a production base in Wuxi, Jiangsu
Province -- its biggest investment in Asia (also the biggest ever by
transnational corporations in China), which cost US$100 million. The base
has a great producing capability and can yield a complete list of
pharmaceutical types, including troches, capsules, oral liquid, aerosol
and asepsis products. Their products include Losec, which is in the
global medicine sale list, and the well-known Betaloc and Bricanyl.
As the biggest pharmaceutical corporation in the world, the headquarters
of GlaxoSmithKline attaches great importance to the Chinese market.
SmithKline invested US$92 million in registered capital in their Tianjin
factory before the merger; the factory in Suzhou tallied an investment
cost of US$136 million by the former Glaxo. As one of the pioneering
pharmaceutical corporations investing in research, GlaxoSmithKline has
worked with Chinese scientific and research groups on several occasions.
For example, at the beginning of the 1990s, it cooperated with a Chinese
pharmaceutical research institute in the filtration and development
process of an approximate 10,000 herbal medicines and it also carried out
collaborative projects worth US$7 million. According to statistics after
the merger, GlaxoSmithKline has injected more than US$10 million in
research and development projects in China.
[Source: Ministry of Health]
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