China issues guideline to strengthen drug distribution
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China's Ministry of Commerce (MOC) on Thursday issued a guideline that says the country will improve supply and marketing of its medical drugs over the next five years.
According to the guideline, the first of its kind issued by the government, the country aims to create one to three nationwide drug distributors with annual sales topping 100 billion yuan (about 15.38 billion U.S. dollars) each by 2015, and another 20 regional distribution companies with sales exceeding 10 billion yuan per year.
The guideline also says the country's top 100 drug wholesalers should aim to raise their sales to account for more than 85 percent of the market share, while the top 100 retail drug-chains should boost their sales to account for at least 60 percent of the market share.
According to MOC data, China had more than 13,000 drug wholesalers and 388,000 drug retailers by the end of 2009, mostly small and medium-sized enterprises. During the same period, the market share for the country's top 100 drug wholesalers and retailing drug-chains stood at 70 percent and 39 percent, respectively.
The data also shows the top three Chinese drug wholesalers make up only about 20 percent of the market share in terms of sales at present, while sales by the top three drug wholesaling enterprises in the U.S. account for more than 90 percent.
Analysts say the guideline will help change the low industrial concentration and inefficiency of drug logistics that has long plagued the country's drug distribution sector.
"It has become very necessary for us to strengthen industrial management and industrial concentration whether in terms of international competition, more efficient drug distribution, or lowering the price of drugs by reducing the procedures in the middle," said Wen Zaixing, vice director of the Market Order Department with the MOC.
The guideline says the government will encourage mergers and restructuring in the sector while stepping up controls in curbing the number of companies from growing excessively.
Fu Mingzhong, chairman of the China Association of Pharmaceutical Commerce, an industrial regulator and adviser to the government, said improving industrial concentration is needed within the sector, but mergers and restructuring should be driven by the market not the government.
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