The Tenth Five-Year Plan of the Medicine Industry and its Development

1. The Tenth Five-Year Plan of the medicine industry
The situation and market environment:
1) The international market
The annual growth rate is expected to be 8 percent annually in the next five years and the market volume will increase to US$540 billion by 2005.

2) The domestic market
The domestic market will not only be influenced by the international market but also by the following factors:

(a) With improving living standards, the medicine market growth rate will exceed that of the international market.
(b) Urban employee reform basic medical insurance will be carried out during the Tenth Five-Year Plan, which will stimulate medicine consumption and the development of the medicine industry.
(c) The urban population will increase by 10 million annually during the Tenth Five-Year Plan, which will increase the demand for medicine.
(d) The nation's population will reach 1.33 billion by 2005, and its net increase will bring a new demand for medicine.
(e) Since many Chinese people are entering their golden years, medicine consumption by the elderly will increase significantly during the Tenth Five-Year Plan.
(f) The retail market will expand continuously and its' annual growth rate is expected to hit 15 percent during the Tenth Five-Year Plan.
(g) During the Tenth Five-Year Plan, rural demand will become the main source of the increase in the medicine industry.

Considering the factors above and the development rate since the Ninth Five-Year Plan, the growth rate of our nation's medicine market will be about 12 percent higher than that of the global market.

3) The impact of China's accession to the WTO on the medicine industry

From a long-term point of view, China's accession to the World Trade Organization will help improve industry performance and international competitiveness. From a short-term viewpoint, the accession will directly influence the following three aspects: a decline in tariffs; protection of intellectual properties; the opening-up of wholesale and retail medical services.

4) Guidelines and main objectives of development and structural readjustments

a. Guidelines
To promote the development of the medicine industry and improve its overall strength and international competitiveness by reconstructing traditional medicine industries, accelerating the industrialization process of advanced technologies and realizing a better industrial structure of the medicine industry.

b. Main objectives
The overall objective for the medicine industry by 2005 is to establish a foundation for the transition from a nation with a high output to one with a high-quality medicinal output. The specific targets of the annual growth rates are as follows: 12 percent for total production value; 13 percent for net increase; 9 percent for total sales; 6 percent for the sum of exports and imports; 13 percent for profits.

Ten new medicines will achieve industrialization, some of which will get internationally registered and enter the international market. About 50 medicines with certain innovations will reach the pre-clinical research.

Two to three patent Chinese traditional medicines will attempt to enter the international market, and their exports will account for a bigger part of the total Chinese drug exports.

Chemical medicines will increase their market share abroad and exports earnings of five kinds of medicines will exceed US$100 million each.

To develop a number of new products with indpendent Chinese intellectual properties rights, the level of physical-imaging facilities should meet that of the end of the 1990s; product structure should adapt to the transformation of medical care objectives and their pattern; medical equipment exports should realize an annual growth rate of 10 percent, and part of them will enter a mass-exports phase.

Large-scale enterprises should set up their technological development centers. The cost of research should account for more than 5 percent of their sales income, and their medium and small-sized counterparts should also undergo relatively high increases.

There should be breakthroughs in biological medicine technologies and genomic medicine should enter the industrialization process.

Based on the existing large-scale enterprises, about 10 large enterprise groups will be brought up whose annual sales will account for more than 30 percent of the total; their main products will have a competitive edge over transnational corporations.

To develop 5 to 10 super-scale medicine circulation corporation groups to realize annual sales over 5 billion yuan; to set up around 40 large-scale regional circulation groups to realize annual sales above 2 billion yuan. All above-mentioned enterprise groups will account for 70 percent of total medicine industry sales. To help 10 retailing enterprises become well established in the domestic market and abroad, each will have more than 1,000 branches and set up a number of regional retailing chains, each with about 100 branches.

5) Focus and main tasks of restructuring
Focus:
a. To develop modern biological technologies;
b. To promote modernization of Chinese traditional medicine;
c. To develop medicines that can take advantage of China's resources;

Main tasks of restructuring during the Tenth Five-Year Plan:
a. To put special efforts into technological advancements and upgrade the industrial structure.
b. To deepen enterprise reforms and adjust and improve the structure of ownership in the medicine industry.
c. To develop a special medical economy and promote a harmonious development of the regional medicine industry.
d. To find new markets abroad.
e. To maintain a sustainable strategy.
f. To enthusiastically promote the industry's information process.

6). Policies and measures concerned

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