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¡êMyers 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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