China Pharmaceutical Industry Association (CPIA) was founded on September 10,1988. It consists of large and medium-sized enterprises engaged in the pharmaceutical industry and other accessory industries like pharmaceutical machinery industry and glass container industry, provincial and municipal pharmaceutical industrial companies, local associations,pharmaceutical research and designing institutes, universities and technical secondary schools etc.

CPIA is approved by the State Drug Administration and is registered with the Ministry of Civil Affairs and is a national industrial society with corporate capacity. CPIA is member and managing director of China Association of Industrial Economics, a member of the Corporate Research Society under the Ministry of Civil Affairs, a member and main initiator of Asian Federation for Medicinal Chemistry as well.

At present CPIA has more than 300 member enterprises and two special branches, fifteen special committees (Working or coordinative committees) and liaison offices in sixteen provinces and municipalities.

Shen Xianji, Vice Director of Advisory Committee, CPIA, elaborates on how the changing regulatory environment is shaping up the Chinese pharma industry, facilitate trade with India, spurs MNC activity etc in an interview with P B Jayakumar. Excerpts:

Could you brief us on the activities of CPIA?
The purpose of CPIA is to make services for member enterprises and government and to defend the lawful rights and interests of member enterprises. As an assistant and adviser of the government, CPIA is in charge of the part administration in pharmaceutical field entrusted by the governmental departments in order to promote steady and quick growth of chemical and pharmaceutical industry.

Since the foundation of CPIA, it has done its best to serve the member enterprises, to report the proper demands and opinion to higher authorities, to put forward good proposals for advancing our pharmaceutical industry, to provide enterprises with valuable information in respect of economy, technology and policies and consulting services; to organize technical and economic exchanges both at home and abroad and various activities which are helpful to the enterprises development; to guide member enterprises to carry out the government's laws and policies correctly. So far, CPIA has won support from member enterprises and praise from the governmental departments, and was honoured with the title of national advanced industrial association in China.

At present, how many pharma units are operational in China?
It is difficult to estimate the number of units as there are numerous units in different segments of the industry. As per the available information, it can be estimated that at present China's pharma industry has over 3000 GMP certified pharmaceutical units. There were more than 4000 units a few years ago. The government mandated the drug manufacturing facilities to have Good Manufacturing Practices (GMP) certification with a deadline of 30th June 2004 and as a result about thousand units have been closed. Majority of the units are into bulk drug production.

How, according to your opinion, the Chinese pharma has been performing, of late?
As per a study done by our association, in the first three months of 2006, the profit of China pharma industry has increased by 21.3% and the industry has grown by 0.54% in terms of production. Sales revenue of pharmaceutical industry has increased by 17.8%. In 2005, our pharmaceutical industry saw a steady increase in production and revenues. The major 24 categories of drug production helped to total a production of 468,000 tons, an increase by 15.8% compared with the same period of last year. Total export stood at 208,700 tons, an increase of over 6.41% when compared with the same period of last year.

What about exports from China?
Exports constitute 44.56% of the total production. Export of 67 major pharmaceutical material and ingredients realised $2,400,000,000 in the year 2005, an increase of 18.75% compared to that of last year. Products are exported to 146 countries, and the top 20 countries account for 80% of the total exports. In the year 2005, exports to India witnessed the highest increase. Exports to India have reached $300,000,000, a growth of 172.44% compared to that of last year. Thus, India has become the second largest export destination, following USA. While the growth in exports to USA was only 7.48% in 2005 with a value of $ 431.55 million, the growth in exports to India is phenomenal. China's pharma exports to other leading destinations are Germany (valued $ 230.20 million), The Netherlands - ($ 133.64 million), Japan ($ 107.03 million), South Korea ($ 86.31 million), Italy ($ 65.81 million), Belgium ($ 63.30 million), Indonesia ($ 58.98 million) and Brazil ($ 55.80 million).

Is there a corresponding growth in imports to China, as well?
India is the leading pharma import destination for China. In 2005, imports from India were to the tune of $ 57.83 million. However, imports from India have declined by 2.90% in comparison to year 2004. When compared to this, Hongkong, the second leading importer, registered a growth of 39.45% during 2005 with products valued $ 49.85 million. This is followed by South Korea with a growth of 41.63% with a value of $ 46.26 million. Japan ($ 45.14 million), Italy ($ 36.86 million),'Lowering of duty a drawback for exports' USA ($ 29.48 million), Germany ( $ 20.17 million), Ireland ($ 13.28 million), Switzerland ($ 12.81 million) and France ($ 12.52 million) are the other leading pharmaceutical product import destinations for China. Imports from Ireland grew by 91.80% and from Germany by 61.93% in 2005.

How far the government policies help shaping pharmaceutical industry in China?
Of late, some of the government policies have proved highly detrimental to the industry. One of the major setback for us was the lowering of duty drawback for exports to 17% to 13%. The government also cut down the subsidies given for power incentive units. Water and power charges are increasing marginally in the recent years. Raw materials costs are high when compared to the earlier period. All these factors have contributed to increase in production charges. As against this, the government, which controls drugs prices, is reducing the prices. All these factors affect the ability of Chinese manufacturers to make cost-effective products and compete in the international market.