The pharmaceutical industry is one of China's strongest performing sectors. According to the figures released by the Chinese government in the previous year, increasing exports, especially in the Asian region and escalating demand for traditional Chinese medicine (TCM) in Asia and Western countries spur the rapid growth in this sector.

Official statistics puts the total output of drugs and pharmaceuticals for the year 2003 was RMB387.65bn (US$46.84bn) - a 19.86 per cent increase on 2002. The output value of new products increased by 22.91 per cent to RMB44.04bn (US$5.3bn). Whereas, total output of TCM increased by 18.45 per cent to 602,900 tons. Exports from the mainland China has witnessed a year-on-year increase of 24.4 per cent amounting to RMB35.2bn (US$4.3bn) and total product sales income increased by 17.05 per cent to RMB293.72bn (US$35.5bn).

Among the various branches of the pharmaceutical industry, figures for 2002 show that pharmaceutical equipment grew faster than average, at 28 per cent, and so did the manufacture of active ingredients (21 per cent); growing at below-average rate were traditional Chinese medicine (16 per cent), biotech-based pharmaceuticals (16 per cent), sanitation materials (15 per cent) and medical equipment (12 per cent).

More than 11,000 types of medical equipment are manufactured in China. These include equipment for computed tomography (CT) and magnetic resonance imaging (MRI). Most pharmaceutical companies in China are relatively small; the combined sales of the top 60 companies account for only 35% of total sales.

Pharmaceutical manufacturers are concentrated in eastern China, and this uneven geographical distribution is becoming more pronounced. Ten provinces account for two-thirds of total pharmaceutical sales, and eight of these ten provinces are in the east. Both imports and exports of pharmaceuticals are increasing. Imports in 2001 were worth $4,532 billion, an increase of 5.4% on the previous year, but 2001 exports were worth $5,864, an increase of 16.6%. Active ingredients and finished drugs account for more than half of both imports and exports.

Traditional Chinese medicine has become more strictly classified and controlled, with delivery mechanisms now including injection, intravenous bolus and aerosol. More than 8,000 individual traditional Chinese medicines are now available, classified into 40 basic types, and production has reached 370,000 t/y.

Biotech firms in China manufacture more than 300 products including bacterins, toxoids, antisera, blood products and diagnosis reagents, including 20 products based on recombinant gene technology.

This upswing in growth figures is attributed to the continuous transformation, which China's pharmaceutical industry undergoes following WTO accession. Opening up of the markets coupled with the reorganization of the regulatory mechanism triggered a series of mergers, consolidation and fresh investment.

In April 2003, the SDA was renamed the State Food and Drug Administration (SFDA), and all regulatory responsibilities for functional foods, dietary supplements and cosmetics were transferred from the Ministry of Public Health to the new body. All the drugs, devices and allied sectors including prescription, non-prescription, vaccines, biologicals, medical devices and drug packaging fall under the purview of SFDA.

The original 1985 drug law underwent a series of revisions in 1998 and 1999. It was in December 2001 the new Administrative Pharmaceutical Law was promulgated defining new regulations on drug research, manufacturing and distribution.

In 2001, the People's Republic of China came out with several laws to improve intellectual property rights. It has extended all patent coverage to 20 years. The new legislation now includes provision for patent linkage and data protection. Considerable progress has been made in import drug licence norms as well. The Department of Drug Registration (DDR) regulates not only domestic and foreign-invested manufacturers but also foreign drug makers seeking to sell in China.

GMP is another area, presently under transformation. The concept of compliance was introduced in the late 1980s. The SDA revised the guidelines in 1988. GMP compliance in line with WHO guidelines is now made compulsory and the deadline for obtaining a GMP certificate is set for June 2004.

At present, out of the 5145-odd pharmaceutical manufacturers operating in China 2,200 are GMP certified by SFDA. A total of 4000 drug makers produce 1,350 APIs. 98 per cent of the countries products are generic copies.