List of pharmaceutical companies in China

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Contents 1 Foreign companies 2 Domestic companies 3 Foreign production 3.1 Xian-Janssen 4 Which foreign companies are doing R&D in China? 5 Which domestic companies are doing R&D?

[edit] Foreign companies

Most Chinese pharma companies with foreign distribution export traditional Chinese medicine mainly to Asian countries or regions. Their foreign distribution, therefore, is not as significant as their western counterparts.

The Chinese government legalized foreign ownership of retail drugstores in 2003. On March 14, 2005, AXM Pharma Inc. (AMEX: AXJ) entered into a distribution agreement with Sinopharm Holding Guangzhou Co., Ltd. for an expected purchase amount through December 2005 of RMB 54 million ($6.56 million) for the Company's line of Elegance products, formerly known as Whisper.

Additional products, including Anti-Fatigue and Asarone, are expected to be sold in upcoming quarters. The sales territory includes Guangdong province, Guangxi Autonomous Region, Yunnan Province, Guizhou Province, Fujian Province, Sichuan Province, Chongqing City, Hainan Province, Hubei province and Hunan Province.

Sinopharm Holding Guangzhou Co., Ltd., an affiliate of China National Pharmaceutical Group Corp. is actively engaged in the research and development, capital investment, manufacture and trade of pharmaceuticals and medical instruments. Sinopharm has achieved an annual sales volume of 10 billion RMB (over 1.2 billion U.S. Dollars) and a total import and export volume of 200 million U.S. Dollars.

[edit] Domestic companies

From 2003 to 2004, the number of retail drug stores climbed to 200,000 from 180,000, and the number of retailers owning chain stores rose from 1200 to 1349.

Before the 1980s, the distribution channel for China’s pharmacy products was monotonous as there were few middlemen for medicine sales and the only wholesaler was the traditional pharmacy shops. However, after the 1980s, with the deepening of China’s reforms, the distribution of China’s pharmacy products have undergone profound changes and the distribution channels of China’s pharmacy enterprises have been no more monotonous. At present, there are three main distribution channels for China’s pharmacy enterprises.

• Pharmacy enterprises national general agent sub wholesaler--retailers – patients

As in the distribution form, there is a sole authorized organization in the country that is responsible for the sale of one or more products of a pharmacy company. Such kind of distribution also can be called “the national agent mode.” Under such a mode, the pharmacy company is responsible for the manufacturing, research and development of the products, and the general agent for the nationwide sale of the products of the company. In most cases, the agents buy the pharmacy products with cash after weighing the costs and profits, and the market risks lie with the wholesalers.

• Pharmacy enterprises regional general agents (sub wholesalers)—retailers-patients

Under this mode, the pharmacy enterprise search for its national or regional general agent and use the agent’s market network to realize the sale of its products. Such kind of distribution mode can be called “the regional general agent mode.”

Under this mode, the pharmacy enterprise usually entrust its general agent with the sale of its products through a bidding process or forming alliance with the agent, providing it products at a bottom price. The agent, after buying a certain amount of products, win the authorization from the pharmacy company to sell its products in a specific region and becomes its sole authorized agent in the region. The regional general agent can be the general wholesaler in a big region, provincial wholesaler, district wholesaler or municipal wholesaler, etc. In a big region or in a province, regional general agents provide patients with their products through sub-wholesalers and retailers. But in a small place as a county, products can go directly from the regional general agent to retailers and then to patients, without the involvement of sub wholesalers.

• Marketing companies of pharmacy enterprises local offices of pharmacy companies—retailers-patients

Before taking such a distribution channel, the pharmacy enterprise should at first register an independent licensed marketing company, and then set up offices in major cities which are responsible for monitoring sales and distribution of its products in their respective regions. Such kind of distribution mode, which requires large amount of capital and high-level management for the pharmacy enterprise, is mostly used by large-sized pharmacy enterprises.

In the above-mentioned modes, pharmacy enterprises, middlemen and patients are three basic components. Middlemen can also be classified under the categories of wholesalers and retailers. Retailers include those with shops, without shops and retail groups. What needs to be pointed out is that in China, the biggest pharmacy retailer is the hospital, due to the country’s medicare and social security mechanisms. In the retail market, 85% of pharmacy products go to patient through hospitals. Hence, the major distribution channels in China can also be described as the following:

• pharmacy enterprises—hospitals-patients; pharmacy enterprises—wholesalers—hospitals—patients;
• pharmacy enterprises—agents—wholesalers—retailers—patients;
• pharmacy enterprises—retailers—patients.

The first two modes are the leading ones in China.

Besides, in recent years, China’s pharmacy enterprises also have ploughed two new fields, one is e-business and the other is the setting up of pharmacy retailing chain shops. At present, the development of the B to C mode of pharmacy business in China is limited.

B to B is the main development trend of China’s e-pharmacy commerce. Though the trade volume of B to B e-pharmacy business only makes up a percentage of the total pharmacy sales, it still has large development potential. In China’s case, the B to B e-pharmacy commerce has grown by 300 percent yearly. In 2003, the trade volume of internet pharmacy sales was estimated to be 10 percent of the total.

[edit] Foreign production

Many foreign pharmacy enterprises operating in China are by no means new to the Chinese market. Their love affair with China can be dated back to a century ago. Bayer of Germany, the inventor of aspirin, began trade with China in as early as 1882. Hest, known as Aventis today, sold its products through 128 distribution agents across China in 1887, becoming China’s No.1 Western medicine and dyeing provider. The US Eli Lilly & Co. opened its first overseas representative office in China’s Shanghai in 1918. ICI, the predecessor of the world’s No 3 pharmacy enterprise Astrazeneca, began trade with China in 1898, and still maintained its old-time office by the Huangpu River in Shanghai.

There are 1,800 foreign-funded pharmaceutical enterprises in China. Currently, all the top 20 pharmaceutical companies in the world have set up joint ventures or wholly owned facilities in China. This suggests that market conditions have never been more challenging, with competition at an all-time high.

Pfizer produces and markets more than 40 innovative drugs in China, and the quality of its products all met the Chinese Pharmacopeia.

Pfizer has GMP manufacturing facilities in Dalian, Suzhou and Wuxi. Its Dalian facility, built in 1989 jointly with Dalian Pharmaceuticals was the first to get GMP certification in China. Pfizer has invested more than $500 million in China.

GlaxoSmithKline has more than 2000 employees in China, and its drugs are sold in 60 cities. The company mainly sells drugs treating HBV, asthmas and infections.

Merck sells antibiotics, prostate drugs, cardiovascular drugs, pain relievers, osteriosis and vaccines. It set up its first joint venture in China in 1994.

Novartis has invested about 100 million in China, with four manufacturing facilities in Beijing and Shanghai. Its core businesses involve patented drugs, generic drugs, eye protection drugs and health products. Novartis Beijing was founded by Novartis AG and Beijing Pharmaceutical group and Beijing Zizhu Pharmaceuticals in 1987, the first foreign pharmaceutical company in China.

Sanofi-Aventis The German-French company sells several drugs in China.

AstraZeneca Pharmaceutical Co. invested 100 million in Wuxi, Jiangsu province to build its Chinese manufacturing facility, a sign that the company is confident of China’s market potential. It sells several products.

Bristol-Myers Squibb is one of the earliest to enter Chinese market.

Johnson & Johnson sells Tynoline and other drugs in China.

Wyeth’s best-seller in China includes Calcium-D

Roche launched a medical education campaign targeting 3,500 doctors in 20 Chinese cities in 2004.

Schering-Plough is a worldwide pharmaceutical company committed to discovering, developing and marketing of new medicines that can improve people's health and extend life. The company is the recognized leader in biotechnology, genomics and gene therapy.

Shanghai Schering-Plough Pharmaceutical Co., Ltd, with a total investment of US 37 million, was founded on August 5, 1994 as a joint-venture, with Shanghai Pharmaceutical Industry (Group) Corporation and Shanghai Corporation of Pharmaceutical Economic and Technical International Cooperation.

Bayer Greater China is Bayer's second largest single market in Asia, accounting for approximately one quarter of regional sales. Its interests in this region have grown steadily over the years, from step-by-step investment in the early 1990s to large-scale, world-class facilities today. Bayer's investment in our integrated production site in the Shanghai Chemical Industry Park makes it evident that Bayer regards Greater China as one of its most important markets worldwide.

Bayer's Greater China Group operates in the market encompassing Hong Kong, Taiwan, and China. The Bayer Group in Greater China is led by management holding companies, with the subgroups and production joint ventures operating independently under their strategic direction. The Country Group Speaker, Dr. Elmar Stachels, leads the Group in Greater China.

The Greater China Group employs ca. 2,800 people across a wide range of functions. Companies and Locations Bayer currently operates 18 companies in Greater China. Eight of them now have production facilities on stream in all business segments in which the company is active. Local production accounts for an increasing proportion of sales.

Bayer China is engaged in a number of cooperation projects with some of the foremost research institutes and universities in China, to conduct research in the field of innovative materials, health care and crop science.

It strongly cooperates with the Chinese Academy of Science and affiliated institutes such as the Institute of Materia Medica and the Kunming Institute of Botany in Yunnan with the aim to identify new compounds in the healthcare and crop science field. There are also a number of projects currently being started in polymers research.

In addition, Bayer also supports a number of chairs and programmes for research and teaching at Chinese universities. These include the Tsinghua-Bayer Public Health and HIV/AIDS Media Studies Program, a national platform designed to play a key role in China’s public health system. Furthermore, Bayer HealthCare supports a chair for Healthcare Management at the China European International Business School (CEIBS) in Shanghai.

Boehringer Ingelheim entered Chinese market in 1995 and invested $25 million in a new facility in Shanghai in 2002. Its drugs treating respiratory diseases and cardiovascular diseases have established well in Chinese pharmaceutical markets.

Hoechst Marion Russel established its China head offices in Beijing in 1995 to manage operations in mainland China and Hong Kong. HMR has two joint ventures in China, Hoechst Huabei Pharmaceuticals Ltd in Shijiazhuang, a heartland of the Chinese pharmaceutical industry, and Hoechst Shanghai International Pharmaceuticals Ltd.

Eli Lilly set up its first overseas office in Shanghai in 1918 and returned to Shanghai, China in 1993. Its main facility is in Suzhou, Jiangsu province and main products include cipro, insulin, and erectile dysfunction drug ED.

Abbott Laboratories Ltd sells a series of products including baby food in China.

[edit] Xian-Janssen

Among foreign-invested ventures in China, Xian-Janssen Pharmaceutical, located in Xi'an is regarded as a model. It has ranked among the top 10 joint ventures in terms of revenue since 1991, thrice landing in the number one spot. The company’s success is due partly to its product line, which includes a range of high-volume sellers: medicines to treat gastronintestinal problems, funguses, allergies and pain, as well as psychosis and epilepsy. But it was Dr. Paul Janssen’s decision to enter China early, to invest inland, and to keep investment plans moving along in the wake of 1989 Tiananmen Square event that have helped build its good relations with the Chinese government.

Degussa The company is shifting a large proportion of its pharmaceutical chemicals production from Europe to China in order to take advantage of low-cost manufacturing and improved production efficiencies in the country. At the same time, the company will restructure some of its large production facilities, the vast majority of them in Germany, which could result in the transfer of the manufacture of other products to China. Rhodia is improving its competitive position in analgesics by reinforcing its more cost-effective manufacturing operations. The company is making a major investment in its Wuxi, China, paracetamol (acetaminophen or APAP) production facility and consolidating its North American and European operations. Rhodia shuttered its Luling, La., paracetamol operations in 2004 and consolidated production in Roussillon, France, and Wuxi, China. Following these changes, paracetamol production capacity will be adjusted to match current levels. Japanese Companies: (¥ is Japanese Yen: 1 US$ = 109¥) Sankyo: Having previously generated revenues from exports to local agencies allied with its own marketing, Sankyo completed a plant for manufacturing its drugs in October 2003, and plans to expand its own marketing. It expects to double the number of marketing representatives (MRs) to 130 in 2004, and increase sales in China from ¥3.0 billion currently (company estimate for 2003) to ¥5.0 billion within a few years. Sankyo already markets hyperlipemic Mevalotin, anti-inflammatory Loxonin, and antibiotic Banan in China, and plans to market hypertensive Olmesartan (currently under development) there in future.

Takeda: The company basically does its own marketing (sales value estimated to be ¥1-2 billion). It also has a manufacturing plant. In 2004 Takeda planned to launch diabetes drug Actos in China, and then it will be marketing all four global products (Actos, anti-ulcer Takepron, cancer drug Leuplin, and hypertensive Blopress). However, the US has priority in its overseas strategy, followed by Europe and then Asia.

Yamanouchi: The firm moved into China in 1994 and does most of its own marketing, covering anti-ulcer Gaster and urinary impediment treatment Harnal among its leading products. Sales are gradually expanding, and operating profitability was achieved in 2001. Accumulated losses have been wiped out during F2003. The company owns a manufacturing plant. In 2004, there are plans to launch Dolner for peripheral circulation, anti-emetic Nazea OD, and hypertensive Hypoca. Yamanouchi does not have plans to increase its 110 MRs significantly at this point.

Daiichi: Shifted to in-house marketing after establishing a sales subsidiary in 1998, mainly selling synthetic antibacterials Cravit (oral and injectable) and Tarivid. It originally planned to launch neurotransmission enhancer Translon too, but after development was halted in Japan, development in China also ended. In 1998, it forecast sales of ¥12.0 billion in 2002, but only actually recorded ¥1.6 billion. Sales are behind plan chiefly due to the suspension of Translon’s development and the proliferation of generic and copycat versions of Cravit. On the earnings side, Daiichi expects to move into operating profit in F2004 as Cravit sales expand. It does not currently plan to expand its force of MRs much from 140-150, but expects to do so when urinary impediment treatment KMD-3213 (Phase 1 under preparation) is launched, which will be 2007 at the earliest.

Tanabe: Markets in-house products such as hypertensive Herbesser and Tanatril. Tanabe does not disclose mediumterm targets, but plans to double the number of MRs to 200 by the end of 2005. No products are currently in clinical trials, but there are a number of development candidates.

Mitsubishi Pharma: The China subsidiary Kuangchou Green Cross has been extending transfusion business (manufacturing, sales) since the days of the former Green Cross, but both sales and profits have been flat for the past several years. The firm has already sold off its transfusion business in Japan to Otsuka Pharmaceutical as part of its restructuring, and the strategic importance of this is diminishing. Anti-coagulant Novastan, which was approved and launched in China in December 2002, is being sold not via Kuangchou Green Cross but by a local agent.

Fujisawa: Immunosuppressant Prograf is being marketed in China by an 80%-owned subsidiary An application has been filed to sell a second product, atopic dermatitis treatment Protopic. It has a relatively large number of MRs at 30-40 (the subsidiary has 60 employees); by comparison, Prograf has 40 MRs in the US. China business is less of a priority for Fujisawa than the US or Europe, but sees its potential as significant due to the large number of organ transplants. In 2000, there were 5,501 kidney transplants performed in China, second only to the number in the US (13,372). Sales of immunosuppressant drugs are relatively high. The top 30 drugs by sales in China (hospital market base) included two such drugs: Novartis’ Neoral at number 22 ($16.1 million), and Roche’s CellCept at 23 ($15.8 million).

Chugai: China is not positioned as a priority market for Chugai, which has focused on Europe since coming under the Roche group. Exports of white blood cell production stimulant Neutrogin account for most of its business in China, with marketing consigned to agents. Kirin’s Gran, another GCSF drug, is marketed in China by Kirin itself and recorded 2002 sales of $11.1 million, ranking it 45th in the hospital market.

Eisai: The firm expanded its own manufacturing and marketing operations into China and Asia earlier than in the European and US markets. Its sales and profits in F2002 and own projections for F2003 place Eisai as number one among Japanese firms in China. Eisai was the first manufacturer among the US, European and Japanese pharmaceutical firms to manufacture in China via a 100% owned subsidiary from the very beginning (founded in 1994). The sales target for 2006 is an ambitious ¥20 billion. By 2006, Eisai plans to increase the number of MRs from 150 to 250, and extend its coverage from 1,000 hospitals in 53 cities to 3,000 hospitals in 100 cities. It already sells two global products, anti-ulcer drug Pariet and Alzheimer’s treatment Aricept, and plans to add osteoporosis drug Glakay in 2006.

Kyowa Hakko: Having previously only exported cancer drugs (a few hundred million yen’s worth), Kyowa Hakko plans to get approval and then start marketing itself thehypertensive Coniel at the end of 2004. Ant-allergy Allelock should also go on sale in 2007, with peak sales for the two combined projected by the firm at over ¥2 billion.

Taisho: The company makes and sells health drinks (tonics) in China, but has no specific plans for prescription drugs. The rights to antibiotic Clarith/Biaxin outside Japan are licensed to Abbott.

Terumo: Unlike the drug makers, Terumo is using China as a manufacturing base (almost all of its 1,362 employees there are in manufacturing). Its manufacturing subsidiary when set up in 1995 specialized in making products for the Japanese market, but more recently this has been producing and shipping products for the US and Europe as well. Terumo is still in the process of exploring China as a market, however. For more than 20 years, it has sold products using agents in China via its Hong Kong subsidiary, but F2002 sales amounted to only ¥1.3 billion (low-margin products are not handled, so there are profits). It plans to consider the possibility of in-house marketing, going forward.

[edit] Which foreign companies are doing R&D in China?

After China’s entry of WTO, many leading pharmaceutical companies are transferring their research and development centers to China. For instance, Roche of Switzerland opened its R&D center in Shanghai recently, GSK has established its OTC research and development center in Tianjin, China, and Pfizer and Janssen Pharmaceutica (Johnson & Johnson) will carry out similar plans in the near future. AstraZeneca, Bayer, Eli Lili, and Hoffman-La Roche, have also set up R&D or clinical trial centers in China.

A poll on 33 foreign pharmaceutical enterprises in China shows that seven out of the 33 companies have their R & D centers in China, accounting for 22 % of the surveyed. The remaining 26 pharmaceutical enterprises have no R & D centers in China, accounting for 78 of the surveyed.

Among the seven foreign pharmaceutical enterprises with R&D centers in China, three have their R&D centers in Beijing, two in Shanghai, one in Guangzhou and one in Changzhou of Jiangsu Province. The maximum number of researchers at those centers is 40, with a majority of R&D centers having around 10 researchers. The researchers of most R&D centers are mainly Chinese, and only one R&D center has an all-foreigner research team. All the R&D centers were founded after 1999, mainly in 2000 and 2001. The capital investment of these centers is not available.

In January 2004, Roche of Switzerland opened its research and development center, the fifth R&D center of the pharmaceutical giant, and the first to be established in China. Roche planed to hire 40 to 50 scientists in the first year and focus their research on pharmaceutical chemistry study. The center aims to step into traditional Chinese medicine research

Novo Nordisk has a $10 million research-and-development center at the Shangdi High-Technology Park in Beijing.

Lonza (Basel, Switzerland, www.lonza.com) has opened a facility in Guangzhou, China;

Discovery Partners International (San Diego, CA, www.dpi, com) has affiliates in China.

Chiral Quest has a research and development facility at a biotechnology R&D park at Jiashan, China near Shanghai.

Affymetrix, Inc. and CapitalBio Corporation, a leading life science company based inBeijing, China formed a strategic relationship to jointly develop and co-market a proprietary, advanced GeneChip

Tiens Biotech Group (USA) operates primarily through its China-based subsidiary Tiens Biological Development CO. Ltd. Tiens Biological has developed and produced seven major product series, of which six are comprised of nutrition supplement products, and the seventh is comprised of personal care products. It develops its products at its own product research and development center and conducts the marketing and sales of its products through its affiliated company, which owns 23 branches, representative offices and chain stores.

Foreign companies doing drug testing or clinical trials in China: Company: NexMed Headquarters: Robbinsville, N.J. Product Tested in China: Cream to treat impotence Current Status: Won approval last year to sell in China after three-phase research trial; in third phase of trial in U.S.

Company: SiniWest Holdings Headquarters: San Diego Product Tested in China: Drugs to treat breast cancer and peptic ulcers Current Status: Did preliminary studies in China; plans U.S. research trial

Company: Cancer Therapeutics Headquarters: Los Angeles Product Tested in China: Treatment involving antibodies that deliver radiation to kill cancer cells Current Status: Expects approval in China this summer; approval in U.S. still three to four years away

Company: FeRx Headquarters: San Diego Product Tested in China: Drug to treat liver cancer Current Status: In research trials in both U.S. and China

[edit] Which domestic companies are doing R&D?

To date, the Chinese domestic pharmaceutical industry has invested very little in the research and development of new drugs, though the central government is encouraging R&D through investment and other incentives in an effort to build a world-class pharmaceutical industry in China.

Shijiazhuang Pharma Group Based in Shijiazhuang, the capital city of Hebei Province in northeast China, the pharma group is one of the largest pharma industry of China. In November 2004, the group announced the official launch of its investigative drug NBP (buthlphthalide) . The group acquired patents of the drug from Chinese Academy of Medical Science for less than $4 million, and spent only $6.3 million on clinical trials.

Shijiazhuang Pharma Group is very typical in the new drug development. The company uses three ways: first, develop new drugs in collaboration with universities and research institutes; second, apply for generic drugs rights before patented drugs’ patents expire; and third, modernize the traditional Chinese medicines (TCM), that is, develop TCMs in the same quantitative way as is used in developing chemical drugs. The third way was used in the development of NBP (buthlphthalide), a traditional Chinese medicine extracted from celery seeds.

Harbin Pharmaceutical Group Co. is about to become more competitive, with a planned $250 million capital infusion from two foreign investors, Warburg Pincus of New York and Citic Capital of Hong Kong. That money will allow Harbin to expand its research-and-development efforts – the company spends about 5% of revenue on R&D, exceptional for a Chinese drug maker yet just a third of what most multinationals spend – and help it become predator rather than prey as the consolidation in the pharmaceutical industry gets more ferocious.

Sinovac Biotech Ltd. (AMEX:SVA) has recently launched marketing of Bilive and expects to record ht first sales in May 2005. a combined Hepatitis A&B vaccine. This is the first combined inactivated Hepatitis A&B vaccine developed by Chinese scientists, and the vaccine has only one directly competing combined Hepatitis A&B vaccine in the world, GSK ‘s Twinrix, which is not available in China and sells for a much higher price than Bilive in countries where it is for sale. In 2004, the company had sales about $6.5 million sales, more than two times 2003 sales.

Sinovac now has two vaccines fully approved for sale in China. It is currently the world leader in the development of a SARS vaccine. www.sinovac.com