Analysis of Economic Operation of China's Medicine and Health Industry in 2015

Introduction: In 2015, the overall trend of China's pharmaceutical economic development was as follows: the pharmaceutical industry maintained a medium-to-high-speed growth but the profit growth slowed, the pharmaceutical circulation purchases and sales remained stable, the three major drugs had a clear terminal differentiation, and the growth rate of pharmaceutical exports was low.

The pharmaceutical industry maintains a rapid growth in output value

During the “Eleventh Five-Year Plan” period, the compound annual growth rate of the total output value of the Chinese pharmaceutical industry was 23.3%. During the "12th Five-Year Plan" period, China's pharmaceutical economy has entered a new normal state, and the industrial structure has been transformed to accelerate growth. The compound growth rate during the "12th Five-Year Plan" period was 16.6%, which was 6.7 percentage points higher than that during the "Eleventh Five-Year Plan" period.

From January to October 2015, the total output value of China's pharmaceutical industry (seven sub-sectors) was 2,2913.1 billion yuan, an increase of 11.6% year-on-year. In 2015, it will achieve a total output value of 2,884 billion yuan for the pharmaceutical industry, an increase of 11.8% over the same period last year.

Pharmaceutical industry profit growth slows down

During the “Twelfth Five-Year Plan” period, due to the combined effects of changes in the macroeconomic environment, prices, and costs, the profit growth of the pharmaceutical industry slowed to 12.8%. From January to October 2015, China's pharmaceutical industry realized a total profit of RMB213 billion, a year-on-year increase of 13.9%. From January to October, the profit rate of pharmaceutical industry sales reached 10%, an increase of 0.4% over the same period of last year.

Pharmaceutical circulation purchase and sales are stable

During the “Eleventh Five-Year Plan” period, the compound annual growth rate of the total sales volume of seven categories of pharmaceutical products in China was 20.5%. During the “Twelfth Five-Year Plan” period, the purchase and sale of Chinese pharmaceuticals continued to be active, with the average annual increase in sales of pharmaceuticals by 16.8%.

In the first half of 2015, the total sales volume of the seven major categories of pharmaceutical products in the country was 814 billion yuan, an increase of 12.4% over the same period of the previous year, an increase of 1.7 percentage points. Among them, the total sales volume of the pharmaceutical retail market was RMB 168.2 billion, which was an increase of 8.7% over the same period of the previous year, after deducting uncontradictable factors. The growth rate decreased by 0.3%.

In the first half of 2015, the main business income of directly-reported pharmaceutical enterprises (1200) was RMB 658.1 billion, an increase of 12.8% year-on-year, a decrease of 2.1 percentage points, and a total profit of RMB 10.8 billion, a year-on-year increase of 11.5%, a decrease of 2.4 percentage points. The average profit rate was 1.6%, which was 0.2% lower than the same period of last year; the average gross profit rate was 6.4%, which was 0.6% lower than the same period of last year; the average expense rate was 5%, which was the same as the same period of last year.

The three drugs have distinct differentiation

During the “12th Five-Year Plan” period, the growth rate of China's pharmaceutical terminal market gradually declined, with a compound growth rate of 14.4%. The pharmaceutical market in China will reach 1,397.8 billion yuan, an increase of 12.2% year-on-year.

The hospital terminal is still the largest terminal for pharmaceutical sales in China. During the “12th Five-Year Plan” period, the growth rate of pharmaceutical sales in the hospital market slowed down, with a compound growth rate of 14.6%, accounting for 68.7% of the Chinese pharmaceutical market, of which urban hospitals accounted for 52.6% of the Chinese pharmaceutical market.

The second largest terminal is the pharmaceutical retail market. During the “12th Five-Year Plan” period, the sales growth of the pharmaceutical retail market gradually declined, with a compound growth rate of 11.7%.

The primary medical market includes the urban community health center station and the township and village medical institutions, which constitute the third largest terminal for Chinese pharmaceutical sales. During the "12th Five-Year Plan" period, the compound growth rate of drug sales for the third terminal was 23.6%.

Low growth rate of pharmaceutical exports

Since 2012, the growth rate of China's pharmaceutical exports has fallen below 10%. In recent years, the growth rate of exports has remained at a low level.

During the "12th Five-Year Plan" period, the export structure of Chinese pharmaceutical products has changed. In 2011, the export of pharmaceutical products was dominated by western medicine raw materials and medical devices, accounting for 49.4% and 35.3% respectively. From January to September 2015, the proportion of western medicine raw materials dropped to 46.9%, and that of medical equipment increased slightly, with a ratio of 35.9. %. The proportion of exports of pharmaceutical preparations to total exports increased from 3.8% in 2010 to the current 5.7%.

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