Western medicine products is the kingpin in China’s import and export of medicines and health products, whose revenue accounted for as much as 59.55% in the total import and export volume of all the medical and health products. In 2011, import and export of China’s western medicine products maintained a good momentum of growth, with a total imports and exports of $ 43.639 billion, up by 31.44%. Among them, exports still account for the most of the turnovers with a total amount of $ 26.474 billion, occupies a proportion of 60.67%. Meanwhile, the import volume is 17.165 billion, occupies a proportion of 39.33% and constitutes a trade surplus of 9.809 billion US dollar, down by 2.181 billion US dollars.

Exports Grew by 25.68%

Despite these unfavorable factors, the global pharmaceutical market maintains a strong growth momentum, which provided favorable conditions for China’s western medicine products export. In 2011, China’s western medicine products to achieve a rapid growth, with an exports of $ 26.474 billion, up by 25.68%. Viewing from the monthly export, every month the total export maintained at 2.4 to 2.6 billion USD, except for in February, when the monthly export plummeted because of shorter month and Spring Festival vacation. And by the end of the year, the exports began to rise again, indicating a very strong potential growth.

Asia, Europe and North America maintain their market position. In 2011, the western medicine products in China had been exported to 193 countries (regions). Asia, Europe and North America remain to be the major market for western medicine products, which is 11.344 billion, 7.491 billion and 3.858 billion US dollars respectively, which in general took a proportion as high as 85.72%. Viewing from the perspective of increase momentum, China’s export to the three markets showed stable increase, up by 28.28% , 18.63% and 14.99% respectively. Besides, the export to Oceania and Latin America showed conspicuous growth, up by 183.97% and 37.94% respectively. All these show that the export of western medicine products in the emerging market is experiencing rapid growth.

In 2011, China’s top export destination countries are still mostly developed countries (regions). China’s top ten trading partners were the United States, India, Germany, Japan, South Korea, the Netherlands, Brazil, Italy, Spain and Australia, accounting for a proportion of 57.66%. Among the top 20 export countries, all but France showed steady trend of growth. And the export to Australia shows the largest amount of increase, amounting to 220.25%.  Besides, export to Mexico, Indonesia, Brazil, Russia and other emerging pharmaceutical market shows significant growth, at 53.27%, 41.68%, 41.5% and 33.16% respectively, much more than the increase of the United States, Germany, Japan and other traditional markets, which reflect a good growth trend.

Enterprises Export Scale is Generally Small

n 2011, more than 10,000 Chinese enterprises are engaged in the export of western medicine products, and the exact number is 10,493, 1165 more than the previous year. All these reflect that we have an active export market. However, viewing in terms of the export revenue, the degree of export concentration is still not high, and the export still undergoes a minimum skill. 75% of enterprises with exports less than one million U.S. dollars. And the total exports of the top 20 companies accounted for only 15.6% of the total export of western medicine products, among which the largest enterprise exports were only $ 300 million.

Among the top 20 export enterprises, 17 are China’s western medicine production enterprises, and only 3 are foreign trade companies, its main export species concentrated in the larger categories such as heparin, vitamin C, citric acid, which also reflects that the export pattern of the leading categories of products would still maintain. In addition, the main products in the market changes directly affect the export performance of the leading enterprises, for instance, influenced by the re-rise of the export price of the heparin sodium, Hai Purui Pharmaceutical Co., Ltd. of Shenzhen City’s exports shrunk by 37 percent over the previous year, despite the fact that it was still the top enterprise of the western medicines. And price of Vitamin C also drops down, making relevant enterprises experience a slight decline in the export ranking.

Among all the export enterprises, private enterprises have taken a large part, the proportion of which is up to 75%; the number of foreign-funded enterprises and of state-owned enterprises accounting for 16% and 10% respectively. The export performance of private enterprises, with a number of advantages, completes the export volume of 51.38% and 48.60% of export amount; and although the foreign-funded enterprises and state-owned enterprises are of a limited number, it accounted for 30% and 20%. In contrast, the average the state-owned enterprises are stronger in operating capacity.

Viewing from the export condition of the provinces, municipalities, western medicine products export mainly concentrated in coastal areas. And the top five provinces in export volume are Jiangsu, Zhejiang, Shandong, Shanghai and Hebei province, total exports accounted for up to 68.4%.

Relatively Stable Pattern of Exports

In 2011 , the pattern of China ‘s western medicine exports experienced no change at all, among the three major export medical commodities, bulk drug is still the dominant products, with a export revenue of $ 22 billion , an increase of 26.58% , and the proportion is as high as 83.1%. Western medicine exports increased significantly, exports of which rose by 40.17 percent, up to $ 2.174 billion, taking a proportion of 8.21%. And the export of biochemistry medicine was $ 2.3 billion, an increase of 7.82%, taking a proportion of 8.69%.

In 2011, the export volume of raw material medicine in China was 5.8832 million tons, an increase of 27.8%, and the average export price of $ 3.74 / kg, decreased slightly by 0.95 percent compared with the previous year. From the point of view export varieties, all bulk drugs export commodities are included in the 225 Customs Code. Their export volume growth accounted for 56% while the exports revenue grew by 72.4%, showing an overall favorable growth. However, from the point of view of export price, Part of the large species, such as vitamin C, paracetamol, tetracycline derivatives and their salts, etc, decreased on an average ground, which also reflects that the grim future for the export price of bulk drug. Large numbers of the products maintain and develop their market at the expense of profit. Intense price competition comes from pressure from the international competitors, domestic overcapacity as well as low-price competition with each other. Without a strong governance means, it is difficult to change such a confusion in the order of operation.

In 2011, the export of Western medicine in China presents a significant decline in amount and increase in price, and the export volume of 207,000 tons, down by 69.83%, and the export price of $ 10.5 / kg, a year – on – year surge of 364.58%. The reason of this situation is mainly because the export structure has undergoing exchanges. From the point of view of export varieties, a total of 65 Western medicine exports under the Customs Code, of which 74% of the varieties of exports grew under 8 Customs Code of Western medicine exports, which increased over 145 %. Penicillins, cephalosporins and other anti-infective drugs is still the flagship product of in the export of Western medicine, total exports of which amounting to $ 558 million, accounting for 25.65% of the exports of Western medicine in China.

On the contrary, things are quite the opposite with the biochemistry medicines. In 2011, although the export volume for biochemistry medicines increased, the price went down significantly, the annual export volume jumped to 94.22 with a total of 361,500 tons; the average export price fell by 44.49 percent to $ 6.36 / kg. The price drop in biochemistry medicines is mainly due to the fact the export volume of low-priced varieties will have an impact on prices.

Size of Imports Is Significantly Amplified

In 2011, China’s western medicine products has shown a strong growth in import, and the total import volume amounted to $ 17.165 billion, an increase of 41.43%, 16% higher than the export growth last year, which means that the policy shows effect in adjusting the management structure, expanding import, and maintaining the balance of trade development. in terms of the export in a single month, the average monthly imports amounted to $ 1.43 billion and the highest monthly import record in December reached 1.716 billion U.S. dollars. While the annual import trend showed a growth momentum among volatility.

Trade Volume and Price All Rose in the Three Major Markets

For a long time, Europe, Asia and North America has been the traditional markets of imported Western medicine products, 94.48% of the market share is highly concentrated in these three countries. In 2011, the overall pattern of imported western medicine products remain stable and the import turnover rose sharply. For instance, China imports from the European market and North American market increased by 44.31 percent and 37.68 percent respectively. Besides, trade volume and price all rose in the three major markets. The good news is that in 2011, China significantly increased its imports from the Middle East, Latin America, and Oceania, reaching 214.7%, 134.21% and 104.28% respectively. The import market becomes more and more diversified and is moving forward steadily.

In 2011 , China has imported Western medicine products from 88 countries (regions) , the top ten import trading partner are as follows: United States , Germany, Japan , France , Switzerland , Italy , UK , Sweden , Ireland and Belgium. And the cumulative proportion of imports from the 10 countries accounts for 71.7%. Among them, United States and Germany, the proportion of imports over 12 %, 12.96% and 12.39% respectively. China’s imports from these 10 countries experienced different degrees of growth. 80% of the country increased more than 30%, and in United Kingdom, Sweden, Ireland, the increase has been more than 70 %.

Import Business Concentration Is Relatively High

In 2011, a total of 6766 enterprises in China are engaged in Western medicine products imports, up by 4.43%. The top 10 enterprise imports accounted for 30.41%, among which 8 are foreign funded enterprises. In terms of turnover, AstraZeneca Pharmaceutical Co., Ltd. ranked the first with the imports amounted to $ 1.233 billion, an increase of 211.5%, which shows that the import business is not only high in the degree of concentration, but also single in their identity: almost all of the leading enterprises are foreign-funded.

Among all the import enterprises, 51.6 percent are foreign-funded. They have completed 31.04% of import volume and 62.85% of import turnover; private enterprises accounted for 38.4%. They have completed 39.23 % of the import volume and 20.11% of import turnover; and the proportion of state-owned enterprises is less than 10 percent. They completed 29.71 percent of the import volume and 15.91% of import turnover. Thus, the volume of imports on the state-owned , private and foreign-funded ” enterprises basically constitute one-third of the total, but foreign funded enterprises imported featured and patent bulk drugs, formulations, whose product value and grade was significantly higher than those of private and state-owned enterprises, therefore, they served as the main force in the import.

In 2011, China’s imports of Western medicine products showing an overall upward trend, with imports volume edging up by 1.57 percent and the average import price rising sharply to 41.43 percent. Three categories of imported goods are all demonstrating this characteristic: bulk drugs imports edged up by 1.53 percent, whose average import price increased by 22.05% ; Western medicine imports grew by 9.23% , with average price rose by 46.91% ; as for biochemistry products, its imports decreased slightly by 4.74% and the average import price rose by 50.75% . The average price of the western medicine rose sharply, on one hand, it reflects that China’s capability of drug consumption and the increase in the new, patent medicine. On the other hand, the rising costs of pharmaceutical raw materials and the characteristics of bulk drugs demand growth had an impact on import price, too.

Imports of Western Medicine Amounts to Half of the Total Imports

In 2011, China imported a total of 325 varieties of western medicine products (according to the classification of the Customs Code), Western medicine imports accounted for 47.17%, almost half of the total imports. Pharmaceutical raw materials, accounting for 40.92%, and the biochemical products account for 11.91%.

Among the top ten varieties of import, 60% were Western medicine or biochemical medicine products, which accounted for 47% of the total imports of western medicine products. The largest import variety is drugs with fixed doses, import of which has amounted to $ 4,708,000,000. As for antisera and other blood fractions and modified immunological products, the total import amount to $ 1.296 billion, ranking second, which forms a stark contrast with bulk drug, China ‘s leading export products. Among the top ten varieties, 90% experienced an increase, 60% ??of the products increased over 10%; and 70% raised the average import price, indicating that the leading varieties are in good operating condition.

In short, in 2011, China’s import and export of western medicine products have maintained a rapid growth, and the import growth has markedly accelerated, making the trade balance achieved remarkable success.

Export Growth Faced with Challenges

In 2012, foreign trade of western medicine products in Chin still faces greater challenges

Firstly, as the global economy is slow in its recovery, the European and the U.S. pharmaceutical market shows limited growth. a certain degree of uncertainty still exists in the market’s prospect and the continued growth of the international pharmaceutical market demand is still not optimistic, there has been increased risk in China’s pharmaceutical export.

Second, India and other major competitors greatly devaluate their currency, while Chinese Yuan still experiences appreciation pressure, which further undermines the competitive advantages of our western medicine products in international market.

Third , on the one hand , the domestic environmental standards has been improved, the cost of raw materials, labor, tended to rise, and will continue to push higher the cost of China’s western medicine products; on the other hand, caused by low-cost competition, the production overcapacity of the bulk raw material products will bring China Western medicine products export to a dilemma.

In addition, the rising recent foreign trade frictions, and the rise of foreign trade protectionism, will also pose serious challenges to China’s exports.

Taking the above-mentioned factors into consideration, in 2012 the export situation of China’s western medicine products is not optimistic. However, due to the international market’s demand of pharmaceutical products, combined with the fact that the market position of these products would be unchanged in a short period, the western medicine products in China is expected to grow, but the growth rate will be possibly down to less than 20%. However, with the growth in the domestic consumer demand and improvement in spending power, as well as the rapid expansion of the pharmaceutical market, the export will be further propelled. It is expected that China’s western medicine products growth in imports is likely to remain above 20%, and the import growth would continue to be higher than export growth.

Since 2012, the world economy began to demonstrate positive signs, as the United States and Japan’s economic performance were better than expected. Employment, consumption and industrial production have all picked up, as a result, the debt crisis in Europe has been controlled to some extend, and the emerging economies’ policy effort to promote economic growth kept on growing. However, the profound impact of international financial crises and sovereign debt crisis is still fermenting; the weak overall growth in the world economy is still unchanged, and the economic recovery is still a long and tortuous uphill struggle. all these have posed serious challenge to China’s foreign trade.

According to customs statistics, in the first quarter, the total export revenue of medical equipments in China amounts to $ 6.25 billion, accounting for 33.69% of the total import and export of medicine and health products, an increase of 14.54%. Among them, export revenue is $ 3.592 billion, a year-on-year increase of 11.26%; while the imports revenue amounts to $ 2.657 billion, a year-on-year increase of 19.29%. The trade surplus was $ 935 million , down by 6.6 percent . Overall, in the first quarter, although foreign trade of medical devices is 7% higher when compared with 7.3% of the country’s foreign trade growth rate,the situation is still not optimistic.

As Import and Export growth Shows Significant Slowdown, Trade Surplus Narrowed

In this first quarter this year, the growth of import and export medical appliances shows significant slowdown, which is only 14.54%. Compared with the growth rate of 43.76% in the same period last year, this year the growth rate goes down by nearly 30%. The main reason for sloppy demand is shrinking international market demand and rising costs in the domestic market. In the first quarter, the trade surplus was $ 935 million, compared with that of the third quarter of last year ($ 1.328 billion) and that of the fourth quarter ($ 1,282,000,000), the trade surplus have experienced great fall for 2 quarters in a row.

The Export Growth to Europe and the United States is lower than the Overall Increase, whereas that to the Middle East and Africa Experienced Rapid Growth

The United States, Japan and Germany are the traditional major markets for China’s exports of medical equipment, in the first quarter, cumulative exports to the three countries reached $ 1.493 billion, accounting for 41.57% of the total exports of medical devices, but the growth in the export still shows downturn, which is 9.99%, 4.92% and 4.9 % respectively. It is noteworthy that China’s exports to Africa and the Middle East are in rapid growth, up by 28.34% and 21.21% respectively; and the export to the Russian market enjoys a growth of 45.9%.

Export of Diagnostic Equipment Grew Steadily, While Dressings and Rehabilitation Supplies Show Negative Growth

In the first quarter, commodities that show strong growth momentum are disposable supplies, Dental Equipment and Materials and hospital diagnostic equipment. The highest share of medical equipment was occupied by the diagnostic equipment, which maintained a steady growth of 12.29%, among which ultra-sonography, artificial respirator, anesthesia equipment and artificial joints enjoy a relatively fast growth, with an increase of more than 20% respectively, while export of Health Care and Rehabilitation supplies and medical dressing’s showed a slight downward trend, decreased by 0.71% and 0.34% respectively.

Private Enterprise Provides Impetus to Export Growth

Baptized the international financial crisis, China’s private enterprises increased its speed in restructuring and upgrading. Besides, it also demonstrates their ability to expand the market and significantly enhances the awareness of innovation; as a result, its export growth rate was significantly faster than the other economic powers. In the first quarter, the export growth was up by 16.28%, becoming the driving force of exports of medical equipment. The export of foreign-funded enterprises increased by 10.32%, and there has been a 1.32% decline in exports of state-owned enterprises.

Import of Diagnostic Equipment Increased, Germany and Japan Become Our Major Source

Viewing from the structure of imported products, in the first quarter of China’s imports of five categories of medical products, diagnostic equipment imports amounted to $ 2.029 billion, accounting for 76.34% of the total imports of medical equipment. Compared with the share of the third quarter (75.27%) and fourth quarter (76.19%) last year, it showed a sustained growth.

The United States, Germany and Japan are major source of China’s imports of medical equipment, in the first quarter, the import revenue from these 3 countries totaled $ 1.457 billion, accounting for 71.8% of the import of diagnostic equipment. It is noteworthy that the faster growth in imports of medical equipment is from the United States and Germany, up by 31.56% and 21.29% respectively. Ever since the new health care reform, the central government has invested a total of over 600 billion yuan for county hospitals and primary health care service system for the standardization of construction and equipment purchase, which is the major motivation of import equipment.

Foreign Investment, Private and State-Owned Share of Imports are in a Tripartite Situation

Different from the structure of the export enterprises, the import market share shows a situation where foreign investment, private and state-owned share of imports are in a tripartite, and their investment in import are $ 1.079 billion , $ 868 million and $ 698 million , accounting for 40.62% , 32.67% and 26.28% respectively.

In the first quarter, the poor export growth is mainly due to the shipped off-season, but the growth rate decline trend shows that exports are still facing many problems and the overall situation is still not optimistic.

First, weak external demand; the world’s economic growth is lack of growth momentum, especially in Europe, the economy is on the verge of recession, demand in the international market shows a weakening trend.

Second. Increase in production costs; especially the labor costs continue to rise. In the past three years, the average wage of urban workers rose by 33%. Although the prices of raw materials fell back a bit, it is still running on a high stage, resulting in the weakening of China’s manufacture’s competitive advantage.

Third, the tight overall trading environment; for instance, according to the relevant departments in Argentina, rom February all the Argentine importers need to fill in the online declaration form before the import of all goods. The importers are required to get a government approval before they can be purchased dollars for the purpose of import, which will undoubtedly increase the uncertainty and difficulties of the export business transactions. However, viewing from the import perspective, with the deepening of domestic health care reform and continuation of the state import policy measures, will continue to drive the growth of imports of medical equipment. Therefore, taking all the above-mentioned factors into consideration, exports of medical equipment is facing multiple challenges. But imports are expected to grow steadily; the overall foreign trade will show a low yet steady growth, demonstrating a trend of balanced momentum.