Report From: China

With government support, China's pharmaceutical equipment sector is trekking ahead despite challenges regarding the country's overall perceived product quality.
Nov 02, 2008
Volume 32, Issue 11

The forecast that the Chinese pharmaceutical equipment market will be "big and promising," should come as no surprise to industry players considering its brisk developments over the years, according to Wang YaJun, vice-secretary-general of the expert committee for the China Association for Pharmaceutical Equipment (CAPE).

A planning and management system was consolidated after setting up the China National Medicine Supervision Bureau at the end of 1978. Realizing the growth potential of the sector, the Chinese government established CAPE in 1991 to set standards and oversee the sector's developments. By the end of 2006, it had drafted 123 standards at both the state and industry level, and with its market regulation, had cultivated a competitive environment among manufacturers. CAPE has participated in quality certification discussions and publicly recognized scientific and technological achievements.

China's "Open Door and Reformation" policy also helped to pave the way for the pharmaceutical equipment sector to rapidly transform and progress. The sector was able to develop alongside Chinese traditional medicine and the country's pharmaceutical drug industry.

Today, the country has more than 900 pharmaceutical machinery manufacturers armed with capabilities to fulfill 90% of domestic needs with an annual output of 200,000 units valued at RMB 8 billion ($1.2 billion). The sector experienced a 30% increase between 2007 and 2008.

Even though China is the biggest importer in Asia, its domestic products have reached the shores of some 80 foreign countries, including India, Indonesia, France, and the United States. Leading Chinese equipment manufacturers such as Canaan Pharmaceutical Machinery (Wenzhou City, Zhejiang Province) and Zhejiang Hualian Pharmaceutical Machinery (Rui'an City, Zheijiang Province) have jumped on the bandwagon, establishing a presence in overseas markets such as Pakistan, Russia, and the US.

Nevertheless, the progress of the Chinese pharmaceutical equipment industry is marred by problems. Weak innovation, lagging production, and low exports are just a few of the challenges the industry faces.

For example, China's analytical instruments market is stranded between high-end and low-end products with no products available in between, according to German-based industry association Spectaris. As a result, foreign firms have moved into the Chinese market to meet unfulfilled market demand.

One reason multinational companies are moving in has to do with their business focus and clientele base. Jamie Davies, head of pharmaceuticals of Business Monitor International (BMI), explains, "Sector maturation has enabled local producers such as Jiangsu Mechanical Equipment (Changzhou City, Jiangsu Province), to cater to compatriot firms. The high-value end of the market will continue to be dominated by foreign firms including Italian-based IMA and US-based Edward Mendell due to their long-term commitment in research and development (R&D) investment."

He adds: "Currently, Chinese pharmaceutical companies export their products to developed markets looking for lower costs and to emerging markets such as Egypt and Pakistan that do not have the necessary industrial capabilities. However, the country's export sector is tainted by a string of product scandals, and it is only with rigorous implementation of production standards that its image will improve."

For example, it has been confirmed that the contaminant of the product in Baxter's (Deerfield, IL) heparin was produced at Changzhou SPL (Scientific Protein Laboratories) in China. In response to the situation, the country's State Food and Drug Administration (SFDA) issued an immediate directive that heparin manufacturers should only purchase supplies from authorized suppliers and has stepped up efforts, including working with the US Food and Drug Administration, to strengthen quality control standards.

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