Pharmaceutical Industry News

Research and Markets: China Pharmaceutical Chain Industry Report, 2010

Recent years have seen rapid growth of China’s pharmaceutical retail market, with expanding scale of chain enterprises and increasing number of drugstores, thanks to a fast-growing pharmaceutical industry and an aging population in China. In 2009, China’s pharmaceutical retail market scale reached RMB 153.1 billion, up 18.2% year-on-year. In particular, China’s top 100 pharmaceutical chain enterprises reaped RMB 58.1 billion in total, accounting for 37.9% of the total sales of the pharmaceutical retail industry. By the end of 2009, China had 2,099 pharmaceutical chain enterprises and 160,000 chain drugstores, up 5.7% and 24.0% year-on-year respectively.

This report not only highlights both the overall development and regional development of China’s pharmaceutical chain industry, but also elaborates on the operation of 14 pharmaceutical chain enterprises including Nepstar Drugstore, LBX Pharmacy, Guangdong Da Shen Lin and Hubei Ready Medicine Industry.

A case in point is Nepstar Drugstore, whose single-store profit decreased by 14.6% year on year to RMB 45,000 in 2009. Compared with the single-store profit of RMB 52,000 and year-on-year decline of 42.2% in 2008, the single-store profit in 2009 showed a downward trend, but at a slower rate, which can be attributable to three aspects: firstly, the proportion of self-owned brand drugs with higher gross profit margin has been increasing; secondly, the cost has been lowered through centralized procurement; thirdly, the profitability has been improved through increasing the sales revenue from non-drug products like nourishments.

Google, Microsoft, Others Join Obama to Fight Phony Pharmacies

On Tuesday, high-tech heavy hitters–including Google and Microsoft–announced support for a new non-profit organization pledged to back the Obama administration’s effort to crackdown on illegal internet pharmacies.

The group, composed of companies that service “choke points” on the internet, is being formed in response to the President’s call for private efforts to police online drug peddlers, according to Bloomberg/Businessweek.

The government hopes to financially strangle the purveyors of fraudulent drugs on the internet by restricting access to credit card approvals and domain names.

Other companies supporting the effort include Yahoo, MasterCard, Visa, American Express, GoDaddy, Neustar, eNom, and Paypal.

According to the National Association of Boards of Pharmacy, an estimated 1-2 percent of drugs in North America are fraudulent, and worldwide drug counterfeiting is expected to grow from being a $32 billion industry to a $75 billion industry in 2010 alone.

“Those who sell prescription drugs online without a valid prescription are operating illegally, undercutting the laws that were put in place to protect patients, and are thereby endangering the public health,” U.S. Intellectual Property Enforcement Coordinator Victoria Espinal said in a statement. “It is a real wake-up call that so many Americans have engaged in this dangerous behavior.”

Counterfeit drugs are often bought via official- and legitimate-looking web sites and are dangerous because they are often composed of various substances–including everything from glue, chalk, and sugar to nearly exact chemical replicas of real pharmaceuticals.

“As the administration has made clear, no one company can solve this problem,” Hilary Ware, managing counsel for litigation and regulatory affairs at Google said in a statement. “So this new cross-industry group is a welcome step forward that we are pleased to support.”

The announcement of the new non-profit was made at a health and safety forum held today at the White House. Illegal online drug sellers have provided tens of millions of Americans prescription medication via the internet without a valid prescription, according to a report released at the forum by The Partnership for a Drugfree America.

“These rogue sellers have preyed upon 36 million people, or one in six Americans, exposing them to the potential of taking counterfeit and unapproved medications,” the report noted.

In June, the Obama Administration submitted to Congress a strategic plan to combat intellectual property theft, including the production and sale of counterfeit medications. Since that time the OMB’s intellectual property office has been working to increase cooperation between the government and the private sector to protect consumers from counterfeit medications sold on the internet by illegal online drug sellers.

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