The Chinese Pharmaceutical Industry

China is one of the world's major producers of pharmaceuticals. Currently, there are approximately 6,300 pharmaceutical manufacturers operating in China, with the capacity to produce 1,350 ethical drugs and more than 8,000 traditional Chinese medicines. In 2000, the China's pharmaceutical industry had sales of US$28.2 billion (approximately 2.8% of GDP), with a 22% growth rate over 1999. According to the State Statistics Bureau, China exported approximately US$3.43 billion in pharmaceutical products, primarily western medicines and imported US$2.33 billion in medicines.

Impact of World Trade Organization. Due in part to the relaxation of trade barriers following World Trade Organization (WTO) accession, China shows every indication of becoming one of the world's largest pharmaceutical markets by the middle of the twenty-first century. As a result, the Chinese market presents an enormous opportunity for both domestic and foreign drug manufacturers alike. Post WTO and the implementation of the patent regime, the Chinese pharmaceutical market presents an enormous opportunity for both domestic and foreign drug manufacturers. With the Chinese government playing a crucial role in aiding accession to WTO, the pharmaceutical industry is gearing up to face the new patent regime. To begin with, the government has stated that it will reduce its average tariff on pharmaceuticals. The reductions will begin directly upon accession and will be completed by January 1, 2003. China has also agreed that foreign companies will be allowed to import most products including pharmaceuticals into any part of China. Current trading rights and distribution restrictions are to be phased out over a three-year period, after accession. In the sensitive area of Intellectual Property Rights (IPR's), China has agreed to implement the trade-related intellectual property