Growth in GIP: As mentioned by China Association of Pharmaceutical and Commerce (CAPC), Gross Industrial Product (GIP) of China pharmaceutical industry in 2007 was RMB692. 78bn, up by 25.

1% year-on-year, sales revenue of RMB639. 27bn, 24. 9% and profit of RMB62. 99bn, 55.

6%. And its output increased by 18% from 2007 to first half of 2008. GDP and Contribution to GDP: Although GDP will slow down from 11. 9% to 8.

2% by 2012 and its domestic demand will remain in 2009-2013. In last 30 years, its economy has grown 10 times with its GDP reaching 3.42 trillion US dollars in 2007.In purchasing power parity GDP, China has biggest economy after US Also, according to 2005 report, 4.

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73% of GDP is spent on Total Health Expenditure and 2. 26% of GDP is spent of pharmaceutical which is highest among all OECD countries. Fig: Pharmaceutical expenditure/GDP in OECD countries and China Impressive economic growth: Pharmaceutical industry notably contributes to China’s economic growth. 16. 72% growth was achieved between 1978 and 2003 in this sector, making China World’s fastest growing pharmaceutical market.Price Inflation There would be challenge for the government as Consumer Price Inflation would remain persistent because labour shortages push up wages and rapid demand growth tests supply constraints. FDI in China has improved last years since it changed its policies.

Most US firms and Japanese firms will be shifting their manufacturing departments to China. Increase in Domestic Demand: Revenue generated from during first half of 2008 was RMB354. 54bn which increased considerably from last year.

This was because country’s domestic demand is increasing drastically.Cost pressures: China’s pharmacy industry is facing challenges because of rise in raw material prices and energy supply. Rise in living standard of Chinese population: There is improvement in medical system and medical insurance, thus, there is huge potential for development in China’s pharmaceutical industry. The market size is expected to be $24bn y 2010 and $120bn by 2020 making it the World’s largest. Increase in OTC market: Growth in OTC market of China has made it the fourth largest OTC market in the World.

According to 2003 report, Roche, OTC drug sales were to increase by 50% and reach 1. 3bn by 2008. And China is ranked 57th among 179 corrupted countries. China produces huge amount of medical instruments but it has cost superiority for only small and low end products and imports top-end medical instruments.

Thus, government aims at investing good amount of GDP to Research and Development department during their 11th five year plan which would develop the logistics department and formation of medicine production in long term.