Chinese Companies Boost Investment in Drug Distribution

Official sources indicate that Chinese industrial groups are moving to enhance their distribution presence in the country's fast-developing drug market.

Local technology group Founder, which mainly manufactures software and computer equipment, claims to have earmarked CNY3.2bn (US$386.64mn) for its pharmaceuticals distribution operations. The company has recently invested heavily in enterprises linked to Beijing's Peking University International Hospital. Crucially, hospitals control about 80% of China's drug distribution market, as they hold the lucrative position of being both prescribers and dispensers. Last November, the country's state development bank awarded Founder Group a CNY1.56bn (US$188.48mn) finance facility for its operations in the sector.

Meanwhile, Chinese wholesale drug distributor Henan Topfond Pharmaceutical Co has announced that it is to make further acquisitions, having purchased Henan Province Pharmaceutical Corporation late last year. Sumitomo, a leading Japanese industrial conglomerate, holds a 20% stake in the company, which is attempting to expand its network throughout the region. As Chinese groups increasingly target drug distribution, foreign companies also appear eager to enter the newly liberalised market, where overall drug spending is expected to reach US$26bn by 2008.