According to China National Association of Pharmaceutical Enterprise Management, an appeal signed by more than 100 pharmaceutical companies including major companies such as Shijiazhuang Pharma and Shandong Antibiotics is now being submitted to the State Council.

This is the second appeal from these pharmaceutical companies to the State Council in 2007.  The appeal addresses the concerns and criticisms of the pharmaceutical industry over the current healthcare financing model and the negative impacts of isolated regulatory corrective measures such as price cuts have on the sustainability of the industry. 

The first appeal was submitted to the State Council in January.  The State Council referred the appeal to the NDRC and the MOH for further actions, but no concrete steps were taken so far to alleviate concerns of the pharmaceutical industry.

According to a recent information release of NDRC, 1,368 Chinese pharmaceutical companies or 23% of all pharmaceutical companies in China, made losses in 2006 with a total loss of CNY 4,463 million (US$576 million), up by 27% compared with 2005. NDRC’s research showed that the average profit margin of pharmaceutical manufacturers fell to less than 8% in 2006 from 9.4% in 2003. 

Upon releasing these figures, NDRC admitted that “the plunge of pharmaceutical industry profitability is related with the falling prices of drug products”, and “pharmaceutical manufacturers and distributors are unwilling to produce and sell many low-priced drug products that are clinically demanded, and medical institution are not interested in prescribing them.  As a result, these products are disappearing from the market”.

The move by these pharmaceutical companies, after their first attempt was largely ignored, is quite unusual and underlines their aggravation and desperation with the present situation.  For many local pharmaceutical enterprises that are struggling to survive, appealing to the top directly seems to be their only chance.