China: Drug Industry Prospects And GATT

Since applying to rejoin the General Agreement on Tariffs and Trade in1986, China has reduced import tariffs on many goods, and on re-joining it will cancel export subsidies, lower customs tariffs and gradually remove import permissions and bureaucracy, reports Chinese Medical News.

Currently, Chinese production techniques and product quality cannot keep pace with international levels; only in raw materials is it globally competitive. Most joint and foreign-owned ventures in China sell mainly generic drugs, says the report, and re-entry to GATT will stimulate production. It also notes that since China adopted its open-door policy, the pharmaceutical industry has benefitted greatly; in 1995, its total output rose to $12.05 billion from $720 million in 1978, constituting 2.3% of Gross Domestic product.

China has over 4,000 pharmaceutical enterprises, of which 76% are classified as small-scale. The large-scale producers do not yet have the capacity to produce innovative drugs, and research tends to be done in universities and institutes, although some of these have begun to cooperate with producers on new drug R&D. Production of medicinal ingredients has improved greatly; some products are now cost-effective and have sizeable markets. Therefore, says the report, implementation of intellectual property protection and GATT regulations will not affect their survival significantly in the near future.