Total output value for the pharmaceutical industry in China will show growth of 20.45% for the whole of 2013, reaching a value of 2,270 billion renminbi ($372.6 billion), according to new official forecasts.

Output for the industry grew 21.6% to 1,031.1 billion renminbi ($169.2 billion) in the first half of this year, and revenues were up 19.5% to 991.1 billion renminbi, according to new figures issued by the Southern Medicine Economic Institute (SMEI), a unit of the China Food and Drug Administration (CFDA).

These levels of growth are similar to those reported for the first six months of 2012, but the figures for first-half f2013 also show a slowing in the rate of rise for net profits, which increased 16.4% to 96.4 billion renminbi, compared with 20.4% during the same period last year.

Commenting on these figures, analysts at IHS Global Insight note that they reinforce the market turmoil reflected in the third-quarter financials reported by multinationals in China last month. These revealed that average revenue growth for the leading 10 drugmakers in China slid to just 1% year-on-year, compared to 18% in the previous quarter – although this rises to 8% if GlaxoSmithKline’s results are excluded.

“Industry profits can expect to be dampened for the rest of the year and potentially into early 2014,” they say.

IHS points to the “constantly changing policy environment” in China to which the industry is now having to adapt, as “numerous” agencies implement ongoing regulatory reforms “designed to raise the quality of the domestic pharma industry output and contain costs.”

Most high-profile of these is the increased involvement by the Ministry of Commerce in management of the industry following its investigation into allegations of corrupt marketing practices. Also, the expansion this year of China’s national Essential Drug List has led to price cuts averaging around 20% for the market’s top-selling drugs, as a result of tougher conditions for hospital tenders, while the CFDA is currently introducing new guidelines for clinical trials, manufacturing and distribution. 

And on the horizon is a move by the National Development and Reform Commission (NDRC) away from direct price controls through retail price ceilings to caps based on reimbursement, while reference pricing is also on the cards, following the NDRC’s request at the end of last year for data from pharmaceutical multinationals relating to pricing levels in other countries, comments IHS.