INDUSTRY REPORT
SEPTEMBER, 2010

Table of Contents

Overview of the Economic and Healthcare Environment in China .................................... 6

China in Brief ....................................... 7

Geography and People ................ 7

Rapid Economic Growth ............ 12

Pharmaceutical Industry in China ...... 15

Pharmaceutical Industry Growth – A Key Contributor to the Overall Chinese Economic Expansion ................ 15

Uniqueness of the Chinese Pharmaceutical Industry ........ 16

Intellectual Property in China..... 18

Pharmaceutical Industry Breakdown .................................. 19

Traditional Chinese Medicine (TCM): A Unique Sub-Industry ................................... 21

Hospital Drug Sales ................... 23

Infectious Diseases .............. 25

Cancer and Immune Systems ....................................... 32

Cardiovascular Diseases...... 39

Digestive and Metabolic Systems ................................. 43

Hematologic Diseases .......... 51

Mental and Neurologic Diseases .................................. 56

Drug Distribution Channels in China .................................. 66

The State Food and Drug Administration (SFDA) – A Regulatory System ........................ 68

History Overview ....................... 68

Similarities between the US FDA and the Chinese SFDA Drug Regulatory Policies
70

Differences between the US FDA and the Chinese SFDA Drug Regulatory Policies 71

SFDA Application and Approval Procedure for New Drug Applications .................... 73

SFDA Application and Approval Procedure for Generic Drugs .................................. 74

SFDA Application and Approval Procedure for Imported Drugs ................................ 74

SFDA Application and Approval Procedure for Non-Prescription Drugs ................... 74

Healthcare Reform in China .............. 75

China Healthcare System Overview ................................... 75

China Establishes a $124B Healthcare Budget for 2009 – 2011 ............................... 77

Health Insurance Budget Predicted to Increase Demand for Pharmaceuticals by Six-fold in 2010 .................. 83

Overview of Select Sub-Industries ...... 84

Tight Chinese Government Control over the Narcotic Industry . 84

High Barriers to Entry Favors “Insiders” ............................. 84

The Under-Served and Fast-Growing Chinese Market for Narcotics and Pain Medicine .................................. 86

Significant Growth Potential of the Plasma Industry in China .... 88

The Government Prohibits Plasma Product Import and Strictly Regulates Domestic Blood Collection ............ 88

The Blood Plasma Market is Under-Penetrated in China Compared with Western Nations ............................. 89

Limited Plasma Supply in China . 90

Major Players in Chinese Plasma Market .......................... 91

Cord Blood Banking Industry............. 92

An Emerging Industry with Limited Regulatory History ...... 92

Governmental Regulation Creates Local Monopolies within Each Region ................ 93

An Overview of the Cord Blood Banking License Application Process in China ....... 94