Page 404 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
Revenue for the TCM manufacturing industry has 17 percent on the previous year. In an international
been increasing at an average annualized rate of 14.7 effort to address the issues, the WHO has formulated a
percent over the five years to 2017. In 2017, the industry Traditional and Complementary Medicine Strategy for
is expected to generate $33.7 billion, up 8.4 percent 2014-2023. It has three goals: improving research and
from 2016. There are about 1,368 industry enterprises formulating national policies; strengthening safety,
employing 170,086 workers with a total payroll of quality and effectiveness through regulation; and
$1.7 billion. TCM pills are the main instruments of promoting universal health coverage. The WHO believes
TCM (TCM) clinics as well as important components of that access to approved traditional medicines is needed
Chinese patent drugs. Domestic demand for industry in areas where the healthcare delivery system is flawed
products has increased from $4.3 billion in 2007 to an and prices are not affordable. The WHO is also working
estimated $32.8 billion in 2017. Revenue for the TCM with China on its traditional medicine policies, and
manufacturing industry is expected to increase at an has recommended that all countries introduce similar
annualized rate of 14.7 percent in the five years to 2017 legislation. Meanwhile a major international boost to
to reach $33.7 billion. Industry growth has been largely safety regulations came in 2017 when the International
driven by rising domestic demand and increasing raw Organization for Standardization (ISO) approved
material prices. The Chinese government has also issued Chinese herbal medicines and assigned them a coding
several regulations and policies to support the industry standard. The intention is both to validate the use of
and promote its market-oriented development. In 2012, traditional medicines, and to make them safer for the
industry growth fell into 19.5 percent as government billions who already use them (EIU).
medical reforms raised production requirements and
quality control standards. As a result, final product China’s food and drug regulatory body revoked the
prices rose and put a strain on domestic demand. Since certifications of 81 manufacturers of TCM products in
2014, industry growth has begun to slow significantly, 2017 after detecting irregularities in the companies’
affected by government policies to control drug prices production, quality control, and inventory processes.The
and medical insurance expenses (IBIS, Medicine). China Food and Drug Administration (CFDA) withdrew
172 drugs from the market, 81 of which were classified
An estimated 2.3 billion people, or 56 percent of as TCM products, because their manufacturers did not
the world population, depend on traditional healing meet so-called good manufacturing practice (GMP)
techniques, including TCMs, to cure a wide range of standards. Some of the inspections were unannounced.
diseases. Yet the regulations used to ensure the safety The CFDA found irregularities in the extraction of
and the efficacy of such medicines are usually far Chinese herbs during production, ultimately affecting
laxer than those used for Western medicines. Some their concentrations in the medicines. Some producers
governments are now moving to tighten the rules in an had falsified their supply records, as well as fabricated
effort to cement the role of traditional medicines in the data on raw materials, according to the report. Other
healthcare system. China passed legislation in 2016 to companies did not have enough personnel to adequately
boost the role of TCM in its rapidly growing healthcare carry out quality control checks, resulting in batches
system. According to U.S. government data, in 2015 of untested drugs being sold, it said. Industry insiders
TCM drugs already make up 39 percent of China’s claim the issue is bigger than the infractions uncovered
Essential Drug List and 46 percent of the National by the CFDA. Yan Xijun, Chairman of Tasly Holding
Drug Reimbursement List, and up to 50 percent of Group, which runs TCM clinics outside of China, told The
the medicines used in the country. However, the law, Paper that 50 to 60 percent of TCM enterprises with GMP
which forms part of the Healthy China 2030 strategy, certificates have problems of some kind. Xu Haoming, a
aims to formalize this use by improving research and deputy pharmacist at the Shanghai Municipal Hospital
development for traditional medicines and training of TCM, told Sixth Tone, The Paper’s sister publication,
medical practitioners on their use, besides setting that the poor test results for TCM drugs can be
up more clinics and hospitals. Several companies are attributed in part to the same standards being used to
expanding both domestic and export sales rapidly, test Western and Chinese medicines. Because TCM uses
helped by the general spread of Chinese influence natural ingredients instead of synthetic ingredients,
in regions such as Africa. Guizhou Bailing Group the contents of the products will vary, he said. But he
Pharmaceutical, one of the biggest TCM companies, also noted that farmers’ use of chemical fertilizers could
reported net profits of 482 million yuan in 2016, up mean some potentially harmful residue ends up in
404
Revenue for the TCM manufacturing industry has 17 percent on the previous year. In an international
been increasing at an average annualized rate of 14.7 effort to address the issues, the WHO has formulated a
percent over the five years to 2017. In 2017, the industry Traditional and Complementary Medicine Strategy for
is expected to generate $33.7 billion, up 8.4 percent 2014-2023. It has three goals: improving research and
from 2016. There are about 1,368 industry enterprises formulating national policies; strengthening safety,
employing 170,086 workers with a total payroll of quality and effectiveness through regulation; and
$1.7 billion. TCM pills are the main instruments of promoting universal health coverage. The WHO believes
TCM (TCM) clinics as well as important components of that access to approved traditional medicines is needed
Chinese patent drugs. Domestic demand for industry in areas where the healthcare delivery system is flawed
products has increased from $4.3 billion in 2007 to an and prices are not affordable. The WHO is also working
estimated $32.8 billion in 2017. Revenue for the TCM with China on its traditional medicine policies, and
manufacturing industry is expected to increase at an has recommended that all countries introduce similar
annualized rate of 14.7 percent in the five years to 2017 legislation. Meanwhile a major international boost to
to reach $33.7 billion. Industry growth has been largely safety regulations came in 2017 when the International
driven by rising domestic demand and increasing raw Organization for Standardization (ISO) approved
material prices. The Chinese government has also issued Chinese herbal medicines and assigned them a coding
several regulations and policies to support the industry standard. The intention is both to validate the use of
and promote its market-oriented development. In 2012, traditional medicines, and to make them safer for the
industry growth fell into 19.5 percent as government billions who already use them (EIU).
medical reforms raised production requirements and
quality control standards. As a result, final product China’s food and drug regulatory body revoked the
prices rose and put a strain on domestic demand. Since certifications of 81 manufacturers of TCM products in
2014, industry growth has begun to slow significantly, 2017 after detecting irregularities in the companies’
affected by government policies to control drug prices production, quality control, and inventory processes.The
and medical insurance expenses (IBIS, Medicine). China Food and Drug Administration (CFDA) withdrew
172 drugs from the market, 81 of which were classified
An estimated 2.3 billion people, or 56 percent of as TCM products, because their manufacturers did not
the world population, depend on traditional healing meet so-called good manufacturing practice (GMP)
techniques, including TCMs, to cure a wide range of standards. Some of the inspections were unannounced.
diseases. Yet the regulations used to ensure the safety The CFDA found irregularities in the extraction of
and the efficacy of such medicines are usually far Chinese herbs during production, ultimately affecting
laxer than those used for Western medicines. Some their concentrations in the medicines. Some producers
governments are now moving to tighten the rules in an had falsified their supply records, as well as fabricated
effort to cement the role of traditional medicines in the data on raw materials, according to the report. Other
healthcare system. China passed legislation in 2016 to companies did not have enough personnel to adequately
boost the role of TCM in its rapidly growing healthcare carry out quality control checks, resulting in batches
system. According to U.S. government data, in 2015 of untested drugs being sold, it said. Industry insiders
TCM drugs already make up 39 percent of China’s claim the issue is bigger than the infractions uncovered
Essential Drug List and 46 percent of the National by the CFDA. Yan Xijun, Chairman of Tasly Holding
Drug Reimbursement List, and up to 50 percent of Group, which runs TCM clinics outside of China, told The
the medicines used in the country. However, the law, Paper that 50 to 60 percent of TCM enterprises with GMP
which forms part of the Healthy China 2030 strategy, certificates have problems of some kind. Xu Haoming, a
aims to formalize this use by improving research and deputy pharmacist at the Shanghai Municipal Hospital
development for traditional medicines and training of TCM, told Sixth Tone, The Paper’s sister publication,
medical practitioners on their use, besides setting that the poor test results for TCM drugs can be
up more clinics and hospitals. Several companies are attributed in part to the same standards being used to
expanding both domestic and export sales rapidly, test Western and Chinese medicines. Because TCM uses
helped by the general spread of Chinese influence natural ingredients instead of synthetic ingredients,
in regions such as Africa. Guizhou Bailing Group the contents of the products will vary, he said. But he
Pharmaceutical, one of the biggest TCM companies, also noted that farmers’ use of chemical fertilizers could
reported net profits of 482 million yuan in 2016, up mean some potentially harmful residue ends up in
404
