The pharmaceutical industry is one of the important components of China's national economy, characterized by high investment, high output, high risk, and high technology intensity, with strong technical barriers. At the same time, the pharmaceutical industry is a combination of traditional and modern industries, integrating the first, second, and third industries. The pharmaceutical industry plays a very important role in protecting and improving people's health, improving quality of life, providing family planning, disaster relief and epidemic prevention, military preparedness, and promoting economic development and social progress.

Since 2016, policies in China's pharmaceutical industry have been frequently implemented. The State Council, the National Health and Family Planning Commission, the State Food and Drug Administration, and other departments have successively issued multiple policies and regulations, accelerating the survival of the fittest in the industry through policies such as consistency evaluation, drug listing permit holder system, and drug clinical trial data verification; Joint efforts between healthcare, medical insurance, and medicine to accelerate medical reform; The industry landscape will accelerate its reshaping, with the promulgation of traditional Chinese medicine policies and the promotion of traditional Chinese medicine culture. Under the promotion of medical policy reform, the development of China's pharmaceutical industry is entering a standardized fast lane.

Benefiting from the strengthening of health awareness among Chinese residents, the obvious trend of aging population, and the innovation and development of pharmaceutical technology, the pharmaceutical industry is expected to maintain sustained growth in the coming years. According to the "Analysis Report on Market Outlook and Investment Strategy Planning of the Pharmaceutical Industry" released by the Prospective Industry Research Institute, it is expected that by 2023, the size of China's pharmaceutical market will exceed 4500 billion yuan.

Prediction of Development Trends in the Pharmaceutical Industry

1. Industry overall trend prediction

The pharmaceutical industry is a key development area of Made in China 2025. Under the unprecedented attention of the state to the pharmaceutical industry, the status of the pharmaceutical industry continues to improve. At the same time, pharmaceutical products are closely related to people's healthy lives. In the future, with the continuous increase of China's population base, the intensification of population aging, the acceleration of urbanization, the increasing emphasis on healthcare, and the deepening of the national healthcare system reform, the sales revenue and profits of China's pharmaceutical industry will still maintain a high growth trend.

China is the world's most populous country, and its huge consumer group has provided a good foundation for the development of China's pharmaceutical industry. Moreover, the accelerating aging process in China has provided sufficient impetus for the further development of the pharmaceutical industry. The World Bank's ranking of the proportion of people aged 65 and above shows that among more than 200 countries and economies worldwide, China ranked around 75th in 1960 and 60th in 2015. Therefore, the rate of population aging in China is faster than the international average. In addition, the proportion of people aged 65 and above has increased from 5% to 10%. It took 35 years for Japan, the most aging country, and at least 100 years for Italy, the second most aging country. However, it only took China 30 years.

In addition, deepening the reform of the medical and health system requires the gradual establishment of a public health service system, medical service system, medical security system, and drug supply security system that covers urban and rural residents, forming a four in one basic medical and health system to provide safe, effective, convenient, and affordable medical and health services for the people. This will further expand consumer demand and improve drug use levels, bringing opportunities for the development of China's pharmaceutical industry.

Overall, the development of China's pharmaceutical industry is facing a favorable domestic environment. The rapid growth of market demand, increased national support for the pharmaceutical industry, and continuous improvement of quality standard systems and management norms are all conducive to achieving stable and rapid development of the pharmaceutical industry.

2. Market competition trend prediction

China's pharmaceutical industry has a huge market scale, but due to long-term disordered development, the overall market competition is fierce, and the concentration ratio of the pharmaceutical industry is low. As of the end of 2016, there were 7449 enterprises above designated size in the pharmaceutical manufacturing industry. It can be predicted that the concentration ratio of the pharmaceutical industry will increase in the future. Meanwhile, after decades of industry accumulation, China has gradually formed a group of excellent pharmaceutical enterprises with certain scientific research capabilities, advanced management and production experience. In the future, resources will be concentrated towards advantageous enterprises, and industry competition will tend to ease.

3. Forecast of segmented market trends

(1) The scale of the drug market in key areas will be further enhanced

With the aging of China's population, the change of residents' lifestyle and the increase of living pressure, the incidence rate of chronic non communicable diseases, such as nervous system disease, cardiovascular and cerebrovascular diseases, musculoskeletal diseases and tumors, continues to rise and become younger, and the market share of drugs in related fields grows rapidly.

On December 27, 2016, the State Council issued the "13th Five Year Plan for Health and Hygiene". The plan points out that we will strengthen the prevention and treatment of major diseases, carry out risk assessment and intervention guidance for high-risk groups of chronic diseases such as elevated blood pressure and blood sugar, abnormal blood lipids, overweight and obesity, and improve the systems for monitoring causes of death, tumor registration reports, and monitoring chronic diseases and nutrition; Strengthen the prevention and treatment of mental disorders, strengthen the registration of reports, service management, and rescue of patients with severe mental disorders; We will strengthen the prevention and treatment of major infectious diseases, reduce the infection rate of hepatitis B virus in the whole population, strengthen AIDS detection, intervention and follow-up, and increase the detection of tuberculosis among general patients. It can be seen that in the next few years, the market growth rate of drugs for mental and neurological diseases, cardiovascular and cerebrovascular diseases, tumors, and musculoskeletal systems is expected to be higher than the average growth rate of the pharmaceutical market.

(2) Traditional Chinese Medicine Encounters Development Opportunities

The 13th Five Year Plan Outline for National Economic and Social Development clearly proposes to improve the traditional Chinese medicine healthcare service system, innovate traditional Chinese medicine service models, and enhance grassroots service capabilities; Strengthen the construction of clinical research bases and research institutions for traditional Chinese medicine; Developing traditional Chinese medicine health services; Conduct a survey of traditional Chinese medicine resources, strengthen the protection of traditional Chinese medicine resources, and establish a database and knowledge base of ancient Chinese medicine books; Accelerate the standardization construction of traditional Chinese medicine and enhance the level of the traditional Chinese medicine industry; Establish large-scale, authentic, and endangered medicinal herb seedling breeding bases to promote the green development of the traditional Chinese medicine planting industry; Support the development of ethnic medicine; Promote suitable technologies for traditional Chinese medicine and promote the internationalization of traditional Chinese medicine services.

In 2015, the General Office of the State Council issued a notice on the issuance of the Development Plan for Traditional Chinese Medicine Health Services (2015-2020), proposing to vigorously develop traditional Chinese medicine health care services, accelerate the development of traditional Chinese medicine medical services, support the development of traditional Chinese medicine characteristic rehabilitation services, actively develop traditional Chinese medicine health elderly care services, cultivate and develop traditional Chinese medicine culture and health tourism industries, and actively promote the development of supporting industries related to traditional Chinese medicine health services Vigorously promote the trade in traditional Chinese medicine services and other seven tasks, and include traditional Chinese medicine in the national economic and social development plan.

Under the strong promotion of national policies, the development of traditional Chinese patent medicines and simple preparations industry in China is expected to maintain a strong momentum.

(3) Intensified competition in the market for specialty raw materials

At present, the overall competition in China's characteristic raw material drug market is relatively relaxed. However, due to the high technical barriers, entry barriers for new entrants are relatively high, so there will be no obvious intensification of competition in the short term. However, in the long run, with the continuous decline of the bulk raw material drug market, more and more enterprises will transform into characteristic raw material drug enterprises, and competition will intensify in the future.

(4) Pharmaceutical e-commerce will gradually rise

In the past two years, the reform in the pharmaceutical field has been gradually refined under the framework of the "New Medical Reform". The new version of GSP, flight inspection, consistency evaluation, drug marketing license holder system, and two ticket system have been gradually promoted, involving various stages of drug research and development, production, circulation, sales, and use. From the perspective of the overall environment in which pharmaceutical e-commerce is located, the supply, distribution channels, and demand sides of pharmaceutical enterprises are all undergoing changes. Pharmaceutical e-commerce is adapting to this change and using internet tools to meet the medication needs of pharmaceutical circulation and individual consumers, which is highly correlated with the pharmaceutical environment. At the same time, in addition to policy promotion, capital, industry acceptance, and the willingness of traditional enterprises to participate are also important driving factors for the pharmaceutical e-commerce industry.