Presentation Outline

1
Presentation Outline

• Market Background
• Regulatory Environment
• Industry Issues
• Intellectual Property Rights
• Growth Sectors
• Conclusions

2
NOTICE from CHCC

• Only Selected Slides are Shown on our website
• Detailed Slides and Presentation can be available
  upon request

3
China- the fastest growing market in the world
4
China- Import vs Export
5
Strong Hard Currency Reserve
6
Increasing U.S. Direct Investment into China
7
China Pharmaceutical Industry Output Growth
Rate ---A Large
and Growing Market
8
China Pharmaceutical Commercial Sales Growth
Rate (Billion Yuan)
9
Rank of Drug sales in 14 major area 2001 China
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Problems in Healthcare System

• Lack of Stable Budget Resources
• Great Variability in Ability to Pay by Employers
• Casual Attitudes toward Medical Expenditure
• Incompatible with New Ownership Structure
• Deferred Payment Causes Resentment and Social
  Problems

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SDA

• Merger of 3 Former Governmental Departments
• Composition
• Department of Drug Registration
• Synthetic, Biological and TCM Divisions
• Department of Medical Devices
• Standards, Product Registration and Supervision
  Divisions
• Department of Safety Supervision
• Department of Market Compliance

12
IPR

• Counterfeiting of Trademarks
• Lax Enforcement of Law and Protection of Local
  Industry
• WTO Accession Exempts China From Giving Immediate
  Patent Protection
• Administrative Protection (AP) is Rumoured to be
  Phased Out in Favour of 20-Year Patent
• Pre-AP Local Generics Considered Legal
• Requirement of Large Generic Prints on Labels

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WTO Challenges (1)

• Regulatory Environment
• More in Line With International Standards
• More Transparent Administration
• ICH Guideline Increasingly More Relevant
• Administrative Barriers to Offset WTO Requirements

14
Biological Products

• Types
• Biochemical, Biological and Genetically
  Engineered Products
• Science and Technology Driven
• Average Growth Rate 12.5 Worldwide Compared with
  8 for Pharmaceuticals
• US 20 Billion in 2000 with 100 Products

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OTC Market in China

• 700 OTC, 70 will be registered as OTC
• Urbanization. Large migration from rural
• Sales by chain pharmacies in coastal cities
  increased by 45 in 2001.
• Foreign companies allowed to run OTC distribution

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TCM Traditional Chinese Medicine

• TCM Source Materials Number Over 12,000
• TCM Industry Produces 5,000 TCM Preparations in
  Large-Scale Production
• TCM Sector Outperforms Average Medical Industrys
  Performance Indicators
• Ride on the Back of Strong Worldwide Demand for
  Natural Medicines

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MORE

• Chinese Hospitals
• Chinas healthcare system