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invest in the creation of vaccine cold chain storage facilities, in addition to bearing costs for vaccines and syringes used in emergency immunization programs initiated by local governments.
The MoH is to direct the EPI though a number of other government agencies will have roles in the program. The National Development and Reform Commission will be responsible for the storage and allocation of EPI vaccines and checking the prices of vaccines, while the SFDA will be in charge of production and distribution of the vaccines.
Interfax Commentary: The nationwide purchase of EPI vaccines will significantly influence the shape of the Chinese vaccine industry and market, with large companies expected to become stronger.
There are no big changes in store for the vaccine procurement-through-bidding policy in China in the short term. However, companies finding their products listed among the EPI vaccines on the provincial basis to start, will experience a boost in their reputations, which may help give them a headstart when options are considered for vaccines to be used in the nationwide scheme.
Low-cost vaccines will still form the majority of vaccines used in the EPI, however, as the program is being executed on a regional basis first, higher-priced but better quality vaccines will not be excluded from the list, particularly in more developed regions of China.
Guangdong's medicine purchasing center announced Mar. 24 that over last year, the southern Chinese province bought medicines to a value of RMB 12.17 billion ($1.73 billion) through online bidding programs.  
By the end of last year, 1,039 medical institutions participated in the online drug bidding procurement system, much higher than the regional government's goal of 683. Of particular note was that all of the county-level hospitals and township clinics in the more developed area of the Zhujiang River Delta bought their medicines online.
The medicines procured using the provincial online drug bidding system were worth an average of 20 percent less than similar medicines bought outside of the system. According to the Guangdong medicine purchasing center, the system meant savings of RMB 2 billion ($284.09 million) for patients in the province.
A Guangdong provincial government announcement said that the online drug procurement cut prices of most antibiotics by a large margin. For example, in the Sun Yat-sen University No. 1 Hospital, cefuroxime was sold at RMB 32 ($4.55) last year, down from RMB 10.63 ($1.51) in 2006, while consumption of the drug increased to 2,100 bottles last year from 210 bottles in 2006.  
This year, some drugs which are in short supply including human albumin, may be supplied to hospitals directly. Other drugs that may be sold directly to hospitals are patented drugs, medicines that were granted government awards due to innovative technology, and some low-cost commonly used generic medicines.
More than 10 provincial health departments have followed the Guangdong online bidding model, while some provinces even use the prices of medicines in Guangdong as references for their drug purchases.  
The Guangdong medicine purchasing service center has completed its 2008 online drug bidding procurement plan and the province will begin bidding for drugs for 2008 on Mar. 26. 
Interfax Commentary: Bidding-based drug procurements have been used in China for the last eight years.
Guangdong's online bidding system has garnered acclaim from the MoH and more provinces are expected to adopt the Guangdong model in future. 
However, to find out if there will be significant changes to the online drug bidding practice in China, we have to wait and see which trials underway in various provinces are favored by the MoH, who will then apply them to the rest of the country as part of the health reform, the plan of which is to be published soon. 
A report released Mar. 21 by the National Development and Reform Commission advocates integrating China's separate urban and rural medical insurance systems into a single system at county level, in order to ensure optimal coverage.
The report detailed the results so far of a trial running in the city of Tongxiang, in eastern China's Zhejiang Province. The city started offering residents of rural areas within the municipality medical coverage under the new cooperative medical insurance program in 2002, while in 2006, the system was extended to urban residents not covered by employment-based medical insurance such as migrant workers and middle and primary schoolchildren.
Under the trial, the city implemented a policy to encourage people to seek treatment in grassroots medical institutions. The government stipulated that 25 percent of outpatient medical expenses incurred in township clinics and community health care centers would be reimbursed by the government, while only 5 percent of the bill from a trip to a city hospital would be reimbursed. Last year, the city's CHCs recorded 1.05 million visits, double the number of visits in 2006.
The local government has increased its payments to the program from RMB 6 ($0.85) per participant in 2002 to the current RMB 110 ($15.6) for every person under the system. 
However, the report said that reimbursement rates offered by the city are still quite low, and government payments per person to the system are still not high enough to entice every resident of the city to sign up to the extended medical insurance program.
At present, nearly 500,000 people in the city, or 97.2 percent of the city's rural residents and 91.28 percent of its urban residents, are covered.
The city was chosen for the trial as the gap in income levels and average medical expenses among residents in the city is not particularly wide, and the number of urban residents is quite small. Following the success of the trial, the NDRC saw that similar initiatives are possible in similarly developed counties, according to the report.
The report suggested that local governments should use electronic data management systems more to save management costs in the long run. The city has already spent RMB 4.5 million ($638,298) in setting up a data center, Internet center and management center, to increase the efficiency of medical expenses reimbursement.
The Chinese government aims to cover all rural residents with its rural cooperative medical insurance program this year, whilst extending urban resident medical insurance to 229 more cities.
China's food and drug safety watchdog, the State Food and Drug Administration (SFDA), said Mar. 21 it will giving priority attention to low-cost commonly used drugs that make up the country's essential drug system in its national drug quality inspection efforts.
While the focus of inspections will be on adverse drug reactions, or ADR cases, connected with essential drugs, the SFDA said it will also look into cases involving traditional Chinese medicines (TCMs) which contain chemical ingredients, as well as drugs found to have quality flaws through evaluations or tests.
Shao Mingli, the head of the SFDA, said that in 2008 the administration will heighten quality inspections on both drugs and medical devices, and improve the current evaluation system used in such inspections.
The SFDA also said it plans to establish an online drug inspection information system where information gathered from inspections can be collected and evaluated. The drug regulatory body has already said that one of its key tasks this year will be devising a drug quality evaluation system and setting up standards for drug evaluations. When completed, the system and standards will be used by local drug testing institutes.
The SFDA said it would also be relying more heavily this year on its fleet of drug inspection vehicles, which conduct drug quality evaluations in order to root out counterfeit and substandard products on the market in the more remote regions of the country.
China's State Food and Drug Administration (SFDA) released Mar. 19 draft regulations for medical device recalls, the first such regulations for the domestic medical device industry, and is asking for public comment.
"Though China has been fortunate not to have encountered any large-scale medical device adverse reactions in the last few years, this regulation is still vital for the management of the industry and to ensure that [future] recalls of medical devices run smoothly," He Chun'ai, from the SFDA's Department of Policy and Regulations, told Interfax.
Titled the Medical Device Recall Management Methods, the regulation mandates the recall of medical devices causing harm to human beings through design or manufacturing flaws; medical devices that have not caused harm to human beings but have the potential to do so; medical devices in which quality does not match government-approved standards and medical devices which pose significant risk to human health.
The regulation also calls on medical device manufacturers to establish their own recall mechanisms. In addition, it states that manufacturers have an obligation to collect information pertaining to the safety record of their products, and when safety is in question in any way, the manufacturer is required to investigate, evaluate and, if necessary, recall medical devices.
Under the regulation, medical device recalls are classified into three classes according to the severity of the risk to human health. A class one recall, the highest level, requires the manufacturer to issue a recall of a product found to be dangerous within 24 hours of being made aware of the fact, in addition to notifying distributors and medical institutions where the devices are utilized.
Medical device makers failing to meet the deadlines set within the regulation may face fines of up to RMB 30,000 ($4,253).
The timetable for the implementation of this policy is yet to be determined.
The Ministry of Health announced Mar. 25 that it expects regional health authorities around the country to crackdown on unnecessary purchases of large-sized medical devices.
In the statement, the MoH requested provincial departments of health to keep a closer watch over the purchases of medical equipment by medical institutions, and prohibit the use of large-sized medical devices that were bought without approval.
The MoH will employ a name-and-shame method to deter medical institutions from unapproved purchases of large-sized medical devices, promising also to conduct investigations into individuals who make unauthorized decisions to purchase such machines.
At the end of 2007, the MoH criticized the Wenzhou No. 2 Hospital, in eastern China's Zhejiang Province, for buying an expensive gamma knife without approval. However, it seems the one case has not been able to discourage other medical institutions from breaking the rules.
Last month, the MoH issued the Class-A Medical Equipment Allocation and Approval Regulation, under which public hospitals have to apply to the ministry for permission to purchase class A medical devices, which are large-sized equipment, such as MRI machines. The health authority said it was organizing a panel of experts to evaluate purchasing plans for large-sized medical devices and to re-evaluate the effectiveness and safety of expensive medical devices within one or two years of a hospital buying a device for the first time.
The MoH has been working to curb the purchase of large-sized equipment since 2005 to slow down escalating medical expenses of Chinese patients. However, its policies have been met with limited success.
China will expand its national campaign to promote traditional Chinese medicine (TCM) across the country, according to an announcement by the State Administration of Traditional Chinese Medicine Mar. 21.
Running from April to October, the campaign will visit Jinan, capital city of China's northern Shandong Province, on April 12, and then move on to another 14 provinces and cities including Anhui, Shanghai, Zhejiang, Fujian, Gaungxi, Hunan, Gansu, Jiangsu, as well as the Macau Special Administrative Region.
Highlights of the campaign include free consultations by TCM practitioners and TCM related training for doctors in rural practices, hospitals and community health centers (CHCs), as well as organizing TCM forums with relevant experts and professors. In addition, local health authorities are encouraged to make initiatives to carry out the program based on local issues and circumstances.
In addition to the 17 government departments that announced their participation last year, organizing committee members of the promotion this year will also include the National Development and Reform Commission (NDRC), Ministry of Finance, Ministry of Culture, Ministry of Railways, and the General Administration of Civil Aviation.
The promotion program started in July last year, and has already been carried out in eight regions across the country. The stated aim of the program is to promote TCMs and educate the public, and will provisionally last from 2007 to 2010.
The promotion program has helped to popularize the use of TCMs, both in hospitals and CHCs across the country. This is the largest-scale TCM promotion program in China's history, according to the announcement.
Chongqing Municipality is conducting a Ministry of Health-backed research program into medical services and health care that will later shape the Chinese health reform, a Chongqing municipal health bureau official told Interfax Mar. 24.
The research will focus on basic medical health service standards, reimbursements of such services, fundraising methods of medical institutions, and the supervisory role the government will take on.
"The bureau has formulated a research project plan and research is already underway in the districts of Jiangbei and Qianjing," said the Chongqing health bureau official, surnamed Xiao.
Researchers will track Jiangbei's policies to increase its numbers of grassroots urban medical institutions, otherwise known as community health care centers, and establish more privately-owned hospitals.
Meanwhile, researchers will observe how Qianjing, a largely rural area, operates its rural cooperative medical insurance program. The policy includes reforms to drug distribution systems of district hospitals and management reforms of township clinics.  
Another policy, which saw the municipal government issue health coupons to residents in 2006, will come under scrutiny. These coupons can be exchanged for basic medical services such as immunization or health check-ups without cost to the patient.
The Chinese Ministry of Agriculture (MoA) announced that it has kicked off a nationwide campaign to inspect veterinary drugs in central China's Hunan Province in order to tighten control over the domestic veterinary vaccines market.
The inspection program aims to monitor the safety of veterinary medicines used throughout the country, especially the supervision of vaccines used to protect livestock against major animal epidemic diseases such as blue-eared pig disease and bird flu.
The inspections in Hunan are part of a wider campaign aimed at increasing supervision over the manufacture, testing, distribution and use of major veterinary vaccines across the country. The campaign will last until the end of April this year, according to the MoA.
An MoA investigation conducted last year revealed that counterfeit veterinary medicines are very common in China. A large number of non-licensed manufacturers were also discovered to be producing biological products for animal use.
At an opening ceremony for the campaign, held in Hunan, 28 major Chinese veterinary medicine manufacturers donated more than 62,000 doses of various biological products to provincial centers for animal diseases control and prevention. In addition, the MoA handed out brochures and videos to promote awareness of the importance of animal diseases control and prevention efforts.
China is providing free anti-retroviral treatment courses for 33,980 HIV/AIDS patients across the country, according to a report released by the National Center for AIDS/STD Control and Prevention Mar. 26.
By the end of December last year, China had provided free treatments to 42,567 HIV/AIDS patients in total, 81.3 percent of which are continuing to receive treatment.
In 2007, more than 10,000 HIV/AIDS patients were commenced on such free treatments, with nearly 70 percent seeing their viral load controlled, the report said. As a result of the policy, the case-fatality ratio of the disease in China dropped to 5 percent last year from 9.6 percent in 2004.
As of last year, the Chinese government has allocated funds to pay for CD4 cell count, viral load and drug resistance tests in HIV/AIDS patients. In the second half of last year, Hubei, Anhui and Henan provinces started to carry out anti-retroviral treatment programs in rural areas, as well as explored treatment programs for people developing drug resistance.
By the end of October last year, 223,501 people in the country were living with HIV/AIDS, and the total death toll linked to the virus came to 22,205, according to a report released by the Ministry of Health in November last year.
Wuhan, the capital of central China's Hubei Province, is considering letting people off with just a slap on the wrist for first-time offences within the health sector provided they were not of a harmful nature, an official from city's public health supervision institute told Interfax Mar. 21.
The institute has drafted a regulation stipulating that perpetrators of actions that technically break health related laws but that do not put anyone in danger of injury will not be punished subject to criminal proceedings, though they will be required to make corrections within a certain timeframe.
"The major goals of this reform are to encourage health institutes to be more service-oriented and to improve the profile of local government," said Lu, an official from the health supervision institute.
The draft lists 31 regulatory items relating to food health, medical health, occupational health, public health, cosmetic health and disinfection, which will see violators receiving more lenient punishment. Practices covered include the issuance of doctored health related certificates by medical institutions, and the offering of treatment for diseases by clinics unauthorized to offer such treatment, provided they make less than RMB 1,000 ($141.64) in one month from such services.   
Wuhan is China's first city to consider implementing such a reform.
Wuhan city sees itself as central China's first city, and the local government is trying to create a better investment environment, Lu said. Wuhan Urban Administrative Bureau introduced a similar regulation last month allowing more lenient punishment for minor violations of laws regarding public property.
Lu said that when the health supervision bureau sticks too rigidly to the letter of the law in punishing clinics or restaurants for technical illegalities that are not seen as harming anyone, a great deal of resentment builds, which makes enforcement of larger issues more complicated.
The institute invited representatives from various fields give their opinions on the draft. Some held that the definition of "minor illegalities" should be clearer, while others expressed concerns that despite the "minor" nature of the violations, turning a blind eye could lead to much more serious consequences.
The institute is currently revising the draft based on the public opinion hearings, and will release a finalized version of the regulation soon, Lu said.
Hospitals in southern China's Guangdong Province had seen 683 people come in with influenza by the morning of Mar. 19, though no-one had yet been classified as seriously ill or died from the recent outbreaks, Guangdong's Emergency Management Office said.
The province reported three new independent influenza outbreaks the same day. The first was in the Yuexiu district of Guangzhou, the provincial capital, while the other two were in the Nanshan and Xiangzhou districts of the large city of Shenzhen.
The new reports brought the total number of reported influenza outbreaks within the province to 12. All reported outbreaks have taken place in schools.
The influenza B virus was the main strain of the virus found among patients in the latest outbreaks, an Emergency Management Office said.
Earlier in the week, Guangdong announced that it had set up an influenza monitoring network to track outbreaks within the province.
Around the same time, the Hong Kong government ordered a two-week suspension of primary school and kindergarten classes, effective Mar. 13, in order to avert a possible influenza pandemic. The move represents the highest-level preventative action that the island has taken in response to threat by disease since the SARS crisis in 2003.
According to the latest update from the Hong Kong Center for Health Protection, released Mar. 17, there have been three suspected and one confirmed reports of influenza outbreaks since Mar. 14. Last week, 23 confirmed influenza outbreaks were recorded.
So far, four children have died from influenza-related causes in Hong Kong.
A joint project by China and Australia to control and prevent the spread of HIV/AIDS in northwestern China's Xinjiang Uyghur Autonomous Region is progressing well and gearing up for assessment, an official from the local health bureau told Interfax Mar. 26.
"It appears that the project has been progressing well and its evaluation will be carried out as of this May by experts sent over by the Australian Agency for International Development, as well as experts representing the Chinese government," Chen Wei, an official involved in the project, said.
The assessment, designed last July by the two countries, will look at how the project has helped the region's response to HIV/AIDS, according to Chen.
The project, China-Australia Xinjiang HIV/AIDS Prevention and Care Project, began in March 2002 and is expected to finish in February 2009. The goal of the project is to slow the rapid spread of HIV/AIDS and reduce the impact of the epidemic on the region's social and economic development.
"At the end of December last year, China and Australia formally agreed to the project's 50th sub-project, which will see community care services expand from being offered in two districts to four districts in Urumqi, the capital city of Xinjiang," Chen said. "The other sub-projects are all now up and running smoothly."
Among the 50 sub-projects are initiatives to offer more training and practice for clinical nursing, promote condom use among commercial sex workers, develop a special HIV/AIDS treatment curriculum for medical students, expand needle and syringe programs among drug users, and conduct training for police on prevention of occupational exposure and health education for detox and rehab center attendees.
At the end of September last year, Xinjiang reported that 20,890 people within the region had contracted HIV/AIDS, making it the fourth top region in the country by the number of people infected, and second by incidence rate. However, estimates for the number of people actually carrying the virus in Xinjiang by the end of the year ran over 60,000.
The value of Chinese-made chemical drugs exported in 2007 hit a historic high of $784 million, up 55.68 percent on 2006, though a third of all revenues were snapped up by 12 dominant joint-ventures, according to new China Customs latest statistics.
Of the 1,222 Chinese-based drug making companies that exported dosage form pharmaceuticals last year, 80 percent recorded record high export values.
The growing presence of Chinese pharmaceutical makers on the global market and recent surges in raw material, energy and labor costs have resulted in soaring prices for pharmaceutical dosage forms, which in turn has helped push up export value figures. Another contributing factor to the expanding export value is an increase in the number of CMO (contract manufacture organization) contracts won by Chinese companies.
Joint-venture companies still accounted for a large proportion of all pharmaceutical dosage form exports. In 2007, there were 12 joint-ventures listed in the top 20 enterprises by dosage form drug export value. Those 12 companies accounted for a third of all dosage form drugs exported from China during the year.
Another key factor contributing to the fast growth in dosage form pharmaceutical exports was a rapid expansion in the number of wholly foreign-owned pharmaceutical companies exporting drugs from China.
Last year, Japan, Korea and Hong Kong were the top three export destinations for Chinese-made pharmaceutical dosage formulations, though the products were also exported to another 162 countries. Pharmaceutical dosage formulations manufactured by joint-ventures still took the lion's share of exports destined for higher-end markets, such as the United States, Japan and European countries. The joint ventures saw their exports of pharmaceutical dosage forms grow significantly last year. 
Due to a lack of innovation and limited approvals by European and U.S. drug regulatory bodies, pharmaceutical dosage forms produced by Chinese companies last year were predominantly shipped to comparatively low-end markets, such as Nigeria and Pakistan. However, a promising trend emerged last year in which the value of Chinese-made pharmaceutical dosage forms exported to emerging markets, such as Poland, Tajikistan and Azerbaijan, showed significant growth.
Generic antibiotics continued to dominate pharmaceutical dosage form exports in 2007, while traditional dosage forms, such as tablets or lyophilized powder for injection, were the main export formulations.
Prices of some active pharmaceutical ingredients in China are ballooning, though production costs, which are rising only slowly in comparison, are not the culprit, a pharmaceutical analyst told Interfax Mar. 26.
The price of penicillin G, an API used in several common antibiotics, has jumped from RMB 60 ($8.53) per billion units at the beginning of January to the current price of RMB 120 ($17.07) per billion units.
"A drug doubling in price within three months is not a common occurrence," said Ba Yanfeng, a pharmaceutical analyst with Healthoo.com.
Although raw materials costs and mandatory environmental protection spending have increased, they have done so only by a small margin. Meanwhile, given that it is a non-peak time of the year for antibiotic use, and none of the larger penicillin manufacturers have suspended production, the recent leap in prices has raised a few eyebrows.
"There is possibility that drug manufacturers intentionally raised prices," Ba said. She added that the likely motivation for the decision to push prices up was that orders for the API may have dropped off to such an extent that the companies are raising prices in order to recoup their production costs.
Price surges are also growing among vitamin products. In November last year, vitamin H was priced at RMB 1,000 ($142.25) per kilogram, increasing to RMB 1,900 ($270.27) per kg at present. The price of vitamin E has hit RMB 180 ($25.6) per kg, double the price at the end of last year.
Ba predicts that though prices may rise a little further, they may soon crash to a little above 2006 levels.
Penicillin G serves as an example. Since the present price is not yet higher than the peak of RMB 150 ($21.34) per billion units that it hit last August, penicillin G makers may continue to ask for more.
"However, all that is needed is for the inflated prices to be rejected on the market over a few consecutive weeks, and we will see prices falling again before the end of next month," she said.
Export prices for Chinese-produced paracetamol will rise this year due to increasing raw material and production costs, an industry report released Mar. 19 by the China Chamber of Commerce for the Import & Export of Medicines & Health Products forecast.
Increasing raw materials prices and production costs have been pushing up paracetamol export prices since June last year, the report said. The export price of the drug increased by 16.26 percent between June and December last year, from $2.83 per kilogram to $3.29 per kilogram. However, the drug's average export price for the year was $2.98 per kilogram, 1.13 percent lower than that in 2006.
Last year, China's total paracetamol exports reached 46,400 tons, up 0.71 percent from 2006, and were valued at $138.39 million, down 0.43 percent year-on-year.  
Other Asian countries are the biggest export destinations for China's paracetamol exports, followed by European and African countries. Taken together, the three regions accounted for 88.81 percent of all exports last year. At the same time, exports to the North American market declined 38.77 percent year-year-on-year. India, Indonesia and Ireland were three largest export destination countries last year.  
The report said that outside of growing production costs, the key challenges for China's paracetamol exporters relate to excess domestic production capacity and the use of outdated technology to produce low-end products.
China has the capacity to produce 80,000 tons of paracetamol on an annual basis. It produced a total of 53,500 tons last year, of which 7,000 tons was sold domestically.
Anqiu Lu'an Pharmaceutical Co. Ltd. was the largest paracetamol exporter last year, followed by Rhodia Wuxi Pharmaceutical Co. Ltd. and Hebei Jiheng Group Pharmaceutical Co. Ltd.
The report also noted that some Indian companies are buying raw material for paracetamol from China, and then exporting the resulting paracetamol abroad. In turn, this is leading to short raw material supplies on China's domestic market, and eating into the global market share held by Chinese companies.  
Top 10 export destination countries last year by value  
Rank Country Value (USD) Percentage (%) Price ($/kg)

1 India 21,815,365 15.76 2.66

2 Indonesia 14,900,541 10.77 2.64

3 Ireland 14,402,076 10.41 3.71

4 Nigeria 11,753,523 8.49 2.57

5 Thailand 8,066,685 5.83 2.69

6 USA 7,293,722 5.27 3.52

7 France 6,662,138 4.84 4.82

8 UK 4,717,864 3.41 3.43

9 Vietnam 3,644,866 2.63 2.57

10 Ghana 2,836,853 2.05 2.80

Total 138,389,858 100 2.98

Source: China Chamber of Commerce for Import & Export of Medicines & Health Products
Taiji Group Co. Ltd., one of China's largest pharmaceutical players, intends to ring up RMB 10.5 billion ($1.49 billion) in sales over the course of 2008, the company announced Mar. 24.
In 2007, Taiji Group sales reached RMB 9.8 billion ($1.39 billion), up from the RMB 9.1 billion ($1.29 billion) it made in 2006. New products contributed RMB 606 million ($85.84 million) to the 2007 total.
"The [predicted] growth in this year's sales will be driven by sales of our flagship products by our two listed companies," Bai Lixi, Taiji Group's board chairman, said.
The company's best known products include Qu Mei, China's leading weight loss medicine, and a traditional Chinese cold and flu treatment, Huoxiang Zhengqi Oral Liquid. Huoxiang Zhengqi Oral Liquid generated revenue of RMB 270 million ($38.24 million) last year, up 12 percent from 2006, a growth the company attributed to an advertising campaign featuring Zhao Benshan, a well known Chinese actor. Taiji Group plans to increase sales of the drug to RMB 2 billion ($283.29 million) within 10 years.
One of the company's newer products, diabetes treatment Tai Luo, which contains the ingredient rosiglitazone sodium, was launched in 2004. The company's commercialization plan for the drug should be completed this year, after which the drug is expected to pull in RMB 200 million ($28.33 million) in sales annually. Also scheduled for completion this year are five production lines for large-volume intravenous infusion sets, which the company forecasts will add another RMB 251 million ($35.55 million) in annual sales.
Taiji Group has three listed subsidiaries - Chongqing Taiji Industry Co. Ltd., Southwest Pharmaceutical Co. Ltd. and Chongqing Tongjunge Co. Ltd.
Southwest Pharmaceutical was one of the 10 companies commissioned by the government to produce low-cost drugs for grassroots medical institutions late last year. The company expects to further benefit from the policy this year.
The group expects sales from its Tongjunge subsidiary to increase by RMB 500 million ($70.82 million) this year. Last year, Tongjunge's sales jumped by more than RMB 200 million ($28.33 million) compared to the previous year.
Huahai Pharma reports 20 pct year-on-year net profit growth
Zhejiang Huahai Pharmaceutical Co. Ltd., the first Chinese pharmaceutical manufacturer to receive U.S. Food and Drug Administration approval for a pharmaceutical dosage formulation, on Mar. 25 reported its 2007 net profit reached RMB 132.04 million ($18.76 million), jumping 19.19 percent year-on-year.
The company's sales revenues hit RMB 706.98 million ($100.42 million), representing an annual growth of 26.22 percent. Earnings per share were RMB 0.57 ($0.08), 21.28 percent higher than in 2006.
Both net profit and earnings per share met predictions made by pharmaceutical analysts earlier this year in reports by CITIC Securities Co. Ltd. and Shenyin & Wanguo Securities Co. Ltd.
Sales of active pharmaceutical ingredients accounted for the lion's share of the company's overall revenues at RMB 645.21 million ($91.65 million), up by 29.15 percent year-on-year. The company made RMB 46.54 million ($6.61 million) from pharmaceutical dosage formulations sales last year, down 7.07 percent from that of 2006.
Around 90 percent of the company's sales were a result of export demand. Huahai Pharma exported products valued at RMB 624.40 million ($88.69 million) last year, while only RMB 80.06 million ($11.32 million) worth of products were sold on the domestic market.
Huahai Pharma's receipt of an ANDA (Abbreviated New Drug Application) for the anti-AIDS drug nevirapine was seen as a milestone for China's pharmaceutical industry. ANDAs are applications for permission to market a generic drug in the United States without having to go through the process of conducting lengthy clinical trials.
Over the year, the company was awarded Drug Master Files (DMF) for nine active pharmaceutical ingredients and one certification for its anti-AIDS dosage formulation manufacturing facilities by the FDA. It also attained approval from the Chinese State Food and Drug Administration for a pharmaceutical dosage formulation.
Being one of the few API makers that focus on the global market, Huahai Pharma is among the handful of Chinese API makers who are trying to become integrated pharmaceutical companies and obtain a share in the global pharmaceutical market.
French-based Roquette Co. Ltd., the world's largest polyol, mannitol, and xylitol producer, signed an acquisition agreement with Guangxi Nanning Chemical Pharmaceuticals Co. Ltd. on Mar. 19, a Nanning Chemical Pharma official told Interfax Mar. 21.
"Roquette will purchase a 67 percent stake in Nanning Chemical Pharma," an official with the company, who wished to remain anonymous, said. The previous investors, the state-owned companies Nanning Water Supply Company and Nanning New High-Tech Development Investment Company, will hold the remaining 33 percent.
The official refused to disclose any financial details of the acquisition.
Nanning Chemical Pharma produces sugar alcohols including mannitol and sorbitol. It has two production bases with an annual production capacity of 1,000 tons of pharmaceutical -grade crystalline sorbitol and 3,000 tons of hard crystalline sorbitol.
Mannitol is a sugar alcohol widely used in the food and pharmaceutical industries. It is used to lower intracranial pressure and to treat post-traumatic raised intracranial pressure.
After the acquisition, Nanning Chemical Pharma plans to invest RMB 60 million ($8.5 million) in upgrading its existing production lines, and set up two new lines, one with an 8,000 ton per annum hexahydric alcohol production capacity, and the other with an annual output of 3000 tons of hard crystalline sorbitol. This will serve to double the company's current hard crystalline sorbitol output, the official said.
Shanghai-listed Nanjing Pharmaceutical Co. Ltd. (Nanjing Pharma) announced Mar. 20 its net profit surged over 300 percent year-on-year in 2007. 
Last year, the company's net profit hit RMB 46.68 million ($6.59 million), up 328.76 percent compared to the 2006 figure of RMB 10.89 million ($1.54 million) it had previously recorded. 
The company mainly attributed the profit growth to changes made to management, operation, marketing and its development strategy, as well as efficient control over costs throughout the year.
In 2007, sales revenues generated by Nanjing Pharma were RMB 9.34 billion ($1.32 billion), up 36.24 percent on an annual basis. Earnings per share were RMB 0.186 ($0.0263), increasing 332.56 percent from RMB 0.043 ($0.0061) in 2006.  
Founded in 1994, Nanjing Pharma is mainly engaged in the sale of drugs, medical devices, chemical reagents and glass equipment. It has over 20,000 products. 
The tables below outline Nanjing Pharma's main business revenues broken down by product and region.
Nanjing Pharma revenues by product, 2007 
Product Revenues Growth y-o-y

(%)

TCM RMB 1.4 billion ($197.74 million) 92.28

Western drugs RMB 7.88 billion ($1.11 billion) 29.61

Others RMB 30.00 million ($4.24 million) 40.24

Source: Nanjing Pharma ' annual report 2007 
Nanjing Pharma's revenues by region, 2007 
Region Revenues Growth y-o-y

(%)

Jiangsu RMB 5.31 billion ($750.42 million) 43.37

Anhui RMB 2.22 billion ($314.12 million) 30.29

Fujian RMB 1.56 billion ($220.34 million) 17.22

Shanghai RMB 148.94 million ($21.04 million) 77.78

Henan RMB 61.55 million ($8.69 million) 100

Source: Nanjing Pharma 2007 annual report 
Shenzhen-listed Hubei Guangji Pharmaceutical Co. Ltd. announced Mar. 22 that its net profit hit RMB 196.62 million ($27.77 million) in 2007, surging by 1,079.75 percent year-on-year.
Guangji Pharma recorded RMB 16.67 million ($2.35 million) in net profit in 2006. 
The company mainly attributed net profit growth to the considerable increase in riboflavin prices in the domestic market. Sales of riboflavin last year amounted to RMB 727.78 million ($102.79 million). 
In 2007, its sales revenue reached RMB 794.90 million ($112.27 million), representing growth of 101.16 percent on an annual basis. Earnings per share were RMB 0.78 ($0.1102), lifting 875.00 percent from 2006's figure of RMB 0.08 ($0.0113).  
Founded in 1969, Guangji Pharma is mainly engaged in the manufacture and sales of active pharmaceutical ingredients and feed additives. More than 60 percent of its main products are exported to over 30 countries and regions worldwide. 
The tables below outline the company's main business revenues as broken down by product and by region  
Guangji Pharma revenues by product, 2007 
Product Revenues Y-o-y growth

(%)

Riboflavin RMB 727.78 million ($102.79 million) 128.20

Transfusions RMB 40.27 million ($5.69 million) -20.82

Source: Guangji Pharma annual report, 2007 
Guangji Pharma revenues by region, 2007 
Region Revenues Y-o-y growth

(%)

Domestic RMB 349.50 million ($49.36 million) 75.85

Export RMB 445.40 million ($62.91million) 126.77

Total RMB 794.90 million ($112.27 million) 101.16

Source: Guangji Pharma annual report, 2007
The State Food and Drug Administration (SFDA) Mar. 19 released an update on its investigation into the Chinese-produced heparin used in the Baxter heparin products linked to a number of adverse drug reactions in the United States, stating that it has found evidence of a contaminant.
The suspect contaminant, hypersulfated chondroitin sulfate (HCS), was detected in heparin samples produced by Changzhou SPL Co. Ltd., the Chinese-based supplier of ingredients for the Baxter products. The SFDA results mirrored findings by the U.S. FDA's tests of Baxter's drugs.
However, the SFDA hesitated to confirm if the ingredient can be linked to the serious allergic reactions resulting in deaths among users of the drug in the United States in recent months.
Chondroitin sulfate, used as a dietary supplement, is a natural compound that is abundant in certain animals, but the contaminant found in the heparin was hypersulfated, a chemical alteration. The resulting compound, hypersulfated chondroitin sulfate (HCS), has not been approved by the FDA for use in humans.
"The methods of extracting heparin and chondroitin sulfate from animals are similar," Ba Yanfeng, an analyst specializing in active pharmaceutical ingredients at Healthoo.com, told Interfax. "However, due to the fact that only a small quantity of heparin can be refined from animal' guts, the price of heparin is much higher than chondroitin sulfate in China."
The SFDA said that testing of heparin samples and Chinese government investigation into the product will continue.
So far, the SFDA has not received any reports of similar large-scale adverse reactions to products containing heparin within China, though it has appealed to local food and drug authorities to monitor the products carefully and report suspected adverse reactions immediately.
Changzhou SPL is a Sino-U.S. joint-venture manufacturing the heparin ingredients. The SFDA said that the products met both the company's and the U.S. Pharmacopeia's quality standards, while the company was approved by the U.S FDA as a supplier of the product, through its parent company SPL.
However, Changzhou SPL was registered in China as a chemical manufacturer rather than a drug maker, meaning that it was not registered or supervised by the SFDA. The company's raw heparin was subject only to its own and SPL's quality checks, according to the SFDA.
The event has seriously affected Chinese exports of heparin. Last month, heparin exports were almost down to zero, according to Ba.
Beijing Tiantan Biological Products Ltd. , one of China's top vaccine manufacturers, announced Mar. 20 its sales in 2007 reached RMB 530.5 million ($75.25 million), up 27.29 percent from the previous year.
Tiantan Biological's vaccine sales came to RMB 433.79 million ($61.53 million) last year, accounting for 81.77 percent of total sales for the year.
The company made a net profit of RMB 149.32 million over the year, up 41 percent against the profit it made in 2006.
Despite the overall growth in sales however, the company said its performance was not as good as it had anticipated at the beginning of the year for a number of reasons. Increased competition dampening sales of the company's flagship product, a hepatitis B vaccine, was one of the key issues mentioned.
In addition, production of the company's measles, mumps and rubella (MMR) vaccine was suspended during the year due to "unstable technology". "We are currently working on the technical problems, but it is unknown when the company will resume production of the MMR vaccine," Ci Xiang, a Tiantan Bio investment official, said when contacted by Interfax.
The MMR vaccine is included in the Chinese government's expanded immunization program, sometimes referred to as EPI, which could spell benefits for the company when the vaccine is produced again.
Further adding to Tiantan's woes has been a general shortage of blood plasma in China, which has restricted the company's production of blood products. Tiantan Bio spent over RMB 10 million ($1.42 million) last year establishing or upgrading four blood plasma collection stations to address the problem, though according to Ci, this may not be enough to get production up to optimum levels this year. "The company will still face a shortage of blood plasma in 2008," Ci said.
The company estimated in its report that the increase in competition, production line problems and blood plasma shortage, in combination, caused the company to lose an estimated RMB 33 million ($4.68 million) in potential earnings last year.    
Last year, the company injected RMB 12.6 million ($1.79 million) into the research and development of recombinant human interferon beta 1b, live attenuated poliomyelitis vaccines and a split flu vaccine for children, among others.  
Beijing Wantai Biological Pharmacy Enterprise Co. Ltd. is conducting phase three clinical trials on a first-of-its-kind hepatitis E vaccine, a company official told Interfax Mar. 25.
"The vaccine is expected to be the world's first genetically engineered hepatitis E vaccine, and the third genetically engineered vaccine altogether, after the genetically engineered hepatitis B and HPV vaccines," Hou Bing, a research and development official with the company, said.
In comparison, GSK's hepatitis E vaccine is still in the phase two clinical trial stage. "We expect to launch this product in 2009 or 2010," Hou said.
The company holds patents on a hepatitis E neutralizing epitope, which forms a part of the surface of the hepatitis E virus that allows antibodies to attach themselves. The vaccine is prepared using an Escherichia coli expression system, which allows the company to guarantee higher safety levels.
Hepatitis E is a disease seen in regions of some countries with lower health levels, such as countries in Southeast Asia and Africa as well as in China.
China's Ministry of Health figures showed that reported hepatitis E cases in 2003 increased by 40 percent on 2002's figure. In 2004, China reported 16,444 hepatitis E cases, up 70 percent on 2003. Between 1986 and 1988, a hepatitis E epidemic spread through northwestern China's Xinjiang Uyghur Autonomous Region, infecting 119,280 people and causing 707 deaths.
"The increase in reported infections is mainly due to the development of new hepatitis E test kits," Hou said.
A study by Beijing Medical University, which looked at 1,819 people with hepatitis E in 11 Chinese cities, showed that the mortality rate associated with hepatitis E is 2.5 percent, much higher than the 0.1 percent for hepatitis A and the 0.9 percent for hepatitis B.
By bearing in mind the similar prevalence of hepatitis E and hepatitis A, China's hepatitis E vaccine market could be worth as much as RMB 2 billion ($284.09 million), Hou said.
Founded in 1991, Beijing Wantai is invested by Yangshengtang Group, a pharmaceutical and health care product holding company, and is focused on the R & D, production and commercialization of in-vitro diagnostic products and vaccines. It is the official supplier of HIV blood screening reagents in China.
Hubei HEC Biopharmaceutical Co. Ltd. has been awarded German GMP (Good Manufacturing Practice) certification for three active pharmaceutical ingredients, an official with the company told Interfax Mar. 24.
The three products are the antibiotics erythromycin, erythromycin thiocyanate and azithromycin.
"A group of officials from Germany came to visit our company last summer to inspect our production facilities and talk to management," an official with the company, surnamed Zhu, said. Zhu added that the company is in talks with European clients to begin exporting the APIs in the near future.
HEC Biopharma, with three pharmaceutical subsidiaries producing 15 types of APIs and over 30 types of pharmaceutical dosage formulations, is a subsidiary of privately owned HEC Group Co. Ltd. 
Sales generated by HEC Group's pharmaceutical manufacturing businesses in 2006 came to around RMB 800 million ($112.68 million).
In March 2006, HEC Biopharma won a licensing deal from Roche, one of the leading European pharmaceutical companies, to produce oseltamivir, or Tamiflu, a treatment for bird flu. The deal made HEC Biopharma the third company in the world to be awarded Tamiflu licensing rights by Roche.
Nasdaq-listed Alnylam Pharmaceuticals Inc. announced Mar. 22 that it has granted Shanghai GenePharma Co. Ltd. a non-exclusive worldwide license to manufacture and provide RNA interference (RNAi) technology patented by Alnylam.
Under the terms of the deal, Shanghai GenePharma may produce reagents for research using Alnylam's RNAi technologies.
The announcement contained no transaction details and Shanghai GenePharma officials were unavailable for comment when contacted by Interfax.
RNA interference is a mechanism in which genes are prevented from "turning on", making it an area of significant interest for drug discovery and development.
Alnylam, with headquarters in Cambridge, Massachusetts, is a biopharmaceutical company developing novel therapeutics based on RNAi. This licensing deal represents Alnylam's first business transaction with a Chinese company.
Founded in 2003, Shanghai GenePharma specializes in developing, manufacturing and supplying RNA and small interfering RNA (siRNA) synthesis technologies.
One of the largest manufacturers of traditional Chinese medicines, Beijing Tongrentang Co. Ltd., announced Mar. 25 that 2007 net profit reached RMB 232.89 million ($33.08 million), climbing 48.89 percent against 2006 profits, which stood at RMB 156.42 million ($22.22 million). 
In its financial report, Tongrentang said the growth in profits was due to an overhaul of the company's business operations, marketing strategy and management. In addition, the company said that 6 percent of its products saw their sales more than double in 2007.   
In 2007, the company generated sales revenues of RMB 2.70 billion ($383.52 million), growing 12.20 percent on an annual basis. Earnings per share came to RMB 0.537 ($0.0763) last year, a 49.17 percent jump from the RMB 0.360 ($0.0511) the company recorded in 2006.  
Founded in 1669 during China's Qing Dynasty, Tongrentang is mainly engaged in the research and development, manufacture and sales of TCMs. It has five production bases around the country making more than 1000 kinds of products in 26 categories. The company was the largest TCM exporter last year in China, according to China Customs.
The table below outlines the company's sales revenues last year. 
Beijing Tongrentang sales revenues by region, 2007 
Region Revenues (RMB) Growth y-o-y (%)

Domestic 2.50 billion ($355.11 million) 11.99

Export 205.36 million ($29.17 million) 14.77

Source: Beijing Tongrentang annual report, 2007 
Tongjitang Chinese Medicine Co., China's first traditional Chinese medicine manufacturer to list on the New York Stock Exchange, announced Mar. 21 that it has signed a definitive purchase agreement to acquire Qinghai Pulante Pharmaceutical Co. Ltd. 
Tongjitang will make an initial payment of RMB 25.5 billion ($3.64 billion), while subsequent payments, based on Pulante Pharma's financial and operational performances, will be paid over the next three years.
"Tongjitang's acquisition of Pulante Pharma is mainly because of their Chongcao Qingfei Capsules," Zhang Xuyang, the company's investor relations official, told Interfax.
Chongcao Qingfei Capsules is an OTC (over-the-counter) product that alleviates the symptoms of respiratory diseases, such as chronic obstructive pulmonary disease (COPD).
"Last year, Pulante Pharma generated total revenues of around RMB 40 million ($5.71 million), of which the great majority came from sales of Chongcao Qingfei Capsules," she said.
China is the world's major tobacco consumer, with around 300 million smokers. "COPD is common among smokers, and the market potential for this drug is large," Zhang said.
"Tongjitang is looking at acquiring companies with products that exhibit good market performance and great potential for growth," Zhang said, adding that the company is also seeking other measures to boost development.
Tongjitang share prices were around 20 percent lower than other share prices when the company launched its initial public offering in March last year. The company's shares are further struggling due to U.S. stock markets slumping on fears of an economic recession.
Tongjitang hopes that the deal will further diversify the company's product portfolio, particularly in the OTC field. The company's flagship product, Xianling Gubao Capsules, is the one of the leading TCMs for the treatment of osteoporosis by sales.
Pulante Pharma is a privately owned manufacturer of herb-derived pharmaceuticals with four products on market, including Jinhuang Lidan Capsules, an acute and chronic cholecystitis treatment, and Shiwei Ruxiang Capsule, which is used in the treatment of rheumatoid arthritis.
Interfax Commentary: The news that Tongjitang is acquiring Pulante Pharma will come as no surprise to investors familiar with the market, as a huge proportion of companies, spurred by the slump of U.S. stock markets, have been casting around for options that will help them shore up future financial statements.
However, in Tongjitang's case, Pulante Pharma is quite small in terms of its current product portfolio. Without a concerted effort, it is unlikely to see greatly boosted sales in the short term, meaning that the acquisition will be of little benefit to Tongjitang in the immediate future.
Jinling Pharmaceutical Co. Ltd., a major producer of traditional Chinese medicines, Mar. 25 reported a 46.2 percent jump in net profit last year to hit RMB 307 million ($43.24 million), boosted by significant investment returns.