Overview Of Pharmaceutical Industry in 2023

In recent days, the China Association for Pharmaceutical Industry Management (CAPIM) released a report on the state of the pharmaceutical industry in 2023. This year marks the beginning of fully implementing the spirit of the 20th National Congress of the Communist Party of China and a year of economic recovery and development three years after the COVID-19 pandemic. While the pharmaceutical industry has steadily progressed towards high-quality development by achieving new breakthroughs in terms of technological innovation, internationalization, and advanced manufacturing, the industry's main economic indicators have declined year-on-year due to a reduction in sales of products related to epidemic prevention and control. Looking ahead to 2024, the pharmaceutical industry still faces many challenges and needs to overcome difficulties to return to a stable growth trajectory.
In 2023, the value added by the pharmaceutical industry above a certain scale was about RMB 1.3 trillion, a year-on-year decrease of 5.2% in constant prices. Businesses above the designated scale achieved operating income of RMB 2.95 trillion, a YoY decrease of 4%, and a profit of RMB 412.72 billion, a YoY decrease of 16.2%. For the first time in many years, all three indicators have declined, and were respectively 9.8%, 5.1%, and 13.9% lower than the overall industrial growth rate of the country. The trends of all three indicators were "W" shaped throughout the year, with a decline in the first quarter, a narrowing of the decline in the second quarter, a bottoming out in the third quarter, and a slight rebound in the fourth quarter.
The trends in various sub-industries have shown differentiation. The traditional Chinese medicine decoction pieces and Chinese patented medicine sub-industries' operating income and profits maintain positive growth, especially with Chinese medicine decoction pieces, whose operating income and profit growth rates reached double digits. The sub-industries of excipients and packaging materials and pharmaceutical equipment achieved positive growth in operating income, but negative growth in profits. The sub-industries of chemical raw materials, chemical preparations, biological products, sanitary materials and medical supplies, and medical equipment and devices saw negative growth in operating income and profits.
To cope with challenges and return to a stable growth trajectory, the pharmaceutical industry should adhere to innovation-driven development, accelerate industrial restructuring, eliminate low-level duplication, and enhance overall competitiveness. Improved market-oriented reforms, continued expansion of international markets, and an increase in R&D investment of pharmaceutical companies should be encouraged to enhance the industry's innovation capability, promote technological progress, and strengthen the industry's core competitiveness and sustainability.