First quarter data release of Pharmaceutical Foreign Trade: looking for opportunities under severe situation

Source: pharmaceutical economic report 2016-05-11 in the first quarter of 2016, China's total import and export of pharmaceutical and health care products reached US $23.667 billion, down 0.58% year on year Among them, the export value was US $13.13 billion, down 3.87% year on year; the import value was US $10.536 billion, up 3.85% year on year Although the performance of import and export volume and price is "volume price deviation", the situation is quite different: export is volume increase and price decrease, while import is price increase and quantity decrease This once again reflects the main characteristics of China's pharmaceutical market - low-end independent products, high-end products rely on imports In addition, the negative growth of export at the beginning of the year and the recovery of import growth after the first negative growth in January are all a shadow However, the author believes that there are still many opportunities for Pharmaceutical Foreign Trade in 2016 In the first quarter of the previous data, the export volume of China's medicine and health care products increased negatively, with the volume and price rising less than that in the first quarter of 2016 The total export volume of China's medicine and health care products reached US $13.13 billion, down 3.87% year on year The export volume increased by 4.42% and the average export price decreased by 7.94% The export continued to decline, and the price is still mainly due to years of double-digit growth The export of Chinese medicine and health care products fluctuated with the pace of global economic growth slowdown: the growth rate of export fell from 2012 to single digit, basically stable at about 7%, and fell to 2.7% again in 2015 In the first quarter of 2016, the figures were: in January, the export growth was negative by 6.17%; in February, the decline expanded to 11.1%; in March, the decline narrowed to 3.87% There are many reasons for the decline of China's export growth of medical and health care products year by year, including the slowdown of demand and the decline of purchasing power caused by the downturn of the target market economy, as well as the unreasonable structure of China's medical products, the emphasis on the low-end of the industrial chain, and the lack of core competitiveness However, the most important factor is that the average export price continues to decline, which gradually drives the export growth down The reasons are as follows: first, the oil price of basic raw material products keeps going down, and the cost of raw materials is going down; two, the currency of India and other competitors has depreciated significantly, which has lowered the market price; three, the major markets in Europe, India and Brazil have caused excessive price competition due to the economic downturn and the decline of purchasing power due to the substantial devaluation of currency; Fourth, China's excess capacity of bulk raw materials has created a price competition between domestic and foreign markets In the first quarter of 2016, the export situation of large-scale commodities was significantly divided Among the raw materials of Western medicine, the export volume and price of lincomycin, sulfanilamide, chloramphenicol, respiratory system medicine and digestive system medicine increased by 54.52%, 43.77%, 43.14%, 35.19% and 18.64% respectively; the export volume and price of cephalosporins and health rehabilitation products also increased by 18.32% and 4.43% respectively At the same time, there are not a few categories with the same volume and price The export of narcotic drugs, penicillin and central nervous system drugs in the raw materials of Western medicine decreased by 24.39%, 19.4% and 5.74% respectively The export of hormone preparations, other biochemical drugs, hospital diagnosis and treatment equipment, oral equipment and materials also decreased by 58.69%, 10.61%, 5.44% and 3.28% respectively Other categories show the phenomenon of quantity price deviation Most of the traditional Chinese medicine products show the trend of quantity price decrease and increase due to the increase of the price of traditional Chinese medicine, while the western medicine and instrument products show the trend of quantity increase and price decrease due to the fierce competition The market is generally sluggish, the first quarter of the U.S market decline, China's major export markets of medical insurance products changed greatly In the past, the growth rate of fast-growing markets has declined significantly, such as ASEAN, Latin America and Oceania, which have all declined by more than 10% year-on-year, and that of African markets by more than 8% The U.S market has been developing well, but for the first time in the first quarter, export growth fell by 7.02% year-on-year In contrast, the European market, which has been in a downturn, was stable, up 1.37% From the comparison of volume and price, most markets showed a trend of increasing export volume and decreasing average price, such as ASEAN market volume increased by 21.15%, Europe, Africa and Oceania market export volume increased by more than 9% This reflects that the decline of export growth is mainly due to the fierce price competition, and China's export market share has not decreased In terms of specific country markets, the volume and price of the U.S market fell unexpectedly Although one quarter's data does not represent the trend of the whole year, the decline of the U.S market inevitably has a negative impact on the judgment of China's export growth of medical insurance products in 2016 The number of India's market increased rapidly, reaching 40.67%, but the price decreased by 32.8% year on year Moreover, India has issued a notice on April 27, 2016, which filed an anti-dumping investigation against amoxicillin, a raw water from China The situation is not optimistic The market volume and price of Japan and the United Kingdom rose at the same time, and the export volume increased by 4.25% and 5.97% respectively, which shows that the markets of major countries are also divided, and there are great variables In the first quarter of 2016, their respective share in the export volume was 53.14%, 35.78% and 11.05%, while their share in the export volume was 67.06%, 26.78% and 5.97%, respectively These proportions are roughly the same as those at the end of 2015, with the performance of private enterprises increasing slightly and the performance of foreign-funded enterprises decreasing slightly, with the proportion fluctuating less than 1% However, the number of export enterprises showed a slight increase, with the total number of export enterprises slightly increased by 1.8% year on year The number of Chinese owned and foreign-funded enterprises has slightly decreased, the number of private enterprises has slightly increased, and the export management team has steadily increased In January, the import volume experienced a temporary negative growth, and the price increase decreased by the first quarter of 2016 The total import volume of China's medical and health products reached US $10.536 billion, up 3.85% year on year Among them, the import volume decreased by 16.85% year on year, and the average import price increased by 24.89% year on year In the first quarter of 2016, the import volume of Chinese medical insurance products dropped sharply, the average price rose sharply, and the deviation between volume and price was obvious The import volume of Western medicine products accounted for 57.48% of the total import volume decreased by 33.11%, and the average price increased by 47.15%; the import volume of medical equipment products accounted for 40.31% decreased by 6.32%, and the average price increased by 21.62% The quantity and price performance of imports are contrary to that of exports, reflecting the main characteristics of China's medical insurance industry and China's pharmaceutical market, that is, the low-end of independent products, and the high-end products in the market rely on imports In recent years, China's import growth of medical insurance products has been higher than the export growth However, with the fluctuation of the global economy, the growth rate of import also dropped from 16.24% in 2012 to 7.32% in 2015 In January 2016, negative growth was 6.69% for the first time, but positive growth was restored in February, with an increase of 2.19% and 3.85% in March, which restored the trend of growth Large category structure optimization, high-end products are eye-catching From the perspective of large category imports, the structure of imported products was further optimized in the first quarter of 2016, and the large category varieties with strong domestic substitution capacity generally showed the trend of "declining import quantity and rising average price" high-end products For example, the import volume of medical dressings decreased by 55.73%, and the average price increased by 126%; the import volume of raw materials of Western medicine, cephalosporins and penicillins also decreased by 35.05%, 31.99% and 27.55% year on year, while the import price increased by 27.81%, 33.32% and 44.53% respectively Thanks to the growth of domestic market demand, the import of high-end pharmaceutical products increased significantly The number of imported diagnostic and treatment equipment, biochemical drugs and vitamin preparations increased by 64.67%, 28.49% and 35.57% respectively The overall import volume and price of Western patent medicine increased by 4.3% The traditional market is stable, and emerging markets are booming Europe, Asia and North America are the main sources of China's medical insurance imports, accounting for 94% of China's total medical insurance imports In the first quarter of 2016, China's imports from the three major sources of import developed steadily, with import growth of 3.96%, 2.09% and 0.42% respectively Among them, the volume of European and Asian markets declined, while the volume of North American market increased and the price fell The deviation between volume and price was generally large: the volume of imports from Europe decreased by 28.85%, and the average price increased by 46.1%; the volume of Asia decreased by 22.12%, and the average price increased by 31.09%; the volume of North America increased by 19.08%, and the average price decreased by 15.67% Thanks to the implementation of market diversification strategy, China's medical insurance products import sources are increasingly rich In the first quarter of 2016, China's imports from the African market increased by 348% year-on-year, and imports from Oceania increased by 26.95% year-on-year China's medical insurance products have more choices In general, the pattern of enterprises importing medical insurance products in China is basically stable In the first quarter of 2016, the three foreign-funded enterprises played a more and more important role in the import of Chinese medical insurance products: the proportion of import volume increased by 7.11% to 69.58% compared with the end of 2015; the proportion of import volume increased by 2.94% to 60.55% compared with the end of 2015 For state-owned enterprises, the proportion of imports decreased by 4.64%, only 4.73%; the proportion of imports decreased by 4.02%, to 14.16% Private enterprises remained stable Although the proportion of imports decreased by 2.49%, the proportion of imports increased by 1.01%, 25.66% and 25.16% respectively The next annual trend line according to the current domestic and foreign economic environment and the actual foreign trade operation data in the first quarter of 2016, the grim situation of China's foreign trade in 2016 has become the consensus of most people, as well as China's pharmaceutical foreign trade The author's judgment on the prospect of China's Pharmaceutical Foreign Trade in 2016 is that the situation is grim and opportunities still exist In the face of multiple pressures, the negative growth of export growth at the beginning of the year may shake people's confidence in the rigid demand for pharmaceutical products In addition, the main market economy continues to be depressed, the currency depreciates substantially, and the purchasing power declines, so the competition will be more intense To make matters worse, exports to the United States fell for the first time, adding to the problem At the same time, the export price continues to be depressed, and the profits of enterprises are small and unsustainable The comprehensive costs of domestic labor, environmental protection and GMP compliance continue to rise, some of which have surpassed the competitors, and the traditional advantages of Chinese medical insurance products are gradually lost The most fundamental problem is: the situation of overcapacity in China's pharmaceutical industry is hard to change, with serious internal consumption Many products fight inside and outside, which greatly reduces the actual effect of the government's support for foreign trade and export policies At the beginning of the year, China Medical Insurance chamber of Commerce conducted a questionnaire survey on the pharmaceutical export situation in 2016 The survey results show that 66% of the enterprises think the situation is grim, 26% think it is almost the same as 2015; 6% say it will be slightly better than 2015; only 3% think it will be significantly better than 2015 It can be seen that most enterprises tend to be pessimistic or cautious about the export situation in 2016 The import situation of China's medical insurance products is slightly better, but at the beginning of the year, it also experienced a negative growth process of import growth At present, although it has turned into a positive growth, the growth rate has recovered slowly, and the pressure is still great Although the situation of the five positive factors is very grim, we should also see that there are some positive factors in China's Pharmaceutical Foreign Trade in 2016, and the opportunities for stable and sustainable development still exist The advantages of traditional industries remain, and the acceleration of industrial restructuring and division of labor in the international pharmaceutical industry chain is not formed in one day, nor will it be completely changed in the short term China's APIs and low-end medical devices