First China Pharmaceutical Group Inc (fka FCPG)

[novicetrader1]

Was looking at China and its distribution industry, this was taken from a Deloitte research link. Thought it interesting considering recent articles from Gong and path Kunming Xin Yuan Tang is pursuing.

2.4 China’s drug distribution industry continues to see consolidation
Pharmaceutical distribution in China is highly fragmented, and often criticised for its inefficiency and lack
of transparency. To illustrate the fragmentation by way of comparison, China's top three distributors—
Sinopharm Group, Shanghai Pharmaceutical, and Guangdong Jiuzhoutong Pharmaceutical—had in
combination less than 20 percent of overall market share in 2009; while in the U.S., the top three
pharmaceutical commerce companies together held a 96 percent market share.
Concentration has been slightly improved. Large companies are gaining more market share through
acquisition, with a view to improving operational capabilities and cost effectiveness. For example,
Sinopharm completed 24 acquisition-related transactions in 2010, including three stake-raising
investments, which together brought the company a nearly RMB4.7 billion increase in sales.10 In January
2011 alone, Sinopharm completed another 12 acquisitions.
The sector will see continuous consolidation in 2011. This is part of the central government’s 12th Five-Year
Plan to strengthen the national drug distribution industry by actively supporting acquisitions, mergers, and
reorganisations. The scheme includes the establishment of one or two leading national drug distribution
companies, each with annual sales of over RMB100 billion (US$15.1 billion), and the creation of 20 regional
drug distribution companies, each with sales of over RMB10 billion (US$1.5 billion).11
However, mere consolidation can only improve the concentration rather than the efficiency and
effectiveness of the distribution system. Without the thorough reform of public hospitals—who
still prescribe and sell more than 70 percent of drugs, although their role in drug procurement has
diminished due to the hospital tendering process and introduction of the EDL—the result of the
consolidation might not mean meaningful change.


Bold section sounds like First China (Xin Yuan Tang Pharmaceutical and its new facility). Improving efficiency and effectiveness through logitics. Just my thoughts.

Link below

http://www2.deloitte.com/content/dam/Deloitte/ch/Documents/life-sciences-health-care/ch_Studie_Pharmaceutical_China_05052014.pdf