The overall profitability of the Jiangsu pharmaceutical industry declined

Since the beginning of this year, the pharmaceutical industry in Jiangsu Province has continued its growth trend last year, and the industry's profits have continued to grow. However, the profit growth rate has been “slippery,” and the increase in sales revenue, profits, and taxes has fallen by 11.7, 18.3, and 22.9 percentage points year-on-year respectively. According to relevant sources from the Provincial Economic and Trade Commission, the rising prices of raw materials in the upper reaches, the continued decline in the prices of medicines, and the intensified competition in the industry are the main reasons for the decline in profits of the pharmaceutical industry in our province.

According to reports, in the first half of the year, the province’s pharmaceutical industry achieved a 17.1% year-on-year increase in the current value-added output value, but the growth rate dropped by 10.8% compared with the same period of last year. The value of completed export delivery was up 23.1% year-on-year, a year-on-year decrease of 6.7 percentage points.

The high prices of energy and raw materials, as well as the rising costs of transportation, are the main factors that make pharmaceutical companies' sales revenue “not catch up” with the growth of sales costs. According to reports, in the first half of the year, the cost of sales of pharmaceutical industry enterprises in our province increased by 21.7% year-on-year, and the cost increase was higher than the increase of sales revenue by 3.3%. Because of the shortage of energy resources, the increase in raw material prices is currently the main bottleneck for economic development. It cannot be effectively resolved in the short term. Therefore, the overall gross profit level of the pharmaceutical industry continues to decline, and profitability is reduced.

The continued decline in the price of the product has even made pharmaceutical companies worse. In October 2005, the National Development and Reform Commission reduced the price of drugs for the 17th time. 22 drugs fell by an average of 40%, with the largest drop of 63%. In June of this year, the National Development and Reform Commission reduced the price of the 18th drug, and this time the main resistance was reduced by 67. The retail price of oncology drugs involved a total of more than 300 dosage forms, with an average price reduction of 23% and a maximum reduction of 57%. The price level of drugs has been on a downward trend, and overcapacity has led to price competition becoming “white-hot”, and the high growth rate of benefits for many years in the pharmaceutical industry may “beautiful”.

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