due partly to its product line, which includes a range of high-volume sellers: medicines to treat gastrointestinal problems, fungi, allergies and pain, as well as psychosis and epilepsy. but it was dr. paul janssen's decision to enter china early, to invest inland, and to keep investment plans moving along in the wake of 1989 tiananmen square event that have helped build its good relations with the chinese government. paul appermont and joos horsten lead the xian-janssen pharmaceutical project. degussa is shifting a large proportion of its pharmaceutical chemicals production from europe to china in order to take advantage of low-cost manufacturing and improved production efficiencies in the country. at the same time, the company will restructure some of its large production facilities, the vast majority of them in germany, which could result in the transfer of the manufacture of other products to china. rhodia is improving its competitive position in analgesics by reinforcing its more cost-effective manufacturing operations. the company is making a major investment in its wuxi, china, paracetamol (acetaminophen or apap) production facility and consolidating its north american and european operations. rhodia shuttered its luling, la., paracetamol operations in 2004 and consolidated production in roussillon, france, and wuxi, china. following these changes, paracetamol production capacity will be adjusted to match current levels. japanese companies: sankyo: having previously generated revenues from exports to local agencies allied with its own marketing, sankyo completed a plant for manufacturing its drugs in october 2003, and plans to expand its own marketing. it expects to double the number of marketing representatives (mrs) to 130 in 2004, and increase sales in china from ¥3.0 billion currently (company estimate for 2003) to ¥5.0 billion within a few years. sankyo already markets hyperlipemic mevalotin, anti-inflammatory loxonin, and antibiotic banan in china, and plans to market hypertensive olmesartan (currently under development) there in future. takeda: the company basically does its own marketing (sales value estimated to be ¥1–2 billion). it also has a manufacturing plant. in 2004 takeda planned to launch diabetes drug actos in china, and then it will be marketing all four global products (actos, anti-ulcer takepron, cancer drug leuplin, and hypertensive blopress). however, the us has priority in its overseas strategy, followed by europe and then asia. yamanouchi: the firm moved into china in 1994 and does most of its own marketing, covering anti-ulcer gaster and urinary impediment treatment harnal among its leading products. sales are gradually expanding, and operating profitability was achieved in 2001. accumulated losses have been wiped out during f2003. the company owns a manufacturing plant. in 2004, there are plans to launch dolner for peripheral circulation, anti-emetic nazea od, and hypertensive hypoca. yamanouchi does not have plans to increase its 110 mrs significantly at this point. daiichi: shifted to in-house marketing after establishing a sales subsidiary in 1998, mainly selling synthetic antibacterials cravit (oral and injectable) and tarivid. it originally planned to launch neurotransmission enhancer translon too, but after development was halted in japan, development in china also ended. in 1998, it forecast sales of ¥12.0 billion in 2002, but only actually recorded ¥1.6 billion. sales are behind plan chiefly due to the suspension of translon's development and the proliferation of generic and copycat versions of cravit. on the earnings side, daiichi expects to move into operating profit in f2004 as cravit sales expand. it does not currently plan to expand its force of mrs much from 140 to 150, but expects to do so when urinary impediment treatment kmd-3213 (phase 1 under preparation) is launched, which will be 2007 at the earliest. tanabe: markets in-house products such as hypertensive herbesser and tanatril. tanabe does not disclose medium-term targets, but plans to double the number of mrs to 200 by the end of 2005. no products are currently in clinical trials, but there are a number of development candidates. mitsubishi tanabe pharma: the china subsidiary kuangchou green cross has been extending transfusion business (manufacturing, sales) since the days of the former green cross, but both sales and profits have been flat for the past several years. the firm has already sold off its transfusion business in japan to otsuka pharmaceutical as part of its restructuring, and the strategic importance of this is diminishing. anti-coagulant novastan, which was approved and launched in china in december 2002, is being sold not via kuangchou green cross but by a local agent. astellas: immunosuppressant prograf is being marketed in china by an 80%-owned subsidiary an application has been filed to sell a second product, atopic dermatitis treatment protopic. it has a relatively large number of mrs at 30–40 (the subsidiary has 60 employees); by comparison, prograf has 40 mrs in the us. china business is less of a priority for astellas than the us or europe, but sees its potential as significant due to the large number of organ transplants. in 2000, there were 5,501 kidney transplants performed in china, second only to the number in the us (13,372). sales of immunosuppressant drugs are relatively high. the top 30 drugs by sales in china (hospital market base) included two such drugs: novartis' neoral at number 22 ($16.1 million), and roche's cellcept at 23 ($15.8 million). chugai: china is not positioned as a priority market for chugai, which has focused on europe since coming under the roche group. exports of white blood cell production stimulant neutrogin account for most of its business in china, with marketing consigned to agents. kirin's gran, another gcsf drug, is marketed in china by kirin itself and recorded 2002 sales of $11.1 million, ranking it 45th in the hospital market. eisai: the firm expanded its own manufacturing and marketing operations into china and asia earlier than in the european and us markets. its sales and profits in f2002 and own projections for f2003 place eisai as number one among japanese firms in china. eisai was the first manufacturer among the us, european and japanese pharmaceutical firms to manufacture in china via a 100% owned subsidiary from the very beginning (founded in 1994). the sales target for 2006 is an ambitious ¥20 billion. by 2006, eisai plans to increase the number of mrs from 150 to 250, and extend its coverage from 1,000 hospitals in 53 cities to 3,000 hospitals in 100 cities. it already sells two global products, anti-ulcer drug pariet and alzheimer's treatment aricept, and plans to add osteoporosis drug glakay in 2006. kyowa hakko: having previously only exported cancer drugs (a few hundred million yen's worth), kyowa hakko plans to get approval and then start marketing itself thehypertensive coniel at the end of 2004. ant-allergy allelock should also go on sale in 2007, with peak sales for the two combined projected by the firm at over ¥2 billion. taisho: the company makes and sells health drinks (tonics) in china, but has no specific plans for prescription drugs. the rights to antibiotic clarith/biaxin outside japan are licensed to abbott. terumo: unlike the drug makers, terumo is using china as a manufacturing base (almost all of its 1,362 employees there are in manufacturing). its manufacturing subsidiary when set up in 1995 specialized in making products for the japanese market, but more recently this has been producing and shipping products for the us and europe as well. terumo is still in the process of exploring china as a market, however. for more than 20 years, it has sold products using agents in china via its hong kong subsidiary, but f2002 sales amounted to only ¥1.3 billion (low-margin products are not handled, so there are profits). it plans to consider the possibility of in-house marketing, going forward. foreign companies doing r&d in china after china's entry into the wto, many leading pharmaceutical companies are transferring their research and development centers to china. for instance, roche of switzerland opened its r&d center in shanghai recently, gsk has established its otc research and development center in tianjin, china, and pfizer and janssen pharmaceutica (johnson & johnson) will carry out similar plans in the near future. astrazeneca, bayer, eli lilly and company, and hoffman-la roche, have also set up r&d or clinical trial centers in china. a poll on 33 foreign pharmaceutical enterprises in china shows that seven out of the 33 companies have r&d centers in china, accounting for 22% of the surveyed. the remaining 26 pharmaceutical enterprises have no r&d centers in china, accounting for 78% of the surveyed. all the r&d centers were founded after 1999, mainly in 2000 and 2001. in january 2004, roche of switzerland opened its research and development center, the fifth r&d center of the pharmaceutical giant, and the first to be established in china. roche planned to hire 40 to 50 scientists in the first year and focus their research on pharmaceutical chemistry study. the center aims to step into traditional chinese medicine research. novo nordisk has a $10 million research-and-development center at the shangdi high-technology park in beijing. lonza (basel, switzerland, www.lonza.com) has opened a facility in guangzhou, china; discovery partners international (san diego, ca, www.dpi, com) has affiliates in china. chiral quest has a research and development facility at a biotechnology r&d park at jiashan, china near shanghai. affymetrix, inc. and capitalbio corporation, a leading life science company based in beijing, china formed a strategic relationship to jointly develop and co-market a proprietary, advanced genechip. foreign companies doing drug testing or clinical trials in china: siniwest holdings; headquarters: san diego; product tested in china: drugs to treat breast cancer and peptic ulcers; current status: did preliminary studies in china; plans u.s. research trial. cancer therapeutics; headquarters: los angeles; product tested in china: treatment involving antibodies that deliver radiation to kill cancer cells; current status: expects approval in china this summer; approval in u.s. still three to four years away. ferx; headquarters: san diego; product tested in china: drug to treat liver cancer; current status: in research trials in both u.s. and china. frontage laboratories; headquarters: pennsylvania; products tested in china: helping domestic firms to conduct ind enabling studies for new cns, cancer and cardiovascular drugs with glp operations in shanghai, gmp operations in beijing, and clinical operations in beijing and zhengzhou (currently established 150 research beds in two centers); current status: in drug development experiments, preclinical and clinical trials in both us and china. governmental policies china's pharmaceutical industry has been a major industry that was completely directed by the state and subject to central planning, upon which transition-era reforms since the 1980s to this day have had a major impact. the pharmaceutical industry has been shaken up following the implementation of several government-initiated structural reforms. the main reforms included: 1. requiring all pharmaceutical manufacturers to meet gmp standards by 2004, 2. diminishing drug sales through hospitals, 3. bidding publicly for drug purchase, 4. implementing a national healthcare insurance system, and 5. strengthening intellectual property protection and sfda supervision. the overall goal has been to improve manufacturing and distribution efficiencies, strengthen drug safety supervision, and separate hospitals from the drug retailing business. regulation with the increasing growth of the chinese pharmaceutical market, the government realised the importance of supervision of pharmaceutical market. they put forward several regulations and reform measures over the past couple of years, especially in the recent period of healthcare reform. the most influential issues for foreign companies are the decree of administration method of import pharmaceuticals recently promulgated by the state drug administration, and the launch of a new version of registration certificate for import pharmaceuticals. despite these advances china is still the leading manufacturer of counterfeit drugs, which claim the lives of people worldwide every year. in june 2009, nigeria seized a large consignment of fake anti-malarial drugs with the label of 'made in india' but found that the medicines were in fact produced in china and were imported into the african countries. the authorities maintained that the incident was not isolated, indicating that more fakes were circulating. regulatory agencies state food and drug administration: as part of the government restructuring announced in march 1998, the ministry of health's department of drug administration merged with the state pharmaceutical administration of china (spac) to become the state drug administration (sda). as a result, sda oversees all drug manufacturing, trade, and registration. in 2003, the sda was restructured to become the state food and drug administration. other former functions of