Research Of China's Pharmaceutical Market: A Supply Chain Perspective

As a special commodity, in process of convection, medicine bears characters of public product, unentirly replaceable, twoness of effect, unbalance of consumption information, poor elastic in price to consumer andéclat the same time, main body of medicine trade bears the following characters:(1)medicine concerned service is highly technical and specialized. It is dominated by doctors and drug store practitioners;(2)High professional ethics are required for concerning practitioners;(3)Psychology of consumers is prevailing poor. Fantod, anxious, depress and even panic are found ;( 4 ) Targets of government organizations are multiply. Sometimes, those targets can contradict each other. (5)Medical service bears a character of continuity and rigor(6)It is much retrained by concerning norms and legal regulations.As our country is now still in process of economy system converting and reformation of medical system, there is far cry with foreign countries in medical treatment and medicine market, medicine management system and government regulation and control. While research on the problem is almost blank and there is no foreign experience to refer with. Therefore,in this thesis, I have chosen the research on developing strategy of the country's medicine supply, expecting to detect the main problems of Chinese medicine convection chains by detail investigation on Chinese medical treatment and medicine market,to perceive the foreground of Chinese medicine supply chains by making corresponding strategy,further the reform of medical system , boost the operation efficiency of medicine convection chain and finally strengthen the competing ability of Chinese pharmaceutical industry.Ever from beginning , government run hospitals have been over proportioned in our medical system, in addition that policies of capital and technology input, review and approval of medical organization, medical insurance, medical treatment at public expense, tax levy and other aspects are in favor of government run hospitals, especially metropolitan large hospitals, resulting in long term monopoly of the medical treatment and sanitation business by those government run hospitals. Income of our hospital consists of government subsidy, charge of medical treatment service and pharmaceutical markup. Because of insufficiency of government subsidy budget, hospital running has to be supported by its own business earning as equalize. When income of medical treatment service can not realize its own work merit, hospital can only survive and develop itself from the profit of medicine markup. In addition to the long last medicine consumption habit of the civilian, which depends on the instruction of doctor and the limited self development and low level competition of the medicine sale terminal, namely drug store, hospitals have been dominating the medical treatment and medicine market with its monopoly advantage. By their domination, they have managed to carry out the channel and price restraint to obstruct the development of their rivals. They hold the capital of manufacture and dealer forcibly, grabbing high quota of filthy lucre such as so called sponsor, discount and rebate. They also take advantage of their knowledge of medicine to give patient over dosed prescription, medicine abuse and high cost medicine. Due to defects and twisted phenomenon of government systems of medicine price fixing, new medicine approval , medicine bidding invitation and basic pharmaceutical rules and regulations, false image of high price of medicine has come into being. Therefore, pharmaceutical enterprises are not active in research on new medicine, many so-called new medicines are only original ones what have just changed their appearance or disguised with a new name. Further more, medicine bidding system has not been executed well, resulting in flooding of shoddy and fake medicine. In additional, management concept of our government is comparative backward, its managing function is not fully converted and brought into full play, managing system is not perfect, proper supervision and restraint is not strict, all these factors finally lead to the mess of our medical treatment and medicine market and the freak of medicine convection.As per my opinion, so many above stated problems of our pharmaceutical trade stem from the unreasonable structure of our medicine convection or we can see stem from the twisted supply chain. Irrationality of the medicine convection can be mainly classified as the following:(1)Trade cost during the process of medicine convection is over high, triggering off the high price of medicine at terminal.(2)Over intervene from government has resulted in the defunction of medicine convection, making the pharmaceutical enterprise tilting to drive up medicine fix price, as higher priced medicine can be better sold out;(3)Pharmaceutical producing enterprises are not willing to invest in research on new medicine, on contrary, they concentrate on medicine sale and changing appearance of old medicine to fake;(4)Compare with the convection of other trade, profit share mechanism for pharmaceutical enterprise is short of on medicine convection chain, resulting in unbalance of profit allot , therefore, leading to a poor coordination among the participators and finally resulting in poor management of the medicine convection;(5)compare with the other markets, due to historical current system reasons, at the terminal of medical treatment and medicine market, co-existence of multi trade forms , in general, co-existence of monopoly and free competition is found;(6)Due to consumption habit of the medicine consumer and information asymmetry on supplier side and consumer side, along with influence of medical indemnification system and system of medical treatment at public expense, civilians are passive , blind in medicine consumption. Why abnormality is found in our medicine supply chain? In view of me, it has stemmed from the long term planned economy, current management system of government. Of course , it also has a lot to do with the poor development of our pharmaceutical trade.The thesis discourses upon the topic not only from the management angle of the supply chain, but from all aspects of the management, especially from the angle of system and strategy analysis, focusing on the development and renewal of original medicine convection chain. The thesis has carried out large quantity of data investigation and case analysis.It has managed to analyze the reason of deformation of the medicine supply chain by combining with the theories of game,monopoly theory ,government norm and syestem , syetem logic . It has formed the strategic layout for medicine supply chain by means of coordinates of eliminate-reduce-increase-create and by comparing the new value curve with the old one. Basing on it, it has put forward corresponding suggestions for developing and managing policies of the supply chain. The thesis discourses upon the Chinese medicine supply chain from the following aspects:Firstly,it carried out the analysis on importance and necessity of the medicine supply chain. It has analyzed character of the government control on the medical treatment and medicine market, demonstrated the theoretical and practical significance of the research on the medicine supply chain.Secondly,it has carried out a systematical and further analysis on the current status and problems of Chinese medical treatment and medicine market. It has demonstrated the detail behaviors of"market defunctions"and"government defunctions"existed in the medical treatment and medicine market.Thirdly,it has carried out the analysis on the current problems of the medical treatment and medicine market. It has pointed out that real reason of the mess and abnormality existed in the medical market is the deformation of the medical supply chain. It has analyzed the problems of the medicine supply chain from the aspects of material convection ,information exchange and capital flow.Fourthly, it has carried out the strategic analysis on development of Chinese medicine supply chain. It also has given comments on several important systems on Chinese medical treatment and medicine market and foreseen the future development of the medicine supply chain.Finally, the thesis has put forward suggestion on developing and management policies for Chinese medicine supply chain. By analysis on the strategy of the medicine supply chain, it has given suggestions for future policy, covering government concept, medicine system, system design and industry development so that to decrease monopoly, reduce asymmetry of information, enhance the industrial competition ability, increase welfare of consumer and promote a healthy development of pharmaceutical enterprises and medical treatment and medicine market.Following innovations can be seen in this thesis:1. It has given an overall, systematic analysis on the current situation, problems, operation pattern of government, pharmaceutical enterprise, wholesaler, hospital and consumer on the medicine chain with a lot of case investigation and analysis. While in the past, research on medical treatment and medicine market only focused on some tache or some problem, therefore it was impossible to detect and analyze the problem integrally, it was, no doubt, impossible to grasp the defect of our medical system and solve the problem.2. Based on analysis on Chinese medical treatment and medicine market, it has drawn the conclusion that the mess and abnormal of the medical treatment and medicine market stemmed from the deformation of medicine supply chain. It analyses the existing problems of the medical treatment and medicine market by studying the material convection, capital flow and information exchange, while in the past, concerning research on the medicine supply chain has never focused on them.3. By means of game theory, monopoly theory ,government norm and syestem , syetem logic , it analyses the reasons of the deformation of the medicine supply chain and has reasoned out the inevitability of the deformation.4. It has formed the strategic layout for medicine supply chain by means of coordinates of eliminate-reduce-increase-create and by comparing the new value curve with the old one eliminate-reduce-increase-create and by comparing the new value curve with the old one and it has foreseen the future development of Chinese medicine supply chain.