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Chinese Pharmaceutical Industry - Research Paper Example

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The Chinese government aims to boost the Pharmaceutical Company by providing them with numerous benefits. The articles of different Provinces of China provide diverse benefits for this purpose, although they are on similar lines.
'High-Technology Innovative Enterprises' (HTIE) is defined differently by the different provincial governments giving them necessary tax benefits…
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Chinese Pharmaceutical Industry
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Download file to see previous pages Theses firms are additionally required to set aside a minimum of 5.5% of the total revenue for R&D expenses. This Shanghai province necessitates a minimum expenditure of 4%, on similar lines to the Fuji Province which necessitates that the minimum R&D expenditure for such firms should be 5%, an increase of 2% from the earlier 3% prior to 1999.
On similar lines, different provinces provide different benefits to the HTIE, with the basic structure remaining the same. These Articles of diverse provinces outline several benefits including tax reductions, discounts on capital purchase, lending support by the government and other operation priorities related to the pharmaceutical HTIE units.
The Shenzhen Article 2.2 gives numerous benefits to HTIE units that have operated for more than a decade. The government promises that the income tax for the first and the second year of operation would be waived off completely, and would be reduced by fifty percent by the time they reached the eighth year of functioning. Article 2.3 states that for products concerning National innovation, twenty-five percent of the total share of the local government tax should be returned by a minimum of fifty percent by the municipal government for three years in a row. Article 3.3 further affirms that financial support as debt would be provided by the government to the tune of twenty percent to the HTIE firms. Article A-4.2 assures a discount between ten-twenty percent on rent and A-13.5 assures HTIE firms to have a priority on exports. Article-A/10 reduces the taxes on R&D expenditure. Although the basic vision and goals of the provinces remain the same, slight differences occur in terms of percentage numbers among the provinces of Shanghai, Fuji, Shangxi and the Zhejiang.
The role of the government in supporting the HTI Enterprises is obvious by the measures taken to provide aid and support to these enterprises. However, the benefits mentioned in the Articles are applied universally, as a whole to diverse industries, including Information Technology, Bio-technology, Modern agriculture, Environment protection along with the Pharmaceutical Industry (Article 5, Shanghai, 2001-7-2). The government ignores the fact that the pharmaceutical and biotechnology industry play a crucial role in R&D spending with nearly fifty leading Chinese global firms spending 16.4% of their total revenue on R&D activities whereas only four-to-six percent was set aside for the HTIE qualified units in China. The figure of 4-6& is understandably sufficient for other industries' innovation and development, but not so for the Pharmaceutical industry. It is therefore necessary to segregate the Pharmaceutical industry from the HTIE, providing it with a distinct status and consequently separate substantial waivers and rewards by the government for these actual innovative Pharmaceutical enterprises to flourish and prosper.
Price Ceiling
In China, the unequal distribution of medication is a serious social problem because of the differences in the price of drugs and regional incomes. In the year 2000, China ranked fourth last among 191 countries of WHO with regard to health service equality and accessibility. The 2003 national health census, confirmed that 48.9% ...Download file to see next pagesRead More
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