For the domestic industry in China, the problem is that, although it is one of the world's largest bulk manufacturers of raw drugs ingredients, it has yet to develop a real capability to develop its own proprietary drugs. This means that 99% of the over-the-counter drugs sold in pharmacies in China were developed by foreign companies. This means that China continues to pay a royalty to these developers, for drugs it could easily be developing for itself.
Given the huge size of the domestic market, both for OTC and prescription drugs, the value of the royalties paid must be huge - which is why foreign drugs makers are so keen to corner the market for themselves. However, the Chinese manufacturers are at last beginning to work together to develop their own patent drugs, in order to begin reaping real profits.
