China's first SARS (severe acute respiratory syndrome) patient since last June has fully recovered, which is good news for the public, but maybe disappointing news for the country's pharmaceutical firms.

An oversupply of SARS-related medicine could reduce these firms' profit margins, analysts suggest.

"As for research and the reserves of drugs and immunization products to fight SARS, there is nothing to be worried about," Beijing-based newspaper China Business quoted an unnamed official, with the Ministry of Health, as saying late last month.

"What pharmaceutical firms could be worried about is they could be seriously hurt financially if SARS does not return."

SARS, which broke out in Guangdong Province in November, 2002, infected more than 8,000 people and killed 774 worldwide - mostly in Asia - before it was brought under control last June. The disease killed 349 people in China.

Chinese drugmakers began racing to prepare medicine and materials to fight SARS in early December, after it was confirmed a lab worker in Taiwan Province had contracted SARS.

On December 24, a Guangzhou-based TV producer was sent to hospital as a suspected SARS patient. It was confirmed last Monday that he had SARS.

Pharmaceutical firms in China are putting greater effort into researching and developing SARS medicine.

On January 5, Zheng Xiaoyu, director of the State Food and Drug Administration (SFDA), said China had approved four SARS diagnostic kits for sale.

Two types of SARS medicine are being tested while another three medicines, including two vaccines, have been approved for clinical trials.

SFDA's database indicates 23 SARS-related medical products - 18 diagnostic kits, three vaccines and two SARS-immunizing blood proteins - are either being reviewed or have been approved for clinical trials or for sale.

However, given the government's quick action since the latest SARS case was confirmed, it appears unlikely there will be another outbreak of the deadly disease.

For drug companies, that might mean poor sales of SARS-related products.

A Beijing Tiantan Biological Co Ltd official told China Business Weekly his firm and its co-ordinating research institutes have invested heavily in SARS vaccine research.

"We first must consider the public's health. As for the market, we think the government will help us take care of it," the company official, surnamed Hao, said.

Yin Hongzhang, director of SFDA's biological department, said the government has a responsibility to help institutes and enterprises research SARS-related drugs. But he added enterprises must adjust their research and investments in accordance with market demands.

The rush to develop SARS-related products might reflect Chinese pharmaceutical firms' ability to adjust their research and production in accordance with market demand still remains low, Yin told China Business Weekly.

Hou Dakun, president of Beijing KevinKing Management Consulting Co Ltd, said despite the low possibility of the massive outbreak of SARS, related health products can still be sold.

"For example, the huge population of doctors, nurses and policemen - who face greater risks of being exposed to infectious diseases - could become repeat buyers of SARS vaccines or other virus-prevention medicine," Hou said.

Producing SARS-related products is a good way for China's pharmaceutical firms to enhance their reputations, Hou said.

On December 17, the day a person from Taiwan was confirmed as having contracted SARS, stock prices of Tiantan Biological rose 9.8 per cent. The daily cap in China for the rise of a stock's price is 10 per cent.

"Chinese pharmaceutical enterprises whose research capability remains quite weak will naturally rush to develop products that are technically easy to produce, such as SARS diagnostic kits," Hou said.

(Business Weekly 01/13/2004 page8)