Local government policies and pharmaceutical clusters in China

Abstract

Purpose – The purpose of this paper is to study how local government policy influences the structure of Chinese pharmaceutical clusters during their industrial catch-up. Design/methodology/approach – This paper applies a case study method by targeting pharmaceutical clusters in Tonghua, Taizhou, and Tianjin. Findings – The varied structures of pharmaceutical clusters in China demonstrate local governments' efforts to utilize local resources accordingly. While the local governments in China introduce different policies to firms with different ownership in the process of constructing different cluster composition, all the local governments emphasize motivating the development of small- and middle-sized enterprises for cluster dynamics. Practical implications – The local governments should try to reach a balance between short-term foundation and long-term competitiveness for industrial cluster development. Originality/value – This paper provides the detailed analysis of local governments' influences on the formation of pharmaceutical clusters in China and helps to enrich the knowledge about how local government promotes industrial clusters to realize industrial catch-up through sectoral innovation system.

The orchestration process for emergence of clusters of innovation

“…Because of the success of these geographical agglomerations, several studies have been developed to propose public policies that support clusters development (Brenner and Schlump, 2011;Ingstrup and Damgaard, 2013;Yu et al, 2014). Although important, cluster development policies do not ensure regional development (Darchen and Tremblay, 2015).…”

Collaboration modes and advantages in supply chain

“…In particular, it also pointed out its importance to the Chinese medicine's development. The Chinese pharmaceutical industry is largely influenced by the government and regulatory institutions when talking about shaping industry structure and building collaboration network [13]. Opportunities along with the challenges, for Chinese pharma, the high-cost in R&D, high complexity, and long processes from "discovery" to launch to the market [9,14], the shrinkage of profit margin due to the conflict between the increasing expenditures on sales and marketing [15] and related "China's retail drug price control policy" [16] are in a way slowing down the development pace of the China's pharmaceutical industry.…”

“…Within a pharmaceutical supply chain, there are some players directly associating with pharmaceutical manufacturer, these include material-medical suppliers, wholesalers, distributors (integrated delivery networks, including 3PLs), customers (including hospitals and physicians), academia (including university and research institutions), government, and regulatory institutions [3,13,17,20,35,36]. Furthermore, the manufacturing outsourcing and partners acquisition may also involve subcontract partners and subsidiaries into the supply chain [25].…”

Determinants of FDI Localization in China: A County-Level Analysis for the Pharmaceutical Industry

“…From a policy perspective, the pharmaceutical industry has been regarded as one of the key industries in China’s Tenth Five-Year Plan, Eleventh Five-Year Plan and Twelfth Five-Year Plan, resulting in becoming a target for a series of national industrial policies directed at the expansion and upgrading of its productive capacity [ 5 , 6 , 7 , 8 ]. In addition, several provinces and cities have implemented special measures to support development in the pharmaceutical industry by means of preferential policies directed to FDI attraction [ 9 ].…”