Last year, total revenue rose 37% to 6.8 bln hkd. Among this, vitamin C series and finished drugs comprised 32% and 29%, respectively, of the top line.

This represents a substantial jump for vitamin C, which in 2007 contributed 22% to total turnover.

Taiwan fund managers, Aries Consulting and NextInsight at a presentation by China Pharma executive director Eddie Chak.

In fact, some of the more bullish market forecasts say that within three years, finished drugs might contribute over three-fifths of China Pharma’s profitability!

The company expects to see further sales upside from the ongoing 4.5 trln yuan economic stimulus package, and continuous efforts by Beijing to make health care more accessible and affordable to all 1.3 bln citizens, especially in the less developed rural areas which still account for around two-thirds of the country’s total population.

But China Pharma realized that while rural demand for its pharmaceuticals was just what the doctor ordered, the company had a lot of work to do before its extensive distribution network and marketing campaigns reached the farmers and rural denizens in the vast hinterlands.

“The rural market less developed for us,” he added.

In a recent report, Merrill Lynch added that with its established portfolio of generic/non-prescription drugs and a sales force of 2,400 concentrating on the lower end of the market, China Pharma is well positioned to benefit from the ongoing healthcare reforms, which specifically emphasize lower end healthcare spending.

“We expect finished drugs to become China Pharma’s major profit earner (contribute >60%) by 2012,” the report concluded.

Mr. Chak said that the company did not sell directly to hospitals, using the far more efficient and corruption-resistant channel of selling to wholesalers instead.

“Wholesalers are our main customers and it’s more cost effective. We have some 1,500 wholesale partners.”

China Pharma was well aware of the importance of brand building in the industry – one in which reputation and quality directly influenced sales and literally had the potential to better the health and livelihoods of consumers.

"We advertise extensively in China. Our ads for corporate brand building and health supplement products are up,” he said.

As for the often unstated rivalry between Western medicine (China Pharma’s bread and butter) and traditional Chinese medicine (TCM), he said that the former would most likely be the bigger beneficiary of government stimulus measures and healthcare reform initiatives, despite this country being the birthplace of TCM.

“To be honest, I don’t know much about TCM. But the ongoing healthcare overhaul will benefit Western medicines like ours more, partly due to their clinical verifiability and proven track record, as well as safety issues. There is much more upside growth potential for Western medicines and a growing demand in China,” he said.

NextInsight asked him if players in China’s pharmaceutical sector were victims of their own success, given the notorious and thriving counterfeit industry that churns out virtual copycats of any product that so much as flirted with legitimate market success.

“It’s inevitable here in China that jealous upstart rivals will bootleg our brand. But we will continue to cooperate with authorities to crack down on this wherever and whenever it appears.”

But Mr. Chak was confident that China Pharma had the right prescription for success in the pharmaceutical industry.

“Our major domestic rival only produces penicillin and finished drugs....but they don’t have vitamin C operations.”