Over the Horizon

Macau Business | December 2021

State-owned giant Guangzhou Pharmaceutical Holdings is allocating significant resources for key Macau investments. The projects are getting off the ground with the first batch of Made-in-Macau TCM products in the pipeline.

The abrupt disruptions caused by the Covid-19 pandemic have not slowed down the investments totalling at least RMB1.5 billion (US$187.5 million) by Guangzhou Pharmaceutical Holdings Ltd (GPHL) in Macau, following its incorporation in the SAR nearly two years ago. One of the biggest pharmaceutical enterprises in China, it is now ready to manufacture “Made in Macau” traditional Chinese medicine (TCM) products, taking the development of the local TCM industry to the next level.

Guangzhou Pharmaceutical Group (Macau) International Development Co., Ltd (GPGM) was established in the city in January 2020 by GPHL in cooperation with Nam Yue (Group) Company Limited — a state-owned firm that is headquartered in nearby Guangdong province — and True Point Global Limited, a Macau enterprise. It is regarded as one of the measures by the Guangdong administration to facilitate the development of the Guangdong-Hong Kong-Macau Greater Bay Area and the economic diversification of Macau.

“Our mission is very clear — we will produce ‘Made in Macau’ TCM products and other relevant food and healthcare products, which could then be exported to other places like Portuguese-speaking countries and Southeast Asian nations,” Li Hong, deputy chairman of GPGM, says in an interview to Macau Business. “Macau is very important for us in terms of taking our business abroad.”

GPGM has established a factory of over 2,000 square metres in the industrial park of Ilha Verde, which is bordering Zhuhai, Guangdong. “We’ve chosen this location because it is just next to Mainland China, and there was also an existing industrial space at the time for us to transform it quickly into a pharmaceutical plant,” Mr. Li remarks. 

The firm aims to manufacture the first batch of products — ganoderma lucidum spore oil, the reproductive cells of a type of fungus that are believed to have health benefits in the TCM perspective like bolstering immunity for humans — in the city by the end of this year. Ban Lan Gen granules, or also known as granules of isatis roots, is another type of products GPGM aims to generate next, which is a herbal type used for the prevention and treatment of virus-related respiratory diseases.

Li Hong, deputy chairman of Guangzhou Pharmaceutical Group (Macau)

“We’re still exploring the Macau market to see the preferences of Macau people, who have different habits in terms of medication than their counterparts in the mainland,” he says, pointing out: “Right now we will launch products that local consumers are familiar with.” The investments by GPGM in Macau will total at least RMB1.5 billion, which will be gradually in place, he reveals.

GPHL is a wholly state-owned enterprise, authorised by the Guangzhou municipal administration of Guangdong to operate state-owned assets. Widely regarded as “China’s largest TCM manufacturer” with products like the red-canned herbal beverage brand Wanglaoji, the conglomerate is also the first company with TCM as its major business in the list of world’s top 500 companies — Fortune Global 500 — in 2021.

Collaboration with academia

Due to the differences in the regulatory regimes concerning medicines and healthcare products in the mainland and Macau, the company also hopes to come up with innovative products in the city. “We are collaborating with the University of Macau [UM] and the Macau University of Science and Technology [MUST], which have a lot of outstanding research in the TCM field but do not have a chance to transform the research results into products for the market,” Mr. Li remarks. 

The TCM sector is one of the few industries that the Macau SAR Government has strived to nurture for the economic diversations of the city away from the dominant gaming industry. The Traditional Chinese Medicine Science and Technology Industrial Park of Cooperation between Guangdong and Macau was established by the authorities from both sides on the nearby Hengqin Island, Guangdong in 2011, with an aim of expediting the industrialisation and internationalisation of TCM as well as facilitating the cations of Macau. Back in 2015, GPHL inked strategic cooperation pacts with the operator of the TCM park in Hengqin and UM respectively for the modernisation and internationalisation of TCM.

“Our mission is very clear — we will produce ‘Made in Macau’ TCM products and other relevant food and healthcare products, which could then be exported to other places like Portuguese-speaking countries and Southeast Asian nations,” Li Hong, deputy chairman of Guangzhou Pharmaceutical Group (Macau)

In regards to the TCM development of the city, Mr. Li acknowledges a lot has been done and advanced in recent years. “I remember when I came to Macau six to seven years ago I had doubts about the future of the local TCM sector,” he says, who is the general manager of another GPHL subsidiary Guangzhou Baiyunshan Pharmaceutical Holdings Co Ltd. “But the [Macau] government has invested a lot in the sector while UM and MUST, as well as the TCM park in Hengqin, have also made a lot of contributions, translating to some results [in recent years].”

For instance, the hardware of the TCM labs in UM and MUST have been as advanced as — if not more — than similar labs in many academic institutions in the mainland. “The two Macau universities have also recruited talents from the mainland to expedite the local development,” he illustrates. 

More confidence

Talking about talents, he indicates one of the biggest challenges for the operation of nearly two years of GPGM was the shortage of local professionals, apart from the Covid-19 pandemic that had disrupted the normal travel between Macau and Guangdong. “It’s relatively easy to look for professionals in the TCM or pharmaceutical field in the mainland, but we have to start from scratch here to train and nurture local talents,” he adds.

The Ilha Verde factory now employs some 10 people, including local and non-local residents, and the headcount could expand to over 20 in the future, particularly focusing on the recruitment of local university graduates. “Many of them have graduated with pharmaceutical-related majors but there is a lack of career opportunities for them in Macau,” he exemplified. “Thus, we hope to nurture more local pharmaceutical engineers through our factory.”

To further advance the local TCM development, the Macau government has also consolidated the supervision over the sector in recent times. A new law regulating pharmaceutical activities of TCM and the registration of TCM products will come into force in the upcoming January, while a bureau-level government department — Pharmaceutical Supervision and Administration Bureau — in charge of the supervision of pharmaceutical products, including TCM products, will also be set up at the start of 2022.

“The establishment of the Pharmaceutical Supervision and Administration Bureau could help further standardise the rules of the Macau sector, and the outside world could then have more confidence towards ‘Made in Macau’ pharmaceutical products,” Mr. Li responds.

Hengqin opportunities

The inauguration of the Guangdong-Macau In-depth Cooperation Zone — which covers the entire Hengqin island — in September, under the guidance of the central government, could also translate to more opportunities for GPHL. The cooperation zone plan comes up with an innovative regulatory framework, in which both the Macau and Guangdong authorities jointly administer the development of the island for the long-term prosperity and economic diversification of Macau.

Acknowledging the TCM industry as one of the major industries for development, the cooperation zone will allow TCM, food and healthcare products manufactured in Hengqin and registered in Macau to bear the signs of “design by Macau”, “produced by Macau” or “production supervised by Macau”. There will also be the so-called “first-tier” and “second-tier” customs controls for goods in Hengqin, according to the development plan of the cooperation zone, in which procedures will be simplified for the flow of goods between Hengqin and Macau as the “first tier” while normal customs procedures between Hengqin and other parts of Mainland China as the “second tier”.

In light of the opportunities arising from Hengqin, GPHL has incorporated a subsidiary on the island. “We will set up a modernised factory in Hengqin, whose size will be much bigger than the Macau plant [… and] more suitable for the production scale of a Global 500 company like us,” Mr. Li reveals. 

“Given the fact that the cooperation zone will be managed by Macau and Guangdong together, we expect the regulations [of pharmaceutical activities and products] will be similar to the Macau regime,” he continues. “In the future we will manufacture the products in Hengqin, which will be registered in Macau and sold in the local market and other markets like Hong Kong, Southeast Asian nations and more.”

The senior executive believes the prospect of the cooperation zone and Macau will be bright. “Hengqin will definitely be very beneficial to the industrial diversification of Macau, which still has money [public coffers] to invest for the development of various industries on the island. It just takes time for the industries to get off ground,” Mr. Li says.

“After a few years of commitment, we hope to build a complete ecosystem of pharmaceutical manufacturing in Macau and manufacture more TCM products for people in Macau, Mainland China and beyond,” he adds.