Chinese pharmaceutical group Shanghai Pharma has signed a memorandum of understanding with DHL Supply Chain to build up a global life sciences distribution network.

According to DHL, it will help Shanghai Pharma to enhance its quality control measures, streamline its distribution processes, and strengthen compliance with local and international food and pharmaceutical regulations.

“China’s pharmaceutical industry has historically suffered from high levels of fragmentation amongst its local customers and distributors, an issue which recent legislative changes like the ‘two-invoice’ policy have sought to combat,” said Yin Zou, CEO of Greater China at DHL Supply Chain. “In this regulatory climate, end-to-end supply chain management plays an increasingly crucial role in determining how effectively Chinese pharmaceuticals firms not only maintain sales locally, but gain traction abroad in a cost-effective and sustainable manner. Shanghai Pharma already holds a formidable reputation as one of China’s leaders in pharmaceutical development, manufacturing, distribution and retail. With this partnership, we look forward to applying our global life science expertise to help them establish an efficient and agile supply chain network to provide consumers with reliable and convenient access to medications.”

Under the memorandum, Shanghai Pharma will gain priority access to DHL’s global logistics network, including temperature-sensitive life sciences to Europe. DHL Supply Chain will also support the manufacturer’s supply chain optimization needs as it expands overseas.

“The quality and resilience of our logistics infrastructure will determine not only how successfully we adapt to new legislation like fapiao – which seeks to cut down on multiple distributors and mark-ups by only allowing two invoices per goods shipment – but also our ability to capitalize on the huge international growth opportunity for high-grade Chinese pharmaceutical products and medical devices,” said Cho Man, president and executive director of Shanghai Pharma. “China’s national market for drugs has grown rapidly in recent years to become the world’s second-largest with an estimated growth to around US$167 billion by 2020. Our partnership with DHL will help Shanghai Pharma to become one of the world’s foremost pharmaceutical manufacturers – supported by a global distribution network that combines world-class quality control with fast, seamless delivery.”

Shanghai Pharma generated almost RMB121 billion (US$18 billion) in revenue in 2016.