On Risk and Return in Domestic Pharmaceutical Industry in China

OBJECTIVE:To establish a reasonable return level for Chinese pharmaceutical industry and to study the return level of the domestic pharmaceutical industry from 2000 to 2005.METHODS:In view of the financial data of Chinese pharmaceutical industry in the statistical yearbook from 2001 to 2006,the return level for Chinese pharmaceutical industry was established based on its risk level using the principle of risk-return equilibrium,and the rationality of the return level of Chinese pharmaceutical industry over the 6 years was validated as well.RESULTS:Over the 6 years,the average lowest anticipating rate of return for the Chinese medicine industry was 7.72% and the actually average assets income rate stood at 8.53%,i.e.the average abnormal return rate over the 6 years was 0.81%.CONCLUSION:The return rate of Chinese pharmaceutical industry corresponds to the risk level as well as the reasonable return level.