China's large-scale pharmaceutical producers have been establishing strategic alliances since 2005 with pharmaceutical trading firms to prevent a further decrease in company profits caused by chaotic competition among the country's numerous pharmaceutical trading firms.

By the end of 2005, the total number of pharmaceutical retailers above county level amounted to 76,295, the number below county level reached 94,899, and the number of pharmacy chains was 65,000.

The heated competition among the big number of market players caused incessant price wars, which have in turn brought down the profits of both pharmaceutical producers and retailers.