Guangzhou Pharmaceutical is planning to expand its retail network and develop new products to cope with the country's medical reforms and fierce competition. The company, the mainland's largest patent medicine producer, is to open 24 more retail outlets in Guangzhou. It will also spend one million yuan (about HK$930,000) to set up a Web site for e-commerce. Vice-chairman Li Yimin said medical reforms had stopped hospitals from selling medicine and compelled pharmaceutical traders to shift focus to retail customers. Hospitals' decreased demand forced pharmaceutical traders to cut prices to maintain market shares last year. The gross profit margin for the company's trading business fell to 12.76 per cent from 13.8 per cent. The margin for the manufacturing side edged up to 47.9 per cent from 43.6 per cent, because of the increased sales of high gross profit margin products such as traditional patent medicine to treat diabetics and stroke victims. 'We would remain focused on development and production of high gross profit margin Chinese patent medicines to boost the bottom line,' Mr Li said. He said the company was now conducting 11 clinical research projects and seven other projects to enhance quality control standards. The company had about 510 million yuan cash on hand and had total debts of 529 million yuan at the end of last year. Its debt-to-equity ratio stood at 51.9 per cent.