Sinopharm Group Co, China's biggest pharmaceutical distributor, posted a 22 percent increase in first-half profits as broader health insurance coverage and higher subsidies spurred demand for medicine.

Net income rose to 959.1 million yuan ($151 million), or 40 yuan a share, in the six months ending June 30, from 784.5 million yuan, or 34 yuan, a year earlier, the Shanghai-based company said in a statement on Thursday. Sales jumped 39 percent, to 66.6 billion yuan.

Drug distributors including Sinopharm and Shanghai Pharmaceuticals Holding Co are benefiting from higher government spending on healthcare, which has expanded insurance coverage and boosted subsidies. As many as 95 percent of Chinese last year were covered by medical insurance, up from 87 percent in 2008, according to the Ministry of Health.

"The company should be on track to meet its targets this year," said Gideon Lo, an analyst with Nomura Holdings Inc in Hong Kong. "China's healthcare sector is also less affected by the economic slowdown as industry leaders such as Sinopharm gain from more government investments."

China Daily - Agencies