The Burrill Report


Forget Black Friday, Cyber Monday, and Encore Tuesday. China is slashing prices on more than 150 drugs for good as government officials in the world’s third largest drug market struggle to get a grip on runaway healthcare costs.

The new mandate, effective December 12, will chop an average 19 percent off the maximum prices for a long list of medications sold by the likes of Roche, Bristol-Myers Squibb, and other global pharmaceutical companies.

“At this time, almost all medicine with prices independently fixed by foreign enterprises will be lowered,” an official from the National Development and Reform Commission told People’s Daily, China’s official state-run publication.

“The prices of all high-priced medicine will be lowered in batches and in periods in order to further reduce the heavy burden of medical expenses on the public,” the representative says.

The National Development and Reform Commission says it expects to save about $300 million per year (2 billion yuan) by targeting high-priced drugs, such as Roche’s antibiotic Rocephin and Bristol-Myers’ heart pill Capoten.

None of the companies affected have issued statements on the new policy. However, investors have had their say, driving down the value of the Shenzhen China Securities 300 Health Care Index by nearly five percent since the price cuts were announced.

China is experiencing a wave of inflation that has driven up the cost of everything from cheeseburgers to housing. Raw materials costs, as well as the prices for food, clothing, and medical care have all risen dramatically since 2009.

Pharmaceutical companies have been drawn to China’s growing market for pharmaceuticals as growth in developed countries slows and pressure to cut spending on healthcare increases. China’s rapidly growing economy and 1.3 billion people remain a big draw, but the specter of price controls may dampen their enthusiasm.


December 03, 2010
http://www.burrillreport.com/article-china_forces_drug_price_cuts.html