Medicine makers may feel the pinch

BEIJING - The ceiling China set on the prices of some multinational drugmakers' self-developed medicines, in line with the nation's efforts to broaden access to healthcare, could significantly affect the foreign companies' profits, some experts said.

The policy, announced on Monday by the National Development and Reform Commission, lowers the retail price ceiling on 162 types of medicines by an average of 21 percent starting on May 28.

Of the 230 drugs affected, most of which are antibiotics and circulatory medicines used in treating cardiovascular disease, 158 are manufactured by multinational companies.

Nineteen of the them were "self-developed" by international pharmaceutical companies such as Eli Lilly, Bayer Healthcare and Pfizer. "Self-developed" medicines are drugs researched and developed by a pharmaceutical company on which the patent has expired.

In China, those medicines are owned mainly by international pharmaceutical giants, and their prices were set by the producers.

The price cuts are significant. For instance, the retail price for injected fluconazole, produced by Pfizer, should not exceed 151 yuan ($22.99), 54 yuan lower than now.

A group of foreign drug makers, including Pfizer, declined to comment.

"Experience suggests that price cuts are not the only way to help lower medical expenses," said Alex Zuo, communication director of R&D-Based Pharmaceutical Association Committee under the China Association of Enterprises with Foreign Investment. "The most urgent steps the government should take is to promote rational use of drugs and strengthen the role of medical insurance to reduce medical costs shouldered by individuals."

Zuo said the new regulation covered many self-developed drugs that sold well in China, so the effect on these companies could be significant.

Guo Fanli, an analyst with China Investment Consulting, said price-capping to expand access to healthcare will encourage foreign medicine makers to promote their products to grassroots areas, an efficient means of broadening healthcare access around the nation.

But the policy may stimulate some foreign companies to compete with local producers in terms of price on the domestic market. Cai Dongchen, chairman of CSPG Pharmaceutical Group Limited and a deputy to the National People's Congress, said setting pharmaceutical prices at a reasonable level is a good thing, but purely pursuing low prices may lead to a price war.

China Daily

(China Daily 03/09/2011 page13)