China: drug price cuts lead to competition

So far this year, the Chinese government has issued three regulations tocut pharmaceutical prices, with the most recent involving reductions of 20% on 120 drug products. This will undoubtedly affect the profitability of drugmakers and intensify competition in the marketplace, contends China Medipharm Insights.

The latest cuts mainly relate to bulk antibiotics, with the steepest imposed on bulk penicillin drugs and formulations in seven categories and 49 specifications. Three categories of bio-engineered drugs in 12 specifications were also involved. Makers of recombinant interleukin-2, human erythropoetin and human albumin will also be affected, but not as severely as the bulk drugmakers.

The average price cuts gap between Good Manufacturing Practice and non-GMP certified drugs is 20%, says CMI, and the reductions are expected to stimulate mergers and accelerate restructuring of the sector.