Drug companies face competition in China as price control reforms begin

Pharma price controls in China could come to an end as the government’s strategy to reform access to medicines is put into practice.

In January online retailers became legally allowed to sell drugs directly to consumers, a move by the government which aims to reduce the cost of medicines. The move will force drug companies to face stiff competition but will also allow them access to a huge market.

The South China Morning Post reported that the move is part of a package of reforms designed to clean up the country’s pharma market and allow the health care system to earn more from services and less from drug sales. Ernan Cui, senior analyst at Beijing-based economic research house Gavekal Dragonomics, told the paper: "This is good news for foreign manufacturers upstream and established players in China, because the move will open the market and reduce transaction costs for selling drugs. However, it will be highly regulated with strict background checks.”