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China to Cut Prices of More than 400 Drugs from February

08.01.2013 -

China will cut prices of about 400 drugs for respiratory diseases, fever and pain by up to 20% from February, in a move to make medicines, including some products from Pfizer, GlaxoSmithKline and Novartis, more affordable.

It will be the fourth such price cut since 2011 and is part of reforms since the early 2000s to make healthcare cheaper and more accessible.

China's National Development and Reform Commission (NDRC) said in a statement on Tuesday the latest round of price cuts involved 20 broad classes of medicines and would include speciality drugs.

As the government cracks down on costs, more Chinese drugmakers are fighting thinning margins.

Sinopharm - China's largest drug distributor - and smaller rivals like Sihuan Pharmaceutical are expanding their distribution networks to get bigger slices of the market to offset increasing pressure on margins.

Faced with patents running out in the West, bigger foreign pharmaceutical companies, such as Pfizer and AstraZeneca, have hitched their futures largely to sales in developing markets including China, India, Eastern Europe and South America.

The average reduction in the latest round of price cuts will amount to 15%, although the cut will be as high as 20% for the most expensive drugs.

Earlier rounds of price cuts included antibiotics, anti-tumour, hormonal and blood-related medicines, and drugs for the circulatory, nervous, digestive and immune systems.

Health Minister Chen Zhu told a health conference on Monday that healthcare was still too expensive and there was still inadequate control over the improper use of drugs.

China, with an ageing population, is overhauling its health system and has made big strides since 2003. It now has a basic universal medical insurance system and heavily subsidises a growing list of essential drugs.

But many challenges remain in the country of 1.3 billion people, including a lack of state funding for hospitals, where drug sales, often at inflated prices, remain a major source of income.