Financial Times: multinational pharmaceutical companies feel cool in China

Source: according to British media on July 6, 2013, the past decade can be regarded as the gold rush period for multinational pharmaceutical manufacturers in China But China's latest official investigation into the pharmaceutical sector is a chill for these companies According to the financial times on July 5, China's national development and Reform Commission said it was investigating the drug pricing of 60 pharmaceutical companies Among them are the Chinese subsidiaries of six multinational groups, including Japan's Estella, the US's Merck and the UK's GlaxoSmithKline The survey is the latest in a string of audit actions launched by the national development and Reform Commission, local pharmaceutical industry executives stressed The national development and Reform Commission is responsible for setting a price ceiling for all patented drugs and generic drugs covered by China's medical insurance However, there are warnings that this move may mean that the trend of drug price reduction in China will be accelerated, and the drug price will be reduced in a wider range and a larger range in the future "Drug prices are being reviewed," said a pharmaceutical industry consultant It had been expected that such a survey would come at some point But the operation came earlier and covered a wider range than expected " Since March 2011, the national development and Reform Commission has cut the price of a variety of clinically applied drugs five times, with an average drop of 15% to 20%, Citi said in an analysis report in January Citi expects that high priced drugs and imported drugs will likely become the focus of the NDRC in the future China's huge aging population, rapid economic growth and the Chinese government's determination to improve health care services have made China an attractive market for Western companies before the growth rate in other parts of the world slowed down, the report said According to official statistics, China's drug sales totaled $71 billion in 2011 AstraZeneca is one of the few pharmaceutical companies to list sales separately in China The company's sales in China increased by 20% in 2012 to US $1.5 billion IMS consulting expects China to leap from the world's third largest drug market to the second by 2020 Several pharmaceutical companies - from Novo Nordisk and Novartis to GlaxoSmithKline - have invested in joint ventures in China for drug production and research, the report said For all pharmaceutical companies, sales growth has been the driving force for expansion With the increasing number of relatively wealthy Chinese middle class, expensive innovative drugs for cancer and other diseases have found an attractive market in China; the cost of these drugs is borne by patients themselves, and the price in China is equal to or even higher than that in the western market But the Chinese government is also expanding the coverage of medical insurance and enriching the types of medical services covered by medical insurance China has been expanding its "essential drugs catalogue", in which the cost of drugs is fully reimbursed by health insurance, while many other drug costs are shared by the state and individuals The price ceiling of essential drugs is set by the national development and Reform Commission and adjusted regularly In order to make the drugs into the "medical insurance drug catalog" formulated by the local government, pharmaceutical enterprises should also give further price discounts to local governments and individual hospitals The report points out that in order to enter the government supported medical insurance system and obtain higher sales volume, it is necessary to accept lower sales price In addition, as in other markets, there is a growing tendency in China to use "health technology assessment" to judge whether a new drug is worth the money Angus Cole, Deloitte's deputy director for China, said: "drug price cuts are a global trend In China, the feeling of drug companies is more obvious Sometimes the price adjustment of drugs happens very quickly It's a trend and a necessity to reduce the drug price " Ames stressed that last year, China asked foreign pharmaceutical companies to provide information on their drug prices in nine other countries, which is likely to be the prelude for Chinese officials to align drug prices with those in other regions "China's reference to drug pricing in other regions could lead to a 15% to 45% drop in sales revenue of multinational drug companies - a major blow to their global business performance," Ames warned