In the cross-country race into emerging markets, drugmakers are bound to encounter plenty of bumps. Here's the latest one: China is working on a step-by-step reduction in drug prices that previously had been excused from the government's controls.
The government's National Development and Reform Commission said late last week that it has been meeting with pharma companies affected by the cuts--presumably to keep relations as friendly as possible--but China's 21st Century Business Herald reports (as quoted by PharmaTimes) that foreign drugmakers are expected to take major hits from the new policy. It's "an end of the super-national treatment afforded to foreign companies," the Chinese paper stated.
"NDRC is discussing with some industry insiders on cutting the prices of basic medicines with independent pricing power in China," a NDRC official said (as quoted by the Global Times). NDRC filed a document saying it would take "persistent efforts to bring down the prices of some relatively expensive drugs."
Since 2000, innovative drugs have been exempt from government price controls, the Global Times reports. Those foreign drug prices have now grown to be some 10 times higher than similar products made by domestic companies, the NDRC says. "[F]oreign pharmaceutical companies will have to say goodbye to the era of super high profits in China," the Times suggests. But given the Chinese market's big growth projections, perhaps drugmakers can make up on volume what it loses on price.