China significantly ratchets back drugs on 'essential drugs' list

China is offering up a little more yin with its yang, balancing pharmaceutical cost controls with their impact on the country's nascent drugmaking industry.

The country increased the number of drugs on its price-controlled "essential drugs" list to about 700, from 307 now, Reuters reports, but that's about 100 less than originally planned when it announced the mandate earlier this year. The new list takes effect at the end of the year.

The essential list is a tool to try to get more medications to its growing population and feed that population's growing expectations for better healthcare. It is also a tool against corruption in hospitals frequently over-prescribing and overcharging. The over-prescription of antibiotics has led to problems with drug resistance as well.

But on the flip side, the price pressure is squeezing the profits of its domestic drugmakers. United Laboratories recently said it would miss its profit estimates "due to [the] general drop in average prices of the Group's products," Reuters reports. And in March, 5 companies issued warnings after China announced the plan. At the time, United said its net profit would fall 57% next year.

In the end, many experts predict an uptick in M&A and international collaborations, but the top players, including Yunnan Baiyao, Sinopharm, and Sichuan Pharmaceutical should come out relatively unscathed--and perhaps even ahead.

- read the Reuters story 

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