Rising ingredient prices, shortages rattle China’s drug industry

Source:Global Times Published: 2018/8/7 22:18:41

Rising ingredient prices, shortages rattle nation’s drug industry

Chinese pharmaceutical companies are sounding the alarm about skyrocketing prices of active ingredients, with media reports of drug distributors cornering markets and raising drug prices up to 100 times, leading to shortages of some products.

"This has been going on for some years now, across the whole country, and the government has already dealt with some cases," Li Tianquan, co-founder of domestic healthcare big data platform yaozh.com told the Global Times on Tuesday.

"Distributors focus on cheap products with few producers, then form a supply monopoly and hike prices."

Some drug ingredients have reportedly seen enormous prices hikes in recent years, according to a report by Qianjiang evening news.

Chlorpheniramine maleate, a compound used in some anti-allergy drugs, rose 58-fold from 400 yuan ($58.6) per kilogram to 23,300 yuan ($3,412) in a month after its supply fell to a monopoly.

The chemical phenol, used in manufacturing aspirins, has risen 100-fold, from 230 yuan per kg to 23,000 yuan.

In July 2017, the National Development and Reform Commission (NDRC), China's top economic planner, imposed fines of 443,900 yuan on two pharmaceutical companies for price-fixing and taking advantage of their dominant position in the market.

In November last year, the NDRC released a new Guide to the Pricing Behavior of Operators Dealing in Drugs and Active Pharmaceutical Ingredients in Short Supply.

Li noted that originally, very low prices of some commodities made it easy for distribution monopolies to form. These monopolies suddenly raised sale prices for important ingredients.

"Sometimes 10 companies might have the necessary permits to manufacture some particular ingredient, but only five actually produce it, because the price is too low. That makes it easy for external distributors to corner the market by acquiring the rights for a single ingredient and then raising prices," he said.

While the industry is unsettled by such practices, the cost to end users is deemed to be relatively small.

Newspaper headline: Rising ingredient prices, shortages rattle nation’s drug industry


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