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Healthcare Reform Brings Little Short-term Benefit For China’s Pharmaceutical Companies

This article was originally published in PharmAsia News

Executive Summary

China's highly anticipated healthcare reform plan rollout (PharmAsia News, Apr. 8, 2009) has raised questions, especially about the details of essential drug pricing. The new plan modifies the previous price ceiling for retail drugs to the current government-recommended prices, providing more objectivity. For instance, the rural-to-city expense ratio now stands at 3:7, which may improve to 50:50 after the reform. However, some drug makers worry that essential drugs may be fixed at a much lower rate, eroding profits for quality products. Analysts believe the pharma industry will see little profit improvement in the next three years due to thorny drug-related issues such as essential drug catalog and dissociating hospital income and drug sales. (Click here for more - Chinese language)
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