Pricing Pressures Lower Profits For Chinese Drug Chain Nepstar, While Healthcare Reform Has Opposite Effect On Hospital Chain Chindex - China Earnings Roundup (Part 1)
This article was originally published in PharmAsia News
Year-end and Q4 earnings results for Chinese healthcare operators and drug stores are shaped by a challenging environment imposed by China's healthcare reform and increasing drug pricing pressure. In 2010, a rising tide of inflation also increased minimum wages and labor costs across the country and impacted companies' bottom lines. Many firms have resorted to business diversification, innovation and enriched pipelines to sustain a strong growth.
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As China opens up its private hospital market and a new wave of investment, major players such as Chindex International Inc. are reevaluating and repositioning themselves to benefit from the growing private infrastructure.
Nepstar says it needs to focus on retaining customer loyalty at fewer, but more productive stores, to keep strong margins even as drugs sales by volume soar in China.
Non-public hospitals are blossoming in China, growing at 19% in 2011, and the trend is accelerating, reflected by 20.5% growth in the first five months of 2012.