Mar 9, 2010
The Business Times

Chinese drug firms see business booming

2010 NPC Meetings

CHINESE pharmaceutical companies are cheering the policy to control drug prices, even if profit margins from supplying these basic drugs to hospitals are likely to be razor thin.

The likes of C&O, a Singapore-listed Chinese company, believe the changes will significantly push up demand for basic drugs like antibiotics – one of the growth drivers for its business.

Seven of C&O's branded products have qualified for the Basic Drugs List, which will require doctors to give top priority to these 307 essential medications.

This will open up a lucrative mass market for local companies like C&O, which has key drug manufacturing and research operations in Nanjing, the provincial capital of coastal Jiangsu.

These companies are betting that the huge sales volumes will make up for the much lower prices, estimated at more than 20 per cent less than current rates.

"This new policy definitely offers benefits for us," C&O chairman Gao Bin told The Straits Times.

He is already planning to produce even more cost-effective drugs that may qualify for the list.

"We can easily make back this investment in two or three years as sales can be very significant. This is a long-term business too," he said.

The company's army of more than 900 sales staff have already built rapport among doctors, especially those in the rural areas where Beijing plans to build some 300,000 more health-care facilities in the next three years.