China fines domestic drug firms for price fixing

FEB 2, 201612:53 PM

[SHANGHAI] China's anti-monopoly regulator has fined five domestic drug firms a total of close to 4 million yuan (S$866,150) for fixing the prices of their medicines, the watchdog said on Tuesday, as the country battles to keep medicine prices down.

The drug firms colluded over a period from April 2014 to September 2015 to raise the price of allopurinol tablets, a drug used to treat gout and kidney disease, the National Development and Reform Commission (NDRC) said in statements on its website.

The fine, though relatively small, indicates China's anti-trust watchdogs may be turning attention towards medicines, a potential headache for domestic and international firms targeting the world's second-largest pharmaceutical market. "(The firms) created monopolies by agreeing to raise sales prices and to artificially carve up the market," the NDRC said in the statements. It added the drug was commonly used and was on the country's essential drug list. "This eliminated or restricted market competition, raising the cost of allopurinol tablets for the end user, and so harmed the interests of consumers."

China's near 1.4 billion potential patients are a major lure for drug firms targeting growth driven by rising incomes and a fast-ageing population. However, regulators have been clamping down on quality and forcing prices down to rein in a wider healthcare bill set to hit US$1.3 trillion by 2020.

The NDRC said the firms had held several meetings with each other to negotiate and agree on fixed prices, thus violating China's anti-monopoly law.

The firms include Chongqing Qingyang, Chongqing Datong, The Place Pharmaceutical (TPP), Shangqiu Huajie Pharmaceutical and Shanghai SINE Pharmaceutical Co, a subsidiary of Shanghai Pharmaceuticals Holding Co Ltd, the NDRC said.

Shanghai Pharma did not immediately comment on the case when contacted by Reuters.

China's drug market, which was growing at above 20 per cent back in 2012, slowed to around 5 per cent by the middle of last year, according to data from IMS Consulting Group.

Chinese regulators have previously gone after technology companies, automakers and dairy firms over monopoly issues, pulling in names such as Microsoft Corp, Daimler AG's Mercedes-Benz and French dairy Danone SA.

REUTERS