China to double price-controlled drugs list by year-end - paper

Sat Aug 18, 2012 4:39am EDT

* Essential drug list to be increased from 307 to 700 - state media

* List intended to control healthcare costs, diminish prescription abuse

* Listed Chinese pharma companies struggle for profitability

SHANGHAI, August 18 (Reuters) - China is set to increase the number of products on its price-controlled "essential drugs" list to 700 from 307 by the end of the year, the official Shanghai Securities Journal reported On Saturday, quoting industry sources.

The move would signify a scaling back of plans announced in February to increase the number to 800, as Chinese pharmaceuticals companies struggle.

The essential drugs list is a key tool for the government in its attempt to provide affordable, universal, high-quality health care to a population of 1.3 billion, many of them poor, while cracking down on corruption and over-prescription problems common in Chinese hospitals.

However, Beijing has struggled to balance the desire to provide the social benefit of cheap drugs with its strategic goal of creating a profitable pharmaceutical industry.

Five Chinese drugmakers, including United Laboratories International Holdings Ltd, issued profit warnings in March. On Aug. 9, United Labs warned again that profits were likely to miss estimates "due to (the) general drop in average prices of the Group's products".

Some analysts believe the low pricing will benefit the largest players in the industry by forcing consolidation.

In June, China Pharmaceutical Group Ltd said it would buy pharmaceutical assets from its parent company for HK$8.98 billion ($1.16 billion) as it aims to expand its finished drug business and curb reliance on intermediates and bulk drugs. (Reporting by Pete Sweeney; Editing by Edward Lane and Paul Tait)

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