* Top agency to review costs, prices at dozens of drugmakers
* Astellas, Novartis, Boehringer, Fresenius also on list
* Move follows separate probe into pricing of milk powder
By Kazunori Takada
SHANGHAI, July 4 China's top economic planning
agency is investigating costs and prices charged by drugmakers,
including units of GlaxoSmithKline and Merck, as
foreign firms come under pressure from Beijing over possible
The move follows a separate probe into instant milk powder,
which has already led to price cuts.
The National Development and Reform Commission (NDRC) is
surveying production costs and prices charged at multiple
foreign and Chinese drug companies, according to a July 2
statement from the commission.
News of the investigation was reported earlier on Thursday
by the official Securities Daily newspaper.
The NDRC will examine 27 companies on cost issues and 33 for
pricing. The investigation is being done to understand the cost
and pricing situation within the companies, and to adjust drug
prices in a timely manner, the agency said.
In addition to GSK and Merck, other foreign companies being
investigated over costs include Astellas, Novartis's
generics unit Sandoz, Boehringer Ingelheim, Baxter
International and Fresenius.
An investigation team from NDRC will visit the companies
involved between July and October, the agency said.
One industry source familiar with the situation said the
probe appeared to be focused on so-called transfer pricing,
which determines how costs are distributed between units of
large companies. Beijing plans to analyse the difference in
prices of imported products sold by foreign firms in China
compared with those in other markets.
The NDRC has also been investigating potential price-fixing
and anti-competitive behaviour by five instant milk powder
makers, including Swiss food company Nestle and French
In response, Nestle and Danone said on Wednesday they were
cutting the price of infant formula milk in China.
GSK OPERATIONS IN FOCUS
The NDRC probe into GlaxoSmithKline comes as high-level
Chinese staff at the firm are being investigated by police in a
separate case in the south-central Chinese city of Changsha on
suspicion of economic crimes.
Changsha police have not provided any further details about
the investigation and a GSK spokesman in London said it remained
unclear what the investigation was about.
An anonymous whistleblower earlier made allegations that GSK
sales representatives in China were involved in widespread
bribery to get doctors to prescribe the company's medicines.
However, GSK said it had investigated the allegations
thoroughly and found no evidence of any wrongdoing. It is not
clear if the Changsha police investigation is related to these
China is an increasingly important market for international
pharmaceutical companies, which are relying on growth in
emerging markets to offset slower sales in Western markets where
many former blockbuster drugs have lost patent protection.
IMS Health, which tracks pharmaceutical industry trends,
expects China to overtake Japan as the world's second biggest
drugs market behind the United States by 2016.