HONG KONG (Reuters) - A renewed push by the central government to expand healthcare reforms and restrict costs for end users is putting pressure on margins for a growing number of Chinese drugmakers.
Below are some Chinese drugmakers that have issued profit warnings in recent weeks:
— In January, Wuyi International Pharmaceutical Co Ltd, which makes medical devices for cancer, respiratory and cardiovascular diseases, said it expected a decline in net profit for 2011 despite improved turnover in the second half because of challenges from state policies and market pressure.
Wuyi said it had cut prices for some products because of lower purchasing power. Its margins were also affected by depreciation and modification charges from the sale of its production facilities because of new GMP certification requested by China’s State Food and Drug Administration on March 29 last year.
— In February, United Laboratories International Holdings Ltd, which makes antibiotics, antipyretic analgesic, anti-allergy and anti-hepatitis B and cardiovascular drugs, warned that it expected 2011 profit to fall on the restricted use of antibiotics, the government’s price-cutting policy on finished products, and an increase in financing costs as bank borrowing rates rose in the second half of 2011.
— Biomedical solutions supplier Mingyuan Medicare Development Co Ltd warned that 2011 profit may fall because of the unsatisfactory performance of its protein chip division due to China’s tightening economic climate.
— Chinese patent medicine producer Guangzhou Pharmaceutical Co Ltd announced in February that 2011 profit rose 7.6 percent year on year, while income from operations jumped 21.3 percent. But it said keener competition and increased price controls on pharmaceutical products would pose challenges to future growth.
— Intravenous fluids and antibiotics maker Lijun International Pharmaceutical (Holding) Co Ltd said it expected to record a net loss for 2011 from a possible goodwill write-off related to its acquisition of Shijiazhuang No.4 Pharmaceutical Co Ltd in 2007.
Reporting by Donny Kwok and Tan Ee-lyn; Editing by Chris Lewis