China to relax centralised procurement programme for generic drugs as part of wider roll-out: report

A report from the 21st Business Herald suggested that China's centralised generic drug procurement plan will be expanded nationwide, but on revised terms, sending shares in some of the country's pharmaceutical companies higher, Bloomberg said Monday. UOB Kay Hian analyst Carol Dou remarked that the revised programme, which is likely to start at the end of the year, "may ease up the tension for other generic drugs for now, and give drugmakers more time to prepare for future competition."

As part of the pilot scheme, which initially covered 11 major Chinese cities, with plans to expand, a single company was chosen as the winner for each tender. However, under the revised programme, authorities will pick the lowest bidder for each generic drug, along with two other companies that are willing to match the price. The three firms will then share the contract to supply 70% of the targeted products to public hospitals.

According to Bloomberg, China's tender system to force companies to bid for contracts pushes down the prices of generic drugs by up to 90%. The programme has so far saved China an estimated CNY 5.8 billion ($843 million) since being introduced last December, Bloomberg added.

Meanwhile, although analysts had expected the scheme to include more drugs, along with the nationwide expansion, the 21st Business Herald report said the number of drugs on the tender list will remain unchanged at 25.

Shares in CSPC Pharmaceutical Group climbed as much as 9.5% on the news, while those in Sino Biopharmaceutical were up 5.4%. Additionally, shares in SSY Group gained as much as 4.9%.

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