China's Volume-Based Drug Procurement Policy Creates Two-Tier Market
Policy pressures multinationals in public hospitals while opening profitable private channels for biotech firms
L'essentiel
- China's volume-based procurement policy forces multinational drug companies to lower prices for public hospital purchases while allowing biotech firms to charge premium prices in the private market.
- The dual-track system benefits internet healthcare platforms and private healthcare providers like Alibaba Health, Yifeng and Hygeia, according to Citi research.
Résumé généré par IA
Pourquoi c'est important
China introduced volume-based procurement in 2019 to reduce drug costs in public hospitals by negotiating bulk purchases. The policy has expanded across multiple drug categories, fundamentally reshaping the pharmaceutical market landscape.
Under volume-based procurement, the government buys drugs in bulk for public hospitals, putting multinational companies under intense price and competitive pressure. The policy allows biotech companies to charge higher prices in the private market, including at private hospitals and retail pharmacies, and online. “This provides more profitable channels to innovative drug makers and potentially benefits internet healthcare players, pharmacies and private healthcare services, such as Alibaba Health, Yifeng and Hygeia,” John Yung, head of Asia healthcare research at Citigroup, wrote in a research report released on April 16.
Questions ouvertes
- How will multinational companies adapt their China strategy?
- What is the timeline for policy expansion to more drug categories?
- How will patient access be affected?
