China is the world's second largest pharmaceutical market. (Photo : Getty Images)
The National Development and Reform Commission (NDRC), China's anti-monopoly regulator, recently fined five local drug firms a total of nearly 4 million yuan for fixing the price of allopurinol, a treatment for gout and kidney disease, Reuters reported.
According to theNDRC, the drug firms colluded to increase the price of the allopurinol tablets from April 2014 to Sept. 2015.
"[The firms] created monopolies by agreeing to raise sales prices and artificially carve up the market," the NDRC said in its official statement.
Allopurinol is on China's essential drug list.
The NDRC emphasized that the involved firms have held several meetings where their officials negotiated to have a fixed price for the said tablet, hence violating the anti-monopoly law.
Among those who were fined were Chongqing Datong, Chongqing Qingyang, Shangqiu Huajie Pharmaceutical, The Place Pharmaceutical, and Shanghai SINE Pharmaceutical Co.
Shanghai SINE is a subsidiary of Shanghai Pharmaceuticals Holding Co.
According to Shanghai Pharma, it respects the decision of the commission. However, it stressed that the increase in price was prompted by the steep raw material costs, which translated to a supply squeeze.
Shanghai Pharma insisted that the price rises did not result from any collusion or illegal coordination among the players in the local health market.
Though relatively small, the fine levied on the local firms shows that the country's anti-trust authorities are now turning their attention to medicines. The report noted that this could be "a potential headache for domestic and international firms" planning to make a foray into China's medical market.
Currently, China is the world's second largest pharmaceutical market.
"This eliminated or restricted market competition, raising the cost of allopurinol tablets for the end user, and so harmed the interests of consumers," the NDRC statement further pointed out.
Data shows that China has around 1.4 billion potential patients, luring drug firms to aim for growth fueled by the country's fast-aging population and rising income. Taking this into account, the authorities have been adamant in clamping down on quality and cutting prices down.
