Beijing To Pilot Public Hospital ReformsMarch 2012 | Industry Trend Analysis
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BMI View: 'Zero-profit' drug sales in China will benefit patients as one of the major components of healthcare expenditure will become more affordable. Pharmacy chains will also see upsides. However, we highlight that such programmes are hard to implement as the country is notorious for corruption and bribery in the public and private sectors. In addition, the expansion of the National Essential Drug List (NEDL) will create more financial stress for grassroots clinics, given that they can only prescribe essential drugs without any profit. The country's simultaneous aim to cut drug prices will also create a less attractive pharmaceutical market, as we believe any substantial price cuts mean companies will need even higher volume sales to achieve revenue growth.