A drugstore in Beijing. A gauge of healthcare stocks fell 3 percent on Monday, the most among the 10 industry groups of the CSI 300 Index. [China Daily]

Kangmei Pharmaceutical Co paced declines by Chinese drugmakers after the Economic Observer reported the government may cut medicine prices by 40 percent. A gauge of healthcare stocks fell 3 percent on Monday, the most among the 10 industry groups of the CSI 300 Index.

Kangmei Pharmaceutical lost 4.64 percent to 21.15 yuan (US$3.17).

Beijing Tiantan Biological Products Corp retreated 2.76 percent to 23.22 yuan while North China Pharmaceutical Co dropped 2.6 percent to 16.46 yuan.

China's National Development and Reform Commission (NDRC) may lower prices by an average 40 percent for 658 approved medications, the Economic Observer reported on Monday, citing officials from unidentified pharmaceuticals companies.

"Lowering the drug prices has been, and will continue to be, a trend," said Li Ying, a healthcare analyst at Capital Securities Corp in Shanghai. "As the government wants to make medical care affordable to everyone, more price cuts are under way."

The latest reduction in prices will be the fourth for nationally approved drugs since 2009, the Economic Observer said. Some prices of traditional Chinese medicine and vitamins will be subject to cuts of as much as 70 percent, it said, citing a government plan that hasn't been made public. Injections of vitamin B6 will fall to 0.17 yuan from 0.39 yuan, the Economic Observer said. The proposal comes after Anhui province initiated cuts averaging 50 percent on 852 separate drug items in September, the report said. NDRC officials praised the move and used it to shape a national plan, it said.

Drug companies are appealing to the State Council and the NDRC because the cost of some medications would be higher than their price, it said. The production cost of Agastachis Herbal Liquid is 3.7 yuan at Zhejiang Conba Pharmaceutical Co, while Shu Zhong Pharmaceutical Group won a government contract in Anhui with a price of 1 yuan, the report said.

China last month cut prices of drugs made by foreign companies including Roche Holdings AG and Bristol-Myers Squibb Co as part of government efforts to rein in healthcare costs.

(China Daily December 21, 2010)