One drugstore formed an alliance with drug
producers and primary wholesalers in Beijing on Monday, aiming to
profit from high sales while providing consumers with lower-price
drugs.
Chen Jinliang, board chairman of Tiantian Hao
Drugstore Co. Ltd, said the move would sidestep intermediate
suppliers and form a transparent and direct supply channel, the
savings from which would be passed onto customers.
The alliance was initiated by the Hangzhou-based
drugstore, a newcomer to the capital's pharmaceutical market, and
was joined by around 20 drug manufacturers and wholesalers.
They included renowned producers Minsheng
Pharmaceutical Group, Sanjiu Medical and Pharmaceutical Co.,
Guangzhou Baiyunshan Pharmaceutical Co., Guizhou Shenqi
Pharmaceutical Co. and wholesalers Beijing Fengkecheng, Beijing
Jingxinlong.
From August 25, according to the agreement, 3,000
of the most popular products will have their prices cut, some by as
much as 90 percent.
The prices of 500 kinds of drugs will be set at
wholesale price levels, a first for China, and is expected to
result in huge savings for customers.
Niu Zhengqian, vice general manager of Beijing
Fengkecheng, said cut-price drugstores can still make profits
through large-scale sales despite cutting profit margins from
around 15 to 7 or 8 percent.
Tiantian Hao's strategy would have a notable impact
on other drugstores in its vicinity, said Niu, but its effect on
citywide prices would be quite limited.
Beijing chain drugstores' sales income was 2.6
billion yuan in 2004, and the market is dominated by large firms
like Yibao Quanxin Drugstore, Jinxiang Drugstore and Tongrentang
Drugstore.
Zhang Zhengrong, general manager of Jinxiang, said
they will not be following suit in reducing drug prices.
High drug prices in hospitals and big drugstores
are a common source of complaint across China.
(China.org.cn by Yuan Fang, August 25, 2005)