In major cities of China, the complaints of exorbitant drug prices in hospitals and big drugstores could be heard frequently. A number of competitive minded drugstores in Nanning, the capital city of Guangxi Zhuang Autonomous Region, is challenging this by lowering their prices. It looks like the medicinal market is going to start heating up pretty soon. 
 
Economy drugstores in Nanning City have slashed their prices once more. Common People Drugstore is a good example. The prices of Chinese traditional medicine there have been cut by more than 30 percent and prescription drugs by 10 percent. Its manager Tang Aiming says the reduction of prices is an attempt to challenge big drugstores as well as hospitals.

"We are considering how to grab market shares from hospitals. We want to offer more attractive prices than hospitals."

Another local drugstore called Kang Quan has followed suit. All of its seven branches have lowered the prices on 80% of products in order to attract consumers.

A senior official from Rui Kang Hospital, Huang Xiaoou admits that these drugstores do pose a threat to big stores and hospitals. Many patients take their prescriptions away from the hospitals and go to fairer-priced drugstores to buy their medicine.

"We have suffered about 6 percent of loss of prescriptions. It has created economic losses for the hospital."

Understanding the demand for cheap drugs, hospitals have responded with their own price cutbacks. For example, hospitals are now trying to cut out the middlemen by buying drugs directly from first-level wholesale enterprises or pharmaceutical manufacturers. This will place the customer nearer to the original supplier and thus avoid unnecessary intermediary price mark ups.

At present, hospitals are still clinging to the majority of the drug market in Nanning, with cut-price outlets getting only about 15 to 20 percent of the business. And, whoever wins this price war, consumers will inevitably reap the benefits of this competitive market.
 
(CRI May 26, 2004)