China Bulk Pharmaceutical Purchasing Program Puts the Squeeze on Pharma Companies to Slash Prices

Three years after China launched a national drug bulk-buying program to negotiate lower prices from drug manufacturers, competitive pressure continues to grow on multinational pharmaceutical companies seeking to compete in the vast country’s market.

The results of the fourth round of the program, known as volume-based procurement (VBP), were released in February.  Of 45 products under consideration, most bids were won by local Chinese manufacturers, who were able to offer prices 50% lower than international competitors, on average.  Under the parameters of the program, public hospitals, as well as some military and private medical institutions, band together to agree to stock a large number of pharmaceuticals in exchange for price savings.

Multinational pharmaceutical companies Novartis, Pfizer, AstraZeneca, and Boehringer Ingelheim all lost out in the bidding. Two others, Sanofi and Fresenius Kolbi, were able to cut prices enough on some of their products to win out over Chinese competitors.