The Chinese medicines market: moving towards a market system?

This paper presents a review of the Chinese pharmaceutical policy in order to analyse the forms of effective market competition introduced or not in the system. Registration, pricing and trade are three areas showing the limits on competition. The government limits the duration of the registration procedure to three years, which leaves some opportunities for challengers to market similar products afterwards. The pricing system in place is a maximum price ceiling. The price structure reveals a net difference of treatment between foreign products and domestic products. With respect to trading policy, the government applies a selective licensing policy for exports and imposes variable custom taxes on a product-by-product basis on imports. At a micro level, the Chinese market has instant market conditions with fair trade where manufacturers, importers and distributors can meet. Different cost-sharing experiments between the state, the working units and the patients also introduce more sensitivity to prices from the consumer. Such a duality between the limits imposed on competition by public policy tools and the experiments or market conditions in place at the level of the organisations underlines the ambiguity of the move towards a market economy in the Chinese pharmaceutical market.