In the past, China’s hospitals depended on the sales of drugs for income, especially to pay doctors. Many of them have also been found writing prescriptions for unnecessary drugs in order to take money from pharmaceutical companies. According to the Chinese Ministry of Commerce, qualified drugstores should replace hospital pharmacies (where prices are higher) and doctors should make prescriptions for medicines thinking of the needs of their patients. The Chinese government tried to low the price of medicines, separating drug sales and hospitals and incorporating drugstores into the country’s medical insurance system, which allows patients to get reimbursed for spending on healthcare and medicines. Because of the wide disparities among China’s regions and the country’s rural-urban income gap, purchasing power and retail demand vary greatly. Nowadays, the Chinese pharmacy retail market needs consolidation. Despite the expanded market access, foreign-invested drug retailers are still rare in China, in part because of the current healthcare system, under which 85 per cent of drugs are sold directly through hospitals. As part of China’s healthcare reforms, the government announced that it will gradually separate drug sales from healthcare institutions, allowing greater market share and more freedom in drug price setting for retailers. The government also recently released several documents that lay out the future of the drug retailing sector. These documents provide several market opportunities for foreign investors, including foreign participation in mergers and acquisitions and drug procurement. They also encourage chain stores that use modern logistics for urban and rural drug retail businesses. The aim is to strengthen the distribution network in rural areas, which will create more favourable infrastructure conditions for chain stores. The gLAWcal team LIBEAC project Friday, November 7, 2014 (Source: Forbes)