Paul Krugman: China’s economy has hit its Great Wall

China has a drug problem. While most Western countries spend 10-12% of their healthcare budget on medicines, in China it is well over 40%, a disparity that goes to the heart of Beijing’s crackdown on the industry.All economic data are best viewed as a peculiarly boring genre of science fiction, but Chinese data are even more fictional than most. Add a secretive government, a controlled press and the sheer size of the country, and it’s harder to figure out what’s really happening in China than it is in any other major economy.Yet the signs are now unmistakable: China is in big trouble. Read more.A promise this week by GlaxoSmithKline to make its drugs more affordable in China in the wake of a bribery scandal is an important lever Chinese authorities may now use to start redressing the balance.Britain’s biggest drugmaker has given no details on the size of the price cuts it will consider, but an examination of its discounts in other emerging markets suggests there may be scope for reductions for some medicines of a third or more. Other pharmaceutical firms might have to follow suit.“Four executives were arrested, the company itself will probably be fined top to bottom, and they are having to cut prices,” said one veteran industry executive in China, who declined to be identified.“That’ll send a signal to other players in the industry, and prices should come down.”Chinese police have detained four Chinese GSK executives in connection with allegations the d...
Source: PharmaGossip - Category: Pharma Commentators Authors: Source Type: blogs