Bloomberg News

China Drugmakers Rise to 19-Month High on Report: Shanghai Mover

February 20, 2013

China’s health-care stocks rose to the highest level since July 2011 after the official People’s Daily reported that the government plans to reduce the number of drug wholesalers.

A measure of drugmakers rallied 4.7 percent at the close, the most among 10 industry groups in the CSI 300 Index, which added 0.6 percent. China Resources Double-Crane Pharmaceutical Co. jumped by the 10 percent daily limit in Shenzhen. China Resources Sanjiu Medical & Pharmaceutical Co. rose 9.7 percent.

China aims to cut the number of drug wholesalers by 10,000 from the current 13,000, by raising entry barriers under newly revised guidelines, the People’s Daily cited Li Guoqing, an official of the State Food and Drug Administration, as saying.

“The move signals streamlining of the health-care industry and we’ll see more action from the government to reform the industry,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million.

The CSI 300 gauge of health-care stocks has advanced 21 percent this year, the biggest gain among the 10 sub-indexes. Health-care spending in China will almost triple to $1 trillion annually by 2020, driven by an aging population and government efforts to broaden insurance coverage, a McKinsey & Co. report said in August.

With disposable incomes rising, “people are getting more rich and more health-conscious,” said Jason Siu, analyst at OSK Investment Bank Bhd. “The health-care A-share market will continue to perform well.”

Reducing the number of wholesalers may boost industry profits. The new guidelines will take effect June 1, the administration said in a statement on its website.

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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