Hong Kong’s lower prices for high-end medicine lure mainland Chinese buyers

PUBLISHED : Wednesday, 14 August, 2013, 3:26pm
UPDATED : Wednesday, 14 August, 2013, 5:28pm

Could medicine become the next milk powder for cross-border traders?

Many high-end imported pharmaceuticals are sold for much less in Hong Kong than in mainland drug stores, Chinese media has reported, prompting more mainland customers to purchase them across the border.

Some cancer drugs – most costing HK$10,000 to HK$20,000 in Hong Kong – are thousands of dollars more expensive on the mainland, said party newspaper People’s Daily in a report on Wednesday.

A bottle of 120 tablets of Glivec, a Swiss drug that treats leukaemia, for example, costs HK$22,330 in Hong Kong, but is sold for 25,500 yuan (HK$32,058) across the border. The price difference for other medications can range from HK$500 to more than HK$10,000.

A 440-millilitre bottle of Herceptin, a drug for breast cancer treatment made by Swiss-based Roche, is marked up more than HK$10,000 on the mainland than in Hong Kong, where it goes for HK$19,110.

The solution for some people on the mainland is to buy the imported pharmaceuticals in Hong Kong, following the trend for milk powder, which also costs more on the mainland after the melamine scare in 2008.

The owner of a drug store in Sai Wan told People’s Daily that mainland buyers now contribute to as much as half of his sales. He said he brings in HK$100,000 in sales every day, and estimated that the proportion of buyers was probably higher in areas with more tourists, such as Causeway Bay.

Swiss pharmaceutical Roche said the mark-up mostly comes from tariffs.

“Hong Kong is a duty-free city, whereas Herceptin’s price on the mainland is set by the National Development and Reform Commission,” a spokesman said, referring to China’s powerful economics regulator.

Another factor contributing to the price difference is the commission fee between pharmacies and hospitals in China, Chui Chun-ming, chairman of the Society of Hospital Pharmacists of Hong Kong, told People’s Daily.

“Medical expenses at public hospitals in Hong Kong are covered by the government, so they are sold at the original price. But mainland hospitals normally charge extra for medicine ... plus the commission fee paid by pharmacies, these have all contributed to a high price for medicine at the end of the distribution chain,” Chui added.

Chinese hospitals have traditionally relied heavily on medicine sales to uphold its enormous operational costs. Previous official records show that between 2000 and 2011, medicine sales on average account for more than 44 per cent of all hospital earnings in China. That figure could be as high as 70 per cent in some smaller hospitals.

“Because doctors at Hong Kong’s public hospitals already enjoy high income, they are less willing to profit on pharmacies,” Chui said, on why doctors are less influenced by pharmacies.