(Yicai Global) Aug. 17 -- China's third centralized medicine procurement program that will open for bidding on Aug. 20 is expected to push down drug prices while saving the national medical insurance fund more than CNY10 billion (USD1.4 billion).

The National Healthcare Security Administration is looking to buy 56 generic drugs, including cancer and psychotropic treatments, during the third year of the program, it said in a statement on its public bidding platform. Sales of these 56 products in China reached about CNY44 billion (USD6.3 billion) last year, based on medical data platform Sinohealth CMH.

Merck Group and AstraZeneca should become some of the most-affected brands as five of the German drug giant's products are on the list that mentions 25 firms while that involves four of the Swedish-British firm's products.

Rivalry among generic drug makers is expected to be fierce as 16 products are expected to have more than five bidders.

Drug price wars could become more intense, with substantial price cuts becoming inevitable as those that lose a bid will basically need to withdraw from Chinese hospitals, according to Sinohealth CMH.

But squeezed prices are better for the people. "The speed of the centralized procurement policy has exceeded everyone's expectations," Fu Gang, chairman of Baheal Pharmaceutical, told Yicai Global. The joint purchasing program should reduce the prices that used to be inflated and promote concentration among high-quality firms. "China has 7,000 pharmaceutical factories, and up to 2,000 will survive."

In the previous procurement scheme, prices of the involved drugs fell by 53 percent. If that discount ratio is true for the third round, the national fund could save more than CNY10 billion via the program.

China's total spend in healthcare has increased over recent years. It was about CNY6.5 trillion (USD940 billion) last year, making up about 6.6 percent of the country's gross domestic product, rising 2 bips from a year before, according to public data. Out-of-pocket payments fell to 28 percent last year from 60 percent in 2001.

Editor: Emmi Laine