(Yicai Global) Aug. 10 -- The Chinese government department that oversees the country’s medicine and apparatus centralized procurement program has struck off some of the drugs produced by Baiyunshan Pharmaceutical Holdings after the Chinese pharmaceutical giant was found to be setting extortionate prices.

Three subsidiaries inflated the prices of 87 drugs, including Baiyunshan’s trademark, self-developed medicine cephathiamidine used to treat sepsis and endocarditis, a type of inflammation of the heart, the National Healthcare Security Administration said yesterday. The names of the other drugs were not provided.

Baiyunshan has been told to eliminate the excessive margin, which accounted for more than half of the price of the medicines on average, and a probe into suspected violations of the law has been launched, the NHSA said.

The three units allegedly bribed hospital staff and other related people to sell the drugs through illegal sales promotions, the administration said. They also bought active pharmaceutical ingredients from more than 50 agents at inflated prices from 2017 to May last year and the sums involved were huge.

“It is difficult to inflate the price of generic medicines,” Huang Xiuxiang, a researcher at the policy research institute under the China Medical Pharmaceutical Material Association, told Yicai Global. “But a firm can make good money by jacking up the price of its own exclusive drug.”

Many provinces have stopped buying drugs from Guangzhou, southern Guangdong province-based Baiyunshan. And there are concerns that the NHSA’s announcement will affect Baiyunshan’s business performance.

Baiyunshan posted revenue of CNY69 billion (USD10.2 billion) last year, according to the firm’s 2021 financial report.

Editors: Shi Yi, Kim Taylor