Four Chinese drugmakers agreed to raise an API price together — ¥355M confiscated

In June 2025 China's State Administration for Market Regulation announced that four pharmaceutical companies — Jinyao Pharmaceutical, Xianju Pharmaceutical, Lianhuan Pharmaceutical and Xi'an Guokang Ruijin Pharmaceutical — had been fined and stripped of illegal gains totalling ¥355 million for fixing the price of dexamethasone sodium phosphate, the raw material for a widely used steroid drug.

The Tianjin market regulator found that in November 2021 the four reached an oral agreement to stop price competition and raise prices together, then from February 2022 to March 2024 lifted the API's price from ¥8,000 to ¥13,000 per kilogram while cutting supply to outsiders in sync, tightening the market. The higher input cost flowed into injection prices, raising costs for China's medical insurance scheme and patients.

Each company lost its illegal gains and was fined 8% of the previous year's sales. For Lianhuan Pharmaceutical alone, the bill came to 72.53% of its most recent annual net profit, cutting 2025 attributable earnings by ¥61.04 million. The probe opened in April 2024; SAMR said drug markets face intensified antitrust enforcement because they touch livelihoods.

They synchronized supply cuts to enforce the pact, lifting the API from ¥8,000 to ¥13,000 per kilogram; the ¥355M fine equaled 8% of each firm's sales.

When only a handful of firms make a drug's raw material, joining a price pact costs each of them nothing — the shortage itself enforces the agreement.

A synchronised supply cut is the lever that turns a price understanding into a market price; without it, any single seller undercuts the pact.

Fines are keyed to revenue, not to the extra profit earned — for a small drugmaker, 8% of sales can exceed most of a year's profit.

In concentrated upstream markets, a price understanding between competitors is a cartel however informal it looks — and the penalty is computed from revenue, not from the profit the pact made.