Pharmacy Chain Coordination in China

1. Introduction

Pharmacy chain coordination refers to arrangements through which competing retail pharmacies, pharmacy chains, distributors, manufacturers, or platforms coordinate prices, discounts, customers, territories, supply conditions, purchasing, bidding, or other competitive parameters instead of independently determining their commercial strategies.

In China, this conduct is particularly sensitive because retail pharmacies form an important part of the pharmaceutical distribution system. The 2025 Antitrust Guidelines for the Pharmaceutical Sector specifically address horizontal price coordination, market division, information exchange, third-party facilitation, resale-price restrictions, and other forms of coordination. The Guidelines state that competing pharmaceutical operators coordinating prices through third parties, industry meetings, information platforms, or similar channels can constitute a prohibited monopoly agreement.

The issue can therefore arise at several levels:

• pharmacy chain ↔ pharmacy chain — horizontal coordination;
• manufacturer ↔ pharmacy chain — vertical resale-price coordination;
• distributor ↔ multiple pharmacy chains — coordinated distribution restrictions;
• pharmacy chains ↔ purchasing organisations — joint purchasing and information-sharing risks;
• pharmacy chains ↔ online platforms — algorithmic or platform-assisted coordination;
• pharmacy chains ↔ bidding participants — coordinated tendering or market allocation.

2. Legal Framework

The principal framework is the Anti-Monopoly Law of the People's Republic of China, particularly its provisions concerning monopoly agreements.

A. Horizontal agreements

Competing pharmacy chains may not coordinate:

1. selling prices;
2. discounts or rebates;
3. price increases;
4. output or sales volumes;
5. customer allocation;
6. geographic territories;
7. procurement conditions;
8. tendering strategies; or
9. other important competitive parameters.

The pharmaceutical-sector Guidelines expressly identify agreements between competing pharmaceutical operators to fix or change prices as generally falling within the prohibition on horizontal monopoly agreements. They also cover coordination through algorithms, formulas, rules, third parties, information platforms and industry meetings.

B. Vertical coordination

A manufacturer or distributor can also create competition concerns by requiring pharmacies to maintain a specified resale price or minimum resale price.

The Guidelines expressly identify:

• fixed resale prices;
• minimum resale prices;
• restrictions on discounts;
• indirect price control through rebates;
• penalties for pharmacies selling below the prescribed price;
• refusal to supply;
• monitoring of pharmacy invoices or sales data; and
• third-party or algorithmic monitoring

as mechanisms through which resale-price maintenance may be implemented.

C. Market allocation

An agreement among pharmacy chains to divide:

• cities,
• districts,
• hospitals,
• customer groups,
• insurance customers,
• online/offline channels,

may amount to market allocation.

D. Information exchange

Pharmacy chains should be particularly careful about exchanging competitively sensitive information such as:

• future prices;
• planned discounts;
• procurement prices;
• inventory;
• sales volumes;
• margins;
• tender strategies;
• customer-specific information.

The pharmaceutical Guidelines specifically recognise third-party communication and information platforms as possible mechanisms for price coordination.

3. What Constitutes Pharmacy Chain Coordination?

3.1 Direct price coordination

Example:

Chain A, Chain B and Chain C agree that a particular prescription medicine will not be sold below RMB 100.

This is classic price coordination.

The fact that the agreement is informal does not necessarily protect the participants. Communication through meetings, telephone calls, messaging applications or intermediaries can constitute evidence.

3.2 Coordinated discount policies

Pharmacies may coordinate not to offer:

• discounts exceeding 5%;
• promotional coupons;
• loyalty-card discounts;
• online price reductions; or
• insurance-linked discounts.

Even without expressly saying "fix the price," an agreement restricting independent discounting can have the same competitive significance.

3.3 Territorial allocation

Suppose:

• Chain A operates in Beijing and Tianjin;
• Chain B operates in Shanghai and Jiangsu;
• Chain C operates in Zhejiang;

and the chains agree not to enter each other's territories.

This may constitute market allocation.

A similar problem could arise where pharmacy chains divide customers according to:

• hospitals;
• residential areas;
• insurance customers;
• elderly consumers;
• online customers; or
• corporate healthcare accounts.

3.4 Joint refusal to compete

Several pharmacy chains might agree collectively:

"We will not purchase this medicine unless the supplier increases the wholesale margin."

Depending upon the circumstances, such conduct may constitute a joint boycott or coordinated purchasing restriction.

3.5 Coordinated tendering

Pharmacy chains participating in government, hospital, insurance or institutional procurement must independently formulate their bids.

Potentially problematic conduct includes:

• agreeing who will win;
• rotating winning bids;
• agreeing bid prices;
• allocating customers;
• submitting deliberately noncompetitive bids; or
• agreeing not to bid against another participant.

4. Six Important Chinese Case Laws / Enforcement Cases

Case 1 — Yangtze River Pharmaceutical Group RPM Case

Yangtze River Pharmaceutical Group Co., Ltd. — SAMR, 2021

This is one of the most important Chinese pharmaceutical competition cases for pharmacy chains.

Between 2015 and 2019, Yangtze River Pharmaceutical Group entered into arrangements with distributors and retail pharmacies, including chain pharmacies, fixing resale prices and minimum resale prices.

The arrangements were implemented through:

• distribution agreements;
• tripartite agreements;
• price-adjustment notices;
• oral instructions;
• sales personnel communications;
• monitoring mechanisms;
• penalties against discounting distributors; and
• third-party monitoring of online prices.

SAMR concluded that the conduct restricted competition and violated the then-applicable Anti-Monopoly Law provisions on resale-price maintenance.

The company was ordered to cease the conduct and fined approximately RMB 764 million, representing 3% of its 2018 sales.

Importance for pharmacy chains

This case demonstrates that pharmacy chains do not need to be the organisers of a cartel themselves to face competition-law exposure. A manufacturer's instructions concerning resale prices can restrict the pharmacy's independent pricing.

It also shows that:

price monitoring + contractual restrictions + enforcement mechanisms = strong evidence of implementation.

Case 2 — Beijing Zizhu Pharmaceutical Distribution Case

Beijing Zizhu Pharmaceutical Distribution Co., Ltd. — Beijing SAMR, 2023

This case involved the medicines Jinyuting and Yuting, both emergency contraceptive products.

From 2015 to 2021, the company entered into arrangements with first- and second-level distributors concerning fixed and restricted resale prices.

The arrangements involved:

• agreements;
• price-adjustment notices;
• undertakings;
• detailed sales-management rules; and
• data-company monitoring of distributors' prices.

The Beijing authority concluded that the conduct constituted a prohibited monopoly agreement and imposed a fine of approximately RMB 12.64 million, equivalent to 2% of its 2020 domestic sales.

Importance

Although the case concerned the pharmaceutical distribution chain rather than a classic pharmacy-to-pharmacy cartel, it is highly relevant to pharmacy-chain coordination because it illustrates how distribution contracts and data monitoring can become mechanisms for maintaining coordinated retail prices.

Case 3 — Allopurinol Tablet Price and Market Allocation Case

Chongqing Qingyang Pharmaceutical Co. and others — NDRC, 2016

Three pharmaceutical companies coordinated the price of allopurinol tablets.

They agreed to increase prices in stages, including an agreement to raise the price to approximately RMB 18 per bottle and subsequently to RMB 23.8.

More importantly, the companies also divided sales territories.

The agreed territories covered different groups of provinces, and participants agreed not to bid or negotiate outside their allocated territories.

Importance for pharmacy chains

The case demonstrates the combination of two separate forms of coordination:

Price coordination + territorial allocation.

For pharmacy chains, an equivalent arrangement could involve an agreement such as:

• Chain A will compete only in northern cities;
• Chain B will compete only in southern cities;
• Chain C will not open stores in the others' designated territories.

Such an arrangement can seriously reduce independent competition.

Case 4 — Estazolam Pharmaceutical Monopoly Agreement Case

Huazhong Pharmaceutical, Shandong Xinyi and Changzhou Siyao — NDRC, 2016

The three companies were competitors in the production of estazolam API and tablets.

They coordinated to:

1. stop supplying API to external competitors;
2. reserve API production for their own tablet production; and
3. coordinate increases in tablet prices.

The companies communicated through meetings, telephone calls, text messages and emails.

Following the agreement, external tablet producers lost access to the relevant API and some were forced to stop production. The three companies then increased tablet prices.

The total fines exceeded RMB 2.6 million.

Importance

This case is particularly relevant to pharmacy chains because it demonstrates the vertical and horizontal consequences of coordinated conduct.

A pharmacy-chain analogue could involve competing chains collectively restricting access to a supplier or jointly refusing to stock a competing product.

Case 5 — Shanghai Xinyi, Henan Runhong and Chengdu Huixin Case

Shanghai Xinyi United Pharmaceutical Materials Co., Henan Runhong Pharmaceutical Co. and Chengdu Huixin Pharmaceutical Co. — Shanghai SAMR, 2025

This is a particularly important recent case.

The three companies coordinated the price of neostigmine methylsulfate injection and divided sales markets.

According to Shanghai SAMR, the companies:

• agreed to raise prices;
• communicated about the coordinated pricing;
• divided public-hospital and private-hospital markets;
• maintained allocated market shares; and
• used arrangements concerning distribution rights and agents.

The coordinated price increase reportedly reached approximately 11 to 21 times the earlier level.

The authorities imposed total penalties and confiscations of approximately RMB 222.998 million. A responsible individual was also fined RMB 500,000. The authority described this as the first case in which personal liability under the amended Anti-Monopoly Law's monopoly-agreement provision was imposed.

Importance for pharmacy chains

This case demonstrates that market division is independently serious even where the coordination is not limited to price.

For pharmacy chains, allocating:

• geographic areas;
• hospitals;
• private/public customers;
• online/offline customers;

could create similar competition concerns.

Case 6 — Tianjin Pharmaceutical / Zhejiang Xianju / Jiangsu Lianhuan / Xi'an Guokangruijin Case

SAMR/Tianjin Market Regulation Commission, 2025

Four pharmaceutical companies coordinated the price of dexamethasone sodium phosphate API.

According to the authorities, the coordination was organised through communications, meetings and site visits. The companies agreed to stop competing on price and jointly raise prices.

They subsequently reduced external supply and increased the price from approximately RMB 8,000/kg to RMB 13,000/kg between 2022 and 2024.

The authorities imposed total penalties and confiscations of approximately RMB 362 million, including substantial individual penalties.

Importance

This is significant for pharmacy-chain compliance because it demonstrates the increasingly serious Chinese enforcement approach toward:

• informal agreements;
• oral coordination;
• intermediary involvement;
• supply restriction; and
• individual responsibility.

A cartel does not necessarily require a written agreement.

5. A Judicial Counterpoint: Children's Oral Liquid Case

A useful judicial example is the Children's Oral Liquid vertical monopoly dispute involving Zhejiang Gumei Pharmaceutical and Weihai Renhe Pharmaceutical.

The agreement required a minimum terminal selling price.

The court recognised that the provision constituted a minimum-resale-price arrangement in form, but found that the relevant children's cold-medicine market was sufficiently competitive and that the product did not possess market dominance. Consumers had numerous alternative medicines.

The court therefore concluded that the particular restriction had not produced the required exclusionary or restrictive effect and rejected the claim that the agreement constituted a prohibited vertical monopoly agreement.

Importance

This case is important because it illustrates an important distinction:

Not every vertical price provision automatically produces the same legal result.

Relevant factors may include:

• market definition;
• market shares;
• competitive alternatives;
• market power;
• actual effects;
• duration;
• entry conditions; and
• cumulative effects.

This must, however, be read alongside the newer pharmaceutical-sector Guidelines, which specifically identify RPM practices and the evidentiary framework applicable to them.

6. Coordination Through Digital Platforms

Modern pharmacy chains increasingly use:

• online pharmacy platforms;
• automated repricing;
• common software;
• shared data providers;
• price-monitoring services;
• digital procurement systems; and
• algorithms.

This creates a new form of coordination risk.

For example:

Chain A and Chain B independently upload pricing data to the same third-party system, which automatically recommends that both maintain the same price.

The absence of a traditional face-to-face meeting does not necessarily eliminate the antitrust concern.

The 2025 pharmaceutical Guidelines expressly recognise coordination through third-party entities, information platforms, algorithms and other technological mechanisms.

7. Pharmacy Chain Joint Purchasing

Joint purchasing is not automatically unlawful.

China's pharmaceutical policy actually encourages legitimate joint purchasing mechanisms in appropriate circumstances. A 2026 State Council policy, for example, encouraged retail pharmacies to participate in centralized procurement and promoted joint purchasing to obtain volume-based pricing.

The competition-law issue depends upon how the joint purchasing arrangement operates.

Potentially legitimate

Several independent pharmacy chains jointly negotiate volume discounts with a manufacturer while:

• remaining independent competitors;
• not exchanging future retail prices;
• not allocating customers;
• not restricting purchases from other suppliers; and
• not coordinating downstream resale prices.

Higher-risk arrangement

The same pharmacies agree:

"We will jointly purchase at this price and all members will sell at RMB X."

The purchasing arrangement has now potentially become a mechanism for downstream price coordination.

8. Key Forms of Pharmacy Coordination

9. Evidence of Coordination

Chinese enforcement practice demonstrates that authorities can rely upon a wide range of evidence.

Documentary evidence

• contracts;
• distribution agreements;
• price notices;
• emails;
• internal policies;
• pricing instructions;
• meeting minutes.

Digital evidence

• WeChat messages;
• messaging records;
• spreadsheets;
• pricing databases;
• platform records;
• algorithmic instructions;
• sales-monitoring systems.

Economic evidence

• simultaneous price increases;
• identical pricing;
• unexplained withdrawal of discounts;
• parallel market allocation;
• unusual supply restrictions.

Witness evidence

• employee statements;
• distributor testimony;
• pharmacy testimony;
• responsible-person communications.

The Yangtze River case is particularly instructive because authorities relied on contracts, price notices, communications and monitoring arrangements rather than merely observing similar retail prices.

10. Parallel Pricing Is Not Automatically a Cartel

An important distinction should be maintained between:

Conscious independent pricing

Several pharmacy chains independently raise prices because:

• wholesale prices increased;
• procurement costs increased;
• regulatory costs increased; or
• demand changed.

This is not automatically a monopoly agreement.

Coordinated pricing

The chains communicate and agree:

"We will all increase prices by 10% next month."

This is materially different.

The pharmaceutical Guidelines specifically identify agreements or communications concerning price changes, discounts, margins, formulas and restrictions on independent pricing as potential horizontal coordination.

11. Market Definition

For pharmacy-chain cases, the relevant market may need to distinguish between:

Product markets

• prescription medicines;
• OTC medicines;
• generic medicines;
• branded medicines;
• specific therapeutic categories;
• medical devices;
• health products.

Distribution channels

• physical pharmacies;
• online pharmacies;
• hospital pharmacies;
• hospital sales;
• direct-to-consumer platforms.

Geographic markets

Depending upon the competitive conditions, the relevant geographic market may be:

• national;
• provincial;
• city-level; or
• local catchment area.

The 2025 pharmacy-sector merger example involving Sinopharm Gaoji Pharmaceutical's acquisition of Tianji Pharmacy Chain companies illustrates that SAMR examines pharmacy retail at geographically defined city markets and can separately analyse wholesale, physical pharmacy retail and online retail markets.

12. Pharmacy Chain Mergers and Coordination Effects

Coordination concerns can also arise through concentration.

A merger between two pharmacy chains may:

• eliminate a close competitor;
• make parallel pricing easier;
• increase transparency;
• reduce independent pricing;
• increase bargaining power against suppliers; or
• facilitate exclusion of smaller pharmacies.

SAMR's 2025 review of the Gaoji–Tianji pharmacy transaction specifically considered horizontal and vertical relationships, market shares, market concentration, unilateral effects, coordinated effects and foreclosure. The transaction was ultimately unconditionally approved on the facts considered.

Thus, a pharmacy-chain transaction should not be assessed only by asking:

"Will the merged company become dominant?"

The analysis can also consider whether the transaction changes the conditions for coordinated effects or foreclosure.

13. Compliance Measures for Pharmacy Chains

A pharmacy chain operating in China should adopt a clear antitrust compliance programme.

Employees should not:

• agree prices with competing chains;
• discuss future discounts with competitors;
• exchange future pricing plans;
• divide geographic markets;
• agree which chain will serve particular hospitals;
• coordinate tender submissions;
• agree not to enter another chain's territory;
• exchange competitively sensitive procurement data.

Management should control:

• industry-association meetings;
• distributor communications;
• supplier contracts;
• pricing algorithms;
• shared databases;
• purchasing platforms;
• benchmarking exercises.

Contracts should be reviewed for:

• minimum resale prices;
• fixed retail prices;
• discount restrictions;
• price-monitoring clauses;
• penalties for discounting;
• supply termination linked to retail prices;
• territorial restrictions;
• customer restrictions.

14. Penalty and Individual Liability

The post-2022 Chinese Anti-Monopoly Law has increased the importance of individual compliance.

The 2025 Shanghai pharmaceutical case demonstrated the practical significance of individual liability: a responsible individual was fined RMB 500,000 for participating in the formation of the monopoly agreement.

The Tianjin pharmaceutical case similarly imposed substantial individual penalties in addition to corporate sanctions.

Therefore, pharmacy-chain compliance should not be treated merely as a corporate legal issue. Executives, procurement managers, sales managers and other responsible personnel can face personal consequences where the statutory conditions are satisfied.

15. Key Case-Law Principles

16. Conclusion

Pharmacy Chain Coordination in China encompasses much more than an explicit agreement between two pharmacy chains to fix retail prices. It can arise through direct competitor communications, market allocation, coordinated procurement, tender coordination, information exchange, supplier-imposed resale prices, third-party intermediaries, digital platforms and algorithmic pricing.

The most important lessons from Chinese pharmaceutical enforcement are:

1. Competitors must retain independent pricing decisions.
2. Market allocation is as significant as price fixing.
3. Vertical RPM can create substantial liability.
4. Oral or informal agreements can be sufficient.
5. Third parties and digital platforms do not automatically insulate participants.
6. Price-monitoring systems can become evidence of implementation.
7. Joint purchasing must be carefully separated from downstream price coordination.
8. Pharmacy-chain mergers may raise both unilateral and coordinated-effects concerns.
9. Individual managers can face liability under the post-2022 regime.
10. The 2025 Pharmaceutical Antitrust Guidelines provide a particularly important framework for analysing these risks going forward. 

For an exam or research answer, the central proposition is therefore:

Independent pharmacy competition must be preserved at the retail level; cooperation in procurement or distribution may be permissible in appropriate circumstances, but coordination of retail prices, markets, customers, supply or competitively sensitive information can cross the line into prohibited monopoly conduct under Chinese competition law.