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Cheap, prescription-free drugs a growing tourist attraction in HK

HONG KONG — The Dragon City Pharmacy has become a cult favourite for Chinese visitors to Hong Kong, selling everything from medicines to mascara. Even so, the owners of this mum-and-dad business were bewildered when copycat drug stores bearing its brand began popping up across the city.

The original Dragon City Pharmacy in Tsim Sha Tsui, Hong Kong, says it only sells drugs to those with a prescription. Photo: Bloomberg

The original Dragon City Pharmacy in Tsim Sha Tsui, Hong Kong, says it only sells drugs to those with a prescription. Photo: Bloomberg

HONG KONG — The Dragon City Pharmacy has become a cult favourite for Chinese visitors to Hong Kong, selling everything from medicines to mascara. Even so, the owners of this mum-and-dad business were bewildered when copycat drug stores bearing its brand began popping up across the city.

In recent years, outlets named after the 60-year-old store — but with no affiliation — have opened up alongside a slew of other tiny pharmacies in Hong Kong’s prime tourist districts, minutes away from the Louis Vuitton and Chanel stores that dot the town. Often decorated in rainbow neon lights, these smaller outlets advertise sales of tax-free medicines.

Their line-up includes muscle rubs, painkillers, aphrodisiacs and traditional Chinese medicine. But if you ask quietly, many will also sell you something else: Cancer and hepatitis C drugs — no prescription necessary.

For years, Hong Kong was known as the place where Chinese shoppers picked up the newest fashions from luxury retailers. Now, prescription drugs are also an attraction.

Treatments such as Gilead Sciences Inc’s Sovaldi for hepatitis C and Roche Holding AG’s breast-cancer treatment Herceptin are either unavailable or more expensive in China. Many visitors from the mainland also prefer to buy their medicines in Hong Kong because they believe they are likely to be better quality.

“Every time I’m here for one of my shopping trips someone or the other will ask me to bring them back some medicine. We all know Hong Kong has better-quality products,” a 52-year-old woman surnamed Chen said in the Tsim Sha Tsui tourist district, where she was stocking up on make-up and shampoo.

The most urgent item on her shopping list was the liver cancer medicine Nexavar, although she did not have a prescription. She planned to stroll around and ask for the drug made by Bayer AG in the dozens of drug stores in the area. Ms Chen had bought similar medicines before and it was pretty easy, she said, holding a rhinestone-encrusted iPhone in one hand while packing a wheeled suitcase with her purchases.

Chinese shoppers such as Ms Chen are travelling across the border in search of cheaper drugs as changing lifestyles have put China in the grip of a cancer epidemic. The World Health Organization says that 3 million new cases are added each year. Estimates of China’s hepatitis C population range from 13 to 44 million: Among the highest in the world.

Surging Prices

The cross-border trade in Hong Kong also highlights the problems facing China’s prescription drug market, which by the estimates of research firm Frost & Sullivan had total sales of 1 trillion yuan (S$222 billion) last year. That is expected to double by 2019.

Even as regulators apply pressure to lower costs, mainland Chinese patients pay some of the highest prices for treatments worldwide.

Drug supply chains are complex, and Frost & Sullivan consultant Neil Wang estimates there is a 5 per cent to 7 per cent mark-up at various levels of the distribution system, which drives up prices. Also, taxes on imported medicines can add up to 17 per cent in China, according to Mr Wang, while Hong Kong doesn’t tax drug imports.

How It Works

Most Chinese rely on government insurance, and that coverage is often not enough. While China has signalled it would like to reform its insurance laws, millions are still left scrambling for access to life-saving treatments.

Meanwhile, a lengthy approval process for new drugs and their patents has stalled the entry of some of the latest drugs from overseas.

After a series of scandals around food safety, including milk tainted with melamine that caused deaths in 2008, many Chinese have greater trust in products bought overseas. So, even while Hong Kong retail sales have slumped, these pharmaceutical sales are helping some of the tiny stores in the tourist district stay afloat.

This is how it works: A customer goes in and asks for a certain drug — perhaps with a photograph of the bottle. Store workers look up the treatment, call around, look at inventory and provide a quote. They ask for half or full payment. Many only take cash, while a few accept credit cards.

Bloomberg visited 40 pharmacies in Hong Kong and found several willing to dispense treatments for illnesses such as liver cancer and leukaemia without a prescription. Some quoted prices that were cheaper than those listed by pharmacies on the mainland.

The real Dragon City Pharmacy said it will only sell drugs to those with a Hong Kong prescription.

This was corroborated by customers who had just visited and asked for treatments.

The Hong Kong government conducts routine inspections of pharmacies, and also buys and tests prescription drugs to fight illicit sales, the health department said in an emailed response to questions.

From 2011 to 2014, the department conducted 4,775 inspections of pharmacies and convicted 67 for illegal sales of prescription medicines.

Lagging Behind

Mr William Chui, president of the Society of Hospital Pharmacists of Hong Kong, estimates 90 per cent of cancer drug sales at Hong Kong drugstores are to mainland tourists, since most local patients can get their supply through hospitals or their doctors.

“How can they survive and pay the salary of a pharmacist and the rental cost?” said Mr Chui, referring to the mum-and-dad stores opening up in some of the city’s high-priced neighbourhoods. “You think they can get by just selling toilet rolls, formula milk powder, shampoo? Of course not.”

On a smoggy Friday in Hong Kong, one mainland Chinese woman surnamed Li said she had just put a down payment on Herceptin for a cousin from the northern Hebei province. The drug cost her HK$20,000 (S$3,640), and she could pick it up the next day. The price she had been quoted is about 30 per cent lower than it is in some parts of China.

“When we found out she had cancer, I rescheduled my trip and came here earlier,” she said, standing on Nathan Road, Hong Kong’s version of New York’s Times Square. “This is life or death, so of course we will do all that it takes to get the best treatment.” BLOOMBERG

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