By Clarence Leong

Chinese pharmaceutical shares skidded Tuesday as new draft rules for conducting oncology drug trials could increase research and development costs, analysts said.

Shanghai Fosun Pharmaceutical (Group) Co.'s A-shares shed 9.6%, while Hangzhou Tigermed Consulting Co. fell 11% and WuXi AppTec Co. declined 5.1%. The companies' Hong Kong-listed shares lost between 4.7%-8.6%.

A draft of the policy, released Friday by China's Center for Drug Evaluation, takes aim at "the low quality and repetitive R&D" of drugs developed in China, and seeks to push pharmaceutical companies to focus on innovation, said Daiwa Capital Markets analyst Dennis Ip.

Tigermed, which provides clinical research services for pharmaceutical product development, might be hit relatively hard in the short term, given its heavy reliance on Chinese clients for revenue, Mr. Ip said. Other companies like WuXi AppTec and Wuxi Biologics (Cayman) Inc. will be less affected since their largest revenue sources are from international clients, he added.

Changes in regulation will likely have limited impact on drugs that are already in the clinical-trial stage, given that the draft rules are still in the consultation stage, Soochow Securities said. The brokerage said higher requirements for conducting clinical trials should benefit drugmakers with greater capital resources and experience in clinical-trial designs.

Write to Clarence Leong at clarence.leong@wsj.com

(END) Dow Jones Newswires

07-06-21 0528ET