The first six reviews and potential centralized varieties
The consistency evaluation has been promoted rapidly to lay the foundation for volume procurement. In the early stage, the competition pattern of China's generic drug market was scattered. The state issued a notice on generic drug consistency evaluation in 2013 and officially began to promote consistency evaluation in 2015. In 2018, some varieties have passed the consistency evaluation. On the basis of the varieties passing the consistency evaluation, the medical insurance launched volume procurement. At present, six batches and seven rounds of volume procurement have been completed. With the increase of the number of varieties passing the consistency evaluation, the scope of volume procurement varieties is also expanding.
Continuous progress was made in volume procurement, and the rules were gradually improved. Since the start of 4 + 7 urban belt procurement in 2018, the belt procurement has been carried out six times. In addition, there is another expansion and centralized procurement for 4 + 7 centralized procurement varieties in 2019. In terms of the number of varieties, according to the rhythm of two batches a year, the number of centralized collection products is increasing, and the rhythm of centralized collection is obviously accelerating. In terms of varieties and types, from oral generic drugs to difficult generic injections to biological agents, centralized collection and expansion have been realized to achieve normalization in an all-round way. From the perspective of procurement rules, the latest price reduction of the Sixth Batch of centralized purchase tends to be rational, and takes full account of the actual production capacity of the enterprise, ensures the stability of medication, and guides the upgrading of clinical products and the innovation and upgrading of industry development.
Supporting policies ensure smooth connection and stabilize the current price. On November 4, 2021, the office of the State Medical Security Administration issued the notice on doing a good job in the succession after the expiration of the national organization's centralized drug delivery procurement agreement, so as to ensure the smooth succession after the expiration of the procurement agreement. The provincial and municipal levels continue to integrate quality, production capacity, credit and other factors, adhere to the integration of bidding and procurement and the linkage between quantity and price, stabilize the current price, protect the interests of the selected enterprises and ensure the normal supply of drugs. Judging from the renewal of the third batch of 22 (1-year) products expired in Jiangsu and Guangdong alliance, the products basically maintain the national purchase price.
At present, there are 202 varieties that meet the conditions of centralized purchase, of which the top 100 sales meet the conditions of centralized purchase, and there are 12 large varieties without centralized purchase. In the future, the probability of centralized purchase will focus on the varieties with 2 or more reviews, A total of 202 species were screened (there are 103 over evaluated companies and 99 over evaluated companies). Since 2018, six batches of centralized procurement have covered 234 kinds of drugs, involving an amount of about 240 billion yuan, accounting for about 30% of the procurement amount of chemical and biological drugs in public medical institutions. Almost all nuclear generic drugs of key companies have been intensively purchased, and the marginal impact of centralized purchase of generic drugs will be greatly weakened. (as of December 21, 2021)
Investment suggestions:
The national procurement with quantity has moved from the original variety pilot to the continuous expansion of the number of varieties, from the original evaluated and fully competitive chemical drugs to the whole variety with high procurement amount, full competition and strong social impact. We believe that under the background of national medical insurance fee control, the negotiation between centralized procurement and medical insurance should be normalized to drive industry innovation. We are optimistic about the transformation pharma and emerging biotech that can pass through the "medical insurance boundary": Jiangsu Hengrui Medicine Co.Ltd(600276) , Baiji China, Shanghai Junshi Biosciences Co.Ltd(688180) , Betta Pharmaceuticals Co.Ltd(300558) .
Risk warning: the progress of volume procurement is less than expected, the risk of sharp decline in drug prices, and other policy risks.
