Recently, according to the official website of Tianjin Municipal People's government, the Beijing Tianjin Hebei "3 + n" alliance organized the joint procurement of orthopedic trauma medical consumables. 20026 products from 89 enterprises were selected, with an average price reduction of 83.48%. The alliance includes 17 regions including Tianjin, Inner Mongolia Autonomous Region, Liaoning Province, Jilin Province, Heilongjiang Province, Zhejiang Province, Anhui Province, Fujian Province and Shandong Province, with a total agreed purchase of 1085700 sets.
It is understood that orthopaedic trauma consumables are one of the high-value medical consumables with large clinical consumption and high purchase amount in orthopaedic surgery. In the field of orthopedics, following the national centralized procurement of artificial joints last year, the national level is preparing to carry out centralized procurement of spinal consumables.
On March 28, the state organized the joint procurement office of high-value medical consumables to issue the notice on carrying out the information confirmation of orthopedic spine medical consumables. The notice clearly pointed out that in order to do a good job in the centralized procurement of orthopedic spine medical consumables, the state has organized the joint procurement office of high-value medical consumables to sort out the component information of spine consumables, and now carries out the confirmation of component information.
Earlier, on February 11, Chen Jinfu, deputy director of the national medical insurance administration, said at the regular policy briefing of the State Council that the procurement of medical consumables will be further extended to spinal consumables, so as to basically realize the main coverage of orthopedic consumables, the largest sector of consumables. At present, we are conducting thorough research on spinal consumables, as well as information standardization and rule research.
At the same time, it will also carry out the procurement of high-value medical consumables in a normalized and institutionalized manner, focusing on orthopedic consumables, drug balloons, dental implants, etc., and strive to cover more than 5 varieties of high-value medical consumables in each province by the end of 2022 through national organization and provincial alliance procurement.
how much coverage will consumables be purchased with quantity
Wang Qiang, a medical device marketing management expert, told the 21st Century Business Herald that at present, there are more than 80000 product registration certificates in the whole medical device industry, and it is estimated that there are 7000 or 7000 kinds of medical devices. At present, only dozens of kinds are purchased in quantity, and the purchase of consumables in quantity will be a long-term policy.
According to the data of the State Food and drug administration, as of January 31, 2022, there were 89354 medical device product registration certificates and 117261 filing certificates in China.
According to the data of Huazhao instrument network, as of February 28, 2022, there were nearly 50 types of volume procurement at the provincial level (including inter provincial alliance), with an average of about 15 consumables included in the scope of volume procurement in each province. Popular varieties such as coronary stents, artificial joints, coronary dilation balloons and intraocular lenses have achieved national coverage.
According to Wang Qiang's analysis, whether it will be purchased in volume depends on three conditions. The first is the market scale. It is expected that the varieties in the 10 billion market will be covered in volume procurement first. The second batch may be 5 billion and the third batch is 1 billion; Second, there is a certain price reduction space. Although the consumption of consumables such as gauze and cotton balls is large, the price is very low and the price reduction space is very small; The third is whether the product is covered by medical insurance.
Another senior person in the industry told the 21st Century Business Herald that the core of how much medical consumables will be covered by volume procurement is the four words - "should be collected as much as possible". In the end, each type of consumables may be covered.
"Of course, there is also a sequence. First, those with mature technology, large use and high price, such as cardiology and orthopedics, and then gradually expand to other varieties. New products may also be covered, but there will be a certain cycle. New products should be allowed to develop in the market before they can be purchased in quantity." Said the senior person.
According to Huazhao instrument network, at present, the high-value consumables purchased in various places are mainly concentrated in three fields: vascular intervention, orthopedics and Ophthalmology; Low value consumables are mainly indwelling needles, infusion sets and other varieties with high clinical use frequency; Gradually, some places began to explore the purchase of reagent with quantity.
In March 28th, the Guangdong provincial drug exchange center issued the notice on developing the forecast work of New Coronavirus Alliance (New Coronavirus) (2019-nCoV) detection reagent consumption related varieties. The notice indicated that it will carry out the forecast work of New Coronavirus alliance New Coronavirus (New Coronavirus) detection reagent consumption related materials. Varieties include: New Coronavirus (2019-nCoV) nucleic acid, IgM antibody, IgG antibody, IgM/IgG antibody, total antibody, antigen detection kit, and nucleic acid extraction or purification reagent kit, sample collection device, vaccine inoculation syringe medical consumables for effective China Medical Device Registration (record) certificate.
With the high-frequency and full coverage of popular varieties, it is speculated that the varieties purchased with quantity will gradually spread to low-frequency purchased varieties such as pressure pump and hemostatic materials, new varieties and innovative varieties such as dental implant system that have not been purchased.
At the same time, there seems to be a problem of expanding the scope of procurement. The relevant person in charge of Shanghai Medical Security Bureau once issued a document saying that we should face up to the gap between China's and foreign pharmaceutical industries. At this stage, we should carefully consider using the volume procurement mode of simple and repeated bidding for industrial fields with high technology content and immature domestic enterprises.
Most foreign-funded enterprises have developed for a long time, long product pipelines, strong R & D capital, and their profits are generally far higher than the cost. However, domestic enterprises start late in the field of high-value medical consumables, and their product lines are generally single. Most Chinese enterprises are still in the stage of imitation and innovation transformation. Multiple rounds of bidding may lead to the decline of prices of relevant products and dilute the profits of production enterprises.
is there a "win-win" balance point under the great changes in the industry
Wang Qiang told the 21st Century Business Herald that once the products are purchased by the provincial alliance or the state, the products will enter a low profit state after the first round of centralized mining, and the enterprise profit may be lower after two rounds.
According to the announcement of the listed company, the loss of minimally invasive medical treatment in 2021 is about US $275 million to US $285 million, which is one of the reasons. The Lepu Medical Technology (Beijing) Co.Ltd(300003) financial report also shows that with the implementation of centralized mining in 2021, the income of traditional stent business decreased, and by the second quarter of 2021, the stent business segment basically returned to the normal level in 2019.
Wang Qiang also said that 90% of the dealers may be eliminated after purchasing consumables in quantity, thus entering the era of natural sales - before purchasing in quantity, the manufacturer needs to sell or the agent goes to the hospital, but after purchasing in quantity, the salesperson loses the significance and value of existence. On the one hand, the price of products is reduced by more than 80%, there is no cost to support sales, and there is no need to sell, develop and maintain the hospital market. On the other hand, Volume purchase has divided the hospital market and sales volume, further weakening the function of sales.
However, the above senior insiders said that under the influence of volume procurement, dealers are not unnecessary. Dealers still have certain value in terms of payment collection, inventory and academic promotion, but too many links of middle-level distribution will be replaced.
"Whether the distribution mode will be replaced by the new mode depends on the profit of the product. If there is space, the enterprise may retain some dealers. If the profit is quite low, it may choose the direct selling mode. In fact, after centralized purchase, it can also be seen that some enterprises choose direct selling, while some enterprises still retain a layer of dealers.
”These people said.
In addition, the purchase with quantity will also have a significant impact on the hospital end, such as how to improve the enthusiasm of doctors after the implementation, so as to avoid excessive use of alternative products. According to the third quarterly report of 3 Shenzhen Sed Industry Co.Ltd(000032) 021, during the reporting period, its cutting balloon, degradable stent, drug balloon and other interventional non implantation product portfolio achieved an income of 610 million yuan, an increase of 1073% over the same period in 2020.
Therefore, the industry may change dramatically. Is there a "win-win" balance point for volume procurement for medical insurance, patients, enterprises, hospitals and other parties?
According to Wang Qiang's analysis of the 21st century economic report, it is difficult to find a balance because the demands of all parties are very complex. For patients, in fact, patients rarely have the right to decide and choose, and the patient groups and demands are diverse. For example, the rich may tend to use higher end and higher price products; For enterprises, some local leading enterprises hope to purchase with quantity, but expect the price to drop by 30% ~ 50%. For the consideration of price system, imported product enterprises may reject purchasing with quantity.
"There may also be two voices on the hospital side. One is the small hospitals below grade II, which have weak voice and strong dependence on medical insurance, accounting for 90% of the medical insurance income. The other is the grade III hospitals, which have strong voice, have a high proportion at their own expense, and the medical insurance income accounts for about 50%, which leads to different demands of the two types of hospitals." Wang Qiang said.
The above-mentioned senior insiders told the 21st Century Business Herald that the best balance point for purchasing consumables with quantity exists, but the key to how to achieve it is to link the quantity and price. "The government exchanges the use of hospitals for relatively cheap prices, and enterprises use prices to win higher use, but what is the amount? What is the price? In the end, if you want to benefit many parties, you still have to find a balance through the market mechanism."
future trend of medical device industry
What are the development trends of the medical device industry under the normalization of consumables with purchase?
Wang Qiang analyzed to the 21st Century Business Herald that for local enterprises, there are two ways for small enterprises to be eliminated or cooperate with foreign-funded enterprises; The leading enterprises may benefit a lot, because they can bring continuous volume, seize the market share of imported brands, and eliminate some foreign-funded enterprises with low market share. In addition, although the products purchased with volume have entered a low profit state, after winning the bid, they can establish a new terminal network, produce linkage effect and promote the sales of other products.
For the leading multinational enterprises in the subdivided fields, such as Medtronic, Johnson & Johnson, Stryker, etc., because their profit margins are gradually reduced, these enterprises either fully localize and move their production and R & D bases to China, or cooperate with Chinese enterprises to make Chinese enterprises become the general agent of products.
Wang Qiang once analyzed that for multinational giants, only localized Chinese companies can have insight into the needs of hospitals at different levels, match products with higher cost performance, build core competitive advantages and make innovative overall solutions for projects. Under the new changes, multinational giants need to readjust their overall marketing strategy if they want to hold their territory.
Purchasing with volume will also encourage enterprises to innovate. Wang Qiang told the 21st Century Business Herald that after products are purchased with volume, enterprises begin to enter higher-end segments, such as electrophysiology. Although the profit space was high before, few enterprises did it because of the high technical threshold. However, after centralized purchase, at least 20 Chinese consumables enterprises began to enter the field of electrophysiology.
"Maybe 10 years later, electrophysiology will also change from high-end to relatively low-end market, so it will usher in volume procurement. Therefore, the current situation of the industry may be to reduce the price of low-end products first, encourage innovation and high-end products, and continue to reduce the price after the market of high-end products is mature. Finally, the profit space in most fields will not be too high."
For the whole industry, under the influence of volume procurement, there may be a trend of resource optimization and rational division of labor.
The above-mentioned senior people in the industry said that after volume procurement, some enterprises with low-level duplication or even high-level but excessive duplication in the future may have the trend of transformation, upgrading, acquisition and merger, "At present, there are more than 20000 manufacturing enterprises in China's medical device industry, but many of them are workshop enterprises. Volume procurement will make large enterprises and good products stand out, and transform the products that are expensive and survive through the gold sales mode, so as to promote a reasonable division of labor."
Wang Qiang also told the 21st Century Business Herald that volume procurement will help promote the specialization and rational division of labor of the medical device industry.
For example, some bid winning enterprises may have insufficient production capacity. Under the condition of product price reduction and diluted profits, if the plant is expanded, the cost may not be covered. At this time, choosing OEM production is a better path. Then the enterprises that fail to win the bid but have production capacity can give full play to their advantages and become OEM processors, so as to find their own position in the industry and survive.
"Volume procurement has brought great changes to the medical device industry. Each enterprise should rethink what its core advantages are and what it is best at?" Wang Qiang said.
