“The capital market only sees negative effects, but in fact, the impact of centralized purchase on market price reduction is one-off. Finally, centralized purchase will gradually become something ignored by the market. It depends more on market demand and enterprise innovation.”
Bid opening of the second regional alliance of Chinese patent medicine in China.
On April 8, Guangdong Pharmaceutical Trading Center issued the notice on publicizing the proposed winning / alternative results of centralized procurement of Chinese patent medicines such as Guangdong alliance Qingkailing. This centralized mining alliance includes six provinces (regions) of Guangdong, Shanxi, Henan, Hainan, Ningxia and Qinghai, involving 53 major varieties and 132 centralized products, including Qingkailing, Xingnaojing, bailing, Shuxuening, compound salvia miltiorrhiza and other well-known products.
The results showed that a total of 124 production enterprises were selected, and 56 production enterprises entered the proposed candidate list Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited(600332) , Shenwei pharmaceutical, Xiangxue Pharmaceutical Co.Ltd(300147) , Tasly Pharmaceutical Group Co.Ltd(600535) , Sichuan Kelun Pharmaceutical Co.Ltd(002422) , Shanxi Panlong Pharmaceutical Group Limited By Share Ltd(002864) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) and other enterprises have products to be selected. 30 proprietary Chinese patent medicines were selected, including Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) Lianhua Qingwen granule, Tasly Pharmaceutical Group Co.Ltd(600535) Compound Danshen dripping pill, Tongji Xianling bone Bao capsule, and Huang medicine Shexiang Baoxin Pills, Jiuzhitang Co.Ltd(000989) naked flower purple bead suppository, Tonghua Baishan compound salvia miltiorrhiza spray and so on.
Minsheng Securities pointed out that a total of 361 products of 53 kinds of Chinese patent medicines in 6 provinces of Guangdong are proposed to be shortlisted. According to the past historical statistics, the overall decline of Chinese patent medicines in Guangdong is measured from three dimensions. The national lowest winning price, national median winning price and Guangdong winning price in 2021 are 13%, 34% and 19% respectively compared with the average decline of the above three dimensions.
“Compared with chemical drugs, the decline of this centralized mining is very mild.” Ma Manran, general manager of Manran asset management, who has long paid attention to traditional Chinese medicine stocks, told times finance and economics that due to the impact of the cost of traditional Chinese medicine, it will not take low prices as the first goal of centralized procurement from the perspective of national policy.
does not aim at low prices and has limited impact on exclusive products
The centralized purchase rule of Guangdong alliance is to design the scheme of “5% pre purchase quantity for every 1% price reduction” according to the reported quantity, as well as the grouping rule of group ab. Enterprises can clearly calculate the price reduction range and market share of their products.
According to the published joint procurement rules, the centralized procurement of Chinese patent medicines of Guangdong alliance is divided based on the proportion of the total number of days taken by each enterprise to the total number of days taken by all enterprises in the alliance area – enterprises with a cumulative proportion of 80% from high to low are listed as group a purchase orders, and the rest are listed as group B purchase orders. Among them, enterprises need to make P1 and P2 step-by-step quotation. The decline of P1 shall be ≥ 1%, and the decline of P2 shall be ≥ P1 and greater than or equal to 11%. The proposed successful selection of non exclusive products requires a decrease of the first 50%, and the proposed successful selection of exclusive products requires a decrease of the first 70% or a decrease of ≥ 21%.
In other words, the market obtained by enterprises is in direct proportion to the decline of varieties.
The enterprises selected in the second cascade price (P2) bidding can not only obtain 100% of the pre procurement volume in the first year of the regional procurement period (2 years) of the enterprise alliance, but also obtain incremental use rights. This means that as long as the enterprise fully reduces the price, it will have the opportunity to seize the market share of other competitive products.
This also explains why Ginkgo biloba leaves and compound Danshen tablets have a large decline and fierce competition. Among them, Shanghai Kaibao Pharmaceutical Co.Ltd(300039) Xinyi (Xinxiang) pharmaceutical compound salvia miltiorrhiza tablet’s proposed winning price is as low as 0.0435 yuan per tablet.
Unlike chemical drugs, some Chinese patent medicines have exclusive properties due to different formulas and manufacturing technologies. This time, the Guangdong centralized purchasing alliance made a separate distinction between exclusive products. According to the statistics of Fengyun yaotan, the average decline of exclusive products was 21.8%, far lower than the average decline of 67.8% of non exclusive products to be bid winning.
30 exclusive products of Chinese patent medicine to be awarded the bid, including Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) Lianhua Qingwen granule, Jiangsu Kanion Pharmaceutical Co.Ltd(600557) Reduning injection, Hainan Jiuzhitang Co.Ltd(000989) naked flower Zizhu suppository, Jiangxi pharmaceutical Zhangshu pharmaceutical Dahuoluo capsule, Tongjitang Xianlinggubao capsule, etc. Among them, the proposed winning price of Lianhua Qingwen granules is 2.3295 yuan / bag, a decrease of 37.88% compared with the highest valid bid price of 3.75 yuan / bag; The final winning price of Reduning injection was 261885 yuan, down 60.5% from the highest valid application price of 66.3 yuan. The above two products are covid-19 recommended therapeutic drugs. While Tasly Pharmaceutical Group Co.Ltd(600535) ‘s exclusive product compound Danshen Dropping Pills has reduced the price by only 15% in the field of “Compound Danshen”.
“Exclusive products are difficult to produce and have a good reputation between patients and doctors. Therefore, in the face of centralized purchase, there is room for negotiation and confidence in negotiation.” Cao Bo, a medical consultant of biotech innovative medicine, told times finance that the centralized purchase of Chinese patent medicine should be divided into specific manufacturers and specific products, and the impact of centralized purchase on exclusive products is limited.
The products with large decline in this centralized purchase are concentrated in the field of cardio cerebrovascular, and the competition is fierce. The decline of some exclusive but highly replaceable products is also obvious.
From the perspective of quotation, the proportion of Guangdong Chinese patent medicine centralized purchase enterprises and products participating in quotation is 87.86% and 86.88% respectively, and some enterprises do not participate in centralized purchase quotation. In this regard, Shi lichen, a pharmaceutical strategic marketing expert, told times finance that enterprises that did not participate in the quotation may be considered in two aspects.
“First, we have our own exclusive products. Now the market sales are good, and the main market is not medical institutions. We are not willing to make a quotation in order to protect the market outside the hospital; second, we estimate that the negotiation price is low and the raw materials are rising, so it is difficult to grasp the profit space, so we dare not make a quotation.” Shi lichen told times finance and economics that if the Chinese patent medicine dominated by the hospital market lacks clinical data such as safety and effectiveness, and does not enter the clinical path, its future development is worrying.
future centralized purchase of Chinese patent medicine or normal
As early as September 2021, Guangdong Pharmaceutical Trading Center issued the draft for comments on the centralized procurement of Guangdong alliance, becoming the first centralized procurement alliance of Chinese patent medicine in China to issue the draft for comments. However, in December last year, the centralized purchase of Chinese patent medicines in 19 provinces led by Hubei took the lead in completing the whole process from document release to bid opening. A total of 182 products from 157 enterprises participated in the quotation, with a winning rate of 62%, an average decline of 42.27% and a maximum decline of 82.63%.
For traditional Chinese medicine enterprises, one of the purposes of participating in centralized procurement is to expand their market share. However, for enterprises that originally did not rely on hospitals for sales channels, centralized purchase did not have a great impact on them.
Ma Manran told times finance that the sales volume of Chinese patent medicines of some companies in hospitals is 3% ~ 5%. Joining centralized purchase is beneficial to enterprises to expand sales. However, due to the long periodicity of planting raw materials of traditional Chinese medicine, a single variety will not be large-scale. “Forsythia trees have to grow for 5 to 8 years to enter the fruiting period. The periodicity of this raw material determines that there is no large-scale production in the downstream.”
In the process of continuous promotion of local centralized procurement, the expectation of national centralized procurement of Chinese patent medicine is also higher and higher.
Up to now, the Chinese patent medicine procurement alliance of 6 provinces in Guangdong and 19 provinces in Hubei have covered 21 provinces in total. In addition, the industry expects that the alliance led by Shandong Province will be the third regional alliance of traditional Chinese medicine launched. Only Beijing, Shanghai, Jiangsu, Zhejiang, Anhui and Guangxi have not carried out the centralized collection of traditional Chinese patent medicines above the provincial level.
On February 11, 2022, the regular policy briefing of the State Council held by the Information Office of the State Council clearly pointed out that this year, based on the procurement of Chinese patent medicine alliance organized by some provinces last year, the scope will be further expanded to realize the full coverage of chemical medicine, biological medicine and Chinese patent medicine.
In the future, the centralized purchase of Chinese patent medicine may become the norm, and the overall purchase price will also show a downward trend. As the Chinese patent medicine with large market consumption is the focus of centralized procurement at all levels, Shi lichen believes that “the leading pharmaceutical enterprises will be most affected, the advantage of exclusive products will be reduced, the market share will be reduced, and the small and medium-sized pharmaceutical enterprises with the same treatment range will get development opportunities.”
Shi lichen told times finance and economics that there is a guarantee of the volume of centralized purchase products, which can improve the overall sales volume of some pharmaceutical enterprises to a certain extent, but the overall sales volume may not be improved, and even the slow growth after centralized purchase will not be improved. “The key to improving the sales of Chinese patent medicines in the future is to have perfect clinical data. With the full popularization of DRGs (disease diagnosis related grouping), Chinese patent medicines with clear safety and effectiveness and clear clinical value will be developed.”
“The capital market only sees negative effects, but in fact, the impact of centralized purchase on market price reduction is one-off. Finally, centralized purchase will gradually become something ignored by the market. It depends more on market demand and enterprise innovation.” Ma Manran told times finance.
