North China Pharmaceuticals has a lower limit!

It was once the cradle of the pharmaceutical industry in New China and was known as the “eldest son of medicine” of the Republic.

However, as the event fermented, on August 23, North China Pharmaceutical (600812) opened its limit once, as of the afternoon of the day, it was reported at 9.

Source: Jiufang Smart Investment

Can North China Pharmaceutical be fined for its interruption of supply and its subsequent production capacity can keep up?

On August 20, 2021, Shanghai Sunshine Pharmaceutical Purchasing Network issued an announcement stating that North China Pharmaceutical, the selected company for the third batch of nationally-sourced ibuprofen sustained-release capsules, failed to supply the agreed procurement volume in Shandong Province according to the agreement.

Ibuprofen sustained-release capsules are the third batch of nationally-sourced varieties.

North China Pharmaceutical supplies ibuprofen sustained-release capsules to 7 provinces, mainly Tianjin, Shanxi, Shandong, Hubei, Hunan, Shaanxi, and Qinghai

Regarding the reasons for the cut-off of supply in Shandong, North China Pharmaceutical stated that due to insufficient existing production capacity, the responsible units did not pay enough attention to it.

It is understood that after the supply of North China Pharmaceutical was cut off, the Shandong Provincial Medical Insurance Bureau has also identified a replacement company in accordance with the relevant procedures, and Zhuhai Rundu will continue to supply it

The third batch of national procurement bidding documents clearly stated that if the selected company fails to fulfill its supply commitment, clinical use will be affected, and the company that is included in the "list of violations" will be disqualified from the selection

Huabei Pharmaceutical was "banned" for 9 months this time, which is not considered a top punishment, but it did serve as a "hit the mountain and shake the tiger"

In response to the announcement, North China Pharmaceutical stated that the sales revenue of ibuprofen sustained-release capsules in 2020 will be 502,200 yuan, accounting for 0.

In the next step, the company will accelerate the approval process for the expansion project of ibuprofen sustained-release capsules, and strive to complete the approval before the end of September.

Regarding the impact of the sixth batch of centralized procurement that the industry is concerned about on its performance, North China Pharmaceutical said that because the information has not been released, the company is unable to predict the impact of the centralized drug procurement activities organized by the state and the sales of selected products on May 10, 2022.

How to solve the problems that occur during the collection and cut-off of supply?

Since the launch of the first round of 4+7 in 2018, some companies have continued to cut the supply of selected products in some provinces, such as Hebei, Yunnan, Hunan, Liaoning, Beijing, etc.

In June 2019, the Hebei Provincial Pharmaceutical Centralized Purchasing Network issued an announcement stating that Sino-US Shanghai Squibb Pharmaceuticals Co.

In June 2020, under the Yunnan Provincial Medical Insurance Bureau issued a "Letter of Yunnan Medical Security Bureau submitted a written note and capacity of the list"

In July 2020, the Hunan Medical Insurance Bureau stated in a summary report on the implementation of the first batch of nationally-sourced drugs that the selected drugs such as atorvastatin calcium tablets and rosuvastatin calcium tablets are due to delayed production capacity and inaccurate basic reporting in various regions.

.
.
.
.
.
.

In addition to the reasons for the supply cut-off mentioned above, the cut-off of the supply in the centralized procurement of enterprises may also be the cut-off of the supply caused by a problem in the production process and the need to modify the production line
.
There are also very few reasons because companies maliciously quoted prices to squeeze out opponents through low prices, and then cut off supply after gaining market share
.

In response to the chaos of centralized procurement and supply interruption, in August 2020, the National Medical Insurance Administration issued the "Guiding Opinions of the National Medical Security Administration on Establishing a Pharmaceutical Price and Recruitment Credit Evaluation System", which clearly proposed the establishment of a credit evaluation catalogue list to deal with improper price behaviors.
, Disrupting the order of centralized procurement, maliciously violating contractual agreements and other behaviors that are contrary to the city's credit, shall be included in the scope of medical price and credit evaluation of recruitment and procurement
.
Violating companies face penalties such as the removal of their products from the Internet
.

In addition, in the declaration process of national procurement, the Medical Insurance Bureau will also require companies to sign a letter of commitment.
The declaration of pharmaceutical companies needs to consider factors such as the price of raw materials, and promise that the declared price will not be lower than the cost price of the product of the company
.
Once selected, production should be organized in a timely and sufficient amount as required, and drugs should be sent to distribution companies in a timely manner to meet the clinical drug needs of medical institutions, and to ensure that the price, quality and quantity of the selected drugs are fulfilled in accordance with the purchase and sale agreement
.

Shi Lichen, head of Beijing Dingchen Medical Management Consulting Center, said that the development of centralized procurement is mainly to reduce the pressure of medical insurance payment, and at the same time ensure normal clinical use, and enterprises will not have supply interruptions
.

He pointed out that the frequent occurrence of supply cuts reflects that there is still room for modification of the current centralized procurement rules.
For example, in the current centralized procurement, after enterprises are selected, the supply provinces are selected according to the quotation from low to high, and each province is determined by Once a pharmaceutical company has a supply problem, it will be cut off
.
Perhaps this one-to-one rule should be modified to one-to-many, or the shortlisted products are all listed on the Internet and selected by medical institutions, or a price limit should be set to allow a large number of companies to participate
.

To curb "low-price death" Experts call for: leave a certain profit margin for drug companies

The reasons for the suspension of supply of North China Pharmaceuticals in Shandong Province this time can be seen, mainly due to the fact that the relevant persons in charge of the production unit did not pay enough attention to the expansion work, the resources were not fully equipped, the progress of related work was slow, and the impact of the epidemic was superimposed
.

According to the announcement, specifically because of the repeated occurrence of the new crown epidemic in Shijiazhuang at the beginning of 2021, the ibuprofen sustained-release capsule production plant is located in Gaocheng District, Shijiazhuang City, which is a high-risk area.
According to the relevant requirements of Shijiazhuang epidemic prevention and control, from January 6, 2021 to On March 8, Gaocheng District was closed, the flow of people and logistics was basically interrupted, normal production was not possible, and the production verification and review and approval work were also greatly affected
.

But the announcement from Shanghai, we also see this description "by the relevant departments repeatedly interviewed consultation has not improved, according to relevant regulations, decided to North China Pharmaceutical included in the" list of irregularities "
.

Behind the cut-off of supply by the selected companies, the industry has also raised concerns about “low-priced drugs”.
Before purchasing in quantities, the state has also adopted many reform measures to reduce drug prices.
For example, the National Development and Reform Commission reduced the price from 1997 to 2015.
The price of medicines has exceeded more than 30 times.
Although the price of medicines has dropped, the production of medicines ceased or disappeared from the market, and even appeared as other high-priced medicines with the same indication.
Only by adjusting the price of medicines, the reform did not make any difference.
Effectiveness
.

According to previous statistics from Medical Rubik's Cube, the over-evaluated R&D cost of a single drug is less than 10 million yuan accounting for 70%, 10-20 million yuan accounting for 22%, and more than 20 million yuan accounting for 8%
.
Among them, the relatively high one such as Hengrui Medicine's abiraterone acetate (new category 4), the research and development expenses reached 39.
05 million yuan
.

Starting from the 4+7 city pilot program, five batches of drug purchases organized by the state have been completed, and it is expected to be carried out twice a year.
The rules are constantly being improved, and the punishment mechanism is also taking shape
.
The success of volume procurement is to ensure the supply of selected companies
.
However, due to the low profits of generic drugs, the A-share market has also undergone major volatility due to centralized procurement and other factors
.
The share prices of pharmaceutical companies represented by Hengrui have plummeted and their valuations have shrunk .

Under the national procurement, will low-cost drugs repeat the historical mistakes of stopping production and disappearing? Shi Lichen said that first, we need to pay attention to the problems and phenomena of enterprise supply cutoffs.
Some of the supply cutoffs caused by the rise of APIs may not be controlled by the manufacturer
.
Second, it is not recommended to bid for a low price, but the low price may hurt the entire industry, and it still needs to leave a certain profit margin for the enterprise
.