The “cut-off” situation in the centralized procurement of Chinese patent medicines may be even worse than the self-built pharmaceutical factory is just helpless

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Following one of the largest chemical pharmaceutical companies, North China Pharmaceutical, an A-share listed company, has received the first "supply cut-off ticket" for the national centralized drug procurement because of the "supply cut" since the establishment of the national centralized procurement system; Beijing Bioo Pharmaceuticals Entecavir The film once again appeared to be collected and cut off the supply, and it was assessed as "serious" dishonesty by Henan Province
.

On September 25, the Hubei Provincial Pharmaceutical Price and Bidding Purchasing Management Service Network issued the "Announcement of Centralized Procurement of Proprietary Chinese Medicines by the Interprovincial Alliance (No.
1)" at this time.
Centralized procurement of Zhongcheng medicines produced by two companies
.

The three seem to be unrelated, but the problems of centralized procurement that stand out behind them are inextricably linked
.

Judging from the current situation of various types of centralized procurement, the state’s attitude is basically very clear: “The price of medicines is low enough, the supply cannot be interrupted, and all medical resources (chemical medicine, biological medicine, traditional Chinese medicine and medical equipment) are treated equally is the fundamental goal

This time, with the help of centralized procurement of Chinese patent medicines, although it can indeed increase the concentration of the Chinese medicine industry to a certain extent, it can accelerate the research and development and innovation of Chinese medicine
.

However, with the impact of the previous incident of centralized procurement and cut-off of supply, for bidding companies, will they also face the situation of trying their best to grab the quota but having no choice but to cut off the supply? Will the reasons that led to the previous centralized procurement and supply cut continue to play a role in this centralized procurement of proprietary Chinese medicines?

What are the reasons for the withdrawal of supply, and the centralized procurement of Chinese patent medicine?

What are the reasons for the withdrawal of supply, and the centralized procurement of Chinese patent medicine?

First of all, summarize the various reasons for the previous centralized procurement and cut off the supply and exclude the influence of uncertain factors.
Basically, the reasons for the centralized procurement and cut off the supply can be classified into four major categories:

The raw materials are tightly controlled and the cost is not well controlled.
The capacity expansion is not timely and the quoted price is too low, resulting in too low profits and decisive abandonment
.

Among the above four, if the latter three are the business management problems of the enterprise itself and the problems of individual enterprises, then the probability of their occurrence cannot be asserted in this centralized procurement of Chinese patent medicines.
However, according to relevant experts’ speculations, The situation of supply cut-off caused by "raw material drug shortage and stock-out" in the centralized procurement of Chinese patent medicines may become more serious
.

Chinese patent medicines are similar to other sub-sectors, and their ability to provide stable supply is superior to other industries, and the raw material medicine factor is more important
.

This is also the root reason why the government has repeatedly emphasized the quality of products, supply capabilities and cost control capabilities of enterprises

The conjecture about the shortage of raw materials caused by the shortage of supply

The conjecture about the shortage of raw materials caused by the shortage of supply

For proprietary Chinese medicines, the large price volatility of Chinese medicinal materials is an inherent characteristic of the raw medicinal material market, far exceeding that of chemical medicine and other industries
.

If the excessive increase in raw medicinal materials causes pharmaceutical companies to "unprofitable" or lose money, this will be the main reason why manufacturers choose not to produce or "stop supply", then there is no doubt that this situation will be in the centralized procurement of Chinese patent medicines.

As the saying goes, decapitating business is done by someone, and no one is doing a loss-making business.
This is always a typical feature of profit-seeking in the market
.

In fact, since the epidemic, due to various factors such as reduced planting area and inflation, the prices of various varieties in the Chinese medicinal material industry have seen a general rise.

At the same time, due to the particularity of the raw materials of proprietary Chinese medicines and the versatility of Chinese medicinal materials, an increase in the price of a raw material is often accompanied by an increase in the cost of multiple medicines, which has a very strong effect on the general rise
.

It will also lead to a worse situation in the centralized procurement of Chinese patent medicines (multiple medicines are cut off at the same time)

So the question is, what is the main reason leading to the shortage of raw materials (medicinal materials) in pharmaceutical companies? Is it really appropriate to attribute the cause to natural factors?

According to the speculation of relevant persons, the reason for the continuous emergence of "centralized procurement and cut-off of supply" due to the shortage of raw materials in recent years, in addition to the influence of natural factors, may also have a deeper meaning
.

On the one hand, because pharmaceutical companies are cooperating with upstream API manufacturers, they usually adopt long-term, fixed mode and single-supplier cooperation, which ultimately leads to the lack of voice in front of API suppliers, and they can only face price increases.

Undoubtedly, the various reasons mentioned above happen to be directed at API companies, and they seem to be deliberately reminding us: The fundamental solution to centralized procurement and supply is to solve the problem of "API monopoly"
.

Most pharmaceutical companies are also gradually realizing that whether to master the advantages of APIs will be the key to their success in centralized procurement.
In view of this, how will pharmaceutical manufacturers take precautions?

Enterprises have built their own API bases and medicinal materials bases

Enterprises have built their own API bases and medicinal materials bases

At present, the main rules of centralized procurement are more beneficial to enterprises with large original market scale and relatively stable control of the upstream and downstream industrial chain.
The state defaults to the comprehensive ability of enterprise cost, price and volume
.

The best way to deal with multi-dimensional fluctuations in the price and output of APIs is undoubtedly to control the raw material bases or maintain long-term and stable cooperative relationships with key API manufacturers, share benefits and risks, and improve supply chain management and management.

According to relevant data, many listed companies such as Xiangxue Pharmaceutical, Dawnrays Pharmaceuticals, Frontier Biotech, Beijing Jialin, Chongqing Yaoyou, Yuekang Pharmaceutical, Guizhou Bailing, Baiyunshan and other listed companies have started to build their own APIs many years ago.
Production base
.

In this way, compared with the previous monopoly of API production in the hands of suppliers, self-built factories to produce APIs will undoubtedly break the previous monopoly of APIs and completely reduce the market price of APIs.
This is both for the country and the enterprise.
It is a great benefit
.

Raw material drug market needs: optimizing the approval system and increasing market competition

Raw material drug market needs: optimizing the approval system and increasing market competition

According to relevant experts, one of the reasons why APIs can control the entire pharmaceutical industry chain is that their industry competitiveness is insufficient.
There are 1500 kinds of APIs in China's finished drugs, of which only one company can produce 50 kinds of APIs with approval qualifications.
Only two companies can produce 44 types of APIs, and only three companies can produce 40 types of APIs.
10% of APIs can only be produced by single-digit companies, and the production of APIs is in the hands of a few companies
.

The problem of self-built factories of enterprises is still to solve the urgent problem of coal burning.
The key is to find ways to increase the competitiveness of the industry.
The relevant person believes that this may be due to the approval system because of the approval of the API companies.
Due to the scarcity of the raw materials, not all companies are able to produce.
If the relevant preparations (Chinese patent medicines) manufacturers can later release the approval of raw materials and increase the monopoly of raw materials, the two-pronged approach may be able to truly solve the problem of shortage of raw materials caused by the shortage of raw materials.
Only when it emerges, can the central procurement participating companies make quotations without hesitation in the true sense, and in the true sense, can the prices of medicines be further reduced
.

Summarize

Summarize

Pharmaceuticals are never a single industry, but an entire industrial chain.
In the process of terminal price cuts advocated by the centralized procurement environment, hospitals, intermediaries, manufacturers, and API companies, as a link in the industrial chain, should work together.
How can the most upstream APIs in the industry stand alone
?

In short, symptomatic treatment, insufficient competition will promote competition, insufficient examination and approval efficiency will speed up efficiency, and insufficient punishment will increase punishment
.

Finding the cause quickly can solve the problem fundamentally.