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Medical Network News, April 9th, the term "involution" has been frequently mentioned recently.
It is used to describe the occurrence of irrational internal competition in a certain field, which has caused people to enter a state of mutual overwhelming and internal friction.
It is used to describe the occurrence of irrational internal competition in a certain field, which has caused people to enter a state of mutual overwhelming and internal friction.
Centralized procurement is a very good "involution" performance.
Since the collection, pharmaceutical companies have cut prices to fight for the market, and drug prices have plunged across the board.
People in the industry have been worried that after this war without gunpowder, the "involution" of pharmaceutical companies is ineffective consumption or competitive power?
People in the industry have been worried that after this war without gunpowder, the "involution" of pharmaceutical companies is ineffective consumption or competitive power?
Speaking from a set of data.
Since the four batches of national procurement, the average decline of selected varieties has basically stabilized at more than 50% (Figure 1).
Figure 1 Number of shortlisted varieties and average decline
From the "4+7" pharmnet.
com.
cn/news/yyzb/" target="_blank">procurement base amount of 1.
9 billion, centralized procurement expansion procurement of 3.
5 billion, the second batch of national procurement 8.
8 billion, the third batch of national procurement 22.
65 billion, and the fourth batch of national procurement base has reached 55 billion, compared with " 4+7" increased by nearly 29 times.
com.
cn/news/yyzb/" target="_blank">procurement base amount of 1.
9 billion, centralized procurement expansion procurement of 3.
5 billion, the second batch of national procurement 8.
8 billion, the third batch of national procurement 22.
65 billion, and the fourth batch of national procurement base has reached 55 billion, compared with " 4+7" increased by nearly 29 times.
The sum of the base number of the five purchases reached 91.
85 billion.
After the sharp price cuts, the amount of "freeing" for medical insurance was about 48.
32 billion.
That is to say, the market size of the five batches of shortlisted products has shrunk by 48.
32 billion without considering other retail channels.
85 billion.
After the sharp price cuts, the amount of "freeing" for medical insurance was about 48.
32 billion.
That is to say, the market size of the five batches of shortlisted products has shrunk by 48.
32 billion without considering other retail channels.
Have the companies that won the bid "win"?
In November 2018, the "4+7" volume procurement pilot was completed.
From the sales data in 2019 (Figure 2), it can be seen that the sales volume of 21 varieties has been increasing, and the number of varieties with sales growth accounted for 87.
5% The sales of major clinically-needed varieties such as gefitinib, tenofovir disoproxil, dexmedetomidine, imatinib, etc.
have increased significantly, and the real sales data have been obtained for the common people to use good drugs.
Verification.
From the sales data in 2019 (Figure 2), it can be seen that the sales volume of 21 varieties has been increasing, and the number of varieties with sales growth accounted for 87.
5% The sales of major clinically-needed varieties such as gefitinib, tenofovir disoproxil, dexmedetomidine, imatinib, etc.
have increased significantly, and the real sales data have been obtained for the common people to use good drugs.
Verification.
Figure 22018 and 2019 sales and sales growth rate
But for companies, sales growth is the way to survive.
In fact, among the varieties that participated in the "4+7" volume procurement pilot, only 7 have achieved positive sales growth, and the sales of the remaining varieties have declined to varying degrees, including the largest sales growth.
Gefitinib.
Gefitinib.
The results of the second round of Guocai's sales data analysis (Figure 3) are even more bleak.
Only six varieties have achieved positive sales growth, while only one sales increase is left.
Anrixentan, the only one.
The varieties with simultaneous growth in sales volume and sales amount have almost supported most of the sky in the second round of national procurement.
Only six varieties have achieved positive sales growth, while only one sales increase is left.
Anrixentan, the only one.
The varieties with simultaneous growth in sales volume and sales amount have almost supported most of the sky in the second round of national procurement.
Figure 3 2019 and 2020 sales and sales growth rate
For the remaining varieties, not only did they fail to achieve the increase in sales due to the "carrying volume", but also because of the "squeezing water" that simultaneously squeezed out the sales performance and profit.
In the volume purchase, there is a "soul variety" amlodipine.
Does the sales performance of amlodipine, which is "floor price, water more expensive than medicine, not as good as flour", directly hit the hearts of the people (Figure 4)?
Figure 4 Changes in the market share of amlodipine
In the first round of centralized procurement pharmnet.
com.
cn/news/yyzb/" target="_blank">bidding , the original research company Pfizer’s Luohuoxi was hit.
Jingxin Pharmaceutical, which offered 9 cents, was unfortunately out of the game.
Dozens of other domestic manufacturers seemed to have nowhere to go.
com.
cn/news/yyzb/" target="_blank">bidding , the original research company Pfizer’s Luohuoxi was hit.
Jingxin Pharmaceutical, which offered 9 cents, was unfortunately out of the game.
Dozens of other domestic manufacturers seemed to have nowhere to go.
However, from the change in market share, it can be seen that the original research Pfizer still occupies the main position, and the sales volume market share has been compressed, but the sales amount will remain strong in 2020, and it still accounts for more than half of the sales share.
After several rounds of bidding, the proportion of sales of the winning bidders has increased significantly, but the proportion of sales is still tepid.
How are the companies that won the bid?
Procurement with volume forces the reform of the supply side of the industry and promotes the reshuffle of the industry, so as to realize the survival of the fittest.
If the selected company does not achieve victory in the end, how can the subsequent companies have the confidence to participate? How can you be confident to go to victory?
If the selected company does not achieve victory in the end, how can the subsequent companies have the confidence to participate? How can you be confident to go to victory?
Before winning the bid, all the focus and expectations of the company are on winning the bid, and I feel that winning the bid is "winner takes all".
After winning the bid, although the company has obtained a wide range of sales markets through price cuts, it has not even demonstrated the benefits of the sales market share, but because the price cuts are too large, sales revenue has been constrained.
This mass purchase has officially kicked off the test of the bid-winning company's ability to control costs.
There is still a long way to go to win with this ticket.
There is still a long way to go to win with this ticket.
On the other hand, foreign companies generally adopt a wait-and-see attitude.
Are most of the answers that are not willing to cut prices also ready to come out?
Are most of the answers that are not willing to cut prices also ready to come out?
Isn’t it just a matter of mere formality that it is said that competition on the same platform, exchange of price for quantity, and elimination of the stubborn disease of patent expiring original research drugs enjoying super-national treatment?
Or does the accumulation of foreign-funded enterprises make them more comfortable?
Or is the confidence in the consistency evaluation not enough to offset the negative reputation of domestic generic drugs for many years?
These are worth exploring.
As a participant and witness of the national "three-medicine linkage" reform, why are pharmaceutical companies always hurt? Is the transmission of policies hindered? Or is the process of implementing the policy biased?
Whether to enter or not to enter, pharmaceutical companies are suffering
The state implements a mass procurement policy with the goal of ensuring the sales of bid-winning companies, reducing sales links, and guaranteeing corporate profits.
Profits can promote corporate R&D investment.
On the other hand, when prices are lowered, medical expenses will naturally be reduced, and medical insurance The expenditure will be less.
Profits can promote corporate R&D investment.
On the other hand, when prices are lowered, medical expenses will naturally be reduced, and medical insurance The expenditure will be less.
In this vision, the ultimate goal is to achieve a win-win situation for the three parties.
In fact, are there any problems in the execution of this decision-making logic?
Of course, the biggest problem is that the price-for-volume exchange is not equivalent to the growth of corporate sales and profits.
It has now been reflected, and it is also the pain point of pharmaceutical companies: to enter, the company is suffering, not to enter, the company is suffering.
It has now been reflected, and it is also the pain point of pharmaceutical companies: to enter, the company is suffering, not to enter, the company is suffering.
Figure 5 Policy motivation and logic of volume procurement
From an economic point of view, "price for quantity" is actually similar to the concept of "small profits but quick turnover", which can be explained by the elasticity of demand.
Only commodities with elastic demand can be "small profits but quicker sales".
Because for a product with elastic demand, when the price of the product drops, the demand (sales) increases more than the price drops, and the total income can increase.
Only commodities with elastic demand can be "small profits but quicker sales".
Because for a product with elastic demand, when the price of the product drops, the demand (sales) increases more than the price drops, and the total income can increase.
There are two main types of "price-for-quantity" in the Chinese pharmaceutical market:
Negotiations for medical insurance are generally innovative products with elastic demand.
Regarding the anti-cancer drugs that have entered medical insurance negotiations in recent years, more than 30 anti-cancer drugs that have entered medical insurance in the past three years have achieved "price-for-quantity", and sales have increased.
Regarding the anti-cancer drugs that have entered medical insurance negotiations in recent years, more than 30 anti-cancer drugs that have entered medical insurance in the past three years have achieved "price-for-quantity", and sales have increased.
Procurement with volume is mainly based on generic drugs and basic drugs, which generally lack demand elasticity.
At this time, "price-for-quantity" will not ultimately lead to an increase in sales, because the unit price decline is far greater than the sales increase.
At this time, "price-for-quantity" will not ultimately lead to an increase in sales, because the unit price decline is far greater than the sales increase.
From the perspective of economics, how to solve the problem of "price for quantity" in centralized procurement?
On the one hand, the purchase volume must be increased to ensure that the increase in the purchase volume is greater than the decrease in the price.
In the true sense, the purchase with a quantity is realized.
The measurement and implementation of the purchase volume need to be guaranteed by corresponding policies and guidelines.
This is currently relatively lacking.
.
In the true sense, the purchase with a quantity is realized.
The measurement and implementation of the purchase volume need to be guaranteed by corresponding policies and guidelines.
This is currently relatively lacking.
.
On the other hand, the price reduction should be within a reasonable range.
The pain must be experienced, but the interval must be rational.
The National Medical Insurance Administration issued the "Opinions on Doing a Good Job in Current Drug Price Management".
In fact, it has been aware of this problem.
These rounds of mass procurement bidding policies have been improved, and the price reduction of drugs has also been narrowed, prompting drug prices to return to a reasonable level.
I believe it is just around the corner.
.
The pain must be experienced, but the interval must be rational.
The National Medical Insurance Administration issued the "Opinions on Doing a Good Job in Current Drug Price Management".
In fact, it has been aware of this problem.
These rounds of mass procurement bidding policies have been improved, and the price reduction of drugs has also been narrowed, prompting drug prices to return to a reasonable level.
I believe it is just around the corner.
.
In the long run, generic drugs have entered an era of meager profit.
The trend of large-scale reshuffle of the industry due to mass procurement is irreversible.
In addition to the feeling that "the first drug company is always the first to suffer the knife", the key to the survival of generic drug companies is still the old-fashioned product quality and cost control.
The trend of large-scale reshuffle of the industry due to mass procurement is irreversible.
In addition to the feeling that "the first drug company is always the first to suffer the knife", the key to the survival of generic drug companies is still the old-fashioned product quality and cost control.
Life is hard, and only one can survive by oneself.
The adjustment of national policies is dynamic, but pharmaceutical companies must grit their teeth and insist on seeing the day when a more reasonable policy is introduced.
Only by taking advantage of the trend can they truly enjoy the dividends of the policy.
Only by taking advantage of the trend can they truly enjoy the dividends of the policy.
How was your life after the collection?
Note: The data with pictures in the article comes from major databases and is compiled into tables by the author.
Medical Network News, April 9th, the term "involution" has been frequently mentioned recently.
It is used to describe the occurrence of irrational internal competition in a certain field, which has caused people to enter a state of mutual overwhelming and internal friction.
It is used to describe the occurrence of irrational internal competition in a certain field, which has caused people to enter a state of mutual overwhelming and internal friction.
Centralized procurement is a very good "involution" performance.
Since the collection, pharmaceutical companies have cut prices to fight for the market, and drug prices have plunged across the board.
People in the industry have been worried that after this war without gunpowder, the "involution" of pharmaceutical companies is ineffective consumption or competitive power?
People in the industry have been worried that after this war without gunpowder, the "involution" of pharmaceutical companies is ineffective consumption or competitive power?
Speaking from a set of data.
Since the four batches of national procurement, the average decline of selected varieties has basically stabilized at more than 50% (Figure 1).
Figure 1 Number of shortlisted varieties and average decline
From the "4+7" pharmnet.
com.
cn/news/yyzb/" target="_blank">procurement base amount of 1.
9 billion, centralized procurement expansion procurement of 3.
5 billion, the second batch of national procurement 8.
8 billion, the third batch of national procurement 22.
65 billion, and the fourth batch of national procurement base has reached 55 billion, compared with " 4+7" increased by nearly 29 times.
com.
cn/news/yyzb/" target="_blank">procurement base amount of 1.
9 billion, centralized procurement expansion procurement of 3.
5 billion, the second batch of national procurement 8.
8 billion, the third batch of national procurement 22.
65 billion, and the fourth batch of national procurement base has reached 55 billion, compared with " 4+7" increased by nearly 29 times.
The sum of the base number of the five purchases reached 91.
85 billion.
After the sharp price cuts, the amount of "freeing" for medical insurance was about 48.
32 billion.
That is to say, the market size of the five batches of shortlisted products has shrunk by 48.
32 billion without considering other retail channels.
85 billion.
After the sharp price cuts, the amount of "freeing" for medical insurance was about 48.
32 billion.
That is to say, the market size of the five batches of shortlisted products has shrunk by 48.
32 billion without considering other retail channels.
Have the companies that won the bid "win"?
In November 2018, the "4+7" volume procurement pilot was completed.
From the sales data in 2019 (Figure 2), it can be seen that the sales volume of 21 varieties has been increasing, and the number of varieties with sales growth accounted for 87.
5% The sales of major clinically-needed varieties such as gefitinib, tenofovir disoproxil, dexmedetomidine, imatinib, etc.
have increased significantly, and the real sales data have been obtained for the common people to use good drugs.
Verification.
From the sales data in 2019 (Figure 2), it can be seen that the sales volume of 21 varieties has been increasing, and the number of varieties with sales growth accounted for 87.
5% The sales of major clinically-needed varieties such as gefitinib, tenofovir disoproxil, dexmedetomidine, imatinib, etc.
have increased significantly, and the real sales data have been obtained for the common people to use good drugs.
Verification.
Figure 22018 and 2019 sales and sales growth rate
But for companies, sales growth is the way to survive.
In fact, among the varieties that participated in the "4+7" volume procurement pilot, only 7 have achieved positive sales growth, and the sales of the remaining varieties have declined to varying degrees, including the largest sales growth.
Gefitinib.
Gefitinib.
The results of the second round of Guocai's sales data analysis (Figure 3) are even more bleak.
Only six varieties have achieved positive sales growth, while only one sales increase is left.
Anrixentan, the only one.
The varieties with simultaneous growth in sales volume and sales amount have almost supported most of the sky in the second round of national procurement.
Only six varieties have achieved positive sales growth, while only one sales increase is left.
Anrixentan, the only one.
The varieties with simultaneous growth in sales volume and sales amount have almost supported most of the sky in the second round of national procurement.
Figure 3 2019 and 2020 sales and sales growth rate
For the remaining varieties, not only did they fail to achieve the increase in sales due to the "carrying volume", but also because of the "squeezing water" that simultaneously squeezed out the sales performance and profit.
In the volume purchase, there is a "soul variety" amlodipine.
Does the sales performance of amlodipine, which is "floor price, water more expensive than medicine, not as good as flour", directly hit the hearts of the people (Figure 4)?
Figure 4 Changes in the market share of amlodipine
In the first round of centralized procurement pharmnet.
com.
cn/news/yyzb/" target="_blank">bidding , the original research company Pfizer’s Luohuoxi was hit.
Jingxin Pharmaceutical, which offered 9 cents, was unfortunately out of the game.
Dozens of other domestic manufacturers seemed to have nowhere to go.
com.
cn/news/yyzb/" target="_blank">bidding , the original research company Pfizer’s Luohuoxi was hit.
Jingxin Pharmaceutical, which offered 9 cents, was unfortunately out of the game.
Dozens of other domestic manufacturers seemed to have nowhere to go.
However, from the change in market share, it can be seen that the original research Pfizer still occupies the main position, and the sales volume market share has been compressed, but the sales amount will remain strong in 2020, and it still accounts for more than half of the sales share.
After several rounds of bidding, the proportion of sales of the winning bidders has increased significantly, but the proportion of sales is still tepid.
How are the companies that won the bid?
Procurement with volume forces the reform of the supply side of the industry and promotes the reshuffle of the industry, so as to realize the survival of the fittest.
If the selected company does not achieve victory in the end, how can the subsequent companies have the confidence to participate? How can you be confident to go to victory?
If the selected company does not achieve victory in the end, how can the subsequent companies have the confidence to participate? How can you be confident to go to victory?
Before winning the bid, all the focus and expectations of the company are on winning the bid, and I feel that winning the bid is "winner takes all".
After winning the bid, although the company has obtained a wide range of sales markets through price cuts, it has not even demonstrated the benefits of the sales market share, but because the price cuts are too large, sales revenue has been constrained.
This mass purchase has officially kicked off the test of the bid-winning company's ability to control costs.
There is still a long way to go to win with this ticket.
There is still a long way to go to win with this ticket.
On the other hand, foreign companies generally adopt a wait-and-see attitude.
Are most of the answers that are not willing to cut prices also ready to come out?
Are most of the answers that are not willing to cut prices also ready to come out?
Isn’t it just a matter of mere formality that it is said that competition on the same platform, exchange of price for quantity, and elimination of the stubborn disease of patent expiring original research drugs enjoying super-national treatment?
Or does the accumulation of foreign-funded enterprises make them more comfortable?
Or is the confidence in the consistency evaluation not enough to offset the negative reputation of domestic generic drugs for many years?
These are worth exploring.
As a participant and witness of the national "three-medicine linkage" reform, why are pharmaceutical companies always hurt? Is the transmission of policies hindered? Or is the process of implementing the policy biased?
Whether to enter or not to enter, pharmaceutical companies are suffering
The state implements a mass procurement policy with the goal of ensuring the sales of bid-winning companies, reducing sales links, and guaranteeing corporate profits.
Profits can promote corporate R&D investment.
On the other hand, when prices are lowered, medical expenses will naturally be reduced, and medical insurance The expenditure will be less.
Profits can promote corporate R&D investment.
On the other hand, when prices are lowered, medical expenses will naturally be reduced, and medical insurance The expenditure will be less.
In this vision, the ultimate goal is to achieve a win-win situation for the three parties.
In fact, are there any problems in the execution of this decision-making logic?
Of course, the biggest problem is that the price-for-volume exchange is not equivalent to the growth of corporate sales and profits.
It has now been reflected, and it is also the pain point of pharmaceutical companies: to enter, the company is suffering, not to enter, the company is suffering.
It has now been reflected, and it is also the pain point of pharmaceutical companies: to enter, the company is suffering, not to enter, the company is suffering.
Figure 5 Policy motivation and logic of volume procurement
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