Will there be a "cut-off" incident in the centralized procurement of Chinese patent medicines?

1.
The price of Chinese patent medicine raw materials fluctuates greatly

In the recent period of time, in the field of medicine, news about Chinese patent medicines will be included in the centralized procurement has been circulating, especially on August 20, 2021, due to the ibuprofen sustained-release capsule produced by North China Pharmaceutical after the centralized procurement won the bid.
The news that the “supply interruption” incident occurred and was severely punished by the National Pharmaceutical Federation procured even more heated discussions in the industry
.

Regarding the discontinuation of ibuprofen sustained-release capsules, a North China pharmaceutical product, recently, many media have made in-depth reports around it.
After the collection, will this kind of "cut-off" situation occur, in order to do some simple analysis
.

Frankly speaking, it is also the author's personal opinion: after the centralized procurement of Chinese patent medicines, if the bidding and bidding parties do not do enough homework in the preliminary work, the layout is not meticulous, or the corresponding possible risks have not been pre-judged and countermeasures in advance, the winning product In the future, there is a high probability of "cutting off confession" events, and it is still very likely to happen!

2.
Why do you want to say that?

Because Chinese patent medicine itself has a greater potential risk than western medicine products, that is, its source of raw materials, that is, the price of Chinese medicinal materials is more unstable
.

For example, in recent years, quite a lot of Chinese medicinal materials have experienced significant fluctuations, and it is very obvious that they are not controllable
.

In this case, similar phenomena have occurred in many varieties such as forsythia, honeysuckle, rehmannia, salvia, chuanxiong, dangshen, angelica, astragalus, white peony, and isatis root
.

In the first half of 2021, affected by various factors such as the epidemic, disaster, inflation, and reduction in planting area, the prices of various varieties in the Chinese medicinal material industry have seen a general increase in the market.
Forsythia has been rising from this year.
The 65 yuan kilogram in March rose to the current 120 yuan kilogram, and the mixed grade of rehmannia glutinosa rose from 13 yuan kilograms in February this year to the current 32 yuan kilograms
.

The two varieties of Alisma and Chuanxiong were still priced at 22 yuan per kilogram and one 24 yuan per kilogram at the beginning of spring.
In just a few months, the price of Alisma orientalis rose to 43 yuan per kilogram by the end of summer, and the price of Ligusticum chuanxiong rose to 38 yuan per kilogram.
Per kilogram, the rapid price increase and the high rate of price increase have caught many manufacturers caught off guard
.

In addition, the difference between Chinese patent medicine and western medicine is that its prescription is a compatible synthesis
.

The characteristic of the Chinese medicinal material industry is that the price increase of one variety can often drive the price increase of multiple varieties, and the linkage and general increase effect is extremely strong
.

The sharp increase in the price of blind medicinal materials has already made it difficult for some relatively weak manufacturing companies to cope with it.
If the price of finished drugs is hopeless, the strategy that companies often adopt is to restrict or suspend production of the product.
So, after the centralized procurement wins the bid, can the enterprise still do so? Obviously it won't work! Even if it is to lose the underwear, I am afraid it can only cut the flesh to heal the injury, otherwise the result of the punishment of North China Pharmaceutical will be a mirror!

3.
What are the "large quantities" varieties of raw materials for proprietary Chinese medicines?

The source of raw materials for Chinese patent medicine production enterprises is generally the professional market of Chinese medicinal materials or the market company of the origin, the agricultural cooperative of the origin or the GAP planting end
.

So, as a manufacturing company, if the centralized procurement wins the bid, in order to prevent the price of raw materials from rising, can it choose to reserve a large amount of medicinal materials for emergency needs?

Of course this is fine!

However, the current initial goal of the relevant government departments to prepare for centralized procurement is to work on the "large quantities and high prices" of proprietary Chinese medicine products
.

In the Chinese herbal medicine industry, the varieties with large sales volume generally refer to the varieties with annual consumption of "10,000 tons", and "10,000 tons" is sometimes just a base number, such as notoginseng, tuckahoe, licorice, angelica, dangshen, white peony The actual annual demand of these varieties, such as Ophiopogon japonicus, Chinese wolfberry, salvia miltiorrhiza, white peony root, and Isatis indigotica, is more than ten thousand tons, and even some varieties have annual demand as high as tens of thousands of tons.
More than 100,000 tons of figures
.

Similar to the above varieties, some large and medium-sized manufacturers, if the proprietary Chinese medicine products belong to the main brand category, the annual consumption of blind medicinal materials is often more than tens of tons, hundreds of tons or hundreds of tons
.

If companies use this method to reserve a large amount of the raw materials of the medicinal materials, not to mention the financial difficulties, the storage and maintenance costs will cause huge pressure.
What's more, as we have said before, the raw materials of Chinese patent medicines need to be purchased in combination.
Yes, to maintain a formula, the object of purchase will not be a kind of medicinal raw materials, but a number or dozens of varieties need to be purchased together.
This is not a small number, can the company bear it?

Then, can the company use the amount of medicinal materials required for the whole year in a one-time package to sign a contract to transmit or transmit the pressure of raw material reserves to upstream suppliers, such as those specialized market sales companies or agricultural cooperatives and industrial alliances.
What about the GAP planting base?

Naturally, it is also possible!

But are the market suppliers, the agricultural cooperatives of the producing areas or the medicinal planting bases all fools? Obviously not
.

1.
The upstream raw material supplier earnestly implements the contract, and even in order to maintain the contract, is willing to reserve the volume of the downstream manufacturers in advance
.

2.
The supplier has only a small amount of goods in his hands.
In order to reduce the length of advancement, they are accustomed to buying at the time of contract execution
.

If the price of raw materials does not rise, supply and demand are happy; if the price of raw materials rises, once it becomes unbearable, the supply of raw materials for medicinal materials will either unilaterally reduce the quality of the supply, or it will break the supply and cause troubles for downstream producers
.

As for the GAP planting bases established by some Chinese patent medicine manufacturers at the source of production, although the current situation is good, the concept is greater than the substance.
After all, the conditions for self-sufficiency are still not mature enough.
At the critical moment, I dare not count on myself in terms of supply.
Most of the "base" enterprises, the rise and fall of the prices of raw materials of proprietary Chinese medicines, everything depends on the face of the market
.

3.
Centralized procurement of Chinese patent medicines is an opportunity and a challenge for manufacturers!

Then, with the continuous advancement of the centralized procurement work of relevant government departments, more Chinese patent medicine products will move towards centralized bidding in the future.
What are the consequences of the price increase of raw materials and Chinese medicinal materials?

1.
In such a situation, some production units may adopt the method of "degrading quality and not reducing quantity" in the specifications of the raw materials of medicinal materials normally used by their own enterprises
.

"Degrading quality without reducing quantity" does not mean that inferior raw materials are completely used, but rather that some controversial raw materials are purchased at the specification level within the scope allowed by the pharmacopoeia standards
.

For example, the pharmacopoeia standards require that the specifications for use of Astragalus and Radix Glycyrrhizae are "30～90cm in length, 1～3.
5cm in diameter" and "25～100cm in length, 0.
6～3.
5cm in diameter"
.
——The so-called "integrated goods" means that the specifications of this medicinal material are "large, medium, and small" or the proportion of tablets is very uniform and moderate
.

However, the price of astragalus or licorice is often different depending on the place of production and specifications.
Generally, the price of astragalus or licorice is different from 20 to 25 yuan per kilogram.
The prices of "small strips and slices" that are lower than the specifications of the general product will also vary depending on the place of origin.
Generally, it is 7-15 yuan per kilogram.
Then, in the case of unavoidable circumstances, in order to reduce the cost, the manufacturer may choose to abandon the high-spec "Small strips, small tablets" are used as pharmaceutical raw materials, which is called "degradation of quality but no decrease in quantity"
.

And although this kind of "degradation" behavior is not worthy of promotion, there is still a gap.
Your Pharmacopoeia standard stipulates that the specifications of a certain medicinal material are "length 30 ~ 90cm, diameter 1 ~ 3.
5cm", although I used " Small strips and pieces with a length of 30 to 60 and a diameter of 1 to 2.
5 cm, but the quality is still controlled within your constraints after all.
Although this is a bit illegal, it is not illegal after all?

Besides, the same specifications and grades are also different.
For the same medicinal material, the medium and large strips (chips) account for 70% of the total products, and the small and medium strips (chips) account for 70% of the total products.
, But the difference in specifications between the two naturally causes a huge price difference.
For the company, this is a way or space for the company to "degrade quality without reducing quantity" in production
.

Second, it is natural to "cut the confession"
.
When a manufacturing company encounters a skyrocketing raw material medicinal materials, with meager profit or even barely keeping the cost of production, I believe he will not dare to deal with the "cut supply" of the centralized procurement, because the end of North China Pharmaceutical is a lesson for the past
.

However, when an enterprise encounters a skyrocketing raw material and faces a dilemma, and is really overwhelmed and has to choose between life and death, he often tends to live in untrustworthy ways, and he is unwilling to choose to take responsibility for his own faults and die.
", then, the next thing is to "cut the confession
.
"

Obviously, whether it is the "degradation of the quality but not the quantity" of the raw materials of medicinal materials or the "out of supply" of the proprietary Chinese medicine products, the above two items are contrary to the original intention of the government's centralized procurement work and the positive significance and values ​​of the company's own existence.
Taken
.

Of course, based on this, we also have reason to believe that in the future, many Chinese patent medicine manufacturers bidding in centralized procurement will have "pros and cons" after experiencing the treatment results of the "discontinued supply" of ibuprofen sustained-release capsules by North China Pharmaceutical.
Under the balance, they will certainly choose not to win the bid or daring to blindly "grab the bid" regardless of the cost without a bottom line.
After all, the cost of "cutting the supply" is still huge
.

So, affected by the "cut-off" crisis, we also believe that in the future centralized procurement of Chinese patent medicines, the relevant government departments will increase the system for considering the strength and credit of those bidding Chinese patent medicine manufacturers
.

For example, although the price of a drug your company bids for is indeed not high, what is the strength of your company? Does the specification level of your raw materials meet the pharmacopoeia standards? Is it an authentic medicinal material? Is the source channel traceable? Does the company have its own GAP planting base for Chinese medicinal materials in the place of production? On the premise of ensuring quality and quantity, what is the performance ability and so on
.

If even the above basic conditions are not met, then, no matter how low the drug quotation is, you may not be able to get into the eye of the centralized procurement, and only get out of the game
.

In short, looking at the current situation, the centralized procurement of Chinese patent medicines is the general trend and the arrow is on the line.
For those manufacturers, this is an opportunity and a challenge
.
In the face of a major reshuffle in the industry, if you can't work hard to meet the difficulties, you can only face being eliminated
.