Some pilot cities implemented the drug consumption procureme

Shanghai, Shenyang and Dalian will begin implementing the pilot program for the procurement of pharmaceuticals on March 20. Industry insiders pointed out that with the advancement of the pilot project of quantity procurement, the price reduction of drugs is a trend, but it gives a higher premium to innovative drugs. For generic drug companies, it is necessary to increase investment in research and development, and develop into high-end generic drugs or areas where medical insurance control fees are weak, and at the same time, launch an impact on innovative drugs.

Implementation of quantity procurement policy

On February 26, Shanghai Pharmaceutical Centralized Bidding and Purchasing Management Office issued a notice, “4+7” city drug centralized procurement in Shanghai area took effect on March 20 carried out. The distribution enterprises in Shanghai are Sinopharm Holding Co., Ltd. (Hong Kong stocks 01090) and Shanghai Pharmaceutical Holdings. According to the above notice, the part exceeding the agreed purchase amount will still be purchased according to the bid price. And before the market rumors exceeded the gradient will be reduced.

In addition, Shenyang and Dalian will begin implementing the policy at the same time.

The National Health Insurance Bureau recently held a symposium, Yangzijiang Pharmaceutical, Kangenbei (600572, Diagnostics) Group, Beida Pharmaceutical (300558, Diagnostics), Tasly (600535, Diagnostics) Medicine, Qilu Pharmaceutical, Junshi Bio, Shijiazhuang Group (Hong Kong stocks 01093), Shenwei Pharmaceutical (Hong Kong stocks 02877), Zhengda Tianqing, Fosun Pharma (600196, diagnostic stocks) (Hong Kong stocks 02196), Hai Cisco (002653, diagnostic stocks) medicine, Pfizer China, Sino-US Squibb and Sanofi and other pharmaceutical companies were present. Participants in the meeting suggested further highlighting the policy orientation of encouraging innovation, establishing a stable and predictable policy environment, and giving play to the decisive role of the market in resource allocation. The National Medical Insurance Bureau stated that it is necessary to actively carry out centralized drug procurement and pilot work, fully summarize the evaluation of the pilot results, and study the gradual expansion of the scope of the pilot.

Essence Securities pointed out that the National Health Insurance Bureau's meeting and the announcement of the Shanghai announcement passed a positive signal, and the market was too pessimistic about the volume purchase. In addition, the dynamic adjustment mechanism of the medical insurance catalogue is gradually improved, and the policy supporting the development of high clinical value innovative products remains unchanged.

Guo Yunpei, president of China Pharmaceuticals (600056, Diagnostics) Enterprise Management Association, said that the companies that have won the bid are hoping to implement them quickly, and the companies that have won the bids hope to make up the bids and look forward to more complete policies. Implement a centralized procurement policy to preventThe price of drugs is too low, and the development of the industry is a win-win situation.

Promoting the integration of the pharmaceutical industry

“4+7” drug concentration purchase refers to Beijing, Tianjin, Shanghai, Chongqing and Shenyang, Dalian, Xiamen, Guangzhou, Shenzhen, Chengdu, Xi'an 11 Some cities have carried out pilot work on centralized procurement of some medical insurance drugs. On December 7, 2018, the results of the “4+7” city drug centralized procurement plan were announced. Overall, compared with the 2017 minimum purchase price, the average price of the same variety of drugs fell by 52%, the highest drop of more than 90%.

Insiders pointed out that with the implementation of the procurement policy, the unreasonable expenses of generic drugs will be compressed. Shanghai Pharmaceutical (601607, Diagnostics) (Hong Kong stocks 02607) Group President Zuo Min said that the volume of procurement to promote the transformation of the generics industry. In the future, the competitiveness of generic drugs companies is mainly based on technology, cost and speed, rather than spending a lot of money on channel promotion.

As the policy became clearer, the pharmaceutical index showed a steady recovery. A fund manager who has long studied the pharmaceutical industry said that drug price cuts are a trend. Measures such as “medical insurance control fees” that began in 2011 are actually considerations for price cuts for pharmaceutical products.

Price cuts will drive the integration of the pharmaceutical industry. Liu Wei, president of Jialin Pharmaceutical, said that there are currently more than 4,700 pharmaceutical companies. According to market demand, the number of pharmaceutical companies within 1,000 is relatively reasonable. Zuo Min pointed out that the current consumption of the Chinese pharmaceutical market ranks second in the world, but the level of innovation in enterprises is not high. In the next 10-20 years, China is expected to have a number of pharmaceutical companies that have entered the top 20 in the world.

Promoting the development of innovative drugs

Many industry insiders believe that the current drug procurement policy has given a higher premium to innovative drugs.

The above-mentioned fund manager said that the regulatory policies and new drug approvals in the past decade have been learning from mature systems. The price cut of generic drugs is a general trend, and the policy encourages drug research and development to move in the direction of innovation. In terms of investment logic, the entire industrial chain of innovative drugs is worthy of attention, and generic drugs companies will be more differentiated.

Tianfeng Securities (601162, Diagnostics) pointed out that for generic companies, price cuts continue to exist. Through the survival of the fittest, industry concentration tends to increase.Under the dual pressure of medical insurance control fees and product competition, generic pharmaceutical companies need to strengthen the construction of variety echelon. At the same time, strengthen cost control and improve control over upstream APIs. In the future, companies with rich product echelons and “battery-agent-formulation integration” production capacity are expected to stand out from the generic drug market. In the long run, generic drug companies should increase investment in research and development, and develop into high-end generic drugs or areas where medical insurance control fees are weak, and at the same time launch an impact on innovative drugs.

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