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Xinhua Health | The New Round of Centralized Procurement Provides Ample Market Space for Domestic Generic Pharmaceutical Companies
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发布时间：2023-11-16
【概要描述】
The ninth round of centralized drug procurement recently concluded with the opening of bids, achieving a winning rate of 78% among participating companies. Notably, leading domestic injectable manufacturers were all selected, thereby creating ample market space for domestic generic drug firms. With the extended procurement period this time, these companies will enjoy greater market stability. The high selection rate and significant cost-reduction benefits for the public demonstrate that this round of centralized procurement has successfully achieved multiple objectives: reducing financial burdens, fostering industry development, and ensuring supply.
The ninth round of centralized drug procurement recently concluded with the opening of bids, achieving a winning bid rate of 78% among participating companies. Notably, leading domestic injectable manufacturers were all selected, thereby creating ample market space for domestic generic drug firms. With the extended procurement period, these companies will enjoy greater market stability. The high winning bid rate and significant cost reductions for patients in this round of centralized procurement have effectively achieved multiple objectives: alleviating the financial burden on the public, promoting industry development, and ensuring supply.
Industry insiders point out that, as policies such as centralized procurement and medical insurance negotiations continue to advance, domestic pharmaceutical companies will also adjust their R&D strategies: some are shifting their focus to innovation, others are continuing to deepen their presence in the generic-drug market, while still others are pursuing both generic and innovative drug development in tandem.
Leading domestic injectable pharmaceutical companies have all made the shortlist.
Centralized procurement is a purchasing method in which multiple medical institutions, through a centralized drug procurement organization, acquire the drugs they need via a tendering process. This round of centralized procurement covers 11 major therapeutic categories, including hypertension, diabetes, oncology, anti-infectives, and mental disorders. Notably, about 50% of the winning bids are injectable formulations, representing the highest proportion in any previous round of centralized procurement. Given the relatively high share of injectables in hospital sales, the average price reduction for injectables is slightly greater than that for all products combined. Specifically, among the 260 products included, 42 saw price reductions exceeding 90%.
According to statistics from Mene.net, several product categories—including magnesium sulfate injection and calcium gluconate injection—have seen price reductions of more than 90% at multiple companies. Among these, the highest procurement values for oxytocin injection, dexamethasone sodium phosphate injection, and calcium gluconate injection reached RMB 1.366 billion, RMB 2.055 billion, and RMB 886 million, respectively. Henan Runhong Pharmaceutical’s dexamethasone sodium phosphate injection experienced a price reduction of over 97%, while Shanghai Hefeng Pharmaceutical’s oxytocin injection and Sinopharm Rongsheng Pharmaceutical’s dexamethasone sodium phosphate injection both saw reductions exceeding 96%.
Yuan Wei, chief pharmaceutical analyst at Guojin Securities, stated that leading domestic injectable manufacturers have all been selected, including well-known companies such as Chengdu Beite, China Resources Pharmaceutical, Qilu Pharmaceutical, Shanghai Pharmaceuticals, Tianjin Pharmaceutical, Yangtze River Pharmaceutical, Chenxin Pharmaceutical, and Shijiazhuang No. 4 Pharmaceutical. “This round of centralized procurement continues the previous trend of few original-brand foreign drugs winning bids, suggesting that domestically produced drugs are poised to achieve substitution and volume growth through this mechanism,” he said.
Provide ample market space for generic pharmaceutical companies.
An originator drug refers to the first pharmaceutical product developed and launched on the market; once its patent protection expires, it may be subject to generic substitution. A generic drug is a medication that contains the same active ingredients, dosage form, route of administration, and therapeutic effect as the originator drug. To ensure that generics are consistent with originators in terms of quality and efficacy, the state has instituted a requirement for bioequivalence evaluation.
According to reports, China’s modern pharmaceutical industry got off to a relatively late start, with most originator drugs being manufactured by foreign companies. The Chinese pharmaceutical market is dominated by generic drugs, which account for the vast majority of sales. Most of the drugs included in centralized procurement are generics that have passed bioequivalence evaluations; by contrast, foreign originator pharmaceutical firms have shown limited enthusiasm for participating in such procurement initiatives.
Qi Peng, an associate researcher at the Price and Procurement Office of the National Institute for Healthcare Security at Capital Medical University, stated that the procurement cycle has been extended from its actual implementation date to the end of 2027—nearly four years in total—thereby providing enterprises with more stable supply expectations.
“In the past, the procurement cycle was two to three years; this year it has been extended to four, providing enterprises with ample market room,” Qu Benyue, Executive President of Shijiazhuang Sihua Pharmaceutical Co., Ltd., told reporters. The company participated in this centralized procurement with a total of four products, three of which won bids at the lowest prices, enabling it to secure procurement contracts in key domestic pharmaceutical markets such as Zhejiang, Jiangsu, and Guangdong provinces. He believes that these successful bids are expected to drive substantial year-on-year growth in sales revenue.
An industry insider revealed to the reporter that tender documents typically cite hospitals’ estimated market shares, which account for only about 50% to 60% of the actual market share. Consequently, the actual procurement volume in a given region can be substantial.
Feng Wenmeng, Director of the Research Office at the Institute of Public Administration and Human Resources of the Development Research Center of the State Council, pointed out that extending the procurement cycle helps to foster stable expectations and boost enterprises’ enthusiasm. After winning a bid, companies can plan their production schedules over a longer time frame, which in turn enables them to form more reliable forecasts. A longer procurement cycle also encourages greater participation, thereby establishing a relatively stable supply mechanism. This represents an optimization of the centralized procurement system; by contrast, if the procurement cycle is too short, it may lead to irrational production planning and even supply disruptions.
In 2020, metformin hydrochloride tablets—a diabetes treatment manufactured by a subsidiary of Jiuzhoutong Group—won a bid in the national centralized procurement program. By the end of 2022, cumulative sales had exceeded 34 million boxes, with total revenue approaching RMB 102 million. Meanwhile, Tianjin Pharmaceutical’s five injectable products also secured bids this time, generating combined sales revenue of RMB 145 million in 2022, accounting for 3.93% of the company’s total operating revenue.
Encourage enterprises to innovate and develop.
“The objectives of centralized procurement are multifaceted and should not be reduced to a simplistic focus on ‘securing supplies solely on the basis of the lowest price.’ This is a misinterpretation,” said Feng Wenmeng. Over the past few years, the scope of centralized bulk procurement of pharmaceuticals has continued to expand, and the relevant rules have been steadily refined. As a result, not only have several commonly used drugs with high demand been included in China’s national medical insurance–covered drug list for centralized procurement, but overall drug prices have fallen substantially, thereby enhancing the public’s sense of gain in accessing healthcare to a certain extent.
Centralized drug procurement has spurred Chinese pharmaceutical companies to enhance product quality and drive continuous innovation. “Many people assume that generic drugs lack technological sophistication and that the products participating in centralized procurement are of only average technical caliber,” an industry insider told our reporter. In fact, even generic drugs have entry barriers and require substantial R&D investment. Generic medications that pass the bioequivalence assessment and are subsequently included in centralized procurement are, by definition, high-quality products.
Numerous well-known domestic pharmaceutical companies, including Hengrui Medicine and Kolon Pharmaceutical, manufacture generic drugs, which also require substantial R&D investment. For example, cyclophosphamide capsules for the treatment of malignant tumors were approved for marketing in the United States in September 2013; Hengrui Medicine’s cyclophosphamide capsules passed the evaluation of generic drug quality and therapeutic equivalence and were launched in 2023, with cumulative R&D expenditures for the relevant project totaling approximately RMB 7.91 million. Another company under the Shanghai Pharmaceuticals Holding Group conducted a generic version of oxytocin injection, with total R&D expenditures for the consistency evaluation amounting to about RMB 4.96 million.
Qu Benyue told reporters that the company has steadily increased its R&D investment and pursued innovative development in recent years. The four drug products participating in this centralized procurement were all newly launched, having only recently entered the market and having already passed the bioequivalence evaluation for generic drugs—none of them had been previously marketed by the company. “If we were to develop the market for these new products on our own, it would not only be time-consuming but also costly. By winning bids through the centralized procurement at reasonable prices, we have both shortened the time required to penetrate the market and enabled these new products to quickly capture market share; moreover, the procurement program has provided us with a stable market foothold.”
Qu Benyue stated that for companies without new products, centralized procurement does indeed involve continuously driving down prices from the existing baseline, making it difficult to survive; however, for firms that see a steady stream of new generic drugs approved each year, centralized procurement has significantly boosted the market share of their new products.
Regarding market development following centralized procurement, Yuan Wei believes that as the scope of nationally procured drugs expands from chemical pharmaceuticals to biologics in the future, the cost savings achieved through generic drugs will create greater room for innovative medicines to be included in national medical insurance.
Source: Economic Information Daily
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