In recent days, centralized procurement has been frequent. As soon as the special centralized procurement of Chinese patent medicines has come, the national procurement of insulin has begun! On August 18, the industry circulated a "National Organization of Insulin Centralized Procurement Plan (Draft for Solicitation of Comments)" (hereinafter referred to as "Draft for Solicitation of Comments"). The draft stated that related work on centralized insulin procurement will be launched in September this year. In early 2022, the results of the selection will be implemented, and the procurement cycle will be 2 years. It means that after a year of deliberation, research and communication, the insulin special collection boots are officially launched! At present, domestic insulin manufacturers are mainly domestic companies Ganli Pharmaceutical, Tonghua Dongbao, United Laboratories, etc., and foreign-funded companies are mainly Novo Nordisk, Sanofi and Eli Lilly. According to Yaozhi data, foreign pharmaceutical companies Novo Nordisk, Eli Lilly and Sanofi account for 70%+ market share, while domestic islets account for less than 30%; among them, 53.27% of domestic sample hospitals are occupied by Novo Nordisk. 16.49% is occupied by Sanofi.
Image source: Yaozhi Data
According to public information, foreign-invested insulin covers most of the public hospital market in first-tier cities, while domestic insulin is mainly produced in second- and third-tier cities, small and medium-sized hospitals in remote areas, primary hospitals, township health centers, and community hospitals. Insulin procurement in the country is about to begin. What impact will this have on insulin manufacturers? With a limited number of manufacturers, will the price be reduced to the floor like chemical generic drugs? The last "divide" companies can only fight for the first Zheng Pei, general manager of Henan Auto Sales Enterprise Management Consulting Co., Ltd., told reporters that the rules for centralized insulin procurement are not the same as those for chemical drug procurement. They are relatively more complicated, and competing companies are relatively clear. Prior to this, Wuhan has carried out centralized insulin procurement, and the rules for national insulin procurement are similar to those of Wuhan. However, Guocai is more subdivided. It is grouped according to second- and third-generation insulins. They are divided into 3 groups according to quick-acting, basic (medium-acting and long-acting insulins are collectively referred to as basal insulin) and premix, with a total of 6 groups. The generic name unit competes. Secondly, the national centralized procurement forecasts the sales volume in the next one to two years, which is controllable. The third is that its national procurement rules are relatively complicated, but in any case, the company with the lowest price can get 100% of the reported volume, and the company with the highest price needs to allocate 50% of its reported volume to the company with the lowest price. If companies don't want to give up their own volume, they can only cut prices drastically for the reserved stock market. The specific price reduction rate depends on whether the product is fully competitive. The highest reduction rate for sufficient competition may reach more than 90%. This is most likely to exist among second-generation insulin companies. Each company is involved in production and price competition. Relatively fierce; and the relative competition of the third-generation insulin is not very sufficient. According to the experience of Wuhan's centralized insulin procurement, the price may be reduced by less than 50%. Specifically, companies are required to formulate price reduction strategies based on fighting for the stock market. According to the rules of centralized insulin procurement, the lowest quotation is higher and the market may be divided up. The lowest quotation not only guarantees 100% of the volume but also a part of it. In this case, the company can only fight for the first place, how to get the first place , Only through price fights to ensure that one's own will not be taken away at the same time to separate people. Insulin production and research details
Data source: Yaozhi data
Note: The data in the text is manually searched. If there is any omission, please add corrections.
Price fights, can domestic production be replaced? The industry agrees that centralized insulin procurement is a competition between scale and cost, and a means to promote industry concentration; at the same time, targeted centralized procurement can quickly realize domestic substitution. As mentioned above, 70% of my country's insulin market share is owned by foreign companies, while domestic production only accounts for 30%. Can domestic production be substituted for this centralized procurement? Li Tianquan, co-founder and vice president of Yaozhi.com, said that this centralized insulin procurement is a good opportunity for domestic insulin companies to expand market share and realize domestic substitution. According to Chen Jinfu, deputy director of the National Medical Insurance Administration, on July 28, 2021 The content of the seminar on centralized insulin procurement showed that the price difference between domestic and imported insulin is large, and the price difference between domestic and imported insulin is 20-40 yuan/piece, which means that the domestic one is about 30% cheaper than the imported one. Under the rule of 100% quantity obtained by winning the bid at the lowest price of centralized procurement, domestic insulin has inherent advantages; related products of foreign companies have limited room for price reduction due to various factors such as cost and import tariffs; therefore, domestic substitution is very likely, and the domestic insulin market will be reshuffled. . However, Zheng Pei said that in terms of the rules of Wuhan Centralized Procurement and the draft for comments, it is still relatively difficult. Unless domestic companies offer extremely low prices, there is no guarantee that import companies will reduce their prices in order to maintain 70% of the market share. When the situation is lower than that of domestic production, it will not only retain the original market, but also divide up the domestic market share. So, it is not certain who will die. Due to the mature technology of insulin and the highly transparent production cost, from the perspective of the special collection of insulin in Wuhan, it does not have much impact on the market occupied by enterprises, whether it is a domestic enterprise or a foreign enterprise. In 2020, Wuhan’s largest collection of insulin special products dropped by 43%. Novo Nordisk won the most bids, followed by Sanofi and Eli Lilly, which accounted for 68% of the market. The overall market competition pattern has not changed. The consensus reached at the previous centralized procurement forum showed that in order to solve the problem of insufficient supply after the previous centralized procurement exclusive or a small number of companies won the bid, many companies will be guaranteed to be shortlisted; and from the distribution rules of the procurement volume this time, due to the incremental part Medical institutions independently select the winning bidders for distribution, so they may be more inclined to continue their original clinical habits and choose imported brands. This may also prompt foreign brands to cut prices and win bids. However, the domestically produced second-generation insulin technology is mature, and the price is relatively low. The quotation is expected to be relatively lower. Foreign-funded companies may give up strategically. Domestic substitution is possible. However, there are few domestic companies involved in the third-generation insulin, and foreign companies are even more expensive. High, it has a large base and can retain most of the market. Domestically produced products may increase their market share by 10% to 20%, but they will not replace the share of foreign companies like generic drugs. 2016-2020-Insulin and its homologues-Analysis of sales varieties (TOP10)
Image source: Yaozhi Data
To sum up, this centralized procurement is definitely bad news for insulin manufacturers, stimulating the price of the company’s products; thus causing market share adjustments and changes. If its operating costs, including the scale of production, cause its prices to be too high , Or will directly "eliminate" and lose the original market, resulting in large-scale enterprise strong Hengqiang, big fish eat small fish, forming a barrier to insulin sales. However, on the other hand, it is also possible to promote the replacement of corporate insulin. At present, there are many second-generation insulin manufacturers, price competition is also fierce, and profit margins are limited, prompting related companies to increase R&D and make innovation breakthroughs. In addition, insulin is the first shot in the procurement of biological drugs. After insulin takes the lead, it will serve as a good reference for the subsequent formulation of standards for centralized procurement of biological drugs.
August 20, 2021
