The purchase of high-value medical consumables is ready to go

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Author : Joe Wong
Update time : 2020-09-22 13:21:54
The purchase of high-value medical consumables is ready to be implemented

In recent years, thanks to economic development, the public's demand for health continues to increase, and the R&D level and manufacturing capabilities of the pharmaceutical industry have been significantly enhanced. At the same time, a series of national policies to support the innovation of domestic medical devices have released dividends, making my country the world's most potential emerging medical device market.

According to estimates, the size of my country's medical device market has increased from 43.4 billion yuan in 2006 to 530.4 billion yuan in 2018, with an average annual compound growth rate of approximately 25.55%. Among them, the market size of high-value medical consumables is about 104.6 billion yuan, a year-on-year increase of 20.37%, which is the highest growth rate in the medical device segment.

However, behind the opportunities are challenges. The purchase of high-value medical consumables and tapes nationwide is on the line and is ready to go.

Policies are introduced intensively and fully implemented to be launched

On July 16 this year, Anhui Province issued the "Implementation Plan for Negotiation and Bargaining (Pilot) for Centralized Purchase of High-value Medical Consumables in Public Medical Institutions in Anhui Province", which clearly indicated that orthopedic implants (spine) and ophthalmology (intraocular lenses) will be implemented. Concentrated purchases of high-value medical consumables were negotiated and negotiated, and the purchases accounted for 70% and 70% of the purchases of orthopedic implants (spine) and anesthesia products in public medical institutions in Anhui Province in 2018. 90%. On July 30, the bargaining results of volume procurement negotiations in Anhui Province were announced. The average price of orthopedic spine materials for domestic products was reduced by 55.9%, the average price of imported products was reduced by 40.5%, the overall average price was reduced by 53.4%, and the maximum drop of individual components was 95%; intraocular lens The average price of domestic products was reduced by 18.1%, the average price of imported products was reduced by 20.9%, and the overall average price was reduced by 20.5%.

In addition, after preliminary negotiations, bidding, and publicity procedures, on August 7, the first batch of high-value medical consumables procurement alliances composed of 55 tertiary public hospitals in Jiangsu Province clarified that it will provide 6 types of cardiovascular stents and 25 Procurement of dual-chamber pacemaker varieties. On the premise of ensuring no less than 70% of the purchase volume, the average price drop of selected stents was 51.01%, with the highest drop of 66.07%; the average price of selected companies in pacemakers dropped by 15.86%, and the highest drop was 38.13%.

One week before Jiangsu Province announced the procurement results of high-value medical consumables, the General Office of the State Council issued the "Reform Plan for Governance of High-value Medical Consumables" on July 31, clarifying that it would improve the price formation mechanism to reduce the false high of high-value medical consumables Price; by improving the classified and centralized procurement methods, medical institutions are encouraged to jointly carry out mass negotiation procurement; by standardizing medical service behavior, strictly control the unreasonable use of high-value medical consumables. It is understood that in the next step, the National Health Commission will cooperate with relevant management departments to establish a consumables consistency evaluation agency, and will explore the successful experience of centralized procurement of drugs to promote the procurement and procurement of medical consumables.

The determination of the national level to promote the purchase of high-value medical consumables is evident. In the context of strict control of medical insurance expenses, it is only a matter of time before the purchase of high-value medical consumables takes place nationwide.

Favorable merger pain enterprises "pain and happiness"

Under the price-for-quantity model brought by volume procurement, the sales performance of high-value medical consumables manufacturers that won the bid is bound to be affected in the short-term; but in the long run, the bid-winning company can enjoy 70% of public hospitals in the province (city). A market share of more than %, which is undoubtedly good for companies with large scale, high production capacity and strong innovation capabilities. At the end of July, after the announcement of the results of the purchase of high-value medical consumables in Jiangsu Province, the executives of a successful cardiovascular stent manufacturer described their feelings as "painful and happy".

On the other hand, with the advancement of volume purchases on a larger scale, the market share of manufacturers that have not won the bid will be greatly reduced. Small and medium-sized consumables manufacturers do not have an advantage in negotiations due to their thin profits, little room for price cuts, and relatively limited production capacity. They are difficult to compete with large-scale manufacturers. If they do not actively seek transformation, in the long run, small-scale and weak innovative companies are likely to suffer. Eliminated in the market.

From an industry perspective, a series of recent policies on the management of high-value medical consumables will not only squeeze out the “moisture” of the high price of products and play the role of “elevating the cage and changing the bird” of medical insurance, it is also conducive to the market mechanism and the survival of the fittest. The role of the industry is to promote the development of the industry in the direction of standardization and intensification.

Compared with imported similar products, domestic medical consumables have more price advantages. The ultimate goal of mass procurement is to control medical insurance expenditures. The implementation of this policy is expected to accelerate the domestic substitution of high-value medical consumables and provide enterprises with independent intellectual property rights and core competitiveness with opportunities to stand out.

We should take precautions and enter the "blue ocean" market

The pharmaceutical industry is extremely sensitive to policy trends, and relevant companies can only achieve sustainable development if they follow the trend and make arrangements in advance.

Gain insights into trends and respond early In the face of the new policy environment spawned by volume purchases, relevant production companies should take precautions and formulate response strategies in advance. Companies can learn about market trends through analysis reports made by their own market departments or external consulting agencies, and by strengthening communication with relevant policy makers, they can learn about the policy trends of mass procurement in various provinces in a timely manner.

Based on the analysis of factual data, companies can form an interpretation of the purchasing mode of various regions, an assessment of the differences of similar products, an estimation of their own maximum production capacity and the largest price drop that they can bear, and a forecast of competitors’ negotiation strategies. Wait for the judgment to prepare in advance.

Broaden channels and expand markets In recent years, thanks to the promotion of hierarchical diagnosis and treatment and "Healthy China" related policies, county-level public hospitals and non-public medical institutions have obtained broad development space and huge market potential. In the context of the saturation of the public hospital market in first- and second-tier cities, the "blue ocean" of county-level public hospitals and non-public medical services deserves the full attention of enterprises and their deployment in advance.

At present, companies such as Medtronic and Shanghai MicroPort have begun to set up marketing departments such as the "Regional Growth Initiatives Department" to promote medical solutions in the county market and the non-public medical institution market.

Independent innovation, mastering the initiative The cardiovascular stents and orthopedic implants included in the mass procurement this time are all high-value medical consumables with relatively mature market development and severe homogenization competition. For manufacturers, if they want to gain stronger bargaining power in volume procurement negotiations and maintain their competitive advantage in the industry, they must have independent innovation capabilities. Enterprises should drive development through innovation, achieve a diversified business layout, and increase the technical content and added value of a single product to enhance their competitive advantage.

The "future" of purchasing high-value medical consumables with volume has come. In this "blue ocean" of the market, opportunities are only reserved for those who are prepared.