National Healthcare Security Administration Recently Organized All Provinces in China to Conduct Follow-up Procurement After the Expiration of the Insulin Centralized Procurement Agreement, and the Bidding Took Place in Shanghai on April 23. A Total of 53 Products from 13 Companies Participated in This Follow-up Procurement, with 49 Products Obtaining the Winning Bid Qualification, a Success Rate of 92%. The Winning Prices Remained Stable with a Slight Decrease, Falling by an Additional 3.8 Percentage Points Based on the Initial Centralized Procurement Price Reduction. Among Them, Gan&Lee Pharmaceuticals, Tonghua Dongbao Pharmaceutical Co., Ltd., and The United Laboratories Each Had Six Products Proposed for Winning Bids, While HEC CJ PHARM Had Five. That Evening, Tonghua Dongbao Pharmaceutical Co., Ltd., Gan&Lee Pharmaceuticals, and Other Companies Released Announcements One After Another, Disclosing the Proposed Winning Results of Their Respective Drugs.
The National Healthcare Security Administration recently organized all provinces in China to conduct a follow-up procurement after the insulin centralized procurement agreement expired, and the bidding took place in Shanghai on April 23. This is the first national centralized procurement follow-up initiated by the National Joint Procurement Office for medicines, and the results of the follow-up procurement will be implemented nationwide in May.
This round of procurement renewal involved more than 35,000 medical institutions across China, with insulin demand exceeding 240 million units, covering commonly used second-generation and third-generation insulin in clinical practice. A total of 53 products from 13 companies participated in this procurement renewal, with 49 products obtaining the qualification for selection, achieving a selection rate of 92%. The selected prices remained stable with a slight decrease, reducing by an additional 3.8 percentage points based on the initial centralized procurement price reduction.
Multiple companies participating in the centralized procurement stated that this procurement would help them further expand related products, and have a positive impact on enhancing the brand influence and long-term future development of the companies.
Products from Multiple Listed Companies Selected
Information from the National Healthcare Security Administration shows that in the first round of centralized procurement, the price difference in the third-generation premixed group with the largest price gap narrowed from 2.3 times to 1.6 times, making market competition fairer and ensuring more stable supply from enterprises. Meanwhile, the proportion of lower-priced Class A selected products increased from 40% in the previous round to 71%. These lower-priced Class A selected products include those from internationally renowned companies and domestic leading brands as well as newly listed enterprises, better meeting public demand.
According to the "Proposed Winning Results of the National Centralized Drug Procurement (Insulin Special Continuation)" published by the Shanghai Sunshine Pharmaceutical Procurement Network, Chinese pharmaceutical companies Gan&Lee Pharmaceuticals, Tonghua Dongbao Pharmaceutical Co., Ltd., and The United Laboratories each have 6 products proposed to win bids; HEC CJ PHARM has 5 products; Hefei Tianmai Biotechnology Development Co., Ltd. has 3 products; Jilin Huisheng Biopharmaceutical Co., Ltd. and Beijing Yadong each have 2 products; Shandong New Time Pharmaceutical Co., Ltd. and Liaoning Bo'ao Bio-pharmaceutical Co., Ltd. each have 1 product. Foreign pharmaceutical companies Novo Nordisk has 6 products proposed to win bids, Eli Lilly and Company has 4 products, Bioton (represented by Yifan Pharmaceuticals) has 3 products, and Sanofi has 2 products.
That evening, Tonghua Dongbao Pharmaceutical Co., Ltd., Gan&Lee Pharmaceuticals, and other companies successively announced the proposed winning results of their respective drugs.
Reporters from the Shanghai Securities News noticed that in this insulin continuation procurement, all six products submitted by Gan&Lee Pharmaceuticals were awarded contracts, and their prices increased compared to the first national procurement. Specifically, the six proposed winning products are Insulin Glargine Injection, Insulin Lispro Injection, Insulin Aspart Injection, Mixed Protamine Zinc Recombinant Insulin Lispro Injection (25R), Insulin Aspart 30 Injection, and Mixed Protamine Human Insulin Injection (30R). The specifications for all products are 3ml:300 units (cartridge), with corresponding bids of 65.3 yuan, 35.55 yuan, 25.9 yuan, 35.55 yuan, 25.9 yuan, and 25.9 yuan, respectively.
A relevant person in charge of Gan&Lee Pharmaceuticals told reporters that the company has been actively responding to China's centralized procurement policy as always, and the categories of products selected in this round are in line with the company’s business development plan. The company will continue to increase R&D investment in health management within the diabetes field to continuously improve blood sugar control for diabetic patients, benefiting more patients.
Tonghua Dongbao Pharmaceutical Co., Ltd. submitted bids for six products: Human Insulin Injection, Isophane Human Insulin Injection, and Isophane Human Insulin Mixed Injection (30R) at 25.93 yuan per vial; Insulin Aspart Injection and Insulin Aspart 30 Injection both at 23.98 yuan per vial; and Insulin Glargine Injection at 63.33 yuan per vial. The prices of most selected products have decreased compared to the previous national procurement.
Tonghua Dongbao stated that this centralized procurement will help the company further expand the sales of related products, especially insulin analog products, accelerate product access, increase market share, and have a positive impact on enhancing the company's brand influence and long-term development in the future. At the same time, the decrease in product prices will further reduce the economic burden of medication for patients, improve the accessibility of insulin products, and benefit a wide range of patient groups in China.
Chinese-Produced Insulin Enters a New Stage of Development
The industry generally believes that the pricing for this insulin continuation procurement is relatively moderate.
In November 2021, the national organization’s centralized procurement of insulin marked the first time that biologics were included in the procurement scope. The selected products had an average price reduction of 48%, bringing China's insulin prices down from the highest in the world to a relatively lower global level. Over the two years since the implementation of the procurement results, the actual procurement volume has exceeded twice the agreed procurement volume. Compared with before the centralized procurement, the usage proportion of third-generation insulin, which has better efficacy and safety, increased from 58% to 70%, moving closer to the drug utilization structure in European countries.
According to a relevant official from the National Healthcare Security Administration, this round of follow-up procurement adheres to the principle of "integrated bidding and purchasing with quantity-price linkage." Based on the generally reasonable price level formed in the previous round of centralized procurement, the goal is to stabilize prices, ensure supply, and maintain clinical stability while continuing and optimizing procurement rules: First, clinical choices are fully respected, with medical institutions reporting quantities by brand. While requiring medical institutions to report sufficient quantities, adjustments between second-generation and third-generation insulin are allowed to meet the need for improving the medication structure. Second, orderly competition is encouraged. While maintaining competitive bidding, companies that did not win during the competition but still have intentions to offer discounts and whose bids do not exceed a certain level of the winning price from the previous round of centralized procurement are given the opportunity to be reselected, allowing more companies to be selected and ensuring stable and diverse supply. Third, a tiered volume approach is implemented where products with lower winning prices receive higher volume proportions, whereas products with higher winning prices receive lower volume proportions, further reflecting the positive incentive of quantity-price linkage.
A review of corporate earnings reports reveals that, under the impact of centralized procurement price cuts, although the sales volume of corporate products has increased somewhat, truly achieving "exchanging price for volume" will still take time. A common trend that cannot be ignored is that companies in the industry are increasing R&D efforts, continuously exploring and developing multi-indication products with high clinical value, and have stepped up their pace of going global.
Market insiders analyzed to reporters that, considering the high user stickiness and weak substitutability of insulin, the trend of domestic substitution in hospitals is expected to further extend to markets outside the centralized procurement, accelerating the import substitution of domestically produced products across China. Meanwhile, expanding overseas markets has become a long-term strategy for the performance growth of Chinese companies. The centralized procurement policy may impact pharmaceutical companies' stock prices in the short term, especially for those reliant on a single product or holding smaller market shares. However, in the long run, the centralized procurement policy benefits the healthy development of the industry, potentially offering more market opportunities for competitive and innovative enterprises. Investors should focus on factors such as product quality, R&D capabilities, and market strategies to make rational investment decisions.