Tenth Round of National Drug Volume-Based Procurement Triggers Market Upheaval Exceeding RMB 70 Billion: Anti-infectives and CNS Drugs in Spotlight as Kelun, Qilu, Yangtze River, CSPC Vie for Dominance

Mar 10, 2024 18:46 CST Updated 18:46

Kelun

Innovative Pharmaceutical R&D Company

Qilu Pharmaceutical

Specialty Formulations and Active Pharmaceutical Ingredients (API) Developer

CSPC

Developer of finished drugs and active pharmaceutical ingredients

As the ninth round of national procurement is gradually fully implemented, the tenth round of national procurement is also about to be launched.

On March 4, the Guangdong Pharmaceutical Exchange Center issued a notice stating that from now until March 11, 2024, relevant enterprises should carry out the information declaration work for the selected and alternative drugs of the ninth national centralized procurement in China. The time for viewing the agreed quantities and maintaining distribution relationships will be announced separately. Currently, provinces such as Henan, Xinjiang, Guangxi, Jiangxi, and Shandong have already issued documents specifying the implementation timeline for the ninth national procurement. With the normalization and institutionalization of drug centralized procurement steadily advancing, the tenth round of national procurement is also expected to be put on the agenda in the first half of this year.

Data from MiNe Network shows that, as of February 28, 115 varieties meet the national procurement "threshold" but have not yet been included. In 2022, the combined sales revenue of these drugs in China's public medical institutions was close to 77 billion yuan. At the enterprise level, companies such as Kelun Pharmaceutical, Qilu Pharmaceutical, Yangtze River Pharmaceutical, Chengdu Bright Future Pharmaceutical, and CSPC have multiple varieties on the list. In terms of therapeutic areas, the 115 varieties cover 13 major therapeutic categories. Among them, the two largest categories are systemic anti-infective drugs and nervous system drugs, each with 16 varieties, accounting for more than 10%.

The proportion of previous batches of national procurement varieties exceeds 20%.

Fierce Competition in Systemic Anti-Infective Drugs

Since the "4+7" pilot program, systemic anti-infective drugs have been a key focus of China's national procurement. This is because such drugs consistently rank among the top three in market share across hospitals in various regions. In the ninth round of national procurement, commonly used major clinical products like Sitafloxacin Tablets, Cefotiam Injection, and Azithromycin Oral Liquid were prominently listed. As more systemic anti-infective drugs are included in national procurement, opportunities are emerging amid market changes.

Data from MiNe Network shows that, affected by the pandemic, the sales of systemic anti-infective drugs in Chinese public medical institutions plummeted by 25% in 2020. There was a slight recovery in 2021, but sales dropped again in 2022 due to the implementation of centralized procurement. In terms of subcategories, systemic anti-infective drugs are mainly dominated by systemic antibacterial drugs, accounting for over 70%. According to statistics, the market size of chemical systemic antibacterial drugs in 2022 was 112.479 billion yuan, with a year-on-year decrease of 7.72%, showing a significant decline in market size over the past three years.

Sales of Systemic Anti-infective Drugs in Chinese Public Medical Institutions in Recent Years (Unit: Billion Yuan)

Systemic anti-infective drugs, due to their wide application and high demand, have always accounted for a significant proportion in bulk procurement. Among the eight batches and nine rounds of chemical drug bulk procurement that have been carried out, systemic anti-infective drugs have had the largest number of varieties included, accounting for over 20%. Excluding the varieties already included in national bulk procurement, there are currently 16 systemic anti-infective drug varieties that meet the bulk procurement threshold, with five or more enterprises eligible for submission. These include different types of anti-infective drugs such as antifungal, antibacterial, and antiviral medications. If these drugs enter bulk procurement, it will further expand the range of anti-infective drug varieties.

Among them, the piperacillin injection is the most competitive variety, with 13 companies meeting the qualification requirements for submission. These companies include North China Pharmaceutical Xiantai Pharmaceutical, Chengdu Better Pharmaceutical, Hunan Kelun Pharmaceutical, and Suzhou Erye Pharmaceutical, among others. Notably, Kelun Pharmaceutical has 20 varieties that have passed the evaluation and are preparing for centralized procurement. In addition to the piperacillin injection, these include ampicillin injection, low-calcium peritoneal dialysis solution (lactate-G1.5%), sitagliptin oral conventional release formulation, sacubitril valsartan oral conventional release formulation, and linagliptin oral conventional release formulation. The sales revenue of these five varieties in Chinese public medical institutions in 2022 all exceeded 1 billion yuan.

The competition for oral lamivudine immediate-release formulations, posaconazole injections, and peramivir injections is equally fierce, with the number of companies meeting the eligibility criteria reaching nine or more. Among them, nine companies, including Qirui Pharmaceutical, Aosaikang Pharmaceutical, Simcere Pharmaceutical, Hunan Kelun Pharmaceutical, and Zhengdatianqing, have successfully passed the evaluation for posaconazole injections. In the sample hospitals of 2022, the sales of posaconazole reached 238 million yuan, with the total purchase amount in Chinese public hospitals being approximately 833 million yuan.

According to the sales data of enterprises, in 2017, only the original research manufacturer Merck was selling posaconazole in sample hospitals. By the first three quarters of 2023, five companies with a total of seven different dosage forms and specifications were selling posaconazole in sample hospitals. Among them, Merck ranked first with a sales revenue share of 63.0%; Jiangsu Aosaikang Pharmaceutical and Shanghai Xuantai Pharmaceutical Technology ranked second and third with sales revenue shares of 26.5% and 9.5%, respectively.

In addition, attention should also be paid to the injectable Peramivir, which exceeded 500 million yuan in sales in Chinese public medical institutions in 2022. In the first half of 2023, its sales increased by 137.87% year-on-year, surpassing the total sales of 2022. Currently, there are nine local pharmaceutical companies, including SiChuan Kelun Pharmaceutical Co., Ltd., YANGTZE RIVER PHARMACEUTICAL GROUP JIANGSU JOINT STOCK CO., LTD, and Qilu Pharmaceutical Co., Ltd., that have received approval for their generic versions of Peramivir injection, and they will compete for the hundred-million-yuan market, stirring up the competitive landscape.

More than 50 varieties have been successively included in the national procurement.

Billions of Nervous System Drug Market Undergoes Changes

Diseases of the nervous system are one of the important types of chronic diseases. With the aggravation of population aging, and the acceleration of residents' pace of life, increased pressure, and emotional tension caused by rapid economic development, the incidence of nervous system diseases has been rising in recent years, and the market size of nervous system drugs has also continued to grow. Compared with developed countries, China's central nervous system drug industry is still in its infancy, with huge growth potential in the future. According to Frost & Sullivan, the market size of China's central nervous system drugs has increased from 144 billion yuan in 2015 to 236.7 billion yuan in 2023.

Currently, more than 50 varieties of neurological drugs have been gradually included in the national centralized procurement, ranking fourth in terms of inclusion quantity after systemic anti-infective drugs, digestive system and metabolic drugs, and cardiovascular system drugs. This makes the field a key focus of national procurement. Notably, the 2023 edition of the National Reimbursement Drug List added 16 new neurological drugs, which are expected to drive a new wave of market growth. With the tenth round of national procurement imminent, competition for 16 products has reached five or more companies, signaling an intense battle in the neurological drug market in 2024.

However, with the implementation of policies such as centralized procurement, key monitoring, and adjustments to the medical insurance catalog, in recent years, the in-hospital market for neurological chemical drugs in China has experienced fluctuations. Data from MiNe Network shows that sales of neurological chemical drugs in Chinese public medical institutions fell by nearly 15% in 2020, rebounded slightly in 2021, and declined again in 2022, with a sales scale of nearly 100 billion yuan, shrinking by over 12.6 billion yuan compared to the peak period in 2019. From Q1 to Q3 of 2023, there was a recovery with a 4.84% increase, exceeding 17.9 billion yuan.

Sales of Neurological Chemical Drugs in Chinese Public Medical Institutions in Recent Years (Unit: Billion Yuan)

In 2022, inhalable sevoflurane was a major product with sales exceeding 2.8 billion yuan in Chinese public medical institutions. In terms of market competition, Shanghai Hengrui Medicine holds over 60% of the market share. Currently, there are 10 pharmaceutical companies in China with approval numbers for inhalable sevoflurane, including Maruishi Pharmaceutical Co., Ltd., Shanghai Hengrui Medicine, Lunan Better Pharmaceutical, Hebei Yipin Pharmaceutical, etc. Among them, six companies have passed the quality evaluation: Shanghai Hengrui Medicine (the first to pass), Hebei Samsons Pharmaceutical, Hebei Yipin Biopharmaceutical, Sichuan Baili Pharmaceutical, Fujian Haixi United Pharmaceutical, and Shandong New Era Pharmaceutical.

Among the antidepressant drugs acting on the nervous system, the implemented chemical drug bulk procurement in China already covers nine generic drugs. Apart from the varieties already included in the national bulk procurement, there are currently two types of antidepressants that meet the procurement threshold, with five or more companies meeting the qualification requirements. These are vortioxetine oral immediate-release formulations and bupropion sustained-release formulations.

Vortioxetine is a new type of antidepressant with a multi-target mechanism of action that has not yet been included in the national medical insurance drug list. Data from Menet shows that in recent years, the terminal market of vortioxetine in Chinese public medical institutions has continued to expand. It exceeded 100 million yuan in 2021, with year-on-year growth of 13.61% in 2022 and 6.46% in the first half of 2023.

Sales of Vortioxetine in Chinese Public Medical Institutions (Unit: Ten Thousand Yuan)

On January 16, Shijiazhuang No.4 Pharmaceutical Co., Ltd. announced that its production of Vortioxetine Hydrobromide Tablets, filed as a Category 4 generic drug, had been approved for production and was considered to have passed the quality evaluation. Currently, nine companies have received approval for Vortioxetine Hydrobromide Tablets, including Zhengda Tianqing, Hengrui Pharmaceuticals, CSPC, Bet Pharmaceutical, Yangtze River Pharmaceutical Group Jiangsu Joint Stock Co., Ltd., and Shijiazhuang No.4 Pharmaceutical Co., Ltd. It is reported that this drug was originally listed as a proposed procurement product in the eighth batch but was later removed from the official directory. Industry insiders pointed out that the core compound patent for Vortioxetine Hydrobromide Tablets expired in October 2022, but another crystal form patent will not expire until 2026. In respect for intellectual property rights protection, the Joint Procurement Office did not include this drug in the eighth batch of centralized procurement.

Bupropion Hydrochloride Sustained-Release Tablets are neurological medications used to treat moderate to severe depression and seasonal affective disorder. Data from the MIR Net shows that sales of bupropion sustained-release formulations in Chinese public medical institutions exceeded 70 million yuan in 2022, with a year-on-year increase of over 27%. Currently, five companies have received approval for their bupropion sustained-release formulations, including Renfu Medicine, Pro Pharma, Disha Pharma, Xuantai Medicine, and Ambit Pharmaceuticals.

In addition, some nervous system drugs are also worth looking forward to. Risperidone Oral Solution and Carbamazepine Tablets, both of which are products with sales over 100 million yuan, currently have more than 60% market share held by the original research pharmaceutical companies. Also, Piracetam Injection, with sales exceeding 1 billion yuan, has already been approved by five domestic pharmaceutical companies, and may become a new target for the tenth round of national procurement in China.

Centralized procurement mechanism continues to be optimized and improved

Drug Prices Across China Becoming More "Transparent"

Since the "4+7" pilot program launched at the end of 2018 to the start of the ninth national procurement round at the end of 2023, the National Healthcare Security Administration has conducted nine rounds of volume-based procurement over five years, covering 374 drugs and is expected to save more than 400 billion yuan in healthcare security funds. At the National Healthcare Security Conference held in Beijing in early January this year, the National Healthcare Security Administration laid out plans for healthcare work in 2024, clearly emphasizing the need to expand and improve the quality of centralized procurement. According to requirements, a new round of centrally organized drug and medical consumables procurement will be carried out, with the total number of drugs procured by both national and provincial levels reaching at least 500. Notably, compared to the procurement target set in 2023, the number of drugs has increased by 50.

The National Healthcare Security Administration actively carries out national procurement while ensuring the smooth implementation of the selected drugs. On January 5, the administration stated in the "Notice on Promoting Fair, Honest, Transparent, and Balanced Prices for Generic Drugs with the Same Name and Brand Across Provinces" that the listed price of nationally procured drugs in supply provinces will be uniformly set at the procurement selection price.

The above-mentioned new regulations also require that, for the drugs selected in the eighth and ninth national centralized procurement, if their listed prices in non-supply provinces are relatively high, enterprises must adjust them according to the requirements of the procurement tender documents to no higher than 1.5 times the winning bid price of the enterprise or the highest winning bid price of the same variety. They are not allowed to avoid price coordination by means such as delisting. For the selected drugs within the agreement period of the first seven national centralized procurements, if their listed prices in non-supply provinces are relatively high, they should be adjusted to the listed monitoring price or lower as required. Pharmaceutical companies are encouraged to voluntarily adjust the prices to no higher than 1.5 times the winning bid price of the enterprise or the highest winning bid price of the same variety.

Currently, the ninth batch of national procurement has been gradually implemented across China. According to incomplete statistics, provinces such as Henan, Xinjiang, and Shandong have already confirmed the implementation timeline for the ninth batch of national procurement. In addition, multiple provinces including Shanghai, Qinghai, and Hainan have announced the latest progress of the ninth batch of national procurement and arranged related work.

Among them, Henan requires the implementation of the ninth batch of national procurement supply starting from March 10. The Provincial Public Resources Trading Center is responsible for maintaining information on selected and backup products, establishing distribution relationships for selected products, signing tripartite purchase and sale contracts, and managing labeling work. On March 8, unified price adjustments will be made for relevant drugs. It is reported that, referring to previous batches of national procurement, Henan has always been one of the provinces with earlier execution times.

In terms of selection and implementation timelines, the national procurement in China has basically formed a rhythm of two batches per year, with execution time intervals ranging from 4 to 9 months. Regarding the procurement rules, there is both a continuation of established frameworks and ongoing optimization in specific details. Taking the ninth national procurement as an example, while continuing the framework from the eighth procurement, it "fills in gaps" by refining certain rule details. First, the contract period has been extended; the ninth procurement will run from the execution date of the selection results until December 31, 2027. Second, restrictions have been imposed on potential situations where multiple related companies might collaborate to manipulate bidding. These involve counting the actual number of bids from related companies as one and, for the first time, allowing relevant companies to form consortia for submission.

After five years of exploration, the selection rules for national drug centralized procurement have been basically established: Products with the same generic name, dosage form, and specifications that have not passed the quality and efficacy consistency evaluation are not allowed to participate in the national centralized procurement bidding. Meanwhile, high quality standards and sufficient competition are important principles for selecting procurement varieties. In terms of market competition, the National Healthcare Security Administration can initiate a national centralized procurement project if there are more than four generic drugs that achieve consistency in quality and efficacy with the reference listed drug. Industry insiders believe that if the tenth round of national procurement begins, it may further refine and innovate upon existing rules.

At present, the National Healthcare Security Administration has completed the exploration of the bottom line for the medical insurance payment standards of drugs through centralized bulk procurement and medical insurance negotiations. Now, drug procurement has entered a new phase of expansion and quality improvement. Based on medical insurance payments, a unified national medical insurance information platform procurement subsystem, which integrates bidding, procurement transactions, settlement, and supervision, has been fully established. As the special governance of "Four Similar Drugs" pricing is successively implemented in various provinces across China, drug prices nationwide will become increasingly "transparent," inevitably further encouraging pharmaceutical companies to focus more on product innovation, research and development, and improving product quality.

Editor: Cheng Lin