Major Provincial Drug Procurement Looms: Over RMB 3 Billion Market Reshuffled, CSPC, Kelun, and China Resources Stand Out as 78 Products Gear Up for New National Volume-Based Procurement

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Recently, there has been frequent news about centralized procurement: Jiangsu's fourth round of centralized procurement bidding has concluded, with a total of 57 products proposed for selection; Anhui will initiate a joint volume-based procurement of 28 traditional Chinese medicines; Fujian plans to carry out its fourth round of drug centralized procurement, involving 50 chemical drugs and 44 traditional Chinese medicines. Notable potential products include Doxorubicin Liposome Injection and Labetalol Oral Immediate-Release Formulations, whose sales growth in public hospitals in Fujian province exceeded triple digits in 2022, as well as exclusive traditional Chinese medicines such as Compound Danshen Dripping Pills and Musk Cardiotonic Pills (including exclusive dosage forms, hereinafter the same). The ninth round of centralized procurement has successfully concluded, and a new round of national procurement is on the horizon, with at least 78 varieties meeting the competitive landscape of five or more companies. Among them, 10 varieties face fierce competition, with 10 or more eligible companies. Leading companies include Qingdao Chia Tai Haier Pharmaceutical Co., Ltd., Yangtze River Pharmaceutical Group Co., Ltd., and Qilu Pharmaceutical Co., Ltd.

Centralized Procurement Rules Further Optimized, Distinguishing Between A/B Groups and Previously/Non-Previously Selected Groups for Bidding

At the end of October, the Fujian Provincial Medical Device Joint Procurement Center released the "Announcement No. 1 of the Fourth Batch of Drug Centralized Volume Procurement in Fujian Province," marking the official launch of the fourth batch of drug procurement in the province. This procurement distinguishes between chemical drugs and traditional Chinese medicine, with separate procurement documents formulated for each, covering 50 types of chemical drugs and 24 groups comprising 44 types of traditional Chinese medicine.

For the chemical drug section, the centralized procurement rules remain largely consistent with the third batch: ① Varieties with the same generic name are divided into Groups A and B based on relevant qualifications; ② The bid price must be ≤ the current lowest provincial centralized procurement price and volume-based procurement winning/alternative (selected) price for the same generic name, dosage form, and competitive bidding group of the company; ③ Separate bidding for Groups A and B. For groups with ≥3 companies, the lowest bidder is proposed to win and receive 100% of the volume. For groups with ≤2 companies, the lowest bidder within the group that meets the corresponding price reduction conditions is proposed to win and will receive 100%/50% of the volume based on the price reduction; ④ New alternative suppliers are added, and when the alternative supply mechanism is activated, the online listing price must meet certain requirements...

First-Year Agreed Purchase Volume of Selected Chemical Drug Products

For the proprietary Chinese medicine section, the core principle is "compare with the lowest procurement price in China, and the price will be set as low as possible, not high." Specific rules include: ① The enterprise’s quoted price must be ≤ the current lowest provincial centralized procurement price and volume-based procurement price for products of the same generic name and dosage form from this enterprise, and must also be ≤ the current highest sales limit price for products of the same generic name in Fujian Province; ② Differentiate between previously selected and non-selected products, meeting certain price requirements to qualify for tentative selection; ③ For allocation, determine corresponding base and adjusted distribution volumes based on price reductions. The undistributed volume can be autonomously allocated by medical institutions among selected products with a price reduction ≥20%......

First-year agreed procurement volume of selected TCM products

Overall, Fujian has conducted three rounds of provincial-level centralized procurement for chemical drugs, with relatively mature rules. The fourth round, compared to the previous three, introduces a new restriction on "products in the same competitive bidding group" concerning the current lowest provincial centralized procurement price nationwide, aiming to ensure that the selected products' prices are the lowest in China. As for traditional Chinese medicine (TCM), unlike the relatively strict single-winner selection process within groups for chemical drugs, the selection criteria are relatively relaxed. Products are categorized based on whether they have been previously selected or not, and meeting certain price requirements is sufficient for selection, without any limit on the number of selected products.

The RMB 300 Million Market Pattern is Reshaping: CSPC, Kelun, and China Resources Are Preparing

This time, Fujian Province's centralized procurement plans to include 94 varieties. In terms of therapeutic categories, the main focus is on cardiovascular and cerebrovascular disease medications, digestive system and metabolic drugs, respiratory system medications, systemic anti-infective drugs, and blood and hematopoietic system drugs, occupying 11, 9, 8, 6, and 5 seats respectively.

In terms of chemical drugs, all are varieties with large clinical usage, high procurement amounts, sufficient competition, and mature in-hospital use. In terms of dosage form classification, 16 injectables are proposed for inclusion, accounting for over 30%.

Proposed inclusion in the fourth batch of chemical drug directory for centralized procurement in Fujian Province

Note: * indicates exclusive varieties, and non-basic drugs and non-medical insurance drugs are indicated by “-”.

Source: Fujian Provincial Medical Device Joint Procurement Center, organized by Menet

Among 50 chemical drugs, the number of varieties with sales growth exceeding three digits in public hospitals in Fujian Province in 2022 is countless. These include exclusive COPD treatment drugs such as procaterol granules, high-end formulations like doxorubicin liposome injections, and labetalol oral conventional release dosage forms that are both essential medicines and medical insurance drugs...

Liposomal Doxorubicin Injection belongs to the category of antitumor antibiotic drugs and is commonly used in chemotherapy for multiple myeloma, lymphoma, ovarian cancer, and breast cancer. Due to high technological barriers, substantial R&D investment, and low clinical success rates, data from MNI shows that currently only CSPC Pharmaceutical Group Limited, Jinyuan Pharmaceutical, Shengzao Pharmaceutical, Zhida Pharmaceutical, and Shanghai Fudan-Zhangjiang Bio-Pharmaceutical have passed or are considered to have passed the consistency evaluation. Additionally, Qilu Pharmaceutical, Luye Pharmaceutical, Dr. Reddy's Laboratories from India, and three other companies have submitted applications under the new registration classification for review. In 2022, sales of Liposomal Doxorubicin Hydrochloride Injection in public hospitals in Fujian Province exceeded 13 million yuan, with a year-on-year increase of 460%, indicating significant market potential.

Progress of Consistency Evaluation for Doxorubicin Hydrochloride Liposome Injection

Source: MiNe Consistency Evaluation Progress Database

Labetalol oral immediate-release preparations are commonly used cardiovascular drugs in clinical practice, suitable for treating mild to severe hypertension and angina. It is a national essential medicine and classified under Category B of the National Medical Insurance Drug List in China. In recent years, the drug's sales revenue at public hospitals in Fujian Province has maintained steady growth, with year-on-year increases reaching 196% in 2022 and 147% in the first half of 2023. Eight companies, including Kelun Pharmaceuticals, Guangzhou Pharmaceutical Group, China Resources Pharmaceutical Group, and Create Pharmaceutical, hold production licenses for this drug, indicating a highly competitive market. If this product is eventually included in the centralized procurement program, it may inevitably lead to an intense price "battle."

Sales Trend of Oral Immediate-Release Labetalol at Public Hospital Terminals in Fujian Province (Unit: Ten Thousand Yuan)

Source: Terminal Competition Pattern of Pharmaceuticals in Key Provinces and Cities Public Hospitals by MiNei Network

Data from MiNe Network shows that in key provincial and municipal public hospital terminals, Fujian Province's sales exceeded 8 billion yuan each year from 2020 to 2022, and surpassed 4.6 billion yuan in the first half of 2023. The 50 chemical drugs proposed for inclusion in this round of centralized procurement had combined sales of over 300 million yuan in their public hospital terminals in 2022.

In terms of proprietary Chinese medicines, exclusive products are the main force, with 32 varieties listed, including Compound Danshen Dripping Pills, Musk Cardioprotection Pills, and Su Huang Antitussive Capsules, among others. These products each exceeded 2 billion yuan in terminal sales at China's urban public hospitals, county-level public hospitals, urban community health centers, and township health clinics (referred to as Chinese public medical institutions) in 2022.

Proposed inclusion in Fujian Province's fourth batch of centralized procurement of traditional Chinese medicine directory

Note: * indicates exclusive varieties, and non-essential medicines and non-insurance medicines are indicated by “-”.

Source: Fujian Province Medical Device Joint Procurement Center, compiled by Menet

Among the 44 traditional Chinese medicine products, Compound Xueshuantong oral formulations and Xin Kesu oral formulations each have 5 varieties granted access, making them the two procurement categories with the highest number of proposed inclusions. Procurement categories such as Nao An oral formulations (4), Lianhua Qingwen oral formulations (3), and Huachansu oral formulations (3) follow closely behind.

In terms of categories, there are five categories previously led by Hubei in the national traditional Chinese medicine (TCM) procurement, namely, oral preparations of Huachansu, Compound Xueshuantong, Maiguan Fukan, Nao'an, and Xin Keshu. It is not difficult to see that provincial procurement or provincial joint procurement will become the "successor" to the national procurement in reallocating market resources, further ensuring the stable supply and clinical use of medicines.

The Tenth Batch of National Collection is on the Way, with 78 Varieties Ready to Go

On November 6, the ninth batch of national procurement was successfully launched in Shanghai, with 41 types of drugs procured successfully. The average price reduction for the proposed selected drugs was 58%. This includes three key nationally monitored drugs: rabeprazole oral immediate-release formulations, esomeprazole magnesium enteric-coated dry suspensions, and piracetam injections, as well as five shortage and emergency rescue drugs such as amiodarone injections, dopamine injections, and oxytocin injections. The procurement cycle for several of the proposed selected drugs will last up to four years... Based on the agreed procurement volume, the ninth batch of national procurement is expected to save 18.2 billion yuan annually.

Following the pace of two batches per year and based on previous timelines, the new round of national procurement is expected to start in January next year, with the bidding time likely set around April 2024. As for the types of products to be included, there is no latest conclusion yet, but chemical drugs, biologics, and even traditional Chinese medicine are all possible.

Currently, the competition in chemical drugs is relatively intense. As of November 10, among the varieties not yet included in national procurement, at least 78 varieties meet the competitive landscape where the number of original research enterprises + consistency evaluation passed enterprises is ≥5, preliminarily satisfying the conditions for inclusion in national procurement. Injectable formulations still dominate, featuring popular varieties such as Sugammadex Sodium Injection, Lacosamide Injection, Dextrorphan Injection, Piperacillin Sodium Injection, and Fosaprepitant dimeglumine for injection, covering major therapeutic categories including nervous system drugs, antineoplastic and immunomodulatory agents, systemic anti-infective drugs, and drugs for digestive and metabolic disorders.

Data from MiNeiNet shows that the total sales of the aforementioned 78 varieties in China's public medical institutions exceeded 46 billion yuan in 2022, of which 10 varieties were highly competitive, with the number of participating enterprises (counted by group; multiple subsidiaries under the same group for the same variety are considered as one) reaching 10 or more.

Among the 78 varieties, six pharmaceutical groups in China (counted by group) have 10 or more varieties that passed the evaluation, including Qingdao Chia Tai Haier Pharmaceutical Co., Ltd., Yangtze River Pharmaceutical Group Co., Ltd., Qilu Pharmaceutical Co., Ltd., Sichuan Kelun Pharmaceutical Co., Ltd., CSPC Pharmaceutical Group Limited, and BRILLIANT PHARMACEUTICALS.

Source: MNI Database, Fujian Province Medical Device Joint Procurement Center, etc.

Note: The terminal competition pattern of pharmaceuticals in Chinese public medical institutions by Menet, covers the statistical scope of urban public hospitals, county-level public hospitals, urban community centers, and township health centers, excluding private hospitals, private clinics, and village health rooms. The terminal competition pattern database for chemical drugs in key provinces and cities’ public hospitals by Menet is based on the procurement data of chemical drugs from nearly 700 sample public hospitals across more than 20 provinces and cities, providing continuous monitoring of all categories of chemical drugs within these sampled hospitals. The above-mentioned sales figures are calculated based on the average retail price of products at the terminals. Data statistics are as of November 10th, and any omissions are welcome to be corrected!