Optimized Tender Rules: National Reimbursement Procurement as an Accelerator for Leading Peripheral Intervention Companies
In the past two years, the peripheral interventional industry has experienced rapid growth. For instance, listed companies in this sector reported substantial year-on-year growth in their peripheral interventional businesses in 2021: Zebra Medical (GuiChuang TongQiao) surged by 752.5%, MicroPort Endovascular (XinMai YiLiao) by 222.15%, Huitai Medical by 80.95%, Acandis (XianRuiDa) by 56.6%, and Lifetech Scientific (XianJian KeJi) by 33.4%.
With the accelerated development of the peripheral intervention industry, an increasing number of industry insiders are growing concerned about its inclusion in centralized volume-based procurement. However, we have found that:Volume-based procurement rules have been increasingly optimized; rather than hindering industry development, centralized procurement may well serve as an accelerator for leading companies in the peripheral intervention sector.。
Recently, the Hebei Provincial Center for Centralized Procurement of Medical Drugs and Devices issued a notice announcing the centralized procurement of 20 product categories, including rigid gas-permeable contact lenses for orthokeratology, atrial septal defect occluders, intracranial stents, and aneurysm clips. These products span numerous specialized fields such as ophthalmic consumables, structural heart disease interventions, and neurointerventional procedures.
Notably, consumer healthcare products such as dental implants, orthodontic treatments, and orthokeratology lenses have been successively included in centralized volume-based procurement, which meansConsumer Medical Devices Are No Longer a Safe Haven from Centralized Procurement。
On the other hand, in early 2022, the State Council’s executive meeting decided to institutionalize and regularize centralized volume-based procurement (VBP) of drugs and high-value medical consumables, thereby further reducing patients’ financial burden for medical care. In light of this, the National Healthcare Security Administration (NHSA) decided to gradually expand the scope of products covered by VBP, guiding all provinces to conduct provincial-level VBP or participate in inter-provincial alliance-based VBP for medical consumables, thus forming a coordinated procurement pattern with vertical integration and collaborative advancement.
As can be seen,Centralized procurement will be conducted on a regular and institutionalized basis, with “national centralized procurement + inter-provincial alliance centralized procurement” becoming the main theme.。
In addition, centralized procurement has demonstrated another characteristic: the exemption of innovative medical devices. In September 2022, the National Healthcare Security Administration stated that the clinical application of innovative medical devices is not yet mature, and their usage volume is difficult to estimate at present, making it challenging to implement volume-based procurement. Based on this analysis,Innovative Medical Devices Will Not Be Included in Centralized Procurement in the Short Term。
To date, multiple rounds of centralized procurement have been conducted in various subsectors of the vascular intervention field, including coronary intervention, structural heart disease, electrophysiology, neurointervention, and vascular access.Only a few innovative areas, such as peripheral interventions, have not yet been included in centralized procurement.
According to the National Healthcare Security Administration, centralized procurement currently focuses primarily on products characterized by high clinical volume, mature clinical application, high procurement expenditure, and relatively sufficient market competition. From this perspective, centralized procurement has not yet been implemented for peripheral interventional devices. On one hand, China’s peripheral interventional market is largely monopolized by prominent multinational medical device companies such as Medtronic, Boston Scientific, and Abbott, resulting in insufficient market competition. On the other hand, due to the specific characteristics of diseases and the unique nature of affected vessels in the peripheral interventional field, the surgical volume applicable to any single product is limited, meaning that individual peripheral interventional products do not meet the requirement of high clinical usage volume.
Based on the rules and scope of centralized procurement, innovative products in the peripheral intervention field—such as peripheral drug-coated balloons, peripheral intravascular lithotripsy balloons, and peripheral aspiration catheters—are not expected to be included in centralized procurement in the short term, allowing the corresponding companies to maintain rapid growth.。
To date, consumer healthcare products such as orthokeratology lenses and dental implants have been included in centralized volume-based procurement (VBP). This indicates that normalized VBP has become an established trend, and medical devices in the peripheral intervention field will inevitably be incorporated into VBP in the future.
However, with the increasing frequency of centralized procurement and the accumulation of experience, the procurement rules have been continuously optimized. For instance, in the first national centralized procurement of coronary stents, the primary consideration was the price reduction magnitude, with contracts awarded to the lowest bidders. Following explorations and pilot programs through inter-provincial alliance procurement, the national centralized procurement for artificial joints and orthopedic spine products has shifted to simultaneously emphasize both product price and quality, resulting in an increased bid-winning rate.
Today, the rules governing centralized procurement are more scientifically and rationally designed. Not only have price reductions become more moderate, but winning bidders are also able to maintain a certain level of profitability. This optimization has not only enabled centralized procurement to truly achieve volume-based price concessions, but will also accelerate industry development.。
Taking intraocular lenses (IOLs) as an example, this product has undergone multiple rounds of volume-based procurement (VBP), with coverage extending to all provinces in China. As a result, Aier Medical, a leading domestic enterprise in the IOL sector, won bids extensively, driving its IOL sales volume from 174,000 units in 2017 to 500,000 units in 2020, representing a compound annual growth rate (CAGR) of 42.1%. Leveraging these widespread bid wins, Aier Medical achieved a substantial increase in sales volume, rapidly expanded its market presence under the support of VBP, and realized import substitution with Chinese-made products.
Furthermore, thanks to its extensive success in public tenders, Aier Medical achieved simultaneous substantial growth in both revenue and net profit, with the latter growing at a faster rate than the former. In 2021, for instance, Aier Medical’s revenue reached RMB 433 million, a year-on-year increase of 58.61%, while its net profit amounted to RMB 171 million, representing a year-on-year surge of 77.45%.
Overall, centralized procurement has accelerated the widespread adoption of intraocular lenses in China, increased their penetration rate, and helped leading domestic manufacturers achieve growth in both revenue and profits.
Based on the updated optimization of centralized procurement rules and case studies involving intraocular lenses, we believe:Volume-Based Procurement May Become an Accelerator for Leading Enterprises in Domestic Niche Sectors。
Returning to the field of peripheral interventions, we believe that if centralized procurement is implemented in this sector, it will, on one hand, accelerate the widespread adoption and increase the penetration rate of innovative products within the industry; on the other hand, market concentration will rise rapidly. Leading domestic companies will leverage their advantages in product quality, cost efficiency, and supply chain management to drive the substitution of imported products with Chinese-made alternatives, thereby achieving simultaneous growth in both revenue and net profit.
In line with the evolving trends of centralized procurement, there is a growing preference for high-quality, low-cost products, an area in which domestic companies hold a distinct advantage.
For instance, in terms of product quality, the peripheral intravascular lithotripsy system developed by the Chinese innovative enterprise Saihe Medical can efficiently and safely fracture calcified plaques without damaging the vascular intima, achieving favorable therapeutic outcomes for calcified nodules, eccentric calcification, as well as superficial and deep calcified lesions.
AcroMed’s independently developed below-the-knee drug-coated balloon (DCB) is the world’s first drug-eluting balloon specifically designed for below-the-knee arterial disease. Compared with traditional plain old balloon angioplasty (PTA) balloons, this product offers advantages such as inhibition of neointimal hyperplasia in the treatment of below-the-knee arterial lesions.
Leao Medical's thrombectomy catheter achieves a venous thrombus clearance rate of over 90%, with minimal patient trauma and rapid recovery. Furthermore, this thrombectomy catheter can effectively remove acute, subacute, and even chronic thrombi, thereby reducing the incidence of post-thrombotic syndrome.
Chinese enterprises possess inherent advantages in terms of product costs. First, domestic labor prices are lower than those in Europe and the United States, resulting in reduced labor costs. Second, China boasts a comprehensive industrial supply chain, leading to lower manufacturing and production costs.
In addition, leading domestic enterprises have adopted platform-based strategies, enabling flexible competition through “volume-based procurement items + complementary products,” thereby gaining a competitive edge. For example, listed companies in the peripheral intervention fieldZhejiang Jumpcan Medical has developed a comprehensive portfolio of arterial and venous products, including stents, balloons, catheters, filters, and vascular closure devices; another listed companyAcandis has also concurrently laid out a portfolio of innovative products, including radiofrequency ablation systems, peripheral thrombectomy aspiration systems, rotational atherectomy devices, and sirolimus-coated drug-coated balloons for the lower extremities.
Once a leading company’s product is included in centralized procurement, its associated accessories, such as guidewires and catheters, will rapidly gain hospital access, becoming new drivers of the company’s revenue and profit growth.
In summary, we believe that:In the short term, innovative products in the peripheral intervention field will not be included in centralized procurement, allowing industry companies to maintain stable revenue and profit growth. In the long run, moderate centralized procurement will be implemented in the peripheral intervention sector. At that time, leading domestic companies will win bids extensively, rapidly increase their market share through centralized procurement, boost net profits, and promote the localization of peripheral interventional devices.