The seventh batch of volume purchases decreased by an average of 48%, in line with market expectations. The injection is still the main dosage form, and the competition among several important varieties is fierce. With the continuous acceleration of import substitution, the market concentration of domestic enterprises is gradually increasing, and the competition pattern of many heavyweight varieties is about to change. Volume procurement has entered a normal stage, promoting the accelerated transformation of pharmaceutical companies. Beijing CHS-DRG tries out innovative pharmaceutical equipment "except payment", and high-quality innovative drugs are expected to break through the limit of medical insurance control fees.

▍The seventh batch of volume purchases decreased by an average of 48%, in line with market expectations.

From July 12 to 13, the results of the seventh batch of national procurement with volume were announced, and a total of 60 varieties were successfully purchased. According to People's Daily, there are 488 bids for products from 295 enterprises, and 327 products from 217 enterprises are scheduled to be selected. the bidding scale is larger than that of the fifth batch of collective procurement (355 bids from 201enterprises and 251products from 148pharmaceutical companies). According to the agreed purchase volume, it is expected to save 18.5 billion yuan a year. The average price of the variety to be selected has dropped by 48%, compared with the average price drop of 52%, 53%, 53%, 52% and 56% compared with the first five batches of selected varieties. The competition for volume procurement this time is relatively fierce, but the average decline is slightly mild, which is generally in line with market expectations.

▍The injection is still the main dosage form, and the competition among several important varieties is fierce.

From the perspective of drug dosage forms purchased, this procurement catalogue includes 28 types of injections, accounting for nearly 50%, which is close to that of injections in the fifth batch of collection, and injection has become a key area of collection. In this collection, there are a large number of over-evaluated manufacturers and a large price reduction, among which, the number of competitors of omeprazole, propofovir, Edaravone, tirofiban, oseltamivir, lenvatinib and milrinone are 27, 14, 13, 12, 12, 10 and 10 respectively. Compared with the highest quoted price, the average price decrease was 93.18%, 96.74%, 77.22%, 92.46%, 84.70%, 85.35% and 88.69%, respectively.

▍Import substitution continues to speed up, and the market concentration of domestic enterprises is gradually increasing.

In this collection, a total of six products from six foreign-funded enterprises were selected, of which four were original research products, namely, Pfizer Inc's tegacycline, Anstelai's micafungin, Emiluo's ebastin, and Boleko's iopalanol, all of which were injections. compared with the highest quoted price, the decrease was 85.41%, 72.72%, 80.43% and 28.98%.

Compared with oral preparations, injections are more dependent on the hospital market. As injections become the focus of collection, the enthusiasm of multinational pharmaceutical companies to participate in collection has increased, but the winning products are still less.

The main force is still domestic leading enterprises. Qilu Pharmaceutical, Yangzijiang Pharmaceutical, Koren Pharmaceutical, Sino Biopharmaceutical and CSPC Pharmaceutical respectively have 16, 11, 11, 9 and 9 varieties to be selected. With the continuous acceleration of import substitution, the advantages of local pharmaceutical companies continue to expand, and the concentration of the domestic generic drug market is expected to further increase.

▍The competitive landscape of several heavyweight varieties is about to change:

• MeropenemMeropenem is the first carbapenem variety to be included in the national collection. MineNet data show that the terminal sales of Chinese public medical institutions in 2019 are as high as 6 billion yuan. According to the Wind pharmaceutical database, the original research manufacturer Sumitomo Pharmaceuticals of Japan accounted for the highest share of sales in the sample hospitals in 2021 (48.36%). In this collection, Sumitomo Pharmaceutical did not win the bid, CSPC Pharmaceutical, Peking University Pharmaceutical and other local enterprises won the bid, which is expected to greatly accelerate the process of import substitution.

• OmeprazoleOmeprazole is the first proton pump inhibitor on the market, and its terminal sales of public medical institutions in China reached 5 billion yuan in 2020, according to Mine.com. According to Wind medical database, AstraZeneca PLC, the original research manufacturer, accounted for the highest share of sales in the sample hospitals in 2021 (32.85%). In this collection, as the number of over-evaluated manufacturers reached 26, the price reduction competition of omeprazole was particularly fierce. The quotations of the 10 winning enterprises all dropped by more than 90% compared with the highest bid, while AstraZeneca PLC did not win the bid. It is expected that the import substitution process of omeprazole in the hospital market will be significantly accelerated.

• Mycophenolate mofetil:The sales of the sample hospitals in 2021 were 1.024 billion yuan, of which Roche accounted for 51.48% and Central American East China Pharmaceutical accounted for 43.40%. In this collection, Roche failed to win the bid, while Sino-American East China Pharmaceutical won the bid with a minimum price drop of 61.87% compared with the highest bid, and five local enterprises, including Xiansheng Pharmaceutical and Haizheng Pharmaceutical, won the bid.

• Tegacycline:The sales of the sample hospitals in 2021 were 983 million yuan, of which Pfizer Inc, Hansoh Pharmaceutical Group and Sino Biopharmaceutical accounted for 30.65%, 27.88% and 19.27%, respectively. In this collection, in addition to Pfizer Inc and Sino Biopharmaceutical winning the bid, six other local enterprises, including Ausaikang Pharmaceutical and Yangzijiang Pharmaceutical, won the bid, but Hansoh Pharmaceutical Group did not win the bid.

• Nifedipine (controlled release agent):The sales volume of the sample hospital in 2021 was 906 million yuan, of which Bayer, the importer, accounted for the main share (92.79%). In this collection, Bayer failed to win the bid, Yangzijiang Pharmaceutical, Shanghai Xinyi balance and other five local enterprises won the bid.

• Octreotide:The sales volume of the sample hospital in 2021 was 858 million yuan, of which Novartis, the importer, accounted for the main share (56.67%). In this collection, Novartis failed to win the bid, Renfu Pharmaceutical, National Medicine and other 8 local enterprises won the bid.

▍Volume procurement has entered a normal stage, promoting the accelerated transformation of pharmaceutical companies.

The seventh batch of volume procurement rules basically follow the previous plan, the normalized volume procurement rules have gradually stabilized, and the subsequent impact on the market is expected to gradually weaken. The focus of volume procurement has gradually shifted to the field of injection, and the pace of promotion has been gradually accelerated. It is expected that the heavy varieties of generic drugs (including injections) with large clinical use and high purchase amount will no longer be the profit growth point for drug companies.

Volume purchase is more to promote the replacement of health insurance funds, as well as support for the research and development of innovative drugs. In the future, the importance of sales ability of pharmaceutical companies will gradually weaken, and innovation transformation is expected to be the main way for pharmaceutical companies to enhance their competitiveness.

▍Beijing CHS-DRG tries out innovative pharmaceutical equipment "except payment", and high-quality innovative drugs are expected to break through the limit of medical insurance control fees.

On July 13, the Beijing Medical Insurance Bureau issued the document "notice on issuing payment Management measures except for CHS-DRG paid New drugs (for trial implementation)", which tried out the payment management methods except for CHS-DRG paid new drugs, and will make authentic payments outside the scope of CHS-DRG for innovative drugs that meet the requirements. The terms of payment for excluding products mainly include:

① is highly innovative, such as being approved for listing within three years, new indications approved within three years, and being included in the national health insurance within three years.

The clinical effect of ② is much better than that of traditional drugs / medical devices.

③ has a great influence on the payment standard of DRG disease group.

In the context of the acceleration of DRG/DIP reform, the introduction of this policy has released a positive signal for the payment environment of innovative drugs, which has not only greatly improved the accessibility of innovative drugs to patients, but also significantly improved the profit expectations of high-quality innovative drugs. Based on clinical effectiveness and innovative high-quality research and development, it is expected to lead pharmaceutical companies to break the fee control limit paid by health insurance. Innovative drugs with better clinical efficacy and leading market speed will become the core elements of the development of pharmaceutical companies.

▍Risk factors:

The reduction of drug prices leads to the reduction of enterprise profits and the risk of decline in sales of unsuccessful varieties.

▍Investment strategy:

With the normalization of volume procurement, the impact on the market is gradually weakened, innovative drugs are expected to become the core competitiveness of pharmaceutical companies. It is suggested that we should pay attention to the leading pharmaceutical companies with rich R & D pipelines and mature commercial construction, and the leading biotechnology companies driven by innovation and R & D and international layout.