Since May 2022, national special insulin collection has been launched in various provinces and cities. While the price of insulin products has declined, the domestic substitution process has greatly accelerated.
The Zhitong Finance App learned that Guojin Securities released a research report saying that the continuation of the insulin collection project is progressing smoothly, and some domestic companies plan to win the bid with a high ranking, and they are optimistic that performance growth will be further driven. The two traditional insulin giants, Novo Nordisk and Eli Lilly, won the bid for the products collected in the B/C category, and were only able to obtain part of the basic procurement volume. Since the last round of collection, the share of domestically produced insulin has continued to increase. This special collection project will continue to be implemented until the end of 2027, and it is expected that the domestic insulin substitution process will further accelerate. Key companies: Tonghua Dongbao (600867.SH), Ganli Pharmaceutical (603087.SH), Federal Pharmaceuticals (03933), etc.
Incident: On April 23, 2024, the Joint Pharmaceutical Procurement Office of the State Organization announced the proposed selection results for centralized drug procurement (insulin special continuation). More than 35,000 medical institutions from all over the country participated in this continuous procurement, reporting a demand for more than 240 million units of insulin, covering second-generation and third-generation insulins commonly used in clinical practice. Insulin manufacturers participated actively, and all bidders selected all or part of the products.
Guojin Securities reviews are as follows:
The special continuous procurement work was carried out smoothly, and the overall price system was steadily declining.
According to the National Health Insurance Administration, in November 2021, the centralized procurement of insulin organized by the state included biopharmaceuticals in the scope of collection for the first time, and the average price of selected products was reduced by 48%. In the 2 years since the selection results were implemented, the actual purchase volume exceeded 2 times the agreed purchase volume. Compared with before collection, the proportion of third-generation insulin usage increased from 58% to 70%, which is closer to the medication structure in European countries. A total of 53 products from 13 companies participated in this successive procurement. 49 products were selected, with a selection rate of 92%. The selected prices declined steadily, and reduced by 3.8 percentage points on top of the initial round of collection price cuts. The three-generation pre-mixed group with the largest price difference in the first round of procurement reduced the price difference from 2.3 times to 1.6 times. Market competition was fairer, and corporate supply was more guaranteed. At the same time, the proportion of products selected in Class A with lower prices increased from 40% in the previous round to 71%.
Some domestic insulin companies won the bid at a high level, which is expected to drive continued growth in performance.
According to the proposed selection results, Gan Li Pharmaceutical participated in the application, such as Jingxin Human Insulin Blend Injection (30R), Lai Pu Insulin Injection, Menthong Insulin Injection, Gansine Zinc Recombinant Liproline Insulin Mixed Injection (25R), and Mendong Insulin 30 Injection were eligible for selection in the successive insulin procurement. All participating groups were selected as Class A varieties. Tonghua Dongbao insulin injection, Jingprotein human insulin injection, Jingprotein human insulin mixed injection (30R), sperm protein human insulin mixed injection (40R), sperm protein human insulin mixed injection (50R), glargine insulin injection, Mendon insulin injection, Mendon insulin 30 injection, and Mendong insulin 50 injection were successfully selected in Class A. Among them, insulin glycine and premixed mendong insulin (Mendong insulin) (30 injections and insulin 50 injections) Class 2 insulin analogues are all classified as Class A1 Selected.
The share of domestically produced insulin continues to rise, and we are optimistic that domestic substitution will be further deepened.
Since May 2022, national special insulin collection has been launched in various provinces and cities. While the price of insulin products has declined, the domestic substitution process has greatly accelerated. According to PDB, the sample hospital's insulin market share was mainly occupied by foreign pharmaceutical giants such as Novo Nordisk, Eli Lilly, and Sanofi, but in recent years, the share of domestic insulin has continued to rise. Among them, the share of domestic insulin sample hospitals increased significantly in 2023. According to the proposed selection results for the insulin project, Novo Nordisk and Lilly's two major pharmaceutical giants were both Class B or Class C. According to collection rules, the B/C winning category products can only obtain up to 65% of the first-year purchase demand. The undistributed procurement demand and the procurement demand for unselected products are the remaining amount, and the pharmaceutical institution independently selects from Class A products. This special insulin collection project will continue to be implemented until the end of 2027, and it is hoped that the domestic insulin substitution process will be further deepened.
Risk warning: Risks such as product sales and promotion falling short of expectations, risk of insufficient production capacity, industry policy risk, etc.