Business Club September 7th The leading international market position and the administrative control of drug prices are the stimulating factors that intensify market share and price competition and influence the competitive landscape of domestic manufacturers. In the future, these factors will have to be fundamentally changed. It will take a long time for the industry environment and advantageous companies to evolve.
Leading position in foreign market and pressure from domestic manufacturers
The transfer of industrial gradients and the growth of pharmaceutical consumption have promoted the prominent and important position of China's pharmaceutical industry in the global pharmaceutical industry chain. Since the 1990s, multinational corporations represented by the world’s top 20 pharmaceutical companies have established a leading industry position and competitive advantage in the Chinese market through industrial investment and (non-core) R&D transfer, which has resulted in the emergence of domestic manufacturers. Continuing competitive pressures. As of 2008, there were 1,144 foreign investment and Hong Kong, Macao and Taiwanese investment in industrial enterprises in pharmaceutical manufacturing, accounting for more than 17.5%. In the same period, the foreign-funded pharmaceutical enterprises realized main business income of 19.996 billion yuan, accounting for approximately 26.96% of the total profit of the industry; and operating profits of 26.01 billion yuan, accounting for approximately 32.80% of the total industry profits. Compared with the industry as a whole, foreign-funded enterprises show stronger competitiveness and profitability, and this pattern continues to expand.
Compared with domestic manufacturers, foreign pharmaceutical companies have a more prominent position in the hospital end market (especially the big city hospital market). The "China Pharmaceutical Industry Safety Status Survey Report" shows that from 2002 to 2006, the share of foreign-funded enterprises (including imported drugs and joint venture drugs) in the hospital market increased from 52.09% to 53.47%, accounting for about 60% of the country's drug consumption in major cities. ~65% of the 50 best-selling drugs in China are foreign brands. The dominant position of imported drugs and joint venture drugs reflects the product lines and marketing strengths of joint ventures and foreign pharmaceutical companies, as well as their quality and technological advantages, but they are also closely related to the drug pricing policy and the mechanism of “doping with drugsâ€.
At the same time, the higher concentration of investment sources and market shares has enabled foreign-invested companies to have greater market influence than their operational strengths: By 2006, the top ten countries and regions had invested in about the pharmaceutical manufacturing industry. 89% of the total capital contribution. Among them, in terms of the country of investment (multinational pharmaceutical companies), the United States accounts for more than 50%, Germany accounts for about 15%, and the remaining countries are below 5%. During the same period, the total market share of the top 10 joint ventures in the hospital market was 44.8%, accounting for nearly 84% of the hospital market share owned by all foreign-funded enterprises.
Drug price administrative regulation: long-term orientation of government system design
The mechanism for the formation of Chinese medicine prices experienced a number of institutional transitions from "comprehensive control" to "comprehensive marketization" to "recovery of partial control." Since 2000, the government has gradually established a complex drug pricing mechanism that combines “government pricing and market pricingâ€: it is included in the “National Basic Medical Insurance, Work-related Injury Insurance and Maternity Insurance Drug Catalog†(hereinafter referred to as “the Medical Insurance Drug Listâ€) and “ The "National Essential Drug List," the drugs and production and management of monopolized special drugs, the implementation of government pricing, and other drugs by the pharmaceutical industry pricing. However, for prescription drugs with a wide range of clinical uses, the government has proposed to gradually explore effective ways to strengthen price supervision through trials. After revisions, the number of drugs covered by the Medicare Drug List has continued to increase, which has expanded the scope of government pricing of drugs. According to the Medical Insurance Drug List published in 2009, a total of 2,151 Chinese and western medicines were included in the government's pricing range, which exceeds 60% of the medicines currently available in the Pharmacopoeia.
Taking the average social cost as a basis and considering other relevant factors in a comprehensive manner is a guide for the government to determine the prices of drugs. However, the pressure to ease residents’ complaints about excessive drug cost burdens and maintain the financial balance of the medical insurance system is the main reason that drives the government to continue to lower drug guidance prices in recent years. In October 2009, the National Development and Reform Commission formulated the retail guide price for 296 drugs out of 307 drugs in the "National Essential Drug List (Utilization of Basic Medical and Health Institutions)". The published price is about 45% lower than the current government guidance price, and the average price reduction is about 12%; about 6% of the species price is properly raised; about 49% of the species price has not been adjusted .
The dependence of the medical institution on self-income creation and its dual monopoly status in the drug sales chain (buyer and seller) make it more willing and able to transfer pharmaceutical retail price pressures to pharmaceutical companies. At the same time, the government also tends to obtain competitive price cuts for pharmaceutical companies by promoting the centralized procurement of medicines in medical institutions, which further promotes the overall decline in the ex-factory price of pharmaceuticals.
Therefore, overall, the government regulation of drug prices and their institutional design reflect the purpose of guaranteeing the quality, supply, and rational use of drugs, and controlling the proportion of drug expenditures in the total health expenditure. It is the government’s policy of continuity and long-term. orientation.
At the same time, through administrative intervention, information asymmetry and monopoly status of medical institutions are used to reduce the distortions in the drug market competition mechanism and price formation mechanism, and it is conducive to objectively and timely reflecting changes in production costs and supply-demand relations, as well as reasonable and effective differentiation between innovation and quality differences. The drug pricing mechanism is also the focus of government-related system design and creation.
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