The centralized procurement policy is closely tied to the hearts of everyone in the pharmaceutical industry. Recently, the National Healthcare Security Administration has issued unified deployment and coordination for local alliance-based centralized procurement initiatives, making it a key area that deserves close attention.
The National Healthcare Security Administration has clarified that by the end of 2022, each province (including inter-provincial alliances) must have at least 100 drug varieties under centralized procurement, covering chemical drugs, traditional Chinese medicines, as well as consumables such as orthopedic trauma products, dental implants, and drug-eluting balloons. For key drug varieties, provinces will be designated as leading entities based on their respective intentions and capabilities. At the same time, other provinces interested in joining are encouraged to proactively participate, thereby expanding the scope of the alliance and optimizing the frequency and pace of centralized procurement efforts.
In 2022, two key alliance-based centralized procurement initiatives are planned for promotion: the traditional Chinese medicine alliance procurement led by Hubei Province, and the dental implant alliance procurement led by Sichuan Province.
First, let's examine the centralized procurement of traditional Chinese medicine (TCM) products led by Hubei Province. Hubei has spearheaded the establishment of an inter-provincial TCM procurement alliance, which includes 19 provinces and cities such as Hebei and Shanxi. This alliance recently conducted a centralized bulk procurement of TCM products in Wuhan, and the process has now entered the stage of allocating purchase quantities.
A total of 19 provinces and over 24,000 medical institutions participated in this joint procurement effort. A total of 157 companies submitted bids for 182 distinct TCM products, with the overall procurement scale reaching nearly 10 billion yuan.
Ultimately, 97 companies were successful in securing contracts for 111 products, achieving an impressive selection rate of 62%. The average price reduction for these winning products was 42.27%, with some products experiencing exceptionally high discounts of up to 82.63%.
The oral implant alliance procurement initiative led by Sichuan has also become a key focus within the industry. Dental implants have long been associated with high costs, compounded by the complex and uneven quality of materials in the implant consumables market, which has deterred many from pursuing this treatment option. Earlier, the National Healthcare Security Administration announced that it would launch centralized procurement programs at both national and provincial levels for dental implants and other medical products of significant public concern. On November 18, 2021, Sichuan Province issued the "Notice on Conducting Information Collection for Certain High-Value Medical Consumables in the Oral Health Sector," initiating the process of gathering product information related to oral implant systems, including implant bodies, abutments, and associated accessories. This move is expected to pave the way for new developments in the upcoming centralized procurement efforts.
Meanwhile, Fujian will lead the establishment of a procurement alliance for electrophysiological and laparoscopic staplers; Shandong will lead a procurement alliance for traditional Chinese medicine decoction pieces; Guangdong will lead an alliance focused on procuring COVID-19-related testing reagents and consumables; and Jiangxi will lead a procurement alliance for liver function biochemical reagents.
Additionally, existing alliances such as the "Eight Provinces and Two Regions" Procurement Consortium and the Guangdong-led Pharmaceutical Procurement Alliance will continue to expand their scope of covered products. Meanwhile, provinces including Tianjin, Zhejiang, Jiangxi, Shandong, Henan, and Shaanxi will take the lead in organizing alliance-based procurement for certain pharmaceuticals and medical consumables, while also encouraging all provinces to participate independently.
According to statistics from the Pharmaceutical Research Institute, there are currently 23 inter-provincial alliances conducting centralized drug procurement, while 18 alliances are focused on centralized procurement of medical consumables. Over the past three years, including local procurement initiatives, the average number of drug varieties procured per province has reached 50, with high-value medical consumables accounting for an average of 3 types per province. Meanwhile, the national centralized procurement program has already completed six rounds spanning seven phases, and preparations for the seventh round—including information submission—have now begun. This latest round involves a total of 59 drugs across 208 product specifications.
According to the earlier targets set by the National Healthcare Security Administration, by the end of 2022, the total number of nationally and provincially centralized procurement drugs in each province should reach more than 350, while the number of high-value medical consumables varieties should exceed 5. This initiative aims to establish centralized procurement as a regular practice, thereby stabilizing societal expectations.
Disclaimer: Under no circumstances should the information or opinions expressed in this document be construed as investment advice to anyone.
