Pharmaceutical sales terminal pattern change medicine business accelerated reshuffle
The new medical reform emerged in the secondary medical network, and the merger and reorganization of pharmaceutical distribution companies fluctuate
The pattern of medical institutions known as the "first terminal for drug sales" faces major adjustments in the reform of the medical system. The three-tiered medical network formerly composed of tertiary hospitals, secondary hospitals, and Tier 1 hospitals will be restructured into a secondary medical network composed of only large hospitals and community medical institutions.
The change in the pattern of this important terminal is tantamount to a major change in the country's 13,000 pharmaceutical wholesale companies.
According to industry insiders, the future pharmaceutical companies have either good network coverage or professional academic promotion capabilities. Most "small, chaotic, poor" pharmaceutical distribution companies are in danger of being eliminated. The desire of mergers and acquisitions and restructuring of distribution companies will become stronger and stronger.
It is worth mentioning that the hospital terminal is called the first terminal for drug sales, which accounts for more than 70% of the entire pharmaceutical sales market. As the pattern of this important terminal changes, for the national pharmaceutical distribution companies, the adjustment of the strategy is imperative.
First terminal change
At present, community health stations, secondary hospitals, and large research-based tertiary hospitals jointly constitute China's three-tier medical service network. Because most patients will use the top three hospitals as their first choice for medical treatment, the number of patients far exceeds the level 3 hospital's ability to accept them, which directly results in difficult medical conditions. At the same time, it also made the government's investment in hospitals, and two-thirds of them were placed in tertiary hospitals. The allocation of medical resources was unreasonable.
The direction of medical reform is to squeeze the pharmaceutical market in urban hospitals that occupy too large a market share, vigorously develop community hospitals, and promote the diversion of drug consumption to pharmacies and community hospitals. That is to increase the construction of a network and form a "low level, high coverage" pattern.
Zhang Li, director of the Department of Disease Prevention and Control at the Ministry of Health, said that the direction of future reforms for the three-tiered medical network in the past is to simplify it as a secondary network. This also means that secondary hospitals will be weakened and face transformation. For those with better conditions, it will rise to a large hospital, and the other part will be transformed into a community medical institution.
In the draft of the new medical reform consultation, it was clearly stated that “major hospitals with the right conditions can promote the rational flow of medical resources through trusteeship, reorganization, etc. according to the requirements of the regional health plan... Take comprehensive measures to improve service capabilities, lower charging standards, and increase reimbursement rates. Measures to guide the general medical treatment to sink to the grassroots level, and gradually realize the community's first diagnosis, graded medical treatment, and two-way referral.â€
In this regard, Zhang Xiaolong, Marketing Director of Wuhan Aimin Pharmaceuticals, pointed out that the new medical reform plan has basically established the pattern of future medical institutions. In the near future, Chinese hospitals are bound to become polarized: Large public hospitals are small but large-scale, shouldering teaching, research, and intractable diseases; urban community health service centers (stations), township health centers, village clinics, etc. The basic medical and health institutions will present "every family's households are dotted," and they will be responsible for prevention, health care guidance and basic disease diagnosis and treatment.
For pharmaceutical distribution companies, this kind of "highly centralized and widely distributed" medical service terminal is entirely new.
To win the qualifications for distribution to large-scale public hospitals, commercial companies must have absolute liquidity and professional service quality; in terms of serving basic medical terminals, they must have sufficient terminal coverage network and storage and transportation cost advantages. Some commercial companies that distribute drugs for basic medical institutions will not be eligible for games in the Chinese pharmaceutical market once they cannot be designated as legitimate distributors by the government.
Industry restructuring accelerates
It is against this background that the mergers and acquisitions and restructuring of pharmaceutical distribution companies are surging. Shen Rulin, vice president of Xian Yangsen, told reporters that the existing industrial policy will speed up the structural adjustment of the pharmaceutical business and promote mergers and acquisitions of pharmaceutical business. "The big commercial distribution companies have great opportunities."
The Industrial Securities analyst report also pointed out that the requirements of the medical reform on the channels are flat and sunny, and the policies will be tilted toward large pharmaceutical commercial enterprises.
According to statistics from the China Pharmaceutical Business Association, at present, almost 90% of China's pharmaceutical and commercial enterprises are small-scale enterprises. The top three pharmaceutical businesses in 2006 were Sinopharm, Jiuzhoutong Group Co., Ltd. and Shanghai Pharmaceutical Co., Ltd., which accounted for the entire country. The market's 8.83%, 4.81%, and 4.55%, respectively, add up to only 18% of the national market.
Wei Yaolin, chief operating officer of Sinopharm Holding, told the reporter that the current market share of the top three giants is close to 20%. According to the Matthew effect, if the market share of the top three giants exceeds 20% is a sign of the turning point in the industry, the market concentration will be quickly obtained. As a result, a large number of small and medium-sized enterprises are eliminated, and a large number of large enterprises will rise rapidly. "The next decade is the best time for the rise of big companies."
Since the beginning of this year, Sinopharm Group has successively acquired local regional distribution companies in Henan, Xinjiang, and Ningxia. The purpose is to lay the groundwork and take advantage of the location.
On October 22, Zhu Jingjin, director of the Planning Department of Sinopharm Group, told reporters that through its control over provincial companies, Sinopharm has achieved coverage of major hospitals and is the only pharmaceutical and commercial enterprise that has a nationwide layout.
At the same time, the regulatory authorities are also strengthening the GSP and other industry standards to improve access barriers and guide corporate mergers and acquisitions. Chen Yu, director of the market department of the State Food and Drug Administration, said that in the future, there will be a batch of small and medium-sized wholesale enterprises that will be eliminated and the business will be given to major circulation companies that will serve as the main channel. The degree of industrial concentration continues to increase, and the phenomenon of small scattered industries will be changed.
“The government will support large pharmaceutical commercial enterprises in the process of reform, which is also in line with the pharmaceutical industry's “Eleventh Five-Year Plan†for the establishment of large-scale enterprise groups.†Deputy General Manager of Tung Shing Yinghua Pharmaceutical Co., Ltd. Tie Tiejun told reporters that the government Supported modern large-scale pharmaceutical logistics and distribution companies will gradually divide their jurisdictions into the monopoly of basic medical terminals. And for those commercial companies that have no liquidity, no service cost, and no end-to-end network coverage, the new healthcare reform program has the greatest impact.
The pattern of medical institutions known as the "first terminal for drug sales" faces major adjustments in the reform of the medical system. The three-tiered medical network formerly composed of tertiary hospitals, secondary hospitals, and Tier 1 hospitals will be restructured into a secondary medical network composed of only large hospitals and community medical institutions.
The change in the pattern of this important terminal is tantamount to a major change in the country's 13,000 pharmaceutical wholesale companies.
According to industry insiders, the future pharmaceutical companies have either good network coverage or professional academic promotion capabilities. Most "small, chaotic, poor" pharmaceutical distribution companies are in danger of being eliminated. The desire of mergers and acquisitions and restructuring of distribution companies will become stronger and stronger.
It is worth mentioning that the hospital terminal is called the first terminal for drug sales, which accounts for more than 70% of the entire pharmaceutical sales market. As the pattern of this important terminal changes, for the national pharmaceutical distribution companies, the adjustment of the strategy is imperative.
First terminal change
At present, community health stations, secondary hospitals, and large research-based tertiary hospitals jointly constitute China's three-tier medical service network. Because most patients will use the top three hospitals as their first choice for medical treatment, the number of patients far exceeds the level 3 hospital's ability to accept them, which directly results in difficult medical conditions. At the same time, it also made the government's investment in hospitals, and two-thirds of them were placed in tertiary hospitals. The allocation of medical resources was unreasonable.
The direction of medical reform is to squeeze the pharmaceutical market in urban hospitals that occupy too large a market share, vigorously develop community hospitals, and promote the diversion of drug consumption to pharmacies and community hospitals. That is to increase the construction of a network and form a "low level, high coverage" pattern.
Zhang Li, director of the Department of Disease Prevention and Control at the Ministry of Health, said that the direction of future reforms for the three-tiered medical network in the past is to simplify it as a secondary network. This also means that secondary hospitals will be weakened and face transformation. For those with better conditions, it will rise to a large hospital, and the other part will be transformed into a community medical institution.
In the draft of the new medical reform consultation, it was clearly stated that “major hospitals with the right conditions can promote the rational flow of medical resources through trusteeship, reorganization, etc. according to the requirements of the regional health plan... Take comprehensive measures to improve service capabilities, lower charging standards, and increase reimbursement rates. Measures to guide the general medical treatment to sink to the grassroots level, and gradually realize the community's first diagnosis, graded medical treatment, and two-way referral.â€
In this regard, Zhang Xiaolong, Marketing Director of Wuhan Aimin Pharmaceuticals, pointed out that the new medical reform plan has basically established the pattern of future medical institutions. In the near future, Chinese hospitals are bound to become polarized: Large public hospitals are small but large-scale, shouldering teaching, research, and intractable diseases; urban community health service centers (stations), township health centers, village clinics, etc. The basic medical and health institutions will present "every family's households are dotted," and they will be responsible for prevention, health care guidance and basic disease diagnosis and treatment.
For pharmaceutical distribution companies, this kind of "highly centralized and widely distributed" medical service terminal is entirely new.
To win the qualifications for distribution to large-scale public hospitals, commercial companies must have absolute liquidity and professional service quality; in terms of serving basic medical terminals, they must have sufficient terminal coverage network and storage and transportation cost advantages. Some commercial companies that distribute drugs for basic medical institutions will not be eligible for games in the Chinese pharmaceutical market once they cannot be designated as legitimate distributors by the government.
Industry restructuring accelerates
It is against this background that the mergers and acquisitions and restructuring of pharmaceutical distribution companies are surging. Shen Rulin, vice president of Xian Yangsen, told reporters that the existing industrial policy will speed up the structural adjustment of the pharmaceutical business and promote mergers and acquisitions of pharmaceutical business. "The big commercial distribution companies have great opportunities."
The Industrial Securities analyst report also pointed out that the requirements of the medical reform on the channels are flat and sunny, and the policies will be tilted toward large pharmaceutical commercial enterprises.
According to statistics from the China Pharmaceutical Business Association, at present, almost 90% of China's pharmaceutical and commercial enterprises are small-scale enterprises. The top three pharmaceutical businesses in 2006 were Sinopharm, Jiuzhoutong Group Co., Ltd. and Shanghai Pharmaceutical Co., Ltd., which accounted for the entire country. The market's 8.83%, 4.81%, and 4.55%, respectively, add up to only 18% of the national market.
Wei Yaolin, chief operating officer of Sinopharm Holding, told the reporter that the current market share of the top three giants is close to 20%. According to the Matthew effect, if the market share of the top three giants exceeds 20% is a sign of the turning point in the industry, the market concentration will be quickly obtained. As a result, a large number of small and medium-sized enterprises are eliminated, and a large number of large enterprises will rise rapidly. "The next decade is the best time for the rise of big companies."
Since the beginning of this year, Sinopharm Group has successively acquired local regional distribution companies in Henan, Xinjiang, and Ningxia. The purpose is to lay the groundwork and take advantage of the location.
On October 22, Zhu Jingjin, director of the Planning Department of Sinopharm Group, told reporters that through its control over provincial companies, Sinopharm has achieved coverage of major hospitals and is the only pharmaceutical and commercial enterprise that has a nationwide layout.
At the same time, the regulatory authorities are also strengthening the GSP and other industry standards to improve access barriers and guide corporate mergers and acquisitions. Chen Yu, director of the market department of the State Food and Drug Administration, said that in the future, there will be a batch of small and medium-sized wholesale enterprises that will be eliminated and the business will be given to major circulation companies that will serve as the main channel. The degree of industrial concentration continues to increase, and the phenomenon of small scattered industries will be changed.
“The government will support large pharmaceutical commercial enterprises in the process of reform, which is also in line with the pharmaceutical industry's “Eleventh Five-Year Plan†for the establishment of large-scale enterprise groups.†Deputy General Manager of Tung Shing Yinghua Pharmaceutical Co., Ltd. Tie Tiejun told reporters that the government Supported modern large-scale pharmaceutical logistics and distribution companies will gradually divide their jurisdictions into the monopoly of basic medical terminals. And for those commercial companies that have no liquidity, no service cost, and no end-to-end network coverage, the new healthcare reform program has the greatest impact.
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