National essential drugs should be "price cut"

In a recent interview, Fang Ming, the regional manager of a pharmaceutical company in Guangzhou, explained how price reductions have impacted the industry. He gave an example: a drug originally priced at 17 yuan would drop to 14.55 yuan after a 15% reduction. With a production cost of 2.55 yuan per box and annual sales of one million boxes, this price cut could lead to a revenue shortfall of 2.55 million yuan for the company. The introduction of the essential drugs list and related policies has significantly influenced pricing, putting pressure on many enterprises. Fang Ming admitted that the impact of these price cuts on the entire supply chain is considerable. Companies are now exploring strategies to adapt. One option is launching multiple product standards to lower prices and comply with regulations, while another is reducing prices first and waiting for future opportunities to adjust them again. According to preliminary estimates from the national price department, the average price of essential drugs has dropped by about 10% since the list was published. When combined with the zero-profit policy at grassroots levels and the elimination of a 15% markup, the total price reduction could reach at least 25%. Additionally, all essential drugs are now included in the basic medical insurance reimbursement catalog, which offers higher reimbursement rates than non-essential drugs. Gu Yu, a professor at Peking University, noted that although the state has set a national retail price guide, it has limited influence on actual drug pricing. Meanwhile, Zhao Jie, a medical reform expert at the Central Party School, pointed out that while drug prices may fall, patients might not necessarily see lower overall medical costs. This depends on hospital treatment programs, as only when essential drugs are used can patients benefit from the price reductions. The price changes are also driving corporate restructuring. As market dynamics shift, manufacturers and distributors are adjusting their strategies. Fang Ming mentioned that in October, Yunnan began inviting bids, and many dealers are now reaching out to manufacturers to secure popular or high-selling products. Under the zero-price policy, distributors mainly rely on state subsidies and manufacturer rebates. Yu Mingde, president of the China Pharmaceutical Enterprise Management Association, believes that the implementation of the basic drug system will boost annual drug consumption by 160 to 170 billion yuan, benefiting many companies. According to the National Bureau of Statistics, the pharmaceutical industry's output value reached 791.2 billion yuan in 2008, with a 25.23% increase. Sales revenue for traditional Chinese medicine rose by 21.253%, and companies listed in the essential drug catalog stand to gain. Opportunities are opening up for well-prepared firms, with some analysts predicting consolidation among large generic drug companies and pharmaceutical distributors. Leading enterprises are expected to benefit the most. However, the implementation of the basic drug system involves complex adjustments, and many companies are overcapacity. As a result, mergers and acquisitions may rise, and weaker players may exit the market. Zhao Jie added that hospitals' use of essential versus non-essential drugs will affect pharmaceutical companies. Those with close ties to hospitals may gain more advantages. Additionally, the "high price mark" in provincial-level bidding plays a crucial role in determining a drug’s sales potential. Finally, Zhao Jie warned that the upcoming public hospital reform could further challenge the industry. If public hospitals become more publicly oriented and less market-driven, the pharmaceutical sector may face significant difficulties, potentially leading to a difficult period for drug manufacturers.

Dietary Supplements

Dietary Supplements,Korean Ginseng,Elite Ginseng,Elite Extract Of American Ginseng

Yanbian Dangun Pharmaceutical Co., Ltd. , https://www.tanjunpharmacy.com