The gross profit rate of the “Jianwei Xiaoshi Tablet†produced by Jiang’s traditional Chinese medicine manufacturer has dropped sharply. In 2008 and 2009, the company’s gross profit margin was 62.99% and 62.57%, respectively, and in 2010 it dropped to 43.90%. It was even lower in the first quarter of this year. To 40.13%.
It is obviously unrealistic to blindly cut prices, and price transparency is what consumers need most.
In 2011, the price of medicines in the Chinese medical system is still an unavoidable topic. According to the requirements of the Ministry of Health, the nationwide procurement and limited-price sales within the “preliminary establishment of a national basic medicine system†and “basic medicine†catalogue in 2011 will become the main means for reducing drug prices. As a result, since June 2011, Yunnan Province has implemented a national basic medicine system at grass-roots medical and health institutions organized by all governments, and zero sales of essential medicines. According to data released by the Yunnan Provincial Department of Health, in 2010 the concentration of basic drug purchases and outpatient clinic fees in township and township hospitals dropped by nearly 30%, and some basic medical institutions and some prescription drugs for chronic diseases declined significantly.
In the face of the National Development and Reform Commission’s announcement of a reduction in drug prices on 27 occasions, consumers are generally applauded. However, is it implemented?
In the year-end survey, we found that, one year later, the drop in drug prices did not satisfy consumers, and the high drug prices were still criticized by many people. This, from the recent popularity of the “drug drop†website On the other hand, drug manufacturers are worried about it, especially when Chinese patent medicine companies reduce the sales price of their products, they also have to face the pressure of rising raw material prices.
Then, if the Internet is drying up, the retail price of many commonly used drugs is twice the ex-factory price, which is normal, and some are five times or even higher. What is the difference between the two?
Prescription drug prices drop significantly
After the implementation of the National Essential Drug System, hundreds of commonly used drugs and some of the most severely ill drugs entered the basic drug list, and some local governments added new varieties when bidding. As of the end of last year, a total of 11,210 grass-roots medical and health institutions in Yunnan Province implemented the national basic pharmaceutical system, accounting for 73% of the province's basic medical and health institutions. Starting from June 1 this year, Yunnan Province implements a national basic medicine system in primary health care institutions organized by all governments, and zero sales of essential medicines are implemented. At the same time, nine public hospitals in Kunming began implementing the basic medicine system. The industry believes that the move marks the implementation of the basic drug system in Yunnan Province, but high-level hospitals are not included.
At the same time, the Yunnan Provincial Health Department also announced the impact of the basic drug system on the price of drugs. In 2010, the total purchase price of essential drugs in the province was 26% lower than the actual sales price before centralized procurement. At the same time, according to a sample survey conducted by relevant departments in Yunnan Province, the outpatient clinic expenses of township and township hospitals dropped from 53.4 yuan in 2008 to 2010. The 38 yuan, down nearly 29 percentage points.
Another set of data that is commonly quoted is that due to the implementation of the basic drug system, compared with the same period of last year, the per capita prescription cost for clinics in township and township health centers and urban community health service centers in Kunming fell by 15%; hypertension, diabetes, and digestion in Yuxi City The per capita prescription costs for systemic diseases dropped by 21.76%, 12.13%, and 5.59%, respectively.
The 27th National Drug Price Reduction Circular issued by the National Development and Reform Commission stated that from March 28 this year, prices of some drugs were reduced, especially the highest retail prices of antibiotics and circulatory system drugs that are mainly used to treat infections and cardiovascular diseases. The adjusted price is reduced by an average of 21% from the current stipulated price, and it is expected to reduce the burden on the people by nearly 10 billion yuan each year.
According to the requirements of the State, after the prices of drugs are cut down, the prices of drugs sold by various medical and health institutions, social retail pharmacies and other pharmaceutical production and business units must not exceed the prices announced at this time, and then the prices of drugs in many provinces across the country will decline significantly. However, consumers are not so concerned about it. The price has dropped. Can you really buy a good medicine? Is there any change in composition or content? "Drug procurement is very deep," an industry source lamented. According to media reports, relevant departments in Shenzhen have repeatedly proposed a plan to further reduce drug prices on the basis of a unified procurement platform in Guangdong Province, but none have been approved by relevant provincial departments.
Sales channels determine drug prices
As for over-the-counter drugs, many of them are familiar with the name of the consumer. When faced with the common symptoms of headache and cough, many people think of it as a chain pharmacy downstairs. "Some minor symptoms go to the pharmacy to buy a few kinds of drugs, it is not worth going to the hospital." Miss Zhu working in Kunming said that although medical expenses are declining, but hospital outpatient charges are still not low, medical insurance also has a share of the various levels, generally small Problems basically do not consider seeing a doctor.
In the eyes of drugstore operators, the opening up of the market for pharmaceutical circulation has actually allowed chain pharmacies to act as “vanguards†for drug price cuts. "In 2008 and 2009, Yunnan's chain pharmacies continued to cut prices. Earlier price cuts have occurred several times. In fact, these are all preceded by price cuts in hospital medicines." A drug chain store manager in Kunming said that the market competition for OTC drugs is now relatively complete. Chain stores are everywhere, all rushing to develop members to bring a stable consumer groups, but also bring more transparent prices, consumers have more choice.
In the eyes of consumers, the consumption of non-prescription drugs is as simple as daily necessities, and they can even shop around, but the use of prescription drugs is another matter. “Doctors say that certain diseases must use some kind of medicine. Can you say no?†Most people who go to hospital for medical treatment have similar experiences, especially if the right to medication is on the side of a professional doctor. The doctor has long lost. The right to speak about the price of medicines.
People in the industry believe that the sales channels for pharmaceuticals are of utmost importance. In particular, prescription drugs can only be prescribed by doctors. Many hospitals try to prevent prescriptions from leaving hospitals. Therefore, it is difficult for consumers to purchase prescription drugs at pharmacies. On the other hand, drug sales agents or manufacturers lack the incentive to sell prescription drugs to pharmacies. In order to save costs, the hospital is the only sales channel. Hospitals have become the most important channel for prescription drug sales.
Constrained by its dependence on such important channels, the Yunnan Provincial Department of Health proposed in 2005 that the ratio of hospital drug revenue to total business income should not exceed 45%. In the past six years, the proportion of total use of drugs in tertiary hospitals in the province has accounted for less than 45% of total revenue. On this basis, the Yunnan Provincial Department of Health made adjustments to the sales ratio and tried to make the price-constrained essential drugs account for a larger proportion. After adjustment, tertiary hospitals must use basic drugs no less than 10%, municipal hospitals no less than 20%, and county hospitals no less than 35%, so that the cost of medication for patients may be reduced.
Where are the intermediate links?
The drop in drug prices does not satisfy consumers, and the high drug prices are still criticized by many people. The huge price difference between the ex-factory price and the retail price of drugs has caused consumers to hate it. In the recent popular website called "drop drug price", many retail prices of commonly used drugs are twice the normal ex-factory price, and some are five times or more.
The reporters inquired about the “drug drop price†website and found that the supply price of a “Compound Tongxinlian Tablet†manufactured by the Yunnan Traditional Chinese Medicine Industry Co., Ltd. was 1.05 yuan, and the retail price was 8.9 yuan; "The retail price is 44 yuan, while the supply price is only 4.5 yuan; and the blood-threatening film produced by Sanjin Pharmaceutical Co., Ltd. in Yunnan Jintai has changed from the retail price of 12.8 yuan to the retail price of 28.5 yuan, and twice the price increase." The amplitude is considered a "normal phenomenon."
After a year-long survey, CCTV reporters found that the retail prices of some commonly used drug hospitals are much higher than the ex-factory prices. From pharmaceutical companies to hospitals, the median profit exceeds 500% and the maximum is more than 6500%. Medical agencies, drug tenders, hospitals, doctors and other parties have divided the price difference, which has made drug prices soar "hidden rules."
Song Ruilin, executive director of the China Pharmaceutical and Pharmaceutical Policy Research Center, told the media that the ex-factory price (manufactured price) cannot be used as the normal reserve price for drugs. This price does not include the intermediate cost that consumers cannot see, and the mode of operation of most companies. related.
Song Ruilin explained that the general practice of drug companies is to sell pharmaceuticals to agents for distribution, which is commonly known as large-scale contractors, which are sold and distributed by large contractors. The ex-factory price now seen is merely the cost of pharmaceutical production plus the profits of pharmaceutical companies, while the rigid costs of promotion, taxation, warehousing, tendering, and distribution have all been transferred to large contractors. "If the promotion, warehousing, bidding, distribution, etc. are all done by pharmaceutical companies themselves, then the ex-factory price of a Nelfacine Hydrochloride injection may be 3.2 yuan," he said.
An executive from a Chinese proprietary Chinese medicine manufacturer in Kunming also confirmed to reporters that many small-scale enterprises do not have the strength to open up their own markets. This is especially true for individual provinces bidding under the Essential Drugs Catalogue, without a reliable agent or contractor. Drugs are difficult to win. "It's a strategy, and it also saves costs," said the executive. "But once the factory is out of the factory, there is basically no way for drug companies to interfere in prices, and at the very least maintain a normal price system."
According to China's current pricing method for pharmaceuticals, only the drugs included in the national basic medical insurance and the special drugs that have monopolized production and management belong to the range of government-administered prices, which only account for 20% of the market's circulating drugs. However, the other 80% of medicines are priced independently by enterprises. Even if the prices of these medicines are high, the government can't intervene, but a large proportion of them are more fully-competitive over-the-counter medicines.
Pharmaceutical manufacturers are wrong
When consumers are not satisfied with the price reduction of drugs, drug manufacturers have started to make a wrong. “Can't go on like this anymore, so how can a pharmaceutical manufacturing company live? Especially if a company with a large proportion of essential drugs can't do it,†Wang Weisheng, president of the Yunnan Pharmaceutical Industry Association, told reporters that drug manufacturers have experienced high growth. During the period, it was also considered to be a profit-making industry. However, with the implementation of the basic drug system, the improvement of production standards, and the increase in raw materials and R&D costs, it is facing a splint-type test of product prices and input costs.
North China Pharmaceuticals, a well-known manufacturer of antibiotics and APIs, faced such tests. The company's main products, such as vitamins, saw a significant drop in gross profit. The National Development and Reform Commission imposed restrictions on the maximum retail prices of antibiotics and circulatory drugs, which led directly to the company’s losses in the first three quarters. A person from the North China Pharmaceutical Securities Department told reporters on Friday that the business environment has not improved in the second half of the year and the company is still facing structural adjustments and transformations, and is actively exploring biotechnology and pharmaceutical logistics.
The production of Chinese patent medicines is even more bleak. Due to the increase in the prices of major raw materials, well-known Chinese patent medicine manufacturers such as Jiangcai, China Resources Sanjiu and Livzon Group suffered from the winter, and the gross profit rate of their main products continued to decline. Since the price of Taizi ginseng rose by about 20 times, the gross profit rate of “Jianwei Xiaoshi Tablets†produced by Jiang’s traditional Chinese medicine owners dropped sharply. In 2008 and 2009, the company’s gross profit margin was 62.99% and 62.57%, respectively, and in 2010 it dropped to 43.90%, to the first quarter of this year, it dropped to 40.13%.
Other companies, such as Kunming Pharmaceuticals, Connbay, etc., either in sales channels, or in new product markets, or have significant adjustments in product structure, support stable or even improved gross profit margins. Connbay 2011 semi-annual report showed that the company's gross profit margin in the second quarter was 65%, an increase of 3 percentage points, and gross margins hit a new high for three years. The pricing advantages of exclusive products have also made some companies enjoy their days. Yunnan Baiyao and Kunming Pharmaceuticals are among the beneficiaries.
In the face of a mixed market, Wang Weisheng believes that the country’s restrictions on drug prices cannot be limited to drug manufacturers. “As for the bidding for drugs like the Anhui model, even if the company won the bid, the company would not dare to produce any raw materials.†Wang Weisheng said that only the low-price tendering model should be changed. Now, Chinese patent medicine companies are waiting for Chinese herbal medicines. The price drop, or waiting for powerful companies to mergers, and many of these companies are not in the market.
More enterprises worry that the National Development and Reform Commission is currently investigating the manufacturing costs and drug ex-factory prices of drug manufacturers. This is interpreted by the market as a signal that the National Development and Reform Commission is brewing a new round of drug price cuts. "Drug prices" will be staged in 2012, let us wait and see!
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