The new medical treatment has been transferred to the deep water area, and the terminal drug market has also undergone significant changes.

This article is The 190th article of the venture capital observation series

Sharers: Zhong Kang Information Vice President Su Caihua

Edit: Dun Yu Ting

The new medical reforms entering the 11th year went to the deep water area, and various new policies were introduced intensively. Whether it is the purchase of 4+7 purchases, the decision-making side focuses on the rational use of drugs, or the payment of the national medical insurance catalogue adjustment. The pharmaceutical terminal market structure is also changing.

Venture Capital Watch | How does healthcare reform affect the end-use drug market? We found five major trends

Su Caihua, Vice President of Zhongkang Information

Summary of core ideas:

1. New products will be the main growth driver, and the contribution of price factors to increments will be very weak;

2. The launch of new special drugs brings incremental opportunities to pharmacies;

3. Inferior generics will be phased out, and raw material integration companies with innovative capabilities and cost advantages will take the lead;

4. The market share of the original research products will be squeezed out, and the unsuccessful products will be eliminated in the hospital market;

5. Brand concentration in the popular OTC category will continue to increase.

How does the New Deal affect the terminal drug market?

Taking the purchase-side heavy policy “4+7 quantity procurement” as an example, the National Medical Insurance Bureau has implemented the procurement of these 25 varieties nationwide, The model follows the principle of “the quality is consistent, the price is low”, and the original research drug and imitation are promoted.The drug will compete with Taiwan, and the price of the product will inevitably go down. Therefore, enterprises need to adjust their resource allocations as early as possible, reduce unnecessary marketing and management costs, and make room for further price reduction.

Take the recent list of the first batch of national key monitoring and rational drug use drugs as an example. The catalogue not only identifies the list of 20 chemical drugs and biological products that should focus on monitoring rational use of drugs, but also explicitly limits the hospital’s Western medicine. Prescription authority for proprietary Chinese medicines. It is to regulate the prescriptions at the decision-making end of the hospital. The drugs entering the catalogue will be limited in hospital sales. The original channel model will encounter challenges and urgently need to be upgraded.

In addition, the medical insurance directory adjustment is also worthy of attention. The current National Health Insurance Catalogue is the 2017 edition, which includes 2,598 Western medicines and Chinese patent medicines, including medicines for two medical insurance access negotiations in 2017 and 2018. Currently, the state is working on the 2019 version of the national medical insurance catalogue adjustment work. According to the plan, the new version of the National Health Insurance Directory will be published soon, and the negotiation access list will be released in September-October.

The seven terminal markets have different performances

What is the change happening? Overall, in 2014-2019, China’s pharmaceutical terminal market has a compound annual growth rate of 6.3%, and urban grassroots and retail pharmacies have grown slightly faster than graded hospitals.

Venture Capital Watch | How does health care affect the terminal drug market? We found five major trends

Zhongkang CMH data show that in 2018, the total Chinese pharmaceutical market (excluding medicinal herbs, Chinese herbal decoction pieces and formula granules) totaled 1,672.3 billion yuan, an increase of 5.8% over 2017, a slight decrease in growth rate. . It is estimated that the size of China’s pharmaceutical market will reach 1,739.2 billion yuan in 2019, an increase of 4.0% over 2018, and the growth rate will continue to slow down. Zhongkang CMH full terminal monitoring data shows that compared with 2017, the seven terminal market share has changed significantly in 2018:

  • City-level hospital drugs: sales of 863.5 billion yuan, accounting for the entire pharmaceutical market51.6%, down 1.1 percentage points from 2017;

  • Country-level hospital drugs: sales of 283.5 billion yuan, accounting for 17.0%, down 0.4 percentage points compared with 2017;

  • Retail pharmacy drugs: sales of 286.9 billion yuan, accounting for 17.2%, an increase of 0.1 percentage points compared with 2017;

  • Urban primary medical drugs: sales of 108 billion yuan, accounting for 6.5%, an increase of 0.4 percentage points compared with 2017;

  • Rural primary medical drugs: sales of 75.1 billion yuan, accounting for 4.5%, unchanged from 2017;

  • Pharmaceuticals for hospital pharmacies: sales of 47.5 billion yuan, accounting for 2.8%, an increase of 0.8 percentage points compared with 2017;

  • Online pharmacy drugs: sales of 7.8 billion yuan, accounting for 0.5%, an increase of 0.1 percentage points compared with 2017.

It can be seen from the data that the measures to promote the development of primary health care, such as grading diagnosis and treatment at the primary medical reform, and primary care at the grassroots level, have achieved initial success in urban primary hospitals, and the growth rate is significantly higher than that of grade hospitals. The growth rate in rural primary hospitals is still slow.

With the guidance of pharmaceutical separation and prescription outflow, the market share of retail pharmacies is gradually increasing; the hospital’s three-pharmaceutical pharmacies mainly focus on new special drugs, biological products, high-priced drugs, etc., and the market is growing rapidly. Under the impetus of the Internet, the rapid development of pharmaceutical e-commerce, the online pharmacy share has shown a trend of increase, but its base is still difficult to compare with offline pharmacies.

In addition, In 2018, the overall market for pharmaceutical terminals was driven by sales volume and new product launches, and the average market price dropped slightly. It is expected that in 2019, new products will become the main growth driver due to The general price increase of retail-end drugs, coupled with the new retail price of new drugs, will once again become a positive driver, but the contribution of price factors to the increase will be very weak.

Future Trend Judgment

With Innovative drug review and listing, access to health care and sales are greatly improved,What changes will happen in the terminal drug market?

The data shows that in <18>, the drug review center passed a total of 106 new drugs, including 2 new Chinese medicine compound preparations, 9 first-class innovative drugs and 67 imported original drugs. The new drugs approved for approval are mainly concentrated in the three therapeutic areas of anti-tumor, anti-virus and diabetes. From the data, these three areas are also the fastest-growing categories in the market.

Zhongkang CMH data shows that most of the newly listed heavyweights, such as erlotinib, ibupotinib, and regorafenib, increased sales in typical sample hospitals in the first quarter of 2019. More than 200%; in addition, new special drugs are listed, need to be quickly sold through DTP pharmacies, the introduction of such new varieties can bring incremental opportunities to pharmacies.

From the market performance data of major companies, multinational companies and innovative companies lead the market growth. Due to the pulling effect of newly listed products, foreign-invested enterprises increased by 12.4% in 2018, and the growth rate was expected to be 11.2% in 2019. Foreign-funded enterprises contributed nearly 70% to the market growth in 2019, like AstraZeneca, Roche and Hengrui 2018. Year-on-year growth of more than 20%, becoming the best performing company in the market. Relatively speaking, local companies are struggling a bit. In 2018, local companies grew by 3.8%, and in 2019 they are expected to grow by only 1.6%.

The bigger change comes from the generics market. In the United States, generic drugs account for 86% of the total, but only account for 13% of the total. In China, generic drugs, regardless of the amount or quantity, are far ahead of the original research drugs, accounting for 71% of the total and 79% of the total, respectively, and there are a large number of high-priced generic drugs.

The promotion of generic drug consistency evaluation, 4+7 quantity procurement, a large number of inferior generic drugs will be eliminated, and the raw material preparation integration enterprises with certain innovation ability and cost advantage will take the lead in the future. The price of the purchased products will drop sharply. The market share of the original research products will be squeezed out, and the unsuccessful products will basically be out in the hospital market.

In addition, with the introduction of the key monitoring and rational drug use list, as well as the limited prescription rights of hospital Chinese medicine, the sales of some auxiliary drugs in the hospital will be affected. The nationally monitored rational drug use catalogue involves a market size of 66 billion, and most varieties have declined by more than 20% for two consecutive years.

Over-the-counter drugs, sales in 2018 are 230 billion yuan, estimated 201