author: Zhu virtual Hou, title figure from: Vision China
Hengrui Pharmaceutical, a leading pharmaceutical company with a market value of 400 billion yuan, has recently been caught in a vortex due to the 3 million bribe.
An open court judgment document shows that Lei Mou, former director of the Department of Anesthesiology at Lishui Central Hospital in Zhejiang Province, was sentenced to 7 years in prison for accepting bribes from pharmaceutical companies for nearly 3 million yuan. Among them, 70% of the rebates come from Jiangsu Xinchen Pharmaceutical Co., Ltd. (hereinafter referred to as “Xinchen Pharmaceutical”) , and Xinchen Pharmaceutical is Hengrui Medicine A wholly-owned subsidiary whose main business is selling drugs for Hengrui.
As soon as the “bribery door” came out, public opinion was upset, and I couldn’t believe that Hengrui Medicine would do such a “means”. The first reason is that Hengrui is the leader of domestic pharmaceutical companies. It is common sense to speculate that it will not openly “sell gold” out of risk considerations. Secondly, Hengrui has always advertised itself as a giant of “towards the world’s first-line innovative drugs”. Since it is an innovative drug, why should we use “bribe” to open the way?
However, the truth often hits the face, and the flag stands so swayed, the face hurts as much as it hits.
It seems that the “medical leader” really lost its lead this time.
However, according to reliable information learned by Zhu Xuhou, the exposure of the “Bribery Door” incident has hit Hengrui very hard. Hengrui has determined to cut and will implement the entire product line to cancel the “band gold” in a short time “Sales” forced the transformation of marketing compliance. Industry insiders analyzed that as the leader of domestic pharmaceutical companies, Hengrui will inevitably shake the industry once it starts the process of “compliance”.
One anesthetic, 25% off the rebate price
Left bupivacaine, a name that many people have never heard of before, actuallyIt is an anesthetic injection. In a sales form of Xinchen Medicine, the price is 20 yuan, and the rebate amount returned to the doctor is 5 yuan, that is, 25% of the cost is eaten.
From February 2017 to June 2019, 5 drugs including butorphanol tartrate injection sold by Xinchen Pharmaceutical were used by the anesthesiology department of Lishui Central Hospital. In signing the purchase agreement, Jiangsu Xinchen Company Raised the purchase price of each potion, and then sent Lei Mouth a rebate totaling 2.36 million yuan. After Lei Mou received it, part of the rebate was handed over to the Anesthesiology Department, and the rest was personally owned.
Picture: The ratio of the bid price and rebate cost of the 5 kinds of medicines, the average of each medicine is 19% (Picture from netizen “Qi Henghui”)
The case of bribery in public hospitals disclosed by Lishui in Zhejiang Province, the main bribery party is Xinchen Pharmaceutical Co., Ltd., a subsidiary of Hengrui Medicine.
Lei Mou is the former director of the Department of Anesthesiology, Lishui Central Hospital, Zhejiang Province. During the five years from June 2014 to September 2019, Lei Mou took advantage of his job convenience to receive a total rebate of 6,744,660 yuan during the introduction and use of medicines, medical devices and consumables, including 3,832,632 yuan from the Shanghai Hospital and the remaining 3,314,828 Yuan is for personal use.
In order to maintain a good relationship with Lei Mou, the sales representatives of the pharmaceutical company, and let their departments maintain and increase the use of drugs, the three employees of Xinchen Pharmaceutical successively gave Lei Mou a “thank you fee” of RMB 408,000.
Coincidentally, in addition to the case of Lei Mou, former director of the Department of Anesthesiology at Lishui City Central Hospital, Xinchen Medicine has also been involved in another case.
In January 2020, a criminal judgment issued by the People ’s Court of Longwan District, Wenzhou City, Zhejiang Province showed that from 2007 to 2019, a natural person used a certain person to serve as the Second Affiliated Hospital of Wenzhou Medical University, Yuying Children ’s Hospital, and the Second Clinical The deputy dean and dean of the School of Medicine are convenient for their duties, so as to make profits for enterprises and individuals in the sales of drugs, consumables and equipment.A total of more than 2.2 million yuan in bribes were accepted.
Details show that from 2010 to 2018, Lianmou sought benefits from Xinchen Pharmaceutical in drug sales and other aspects, and received RMB 430,000 and valued at RMB 20,000 from Sun Mou, the regional manager of Xinchen Pharmaceutical 10 times. Fuel cards, a gold bar, $ 2,000 and tiger head gold jewelry and other valuable items.
Originally thinking that this was an isolated incident, I looked into it and found out that Hengrui, who had thick eyes and big eyes, was already a middle-aged veteran.
Hengrui has 26 holding subsidiaries, most of which are R & D and production companies, and only 2 are sales companies. In addition to Xinchen Pharmaceutical, another sales company, Jiangsu Kexin Pharmaceutical Sales Co., Ltd. (hereinafter referred to as “Kexin Medicine”) was also found to be involved in “sale with gold”.
A criminal judgment issued by the People ’s Court of Dafeng District, Yancheng, Jiangsu Province in December 2019 showed that during the Spring Festival from 2015 to the Spring Festival of 2018, the defendant Jiang Mou used the position of director of the pharmacy department of Dafeng People ’s Hospital of Yancheng. Convenience of duty, for the benefit of Kexin Pharmaceutical in the supervision and inspection of drug procurement and rational use of drugs, has illegally received cash from bribes of the company’s Dafeng salesman Li Mou for 7 times, totaling 28,000 yuan.
： Picture of the two sales companies under Hengrui Medicine
“Academic marketing” is just a gorgeous robe
There is a saying in the circle of pharmaceutical sales representatives, “Hengrui travels, no grass grows,” referring to Hengrui’s strong position on the rivers and lakes.
The performance of Hengrui Medicine in the first three years shows that its current sales expenses are 5.19 billion yuan, 6.46 billion yuan, 8.52 billion yuan and 1927 million yuan, a significant increase year by year. Among them, the sales expenses in 2019 were 8.52 billion yuan, a year-on-year growth of 31.87% in 2018. It accounts for 36.61% of the company’s revenue.
Why does the innovative drug “boss” Hengrui spend a lot of money on sales for sales expenses that exceed 30% of revenue?
Hengrui Medicine claims to be one of the largest research and production bases for antitumor drugs, surgical drugs and contrast agents in China. Since its listing, it has been working towards innovative drugs.
However, public information shows that since its launch in 2000, Hengrui Medicine has only 5 innovative drugs, namely, irixibu, apatinib, thioperfigrastim, pirotinib, Carrizumab for injection.
Hengrui Pharmaceutical’s 2018 annual report shows that Hengrui’s actual operating income in 2018 was 17.418 billion yuan. Among them, about 90% of the operating income comes from the generic drugs of Hengrui Medicine. The revenue of innovative drugs only accounts for about 10% of operating income.
At the same time, let’s look at the changes in Hengrui’s sales expenses in the past three years. The three-year sales expenses in 2019, 2018 and 2017 increased by 31.87%, 24.58% and 19.24% year-on-year respectively.
Who can think of how many medical borers are “feeding” behind the increasing sales expenses every year?
Under the sales expenses of Hengrui Medicine, the subjects are listed in different categories, namely “market expenses such as academic promotion and professional platform construction of innovative medicines”, “travel expenses”, “equity incentive expenses” and others, among which The total of the two items is close to 99%.
In fact, “market expenses such as academic promotion and the construction of specialized platforms for innovative medicines” is a new word that appeared in Hengrui’s annual report only in recent years. Hengrui directly described it as “market” in the 2017 annual report cost”.
So if the attribution of “academic promotion” is packed, can it hide the essence of market fees?
From various sources, the “academic promotion” of pharmaceutical companies is not that simple.
An industry expert pointed out: “Academic promotion is bluntly a‘ heavy money piled up ’consumption channel, and it has always been a high-risk area for commercial bribery.”
Academic promotion means that the company promotes and introduces its products through academic promotion conferences or academic seminars. “For example, a pharmaceutical company invited us to attend an academic conference, give a half-hour course, and then play for a few days. The countertop is a normal academic conference, which is also regarded as academic marketing,” said an anonymous person in the pharmaceutical industry. “Strengthen “Academic marketing efforts” are more common in pharmaceutical companies. “It is nothing more than increasing the frequency of inviting guests to eat and eat.”
In the process of academic promotion, bribery has also quietly occurred. In July 2018, another medical industry, Baima shares Lepu Medical, paid lecture fees of 24,000 yuan to lecturers at academic conferences and produced handouts with propaganda words. The Shanghai Qingpu District Market Supervision Administration determined that it was suspected of commercial bribery and was punished. 150,000 yuan.
It is worth noting that Hengrui Medicine has put the “academic marketing” on the table in a grand manner.
How can academic and marketing be a combination? Is anyone still struggling to promote “academic” now?
Hengrui Pharmaceutical has emphasized in its annual report for the past three years that it must “strengthen academic marketing efforts”, that is to say, pharmaceutical companies should increase market expenses substantially, “of course, including rebates.” The above-mentioned people said that rebates, please eat and drink Concealed expenditures included in academic marketing.
Picture: Composition of Hengrui Pharmaceutical ’s 2019 sales expenses
Hengrui Pharmaceutical’s 2019 annual report disclosed that “the company has established a high-quality and professional marketing team”, “established and improved a professional sales team, strengthened the breadth and depth of market sales, including paclitaxel for injection and Ai Rexibu tablets, butorphine tartrateThe production and sales volume of Nuo injection and iodixanol injection increased rapidly. “
Coincidentally, butorphanol tartrate injection is the drug involved in the kickback and bribery in the Leimou Hospital of Lishui Hospital, with sales of 37.631 million units in 2019.
GSK is not far away, supervising the “heavy hammer” on the road
Seven years ago, GlaxoSmithKline, a multinational pharmaceutical company giant, was planted in the “academic marketing” routine.
In order to sell medicines into hospitals and leverage doctors ’prescription rights, many pharmaceutical companies often promote or promote medicines in the form of holding or sponsoring academic conferences. As a result, pharmaceutical companies’ conference expenses have increased significantly.
Drug promotion through academic marketing is a marketing strategy for multinational pharmaceutical companies to introduce China. However, the relevant executives of GlaxoSmithKline revealed their troubles when reimbursing high conference expenses through external travel agencies, and were subsequently seized by the regulatory authorities.
After the case of Ge, multinational pharmaceutical companies were clamoring and gradually moved towards compliance. Unexpectedly, it has been “acquired the truth” by intentional domestic pharmaceutical companies, and has instead promoted the “sale of gold” medicines in the name of “academic marketing”.
Perhaps it is based on the lessons learned from GlaxoSmithKline’s “overturn”. Hengrui Pharmaceutical chose its own sales company to inventory these “bills” and even buried them in the financial reports of listed companies through accounting adjustments.
After the transfer, the sales cost is taken into account in the cost of the listed company. In fact, it is passed on to the patient and the national medical insurance. The real payer is the ordinary people who are “difficult and expensive to see a doctor”.
Penetrating through the mists of “sales with gold”, the cumulative “rebates” are not unrelated to the patient’s medication prices.
In 2010, Hengrui Medicine is vigorously expanding its market share in the Southwest region and has begun to give hospital doctors high rebates. A product of Hengrui Medicine named “Ai Su” (Docetaxel Injection) won the bid for Guangxi Pharmaceuticals in 2010 for the bid price of 483.96 yuan, the retail price of the hospital to patients is about 556 yuan. Among them, 205 yuan belongs to the “promotion promotion fee”, and the rebate received by the doctor is about 120 ~ 140 yuan.
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author: Zhu virtual Hou