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OVER 70% ENTERPRISES ELIMINATED WITH MAXIMUM DECREASE OF 80.39%!

Time:2019-09-03

The maximum decrease is 80.39%, and 70% bid enterprises are eliminated. Bid-winning imported brands only account for 30%! Following the procurement of high-value consumables, the procurement of common consumables with target quantity begins!

70% bid enterprises are eliminated and bid-winning imported brands only account for 30%

A few days ago, the Nanjing Security Center for Centralized Medicine Procurement issued the Notice on the Invitation to Join in Nanjing, Taizhou and Huai’an Regional Alliance for Centralized Procurement of Four Kinds of Medical Consumables with Target Quantity. The Municipal Healthcare Security Administrations of Nanjing, Taizhou and Huai’an established a regional alliance and carried out the centralize procurement of four kinds of medical consumables with target quantity including implantable drug-supplying devices (infusion ports), prefilled catheter flushers, precision infusion apparatuses and airtight indwelling needles.

This is the first time that common consumables were involved in recent consumable negotiations and 86 hospitals in three cities as a group purchases consumables with target quantity. The centralized procurement with target quantity primarily aims to reduce all kinds of expenses of enterprises in public relations. It is determined that the bid-winning enterprises undertake 70% of procurement amount according to the procurement amount of the previous year and expected procurement amount of the next year of hospitals.

Today (on August 20), the bidding results of the negotiation on the joint procurement of four kinds of common consumables with target quantity for three cities are released!

The Nanjing Municipal Healthcare Security Administration issues the Announcement on Negotiation Results for the Centralized Procurement of Four Kinds of Medical Consumables with Target Quantity in the Regional Alliance of Nanjing, Taizhou and Huai’an.

Ultimately, there are 18 specifications for four kinds of common consumables and 10 “shortlisted and alternative” bid-winning enterprises! Among them, two enterprises of imported brands undertake 6 specifications, only accounting for 33%! Many domestic long-established enterprises reduce prices to occupy the market, which shows that it is unstoppable to obtain more quantity by price reduction!

Noteworthily in particular, the elimination rate of this negotiation is very high! A total of 35 enterprises participated in the negotiation and only 10 enterprises won the bid. The elimination rate was 71% (10 enterprises out of 35 enterprises). It is pretty fierce! The other 25 enterprises will have little sales of related products in 86 medical institutions in the three places and lose the market.

It was reported that in the first round of the negotiation on some kind of consumables, several enterprises with recorded products had a round of price competition. The winners directly entered the second round. Bid-winning enterprises made offers in the second round while enterprises with recorded products did not make offers. The two parties competed once again. Thus, if enterprises want to gain advantages, the offer in the first round shall be appropriate. The elimination occurred in four rounds of the negotiation, which showed a very fierce competition.

The alliance of three cities purchased 14 types of products in four categories (precision infusion apparatuses, venous transfusion indwelling needles, infusion ports and prefilled catheter flushers). According to the results of price reduction in the final negotiation, in terms of the shortlisted prices, the maximum decrease was 80.39%, the minimum decrease was 51.67%, and the average decrease of the three cities was 72.61% (the decrease of Nanjing City was 75.14%).

Previously, there were four kinds of consumables with 14 specifications involving 157 models in the Nanjing market. With the addition of models of Taizhou and Huai’an, there were 323 models in total. After this negotiation, four kinds of consumables are merged into 14 product specifications with 7 prices.

The four kinds of common consumables have large sales in the market, so the competition is so fierce in the procurement negotiation of four kinds of common consumables with target quantity for three cities.

Common consumables do not have high values, but their consumption is very large. For the four kinds of products included in the negotiation, the worth of online amount purchased in Nanjing reaches CNY 270 million, accounting for 1/6 of all common consumables. On the day that the negotiation results were announced, 86 medical institutions placed orders worth over CNY 500 million.

Diao Renchang, director of Nanjing Municipal Healthcare Security Administration, said, “This year, 100 consumable products will be selected for negotiation in Nanjing, so the procurement with targeted quantity is just a start. The similar procurement with targeted quantity and negotiation will be carried out every month.”

The procurement of medical consumables with target quantity is carried out across China! The market is being rapidly readjusted
Nationally, after the provincial procurement of high-value consumables with quantity was carried out in Anhui and Jiangsu, the provincial procurement with quantity was announced to be carried out in Shandong a few days ago. At the municipal level, for the joint procurement with targeted quantity by Nanjing, Huai’an and Taizhou in Jiangsu, by Linyi and Heze in Shandong, and by Nantong and Wuxi for all public medical institutions, the core content is “integration of bidding and procurement and real prices with real quantity”. Basically, some kind of consumables achieves the price adjustment with quantity by over 50% amount purchased in the whole year.

Finally, the minimum price reduction is nearly 20% and the maximum reduction is over 90%.

Recently, the National Healthcare Security Administration also said, “Next, the National Health Commission will work with relevant managements to establish institutions for consumable consistency evaluation”. The “consistency evaluation” is the cornerstone of comprehensively implementing the “quantity procurement” of high-value consumables. It shows the China’s determination and attitude in promoting the “quantity procurement” of medical consumables.

The procurement with target quantity is carried out in the field of medical consumables with price reduction for quantity. In a short period, the sales of bid-winning enterprises have to be affected negatively and their profit rates will decrease. However, in the long term, several bid-winning enterprises can occupy more than 70% of market shares of provincial (municipal) public hospitals, which is undoubtedly good for the development of leading enterprises in the industry with the large scale, high production capacity and strong innovation ability.

Therefore, some domestic bid-winning enterprises also jokingly said “suffering while enjoying”.

Small and medium-sized enterprises for consumable production often have less profit, small ranges for price reduction and relatively limited production capacity. So these enterprises do not have advantages in the negotiation on quantity procurement and it is difficult to compete with large leading enterprises. In the long run, enterprises with the small scale and poor innovation ability will easily be gradually eliminated from the market if they do not actively seek for transformation.

In terms of the circulation field, in the past, a hospital purchased a small quantity of high-value consumables with high payment. A dealer who traded with several hospitals can had a good life. But after the quantity procurement, those bid-winning enterprises are bound to occupy the market shares of small local agents.