** Expansion will give birth to huge industry opportunities Pharmaceutical companies will welcome five years in gold

Business Club April 11th The National “Twelfth Five-Year Plan” proposes to improve the basic medical insurance system covering urban and rural residents and further improve the basic medical insurance for urban employees, basic medical insurance for urban residents, new rural cooperative medical care, and urban and rural medical aid system. Establish and improve the drug supply guarantee system based on the national essential drug system, strengthen the management of drug production, rectify the order of drug circulation, standardize the centralized procurement of drugs and rational use of drugs by medical institutions.

This fully shows that the expansion of medical insurance and the pharmaceutical supply system based on the basic pharmaceutical system will have major changes in China's pharmaceutical industry. It is estimated that in the next five years, the total pharmaceutical sales in China may exceed 2 trillion yuan.

During the “Twelfth Five-Year Plan” period, pharmaceutical production enterprises with quality and cost advantages faced with complex industrial opportunities; on the one hand, the survival of the fittest in the prescription drug market was accelerated, and strong companies with variety advantages and new drug R&D advantages had the “leftover” as the king; On the one hand, the OTC market will usher in a more intense era of competition. With the diversion of consumer spending across the nation, market share may shrink, and how to form brand barriers will become the core competitiveness of pharmaceutical companies.

In the next five years, it is the key five years for the Chinese biopharmaceutical industry to “adjust structure and promote upgrading”. The state promotes the overall upgrading of China's biopharmaceutical industry through various means such as policy guidance. The industry is also facing opportunities for restructuring and development. It is expected that the formation of a bio-pharmaceutical enterprise with a central SOE as the first group, local state-owned enterprises promoted by the local SASAC, and high-quality private pharmaceutical companies will jointly form the second echelon. Enterprises with poor qualifications and backward production capacity will be eliminated.

At the end of the “Twelfth Five-Year Plan” period, the total size of China's pharmaceutical circulation market will reach 900 billion yuan, maintaining a speed of 10% annually. At present, there are as many as 13,000 pharmaceutical distribution companies in China, and only a handful of companies have relatively satisfactory scale strength and profit levels. In the future, the merger and reorganization of domestic pharmaceutical distribution companies will become the norm. After the completion of the “Twelfth Five-Year Plan” integration, the Chinese market will form the business status of many pharmaceutical companies, a few circulation companies, and many hospital pharmacies. This format determines that the profitability of pharmaceutical distribution companies may increase significantly.

China's pharmaceutical import and export will usher in a tremendous opportunity for development during the 12th Five-Year Plan period. Between 2011 and 2015, there will be sales of US$77 billion worth of patented drugs that expire. The huge market capacity released by patent invalidation is undoubtedly a good factor for Chinese pharmaceutical companies. Chinese pharmaceutical companies are faced with the opportunity of global pharmaceutical outsourcing to Asia. They must increase their ability to undertake the transfer and absorption of international pharmaceutical industries. They must negotiate comprehensive cooperation with raw pharmaceutical companies from raw materials to pharmaceuticals to obtain large-scale formulation contracts. The use of its own cheap raw material medicines will also increase profits, and it may also be granted the opportunity to authorize copying or first copying, and it can also use its partners' marketing channels to penetrate products into the international market.

Of course, opportunities and risks coexist. The next five years will also be a five-year period of high international competition. The demand for medical and health care in China will continue to grow, and multinational pharmaceutical companies will turn their attention to China. The overall sales profit margin of China's pharmaceutical industry is less than 10%, while the world's top 50 pharmaceuticals have an average sales profit rate of 18%, and the world's largest pharmaceutical company Pfizer has a net profit rate of 16.78%. From the aspect of benefit level, innovation ability and so on, China's pharmaceutical companies must make more efforts. Otherwise, the spring breeze brought by the "Twelfth Five-Year Plan" will be eroded more by the world's pharmaceutical giants.