Background:

1.  Since 2019, “centralized procurement” has been mentioned in all official documents released by the State Council on the topic of the Reform of the Pharmaceutical and Healthcare System (Key Tasks for Deepening the Reform of the Pharmaceutical and Healthcare System, released in 2019; and Opinions on Deepening the Reform of the Pharmaceutical and Healthcare System, released in 2021.)

2.  First batch of national centralized procurement was on coronary stents. It was largely successful and had favorable prices for public users.   

Current Status and Facts:

1.  The latest announced result of national centralized procurement (the second batch for hip and knee joints) was made in early September. It was fully launched on September 14, 2021.

2.  Big price drop:

    a) First batch: coronary stent: the final average price dropped 90% compared to the previous market price.

    b) Second batch: the final average price dropped 82% compared to the previous market price.

3.  New trends in the latest centralized procurement:

    a) Categorized products in  tendering documents

    b) Bigger procurement quantity

    c) Added “technical service” that allows manufactures to assign technical staff on-site support during operation. The quotation of this supplementary service can also be admitted in the bidding document.

4.  Bid winners consisted of both domestic and foreign manufacturers: in the artificial joint procurement, 48 enterprises participated in the tendering. Out of all participants,44 won the bidding, including 14 foreign medical companies/MNCs (such as Stryker, Johnson & Johnson, Zimmer Biomet, B. Braun, Smith & Nephew PLC etc.).

Possible Impact and Suggestions:

1.  Still a huge market with huge growing potential: more high-value medical consumables shall be covered by national centralized procurement. Intraocular lens (IOL), balloon-expandable coronary stent and drug-coated Balloons (DCB) are predicted by experts and professional press to be included in the centralized procurement system. MNCs or foreign medical enterprises are advised to follow future centralized procurement biddings.

2.  MNCs and foreign manufacturers that won the national bid are more favorable for patients against local ones with their technical advantage. However, this could also result in a quicker development of Chinese manufacturers in this field in the long run.

3. The newly-added supplementary service that appeared in the latest centralized bidding may create a new market demand for third party outsourcing. 

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