In Vitro Diagnostic Industry in China - Clinical Chemistry XV

​3.2.3 Impact of Medical Insurance Cost Control, Centralized Procurement, and Online Bidding Through a Centralized Drug Procurement Platform

In terms of the pharmaceutical macro-political environment, the biomedical industry policies such as medical insurance cost control and target quantity procurement, are gradually implementing. The pilot of centralized procurement price reduction will face more difficulties, and the multi-modal procurement has continued to emerge. The centralized procurement of IVD reagents will be gradually implemented nation-wide, and the biochemical reagents will face the pressure of price reduction. However, the centralized procurement will face challenges and opportunities. On the one hand, the centralized procurement will pose greater pressure on the imported biochemical reagents than the domestic biochemical reagents, which is conducive to achieving the import substitution in the biochemical diagnosis industry; and on the other hand, the government's centralized procurement is for the companies with high quality, large output, high market share and good distribution channels.

The online bidding procurement policy through a centralized procurement platform has been implemented in many provinces nationwide, and the centralized, open, and transparent procurement of reagents has become a mainstream. Since 2016, the sunlight procurement plan of in vitro diagnostic reagents has been successively issued in Sichuan, Shanxi, Anhui, Inner Mongolia, Hainan, Gansu, etc. According to the Plan, common medical consumables are purchased through online sunlight procurement, and the price is adjusted dynamically based on the variety and quality. For common medical consumables (including in vitro diagnostic reagents) that are used in large quantities and relatively stable, the quantity-based pricing, and target quantity procurement will be implemented gradually.

Under the overall idea of medical insurance cost control, with the policies of two-invoice system, target quantity procurement, Diagnosis Related Groups (DRG), regional inspection center model in the form of medical consortia, and the packaging, custody, and centralized procurement of medical institutions, etc., the distribution model of the biochemical diagnosis industry may encounter increasing challenges and pressures in the future. These policies will accelerate the promotion of the concentration ratio of the biochemical diagnosis industry, and the manufacturers will be required to establish their own marketing teams, reduce the dependence on the distributors and strengthen the terminal service capability. The accelerated implementation of DRG also proposes higher requirements for the reagent cost and quality of biochemical diagnostic manufacturers. In the face of complex policies and market environment, various companies should give full play to their existing technological brand and channel advantages, turn crises into opportunities, continuously seize opportunities in the competition, and consolidate their existing industry positions.

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