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Price cuts and cost increases are the main reasons for the decline in profits
The report proposes that since the beginning of this year, the pharmaceutical industry has realized a total output value of 113.4 billion yuan and a total profit of 7.89 billion yuan, a year-on-year increase of only 6.3%. The growth rate has dropped sharply and dropped to a record low. However, medical equipment and equipment, Chinese Herbal Medicine Pieces, and sanitary materials and medical supplies achieved profits of 7.2, 1.3, and 300 million yuan, respectively, an increase of 80.7%, 33%, and 30% year-on-year. The growth rate of chemical drug preparations, proprietary Chinese medicines, and biochemical products is lower than the industry average.
According to the analysis of the report, the increase in the loss of the pharmaceutical industry is mainly due to the continuous rise in production costs, and the upstream production factors such as water, electricity, and coal continue to be at higher prices, which increases the pharmaceutical production costs accordingly. Rising raw material prices are currently the major bottleneck for China's economic development and cannot be effectively resolved in the short term. This will be a challenge that the pharmaceutical industry must face in the future development. In addition, due to the increase in operating costs and underemployment after the GMP reform, the pharmaceutical industry has also exerted pressure on pharmaceutical companies to reduce production costs.
In addition, the continued decline in the prices of pharmaceutical products has caused the overall gross profit level of the industry to continue to decline. The high efficiency growth of the pharmaceutical industry for more than 20 years has been changing, and the industry has entered a period of steady growth.
Governance policies begin to show significant results
The report said that the state will increase the crackdown on commercial bribery in the purchase and sale of pharmaceuticals, correct the market chaos of "more than one drug", and the introduction and implementation of various medical-related policies will have a profound impact on the industry's competitive landscape and pharmaceutical value system. The vigorous development of community medical care, the establishment of a new rural cooperative medical system, and the continuous expansion of the end market will stimulate continued growth in the demand for the domestic pharmaceutical market, and will also change the current market pattern where pharmaceutical consumption is too concentrated in large urban hospitals.
The report believes that the implementation of the generic name system will have a huge impact on the company’s business decisions and market operations in the areas of R&D, production, and marketing. A group of companies with low capacity utilization and poor quality control will be forced to stop production. Some large companies with brand strength will use integration to achieve scale and brand effect and win in the competition.
The report also pointed out that relevant departments should study specific methods, formulate corresponding regulatory policies through drug approval systems and pricing methods, curb the vicious competition of generic drugs, and reduce low-level duplicate production.
The report believes that the country's vigorous development of community medical care and the establishment of a new rural cooperative medical system will lead to an ever-expanding pharmaceutical end market, which will stimulate continued growth in demand in the domestic pharmaceutical market, and will also change the current status of drug consumption in large urban hospitals. Enterprises should be encouraged to vigorously develop the rural market and actively guide enterprises to participate in the development of the rural medicine market to solve the problem of difficulty in rural drug use.
The profit growth of the pharmaceutical industry is weak
An analysis report released by the National Development and Reform Commission on the health status of the pharmaceutical industry this year shows that medical production and sales have maintained rapid growth in the first quarter of this year, but the growth in industry efficiency has been sluggish, and profit growth has fallen sharply.