Health & Beauty

Recently, a pharmaceutical company was unable to supply goods in accordance with the agreement and was cancelled the qualification for the state to organize centralized drug procurement activities, causing an uproar in the market.

The amount of discontinued products is not large, and it does not account for a large amount of the company's sales. From the company's interpretation, there are indeed some objective reasons. However, the suspension of supply is still a cause of great concern, whether this will be the beginning of the company's supply suspension, or whether some companies simply do not participate in bidding because of their meager profits. Judging from the sharp decline in the profits of pharmaceutical companies, if the results of centralized procurement cannot take into account the interests of the supply side, hidden dangers will arise in the long run.

Centralized procurement has many positive meanings: from the customer's point of view, the lower the product, the better. It is good for the common people to solve the problem of medical treatment and solve the shortage of medical insurance funds in my country; it can also reduce the cost of drug circulation and reduce the gray cost; For companies, in the past, they had to raise a huge sales team to push it to the hospital, and to compete with different hospitals and distribution channels. Now they only need to use centralized procurement, and after getting the contract, they can go into production with all their strength and reduce complicated tasks.

However, centralized procurement may also encounter a problem, that is, the price of medicines can easily be pushed down to the "floor price." If the competition in my country's pharmaceutical industry is not so fierce, pharmaceutical companies still have the ability to bargain, but my country is a large manufacturing country, and it is prone to fierce competition among multiple companies. Centralized procurement will simplify competition and make the competition more transparent. It is determined by drug prices, service capabilities, and products. Quality is not the main consideration. This is easy to stifle the differentiated competition of enterprises. Previously, some pharmaceutical companies could also build consumer favor through advertising and stimulate consumption through consumers. Now it is no longer necessary. They only need to focus on supply, and pharmaceutical companies have become production workshops.

Centralized bidding often leads to substantial price cuts for medicines. Centralized procurement prices are no longer cut in the middle, but cut on the knees. Even so, companies have to participate. Not only are Chinese-funded companies participating, but foreign-funded companies are also very aggressive when they lower their prices, because they are afraid of losing the market. Under competition, companies often make small profits or make losses.

Like other industries, pharmaceutical companies also need a certain amount of orders to maintain production lines. If there is no order, no matter how good the technology is, no matter how good the product is, it is easy to be marginalized.

In the IT field, competition is fierce, and digital products are often priced at a loss for production at the beginning. As orders increase, costs are reduced through economies of scale and profits are made. In order to win the order, some project bidders often quote a low price, first take the order, and then try to make up for the benefits through various methods. This all illustrates the importance of orders.

After centralized procurement and bargaining, pharmaceutical companies have become chemical companies, and there is not even a high net profit margin for chemical companies. Take the above-mentioned companies with out-of-supply as an example. Last year's sales exceeded 10 billion yuan and the net profit was less than 100 million yuan. In the long run, companies will have some negative problems, that is, they are unable to invest in research and development, and can only maintain production. Because they cannot create value for shareholders, they will not only be abandoned by shareholders, but also cannot attract new funds.

Traditional companies can leave their competitors behind in long-term competition through technological upgrades, scale advantages, or advantages in marketing capabilities. This is also the motivation for companies to strive for governance. If they know the result is no matter how hard they work, they will still be Centralized procurement is so low that profits are meager, and companies may lose momentum because of their hopeless prospects.

The low price effect brought about by centralized procurement has begun to be amplified. The stock prices of several well-known companies fell in homage as soon as they heard that medical equipment was going to be concentrated. Leading companies that used to be very resilient are now also falling sharply.

Many people in the industry said that centralized procurement can use more reasonable institutional arrangements to enable enterprises to make contributions to society while also leaving reasonable profits. The value of an enterprise is divided into many aspects. It belongs to the society, but also to shareholders and employees. It must also take into account the interests of upstream and downstream, as well as the interests of employees. For listed companies, the criteria for investors to consider is simple, whether they can continue to create value for shareholders.