Pharmaceutical industry sales of prescription drugs into the winter industry to accelerate the shuffle
2018-05-22 17:01:15
As domestic drug consumption maintains a good momentum, the sales revenue of pharmaceutical companies continues to grow this year, but its differentiation is even more pronounced and profits are being concentrated toward dominant companies.
The gross profit of the industry declined, and the dominant pharmaceutical company market will expand in the first quarter of this year. The pharmaceutical manufacturing industry and various sub-sectors enjoyed a good growth in sales revenue, with a growth rate of over 17%, of which the biological products industry enjoyed the fastest growth. However, compared with 2005, the sub-sector’s gross profit margin fell by 0.6-3.4 percentage points, the pre-tax profit growth of the pharmaceutical manufacturing industry was only 3.8%, the pre-tax profits of the chemical preparation industry grew negatively, and the growth rate of the Chinese patent medicine and biological products industry were both Less than 5%.
With the announcement of the price reduction plan for anti-tumor drugs on June 1, 2006, other drug price reduction plans will also be introduced in succession. The price cut will boost the sales of medicines and concentrate the market share toward the dominant companies. At the same time, the introduction of a series of medical policies and regulations will eventually lead to a rational distribution of profits in all aspects of the industry chain. Because of its strong ability to negotiate between upstream and downstream, advantageous pharmaceutical companies will maintain profits without falling drug prices. In the future, the pharmaceutical industry will become a norm, and it will also create a good ecological environment for the dominant pharmaceutical companies. The differentiation of firms within the industry will be even more pronounced.
Pharmaceutical circulation will be the fastest integrated sub-sector in the entire industry. Within five years, in-line companies are expected to shrink from the current 10,000 or so to several hundred, and small-scale enterprises will be included under the banner of large enterprises. At the same time, pharmaceutical distribution companies that have won the integration will also gradually transform themselves into logistics and distribution service providers. They will effectively reduce operational costs through measures such as cross-regional mergers and acquisitions and the introduction of multinational business management models. Maintain a relatively stable profit margin.
The marketing mode of prescription drugs is faced with changing the behavior of standard drug distribution channel purchases and sales, so that drugs can reasonably increase prices at all stages of circulation. Now it has become the regulatory focus of the pharmaceutical industry. In April 2006, the food and drug regulatory authorities decided to establish a “black list†system for commercial bribery companies. This would allow individual distributors who control the 70% market share of prescription drug sales in Chinese hospitals to squeeze out the sales of drug products in hospitals.
Because of the impact of policies and regulations, sales of prescription drugs will enter the winter and prescription drug consumption bubbles will be gradually squeezed. This process may take up to 1 year. To realize the transformation of prescription drug marketing models from gold sales to time-consuming, specialized academic promotion and brand building, the company's contingency strategy should be continuous innovation, leading new products to maintain a stable profit margin. In this changing situation, pharmaceutical companies with channel advantages may take the lead in the winter of the industry.
The vaccine industry has become a bright spot After the outbreak of SARS in 2003, the government’s investment in disease prevention systems increased. In 2004, the investment reached 4 billion yuan, and in 2005 it reached 5 billion yuan, equivalent to the sum of the previous 5 years. Looking at the overall trend, the government’s injection coverage rate for planned vaccines (free vaccines) will increase from the current 50% to 85%. Moreover, in the “Eleventh Five-Year Planâ€, the biopharmaceutical industry is the focus of government support. Therefore, Driven by policies, the demand for planned vaccines will continue to grow strongly. The production and sales of vaccines may become bright spots in the industry. Directly beneficiaries of the company are Tiantan Biologicals, and companies that may benefit in the future are Hua Lan Bio.
Medicinal consumer goods will rise rapidly As OTC drugs can meet people's increasing self-care and self-diagnosis needs, their sales have increased rapidly in recent years. In 1990, the scale of consumption of OTC drugs in China was only 1.9 billion yuan. In 2005, it was close to 80 billion yuan, and the compound annual growth rate for the 15 years was 28%. The trend of medical separation will further promote the rapid growth of OTC drugs, and it is expected that the OTC market will maintain an annual growth rate of 14-15%.
At present, domestic pharmacies take the path of professional management. Although their sales scale is still expanding, because of the professionalism of drug sales, consumers will only visit pharmacies if they buy drugs. The pharmacy traffic is relatively small compared to supermarkets. The overall profitability of pharmacies is poor. We expect that China's future retail sales of pharmaceuticals may go to Japan's "convenience store road," that is, pharmacies adopt a diversified business model, and the vast majority of pharmacies and supermarkets are combined into one.
From a long-term perspective, China’s pharmaceutical consumption will eventually move towards separation of medicines. Sales of OTC drugs will surely converge with the fast-moving consumer goods market operations. Therefore, some prophetic pharmaceutical companies have already passed pharmaceutical consumer goods, such as Yunnan Baiyao through Baku medicine transdermal agents. Baiyao Toothpaste and Yitong Pharmaceutical are involved in the fast moving consumer goods industry and gain early experience through the Lianxiangxiyu series of products.
Medicinal consumer goods is one of the OTC subdivided industries. Currently, the market capacity is only 2 billion yuan. The Jianwei Xiaoshi Tablets and CaoCao Lozenges from Jiang Traditional Chinese Medicine and San Jingjing's calcium gluconate and zinc gluconate are typical examples. Medicinal consumer products. Medicinal consumables have the characteristics of a combination of medicine and food. Most of them are Chinese medicines and vitamins. They are fast-moving consumer goods in medicine.
At present, there are about 100,000 retail pharmacies in China and 7 million in supermarkets. Since pharmaceutical consumer goods can quickly enter the supermarket terminal, its sales are also facing rapid growth. We expect that in the next five years, the sales volume of the pharmaceutical consumer goods industry will increase by more than 10 times, and the market size will exceed 20 billion yuan.
The “consumer monopoly†type enterprise is the investment preferred. In the pharmaceutical industry, the “consumer monopoly†type enterprise has the most investment value. The so-called consumer monopoly includes two types. The first category is "brand consumer monopoly". Such companies have brand discourse rights, and the brand has a high awareness among consumers. Among them, OTC companies include Tong Ren Tang, Yunnan Baiyao, Dong'e Ejiao, Pien Tze Tong, Ma Ying Long, Yi Tong Pharmaceutical, Jiang Traditional Chinese Medicine, San Jing Pharmaceutical. Other branded companies, including prescription drug companies, include Hengrui Pharmaceutical and Yiwei Pharmaceutical.
The second category is "channel consumer monopoly." The consumer monopoly of channels means that they occupy the main channels and funds of dealers and can help dealers to achieve profitability. Such strong enterprises include Jiang Medicine and Yiwei Pharmaceutical, while Yunnan Baiyao, Hengrui Medicine, Donga Ejiao and Ma Yinglong also have relatively strong channel control capabilities.
The gross profit of the industry declined, and the dominant pharmaceutical company market will expand in the first quarter of this year. The pharmaceutical manufacturing industry and various sub-sectors enjoyed a good growth in sales revenue, with a growth rate of over 17%, of which the biological products industry enjoyed the fastest growth. However, compared with 2005, the sub-sector’s gross profit margin fell by 0.6-3.4 percentage points, the pre-tax profit growth of the pharmaceutical manufacturing industry was only 3.8%, the pre-tax profits of the chemical preparation industry grew negatively, and the growth rate of the Chinese patent medicine and biological products industry were both Less than 5%.
With the announcement of the price reduction plan for anti-tumor drugs on June 1, 2006, other drug price reduction plans will also be introduced in succession. The price cut will boost the sales of medicines and concentrate the market share toward the dominant companies. At the same time, the introduction of a series of medical policies and regulations will eventually lead to a rational distribution of profits in all aspects of the industry chain. Because of its strong ability to negotiate between upstream and downstream, advantageous pharmaceutical companies will maintain profits without falling drug prices. In the future, the pharmaceutical industry will become a norm, and it will also create a good ecological environment for the dominant pharmaceutical companies. The differentiation of firms within the industry will be even more pronounced.
Pharmaceutical circulation will be the fastest integrated sub-sector in the entire industry. Within five years, in-line companies are expected to shrink from the current 10,000 or so to several hundred, and small-scale enterprises will be included under the banner of large enterprises. At the same time, pharmaceutical distribution companies that have won the integration will also gradually transform themselves into logistics and distribution service providers. They will effectively reduce operational costs through measures such as cross-regional mergers and acquisitions and the introduction of multinational business management models. Maintain a relatively stable profit margin.
The marketing mode of prescription drugs is faced with changing the behavior of standard drug distribution channel purchases and sales, so that drugs can reasonably increase prices at all stages of circulation. Now it has become the regulatory focus of the pharmaceutical industry. In April 2006, the food and drug regulatory authorities decided to establish a “black list†system for commercial bribery companies. This would allow individual distributors who control the 70% market share of prescription drug sales in Chinese hospitals to squeeze out the sales of drug products in hospitals.
Because of the impact of policies and regulations, sales of prescription drugs will enter the winter and prescription drug consumption bubbles will be gradually squeezed. This process may take up to 1 year. To realize the transformation of prescription drug marketing models from gold sales to time-consuming, specialized academic promotion and brand building, the company's contingency strategy should be continuous innovation, leading new products to maintain a stable profit margin. In this changing situation, pharmaceutical companies with channel advantages may take the lead in the winter of the industry.
The vaccine industry has become a bright spot After the outbreak of SARS in 2003, the government’s investment in disease prevention systems increased. In 2004, the investment reached 4 billion yuan, and in 2005 it reached 5 billion yuan, equivalent to the sum of the previous 5 years. Looking at the overall trend, the government’s injection coverage rate for planned vaccines (free vaccines) will increase from the current 50% to 85%. Moreover, in the “Eleventh Five-Year Planâ€, the biopharmaceutical industry is the focus of government support. Therefore, Driven by policies, the demand for planned vaccines will continue to grow strongly. The production and sales of vaccines may become bright spots in the industry. Directly beneficiaries of the company are Tiantan Biologicals, and companies that may benefit in the future are Hua Lan Bio.
Medicinal consumer goods will rise rapidly As OTC drugs can meet people's increasing self-care and self-diagnosis needs, their sales have increased rapidly in recent years. In 1990, the scale of consumption of OTC drugs in China was only 1.9 billion yuan. In 2005, it was close to 80 billion yuan, and the compound annual growth rate for the 15 years was 28%. The trend of medical separation will further promote the rapid growth of OTC drugs, and it is expected that the OTC market will maintain an annual growth rate of 14-15%.
At present, domestic pharmacies take the path of professional management. Although their sales scale is still expanding, because of the professionalism of drug sales, consumers will only visit pharmacies if they buy drugs. The pharmacy traffic is relatively small compared to supermarkets. The overall profitability of pharmacies is poor. We expect that China's future retail sales of pharmaceuticals may go to Japan's "convenience store road," that is, pharmacies adopt a diversified business model, and the vast majority of pharmacies and supermarkets are combined into one.
From a long-term perspective, China’s pharmaceutical consumption will eventually move towards separation of medicines. Sales of OTC drugs will surely converge with the fast-moving consumer goods market operations. Therefore, some prophetic pharmaceutical companies have already passed pharmaceutical consumer goods, such as Yunnan Baiyao through Baku medicine transdermal agents. Baiyao Toothpaste and Yitong Pharmaceutical are involved in the fast moving consumer goods industry and gain early experience through the Lianxiangxiyu series of products.
Medicinal consumer goods is one of the OTC subdivided industries. Currently, the market capacity is only 2 billion yuan. The Jianwei Xiaoshi Tablets and CaoCao Lozenges from Jiang Traditional Chinese Medicine and San Jingjing's calcium gluconate and zinc gluconate are typical examples. Medicinal consumer products. Medicinal consumables have the characteristics of a combination of medicine and food. Most of them are Chinese medicines and vitamins. They are fast-moving consumer goods in medicine.
At present, there are about 100,000 retail pharmacies in China and 7 million in supermarkets. Since pharmaceutical consumer goods can quickly enter the supermarket terminal, its sales are also facing rapid growth. We expect that in the next five years, the sales volume of the pharmaceutical consumer goods industry will increase by more than 10 times, and the market size will exceed 20 billion yuan.
The “consumer monopoly†type enterprise is the investment preferred. In the pharmaceutical industry, the “consumer monopoly†type enterprise has the most investment value. The so-called consumer monopoly includes two types. The first category is "brand consumer monopoly". Such companies have brand discourse rights, and the brand has a high awareness among consumers. Among them, OTC companies include Tong Ren Tang, Yunnan Baiyao, Dong'e Ejiao, Pien Tze Tong, Ma Ying Long, Yi Tong Pharmaceutical, Jiang Traditional Chinese Medicine, San Jing Pharmaceutical. Other branded companies, including prescription drug companies, include Hengrui Pharmaceutical and Yiwei Pharmaceutical.
The second category is "channel consumer monopoly." The consumer monopoly of channels means that they occupy the main channels and funds of dealers and can help dealers to achieve profitability. Such strong enterprises include Jiang Medicine and Yiwei Pharmaceutical, while Yunnan Baiyao, Hengrui Medicine, Donga Ejiao and Ma Yinglong also have relatively strong channel control capabilities.