The draft pharmaceutical distribution plan will introduce incentives for mergers and reorganizations to be the focus

Business News Agency reported on August 13 that the highly anticipated draft "2010-2015 National Pharmaceutical Distribution Industry Development Plan" (hereinafter referred to as "Planning") has been completed, and began to solicit comments from all parties and will be introduced in the near future. Looking at the content of the draft plan, we encourage drug distribution companies to merge and reorganize, encourage the development of retail chain operations, and foster state-level, prefecture-level leading aircraft carrier companies, which will become the focus of the pharmaceutical circulation sector during the 12th Five-Year Plan period.

At present, in the context of the three pillars of Sinopharm, New Pharmacy, and China Resources, which have formed a domestic pharmaceutical circulation, industry insiders have said that mergers and acquisitions in the field of pharmaceutical distribution or related industries will increase. In addition to the major actions of the central enterprises, local governments have also taken the pharmaceutical industry as a new round of economic focus.

Draft plan

The core lies in the market allocation of resources

On the 12th, the insider of the Planning Department of the Ministry of Commerce’s Market Order Division disclosed to the reporter of the “Economic Information Daily” that the Ministry of Commerce has formed a plan for the development of the pharmaceutical circulation industry during the “Twelfth Five-Year Plan”. The draft plan has been completed recently Consult relevant ministries and commissions. The opinions of industry associations and enterprises will be announced in the near future.

Niu Zhengqian, vice president of the Chinese Pharmaceutical Management Association, also revealed on the 11th that an interview with the "Economic Information Daily" reporters that the Pharmaceutical Management Association and the Chinese Medicine Business Association are improving specific terms. According to the status quo of the industry, policy support for the merger and reorganization of drug distribution companies will be provided, and raising industry concentration will become one of the key tasks for planning.

According to insiders close to the plan, the overall goal of the plan is to improve the domestic drug supply security system in accordance with the overall guidelines for national medical reform. In the draft plan, the key words are "merger and reorganization", "guide to make bigger and stronger", "smooth transition", and "develop modern logistics." Specifically, it encourages the merger and reorganization of pharmaceutical distribution companies, guides pharmaceutical distribution companies to become bigger and stronger, and nurtures leading aircraft carriers for state-level, city-level and pharmaceutical distribution companies.

In the field of pharmaceutical wholesale, the focus is to accelerate mergers and reorganizations and increase industry concentration. For example, to guide a municipality to focus on cultivating three to four major pharmaceutical wholesalers. After several years of development, the concentration of the industry will increase. In the field of pharmaceutical retailing, it focuses on promoting chain operations and strives to achieve a two-thirds ratio of chain operations during the “Twelfth Five-Year Plan” period. In the part of mergers and reorganizations, breaking regional restrictions and achieving a balanced distribution is also an important aspect.

In addition, the core of the plan is to allocate resources in a market-oriented manner, relying on the industry itself to promote, rather than relying on the power of the executive. "Therefore, there is no 'government subsidy' in the draft plan, the government will give support, but not through direct subsidies and other administrative measures." The above person pointed out.

At present, the market concentration of China's pharmaceutical distribution industry is much lower than the world average. US pharmaceutical sales account for 40% of the world's pharmaceutical market, but there are only 75 US pharmaceutical wholesalers. Germany's three largest pharmaceutical wholesale companies account for 60% to 70% of the national market share. The data shows that as of the end of 2008, there were more than 13,000 pharmaceutical wholesale companies in China, but the market share of the top three largest companies accounted for only about 20%. Industry analysts pointed out that the current situation of low concentration and low degree of chainization in China's pharmaceutical distribution industry cannot meet the requirements of the reform of the medical and health system and market development. Accelerating mergers and reorganizations and becoming bigger and stronger are the top priorities.

Accelerate change

Market concentration has greater room for improvement

It is understood that in the past many years, the pharmaceutical distribution industry has been guilty of having no competent authorities. At the end of last year, the State Food and Drug Administration formally promulgated the "Notice on Strengthening the Administration of Drug Distribution Industry." The "Notice" clearly stipulates that the competent commerce department shall become the administrative department of the pharmaceutical distribution industry. "This time the Ministry of Commerce took over the urgency of this area is to first develop the industry plan, as the basis for subsequent management." Niu Zhenggan said.

Zheng Yufen, vice president of Zero2IPO Capital, said in an interview with the reporter of “Economic Information Daily”: “The increase in the concentration of pharmaceutical circulation itself does not require policy promotion and is determined by the nature of the industry. The pharmaceutical circulation industry is an industry with a very large scale effect. ."

She took the data from five years ago as an example. At the time, the top three pharmaceutical commercial enterprises in the United States accounted for 96% of the US pharmaceutical market (31% in 1995), and the top three in Japan accounted for 67% (21% in 1995). China's three countries, namely, Chinese medicine, Shangyao, and Kyushu Express, accounted for only 20.4% of the total, so there is still much room for improvement in the market concentration of Chinese medicine circulation.

The boost of policies will undoubtedly greatly accelerate the changes in the pharmaceutical distribution industry. In an interview with the "Economic Information Daily," Guo Fanli, a research fellow in the pharmaceutical industry of China Investment Advisors, stated that most of the advantages in China's pharmaceutical industry are indeed reflected in the policy level. In May last year, the State Council issued the "State Council's support to promote and promote the development of Chinese medicine. Several opinions on the “China's first time” put the development of the Chinese medicine industry on the agenda; in June last year, the State Council passed the “Several Policies to Promote the Accelerated Development of the Biological Industry”, which injected a boost to the Chinese biopharmaceutical industry. With respect to funds, after the launch of the new medical reform, the country has arranged 850 billion yuan to guarantee the smooth progress of the new medical reforms from 2009 to 2011. These are all advantages of the development of China's pharmaceutical industry.

The momentum is showing

The number of mergers and acquisitions increased significantly in the first half

The reporter learned from the Zero2IPO Research Center on the 12th that in July 2010, there were 33 investment cases in China's venture capital and private equity investment markets, and 9 cases in the biotechnology/healthcare industry accounted for the largest number of investment cases. In addition, as of June 30, a total of 23 cases of biotechnology/healthcare mergers and acquisitions were disclosed this year, of which 20 cases were disclosed, involving a total amount of US$226 million. Among them, there were 5 mergers and acquisitions in the field of pharmaceutical circulation, and 4 had disclosed amounts, totalling 21.02 million US dollars. In terms of the number of mergers and acquisitions, there was a substantial increase year-on-year.

Guo Fanli pointed out that 850 billion yuan brought about huge market demand, prompting foreign pharmaceutical companies to step up to enter the Chinese market, and entering the Chinese market was mainly achieved by establishing R&D centers and production bases in China. These enterprises have a common feature, which is to save costs, substantially expand the local market in China, establish partnerships with local leading companies, and finally gradually control the local sales network. Each step of these enterprises is a huge market for new medical reforms. Need to go. This indicates that the current situation is suitable for major reshuffles in the industry. From the perspective of the new medical reform, the new medical reform is beneficial to “big companies and large groups” in all aspects of the pharmaceutical industry. The implementation of the new medical reform is also A fuse for reshuffle in China's pharmaceutical industry.

“Similar actions will continue to occur in the near future, because the ongoing medical reforms in China are a good opportunity for multinational pharmaceutical companies. On the one hand, the Chinese government will increase investment in the medical field and popularize health care services will continue to increase. China's demand for pharmaceutical products; on the other hand, multinational pharmaceutical companies are leading the world in disease prevention, vaccine research and development, etc. The implementation of new medical reforms has also enabled multinational pharmaceutical companies to participate, which is also a good opportunity for multinational pharmaceutical companies. ."he thinks.

Mergers and acquisitions

New investment opportunities in the future

Guo Fanli also told the "Economic Information Daily" that the effects of the new health care reform may appear within the next 3-5 years. During this period, the investment focus and emerging hot spots of the pharmaceutical industry in China will be in the “green fields” such as biopharmaceuticals and botanicals, and the focus of development will be on the pharmaceutical distribution industry.

Zheng Yufen also analyzed that mergers and acquisitions under the same or similar business conditions in the field of pharmaceutical circulation will increase, and some local medical and commercial enterprises that originally had separatists may further expand their geographical coverage or strength. In addition, stronger corporate mergers and acquisitions have investment opportunities in local pharmaceutical sales companies that have good coverage in a certain city or province.

In addition, as community health services and rural health services are one of the key directions of the new medical reform, they will be heavily supported and urban hospitals are often covered by large-scale pharmaceutical distribution companies. Local small and medium-sized pharmaceutical distribution companies will target Target community and rural markets, and it is possible to spontaneously form local industry alliances.

Insiders pointed out that the core tasks of the pharmaceutical industry during the “Twelfth Five-Year Plan” period were mergers and reorganizations, process optimization, and a pharmaceutical group with strong competitiveness, complete industrial chain, and resource advantages over a long period of time. .