Anti monopoly of medical devices is coming: potential rules push up prices

Source: according to various signs in China business daily on September 15, 2014, it seems that the anti-monopoly stick is about to spread to the medical device industry According to relevant people from the Ministry of Commerce, in early September 2014, Zheng Wen, deputy director of the antimonopoly Bureau, led a team to Shanghai to investigate the antimonopoly review of concentration of business operators, so as to further understand the market competition of semiconductor, medical devices and other related industries In the eyes of the outside world, after the software and automobile industries, medical devices will become the "disaster area" of anti-monopoly Although it is an indisputable fact that the price of foreign medical devices is only high in the Chinese market, the insiders pointed out that there is no relevant evidence to judge that they are suspected of price monopoly, and the multiple sales links prevailing in the domestic potential rules also make the price of the products increase layer by layer, which is no exception for domestic and foreign enterprises The anti-monopoly research shakes the anti-monopoly storm of foreign-funded enterprises is sweeping all industries Among them, the software and automobile industries have become the first ones, and the anti-monopoly investigation of Qualcomm and Microsoft has not yet been finally defeated At the end of August, the price supervision and inspection and Anti-monopoly Bureau of the national development and Reform Commission imposed a fine of 1.235 billion yuan on 12 auto parts manufacturers, such as Hitachi and Mitsubishi Electric, while BMW, Mercedes Benz and Audi have been continuously strengthened in the national anti-monopoly efforts Jaguar Land Rover and other vehicle companies have lowered the vehicle sales guidance price and parts price It is in this wave that the research of the relevant departments on the medical device industry has triggered a lot of speculation "In terms of product price manipulation, foreign products are suspect in many fields, such as automobiles, medical devices, etc." Liu Yugang, a senior medical industry consultant, said For example, the price of iPhone 6 sold in China is more than 4000 yuan, far higher than that of foreign sales of 199 dollars and 299 dollars, which is suspected of monopoly In fact, the anti-monopoly investigation on medical devices has been started for a long time In August 2013, Johnson & Johnson was judged by the Shanghai Higher People's court to compensate the distributor Beijing ruibangyong and science and Trade Co., Ltd (hereinafter referred to as "Ruibang company") for the economic loss of RMB 53 due to its suspected monopoly on the price of medical products Million yuan, opened the prelude for foreign medical equipment companies to pay anti-monopoly tickets In this case, Johnson & Johnson signed an agreement with Ruibang to require the latter not to sell suture products at a price lower than the minimum price set by Johnson & Johnson However, Ruibang company won the bid in violation of this provision in the sales bidding of Johnson & Johnson Medical suture held by the people's Hospital of Peking University, and Johnson & Johnson company cancelled its distribution right in Fuwai Hospital and plastic surgery hospital "Taking advantage of the dominant market position and depriving buyers of the right to choose is a feature of monopoly." Liu Yugang introduced that this case was called the first "vertical monopoly case" in the domestic medical device industry Data shows that in 2013, China has surpassed Japan to become the second largest medical device market in the world The 2013 analysis report on the domestic medical device market by the medical device branch of China Medical Materials Association pointed out that in the past 12 years, the sales scale of China's medical device market increased from 17.9 billion yuan in 2001 to 170 billion yuan in 2012 Excluding the influence of price factors, it has increased nearly 9.4 times in 12 years It is estimated that the annual sales volume in 2013 will reach 212 billion yuan, an increase of 21.19% over the previous year By the end of 2012, there were 14928 medical device manufacturers in China, but the domestic enterprises were small and the market was scattered In the first half of 2013, the revenue of 22 listed medical device enterprises was only 10 billion yuan, accounting for only about 5% of the total scale of the industry According to industry insiders, at present, the market of domestic large-scale medical equipment is mainly occupied by three foreign-funded medical equipment enterprises called "GPS", which are Ge, Philips and Siemens On the one hand, the market is dominated by foreign capital, on the other hand, the "favor" of domestic brands by senior government officials is also revealed from time to time On May 24, 2014 On the same day, CCTV news broadcast reported that President Xi Jinping visited the Shanghai Union Medical Technology Company, and pushed back and forth the X optical machine produced by the company, praising the device as "lightweight and handy as a small cart" Headquartered in Zhangjiang hi tech park, Shanghai Lianying Medical Technology Co., Ltd has 10 products entering the market within three years since its establishment It is the only company in China with a product line covering all high-end medical imaging equipment According to Xinhua, Xi Jinping said during the visit that some high-end medical equipment can not afford to buy at the grass-roots level and people can not afford it It is necessary to speed up the localization process of high-end medical equipment, reduce costs, and promote the continuous development of national brand enterprises Combined with the attitude of China's top management and the research of relevant departments, there is no reason for the panic of foreign medical equipment manufacturers According to an insider, the boss of a GPS company has sent an email to all employees, one to cheer them up, the other to ensure that the company is not suspected of monopoly in China Compared with domestic products, the price gap of foreign medical devices is very obvious Luo Xielong, executive vice president of China Pharmaceutical Enterprise Management Association He said that medical device products need mechanical and electrical integration, and the technological innovation ability of foreign investment is much higher than that of domestic A person in the industry pointed out that the price of foreign brands is generally higher than that of domestic products by more than 70% For example, the price of domestic products is 3 million yuan, and the price of foreign products is more than 5 million yuan Chen Jian, deputy general manager of Yuyue medical, said that in some products such as X-ray machines, the price of foreign medical brands used to be 1-1.5 times the price of domestic products at the peak However, with the improvement of the production capacity of similar products of domestic manufacturers, the price of foreign brands also began to drop dramatically, "the key is whether you can produce alternative products." Chen Jian said that the gap between domestic products and foreign products is also reflected in stability For example, for image products, domestic products need to be repaired in a few months, and foreign investment may be able to maintain stability in a few years This also makes foreign products have no fear of high pricing in the domestic market In addition to being higher than domestic products, their pricing is often significantly higher than the price in the international market For example, if the price of spiral CT products is US $1.5 million in the international market, the price in the domestic market is often US $2-2.5 million "Authorities have also considered setting sales prices for medical devices, but it is difficult to implement them." Luo Xielong said that it is very difficult for foreign medical equipment enterprises to control their products by splitting them up and selling only parts According to industry insiders, foreign medical devices occupy a leading position in many fields In addition to large-scale equipment, foreign medical equipment products also occupy a leading position in many consumables Roche, Johnson & Johnson and Abbott still have more than 60% market share in blood glucose products In terms of terminal consumables for hospitals, foreign products play a leading role in orthopedic products, cardiac stents, advanced accessories and other fields "However, after years of catching up, domestic enterprises have been able to gradually produce mid-range products competing with foreign investors in some fields." Chen Jian believes that "maybe compared with anti-monopoly, the state should formulate policies to encourage large hospitals to purchase domestic products." The rapid development of Korean medical devices in the international market these years is driven by domestic industrial policies, and Korean hospitals are also willing to purchase domestic products "Although the price of foreign medical devices is much higher than that of domestic products, even higher than that of the international market, this aspect is not as outrageous as that of high-end cars, and whether there is monopoly can be determined only through careful investigation." Luo Xielong comments According to one insider, the first step for foreign products to enter China is to pay a large amount of tax Take rehabilitation medical devices as an example, including 4% tariff and 17% value-added tax If the goods are in urgent need, they can be exempted from customs duty, but the VAT is still charged according to the bill Only medical equipment for scientific research can be fully duty-free This has increased a higher cost for foreign medical devices to enter the Chinese market In addition, according to the insiders, the registration cost of foreign products is relatively high However, compared with the increase of the upper level of domestic sales channels, these two expenses are insufficient Digital subtraction angiography (DSA) is a high-end equipment purchased by the hospital At present, the three giants of general motors, Siemens and Philips control most of the market share of DSA in China, said a person engaged in the equipment related industry As far as he knows, a DSA made by three major manufacturers costs more than 700000 US dollars (less than 5 million yuan) CIF in China, which is the same as that in the international market, but it is finally sold to the terminal hospital, which costs more than 12 million yuan, mainly due to the price raised in the middle of the distribution chain Bai Yu, chairman of the medical devices branch of the China Medical Materials Association and chairman of the medical equipment chain of rehabilitation homes, believes that the reasons for the high price of foreign medical devices are mainly three First, there are too many circulation links, and the price increases at different levels The second is that hospitals blindly compete, the more high-end products are more popular, and the over emphasis is on the advanced nature Third, there are too many stakeholders involved in equipment procurement, which has become the hotbed of grey trading and greatly pushed up the product price A dealer of European biochemical instrument brand points out that if it is sold to hospital laboratory, the price will be 30% higher than that to university and other scientific research institutions, because there are many sales links and grey trading parties "The sales link of China's medical device market is not as transparent as that of foreign countries, and the sales channels at all levels add considerable product costs." A person from the Beijing medical device business association pointed out that no matter the foreign and Chinese medical device products, there is no way to avoid doubling the cost due to potential rules.