echemi logo
Product
  • Product
  • Supplier
  • Inquiry
    Home > Active Ingredient News > Drugs Articles > When medical insurance negotiations no longer become bad news for the stock market, does it mean the end of the era of sharp price cuts for innovative drugs?

    When medical insurance negotiations no longer become bad news for the stock market, does it mean the end of the era of sharp price cuts for innovative drugs?

    • Last Update: 2021-12-07
    • Source: Internet
    • Author: User
    Search more information of high quality chemicals, good prices and reliable suppliers, visit www.echemi.com

    The annual medical insurance negotiations have ended.
    Although the specific results of the negotiations have not yet been announced, the stock prices of various companies have responded
    .


    As far as the most concerned oncology drug field is concerned, the domestic innovative pharmaceutical companies involved in this negotiation have collectively risen on November 10, the day of oncology drug negotiation


    The huge drop in drug prices triggers turmoil in the capital market

    However, before this, medical insurance negotiations have gradually become a nightmare for innovative pharmaceutical companies.
    The increasing price drop has caused the future market imagination of drugs to fail to meet the expectations made by investment institutions before the listing, and it is not enough to support the high rise of many pharmaceutical companies.
    The price-earnings ratio, which caused drugs to enter the medical insurance through negotiation, turned out to be a short-term bad news
    .

    In addition, with the upsurge of the pharmaceutical industry, the stock prices of innovative pharmaceutical companies that have been listed successively after the capital market has cooled down, or even broke, take the science and technology board as an example, among the 19 companies that currently have a pipeline of research and development of class 1 chemical drugs and biological drugs, As of November 15th, 6 companies have had their share prices broken, and at the same time, there are 3 companies whose share prices are down and close to the issuance price (up ≤40% from the issuance price).
    The combined proportion of companies that are close to breaking and has broken has reached 47%
    .

    The high-cost R&D investment of innovative drugs does not match the ability to pay for medical insurance

    It is well known that the research and development of innovative drugs has the "Double Ten Law", and both time and money costs are very high.
    If the drug is to be released on the market to recover the cost and make a profit before the patent expires, the high price of the drug is almost inevitable
    .

    Figure 1 Long-term, high-cost, and high-risk new drug development

    Data source: Kanglong Huacheng prospectus, Guosheng Securities Research Institute

    As China has leaped from the previous third echelon "following" to the second echelon with China's pharmaceutical R&D, entering the first echelon has become the goal of the long-term development of China's pharmaceutical industry
    .


    In this era of rapid development of the innovative drug industry, a large number of new innovative drugs are on the market every year, and the corresponding patients urgently need these drugs to enter medical insurance to reduce the cost of treatment


    However, the amount of funds in the medical insurance fund is growing slowly, and it is seriously mismatched with the number of rapidly growing innovative drugs, which makes it difficult for innovative drugs to be included in medical insurance
    .


    The main contradiction in the domestic innovative drug industry has also been transformed into the contradiction between the increasing number of innovative drugs and the slow growth of medical insurance funds


    The "vacation of cages for birds" of the medical insurance fund is still at an early stage

    Regarding this problem, the state has begun to solve this problem from the policy level.
    The centralized drug procurement policy has enabled a large number of generic drugs to be significantly reduced in price and set aside funds for the payment of innovative drugs
    .

    However, compared with the large-scale domestic pharmaceutical market that is growing day by day, the current series of policies for the medical insurance fund to vacate the cage and change the bird cannot effectively alleviate this contradiction
    .


    According to the latest statistics of IQVIA, the decline in drug sales caused by volume purchases only accounts for 44% of the normal growth of drug sales, and the overall domestic drug sales are still growing rapidly


    Figure 2 Analysis of China's pharmaceutical sales growth MAT 2020Q2 VS MAT 2021Q2

    Data source: IQVIA report: "Review and Prospect of China's Pharmaceutical Market Trends"

    High-cost R&D expenses should be paid by a multi-level medical security system

    As the medical insurance fund is facing a large number of innovative drugs and the amount of funds is stretched, it is more necessary for policy guidance to leave room for development of other insurances such as commercial insurance, so that China's multi-level medical security system can be constructed and improved more efficiently
    .

    China's commercial health insurance is still in the early stage of development.
    According to the report "Building China's Pharmaceutical Innovation Ecosystem (2021-2025)", China's direct medical expenditure is still growing rapidly, but different expenditure methods are not the same
    .

    In the past two years, medical insurance expenditures have gradually reached saturation, but as of 2020, the amount of commercial health insurance claims in China has grown slowly and accounted for a very small proportion.
    This has led to a continuous increase in the proportion of personal expenditures.
    Personal medical expenditures have increased by nearly 80 billion in the past five years.
    Yuan, commercial insurance is in urgent need of rapid development to meet the needs of more patients
    .

    Figure 3 Direct medical expenditures in China

    Data source: "Building China's Pharmaceutical Innovation Ecosystem (2021-2025)"

    A reasonable payment system is the guarantee for the perfect closed loop of the new drug industry

    The foundation of the development of the pharmaceutical innovation industry is long-term and continuous investment in drug research and development
    .


    Only by allowing companies to get more returns than investment in innovative drug research and development, can they have continuous motivation to carry out the next round of innovative drug research and development


    Only the ability to pay can match China's strong new drug research and development capabilities, and a perfect closed loop between R&D, patients, and payment can be formed, and the sustainable development of China's pharmaceutical innovation industry can be promoted


    This article is an English version of an article which is originally in the Chinese language on echemi.com and is provided for information purposes only. This website makes no representation or warranty of any kind, either expressed or implied, as to the accuracy, completeness ownership or reliability of the article or any translations thereof. If you have any concerns or complaints relating to the article, please send an email, providing a detailed description of the concern or complaint, to service@echemi.com. A staff member will contact you within 5 working days. Once verified, infringing content will be removed immediately.

    Contact Us

    The source of this page with content of products and services is from Internet, which doesn't represent ECHEMI's opinion. If you have any queries, please write to service@echemi.com. It will be replied within 5 days.

    Moreover, if you find any instances of plagiarism from the page, please send email to service@echemi.com with relevant evidence.