Beijing’s new rules for state-led bulk tendering of medical drugs are the latest example of its “anti-involution” drive to combat cutthroat competition, a move analysts said would favour more established players.
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“The centralised bulk procurement rules optimisation is a sign that the National Healthcare Security Administration is proactively pushing Beijing’s anti-involution agenda within the pharmaceutical sector as part of efforts to bolster domestic consumption,” Guotai Haitong Securities’ analysts said in a research note on Monday.
The revised rules were aimed at patients’ well-being, ensuring product quality, preventing bid rigging and discouraging the deployment of excessive and unsustainable low-price strategies, they said.
Earlier this month, President Xi Jinping outlined measures to deal with excessive competition in certain industries, and called on industry associations and regulators to guide companies to improve quality, favour quality over price, and oppose low-quality products. Overcapacity in sectors such as electric vehicles and solar power equipment has resulted in price wars and widespread losses.
The new rules have been introduced for the 11th round of bidding under way. Beijing launched the centralised bulk procurement programme in 2018 in a bid to reduce prices and make drugs more accessible to patients.
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A key part of the new rules is a requirement for bidders to declare that their offers are not below cost. Bidders must also affirm that they have “fully considered various cost factors, including raw materials, and have not bid at below-cost prices”.