On July 27, poinsettia (300723. SZ) announced that its wholly-owned subsidiary, Guangzhou Poinsettia Pharmaceutical Co., Ltd., received a notice of default from the National Drug Joint Procurement Office.
According to the Notice, Poinsettia Pharmaceutical (including the authorized person of Poinsettia Pharmaceutical) had Article 17.4 of the National Centralized Drug Procurement Document in the bidding for the seventh batch of state-organized centralized drug procurement of bromhexine hydrochloride injection. Poinsettia Pharmaceutical shall bear the losses caused to the purchaser. According to its sales data, its breach of contract caused a loss of 266 million yuan to the purchaser. Poinsettia Pharmaceutical will return all the losses in strict accordance with the relevant agreements.
The above-mentioned clause 17.4 refers to "collusion in declaration, negotiation of quotations, exclusion of fair competition of other reporting enterprises, and damage to the legitimate interests of the purchaser or other reporting enterprises".
Article 17 of the "National Centralized Drug Procurement Document" stipulates that if there are any of the above behaviors of centralized procurement declaration enterprises, selected enterprises, and distribution enterprises, they will be included in the "violation list" if the relevant departments determine that the circumstances are serious.
In this regard, Poinsettia said that the above-mentioned default refund amount is calculated based on the sales data of Bromhexine Hydrochloride Injection of Poinsettia Pharmaceutical from 2022 to the present, and the impact on the company's financial performance in the relevant year is uncertain.
It is worth noting that the bromhexine hydrochloride injection under Yipin Hongqi was approved in September 2021 and is the seventh batch of "barefoot products" selected in July 2022. According to the estimates of Titanium Media App, the refund amount of poinsettia is almost half of all sales revenue since the drug was launched.
On the first trading day (July 29) after the disclosure of the news of liquidated damages, poinsettia opened low and went low, and once hit the fall limit in the intraday, closing at 15.50 yuan, down 17.33%, with the latest total market value of 7.039 billion yuan, and the market value evaporated about 1.5 billion yuan in one trading day. And this will be far less than the impact on those who come after it.
The income of "barefoot products" has been halved, and the boots have not yet fully landed
In April this year, a number of pharmaceutical companies were interviewed on suspicion of abnormal bidding prices for centralized procurement, involving four varieties of bromhexine injection, octreotide injection, piperacillin-tazobactam injection, and glycerol fructose sodium chloride injection. Poinsettia Pharmaceutical is one of the companies interviewed, and the company's bromhexine injection is the winning product of the seventh batch of national procurement (July 2022), and the winning bid price is 17.88 yuan per piece.
In the following month, the winning bidders of bromhexin injection have lowered the price, among which, the bromhexine injection of Poinsettia Pharmaceutical fell to 8.27 yuan per piece, a decrease of 53.74%, and the price difference of a single piece was 9.61 yuan.
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According to the latest "fine" information disclosed by Poinsettia, the compensation of 266 million yuan is the "loss of the purchaser" since the drug was selected for national procurement, which can be understood as the return of the total price difference, if calculated according to the price reduction difference, the sales revenue of bromhexine hydrochloride injection is about 496 million yuan, and the compensation amount of Poinsettia may be more than half of the total sales revenue since the drug was approved.
Poinsettia will be negatively affected by the above-mentioned "fines" in two main aspects, one is that it may affect the company's centralized procurement qualifications. According to the eighth batch of national procurement documents, if the declared enterprises and selected enterprises are found to have abnormal bidding prices, they may be included in the "violation list" if the relevant departments determine that the circumstances are serious, which will directly affect the qualifications of centralized procurement. The second is to determine the impact of financial data.
There are four major sectors under Yipin Hongqi: children's drugs, chronic disease drugs, other drugs, pharmaceuticals and other services. Last year, the company's chronic disease segment revenue was 770 million yuan, and the products involved in the refund belonged to chronic disease drugs, and the refund amount accounted for 34.55% of its revenue in the chronic disease sector in 2023. The company also specifically mentioned in the annual report that the sales revenue of bromhexine hydrochloride injection in 2023 will grow rapidly year-on-year, which is embarrassing now.
It should be noted that after the approval of bromhexine hydrochloride injection and the pre-procurement sales revenue of the winning country, the published data shows that in Q1 of 2021 and 2022, its sales revenue is only 198,400 yuan, which is why the drug is called a "barefoot product". Generally speaking, "barefoot products" refer to drugs that do not account for a high proportion of revenue or have not yet been sold, and once such drugs are selected for national procurement, they will bring pure incremental income to the enterprise, and may also allow the company to achieve "overtaking" in the subdivision of the drug track.
Poinsettia was once a direct beneficiary of the "barefoot product" selected by the country. In July 2022, the company's three "barefoot" varieties of oseltamivir phosphate capsules, nifedipine controlled-release tablets, and bromhexine hydrochloride injection were selected for the seventh batch of national procurement, and the revenue of the first two drugs in the previous year was 0.
In the first three quarters of the year, dragged down by the withdrawal of acetyl glutamine for injection from local medical insurance, the revenue of the poinsettia chronic disease segment fell by 16% year-on-year to 537 million yuan, while in the annual data, the revenue decline of the product segment narrowed to -4.13%, and the year-on-year growth rate reached 87.50% after deducting acetyl glutamine for injection. The three "barefoot products" shouldered the important task of generating revenue for the company's entire chronic disease segment. By 2023, the company will have 7 bid-winning products, making the year-on-year growth rate of centralized procurement product revenue as high as 244.34%.
Looking specifically at the main product of this sky-high compensation, bromhexine hydrochloride injection, Xinkangjie statistics show that the company's entrusted manufacturer, Hebei Kaiwei Pharmaceutical, has soared its sales of bromhexine hydrochloride injection in 2023 by more than 1053%, with a market share of 33%, ranking first. In other words, poinsettia has become the NO1 of this hot product.
The price of old drugs is suspended, and many pharmaceutical companies take advantage of the wind to collect "dreams"
As an expectorant drug, bromhexine hydrochloride injection is slightly special.
The drug was first developed by Boehringer Ingelheim in Germany in 1963 and is a veritable "old drug", but in recent years, the price has soared, and it has even become a "collective procurement-friendly" variety.
Hospital statistics show that before 2012, the average price of bromhexine hydrochloride injection was less than 1 yuan, and in 2018, it was still about 2 yuan per bottle, but in 2021, the average price soared to 22.78 yuan, and in the first half of 2022 before the first centralized procurement, it rose to the ceiling price of 33.83 yuan per piece.
The reason for this is that the epidemic is the biggest factor driving its price increase. As a commonly used cough and expectorant medicine, bromhexine has been included in the "Reference List of Commonly Used Drugs for Home Treatment of Novel Coronavirus Infected Patients" issued by the Joint Prevention and Control Mechanism of the State Council, and is an officially certified recommended drug for the treatment of new coronavirus. At the same time as the price increase, the sales volume has increased significantly, and the Zhongkang Kaisi system shows that the sales of bromhexine hydrochloride injection in grade hospitals have climbed for three consecutive years, and the sales volume has increased from 32 million yuan in 2020 to 1.724 billion yuan in 2023.
The price was raised first and then the price was reduced, and the profit margin of the drug was not greatly compressed by centralized procurement. After entering the national centralized procurement, the price reduction of bromhexine hydrochloride injection was also much lower than the average price reduction - the average price reduction of all products in the seventh batch of national procurement was 48%, and the average price of bromhexine hydrochloride injection was 21.3%, and the average price after the price reduction was 16.08 yuan/piece.
The bromhexine hydrochloride injection that was collected also supported an IPO for a time.
In 2023, together with Poinsettia and other enterprises, seven batches of state-sourced Chengdu Xinjie Gaozhi GEM will be selected, and the company's bromhexine hydrochloride injection will have a revenue of 157 million yuan in 2022, accounting for 56.21% of the total revenue, which is all driven by centralized procurement. Because in 2021, the drug will only generate revenue of 17 million yuan. In response to inquiries from Shenzhen Communications, Chengdu Xinjie High-tech also admitted that its business was "relatively concentrated".
There is a hard threshold for listing on the GEM, and the cumulative net profit needs to be not less than 50 million yuan. According to the Chengdu Xinjie high-tech prospectus, from 2021 to the first half of 2023, the gross profit margin of bromhexine hydrochloride injection will remain at about 95%. Earlier this year, however, the company withdrew its listing application.
Under the centralized procurement, some drugs can actually benefit, which naturally attracts more pharmaceutical companies to follow suit.
Titanium Media App searched the official website of the National Center for Drug Evaluation (CDE) and found that up to now, there are still 9 companies that have submitted supplementary applications for the new registration classification and consistency evaluation of bromhexine hydrochloride injection, including Hebei Huide Xusheng Pharmaceutical, Heilongjiang Aolidanai Pharmaceutical, Chenxin Pharmaceutical, Yunnan Pharmaceutical Academy Biomedicine, Hainan Quanxing Pharmaceutical, Anhui New Century Pharmaceutical, Emeishan Tonghui Pharmaceutical, etc.
The picture comes from the official website
In terms of approved products, on July 19, Zhenbaodao (603567. SH) announced that the company received the drug registration certificate for bromhexine hydrochloride injection issued by the State Food and Drug Administration (certificate number: 2024S01637), which is mainly used for patients with chronic bronchitis and other respiratory diseases such as asthma, bronchiectasis, silicosis and other mucous sputum that is not easy to cough up in the case of difficult oral administration.
So far, a total of 14 companies have been approved for marketing of bromhexine hydrochloride injection, including Huluwa, China Resources Shuanghe, Shandong Shenglu Pharmaceutical, Sinopharm Guorui Pharmaceutical, etc., including 4 pharmaceutical companies including Poinsettia, which have been selected for national centralized procurement and have eaten the so-called "dividends", but with the emergence of the refund and compensation incident of poinsettia, the other 3 selected national procurement companies may also be among the price differences in the future.
Judging from the bid-rigging and collusion incidents, the reason why bromhexine hydrochloride injection can maintain high prices and high gross profits is not only driven by market demand, but also the impact of "secret efforts" of enterprises.
(This article was first published in Titanium Media App Author丨Yang Yaru Editor丨Sun Cheng)