Since last year Since the state announced the centralized procurement of artificial joints in September, Guangdong Province issued a notice on March 18 to do a good job in the centralized procurement and use of artificial joints organized by the state, and said that the centralized procurement of artificial joints would be launched in Guangdong on April 15; At the same time, Hainan Province also issued a notice recently, specifying that the national organization of centralized procurement of artificial joints will be implemented in Hainan on March 25.

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After the announcement of this centralized purchase, the Hong Kong stock market responded quickly, and orthopedic consumables stocks fell collectively.

by At the close of March 21, Weigao shares closed at HK $9.90 per share, down 1.00%; Aikang Medical Hong Kong shares closed at HK $4.43, down 2.69%, while Chunli Medical Hong Kong shares closed at HK $9.75, up 3.17%.

The price decreases by up to 80%

On March 18, according to the information on the official website of Guangdong Medical Security Bureau, there were 330 medical institutions in Guangdong Province participating in the centralized procurement of artificial joints, including public hospitals and private hospitals. The scope of products purchased was artificial hip joint and artificial knee joint. In the first year, the province purchased 36400 sets, which is expected to save 750 million yuan annually.

It is reported that the hip joint products in this collection are based on ceramics -Ceramics, ceramic polyethylene and alloy polyethylene are divided into three groups. Each type of product is divided into Group A and Group B according to the national supply capacity of enterprises and the demand of medical institutions. Some insiders believe that, unlike the previous single product in the centralized procurement of coronary stents, the centralized procurement of artificial joints has increased grouping, and more attention has been paid to product differences, clinical demand and supply capacity.

According to the information released by Hainan Province 35 medical institutions participated in the centralized procurement of artificial joints, and the scope of products purchased was artificial hip joint and artificial knee joint. The average price of the selected hip joint decreased from 35000 yuan to about 7000 yuan, and the average price of the selected knee joint decreased from 32000 yuan to about 5000 yuan, with an average decrease of 82%. Hainan Province purchased 3356 sets in the first year, which is expected to save 70 million yuan of procurement funds annually.

stay On September 14, 2021, the bid for the second high-value medical consumables purchased by the state in large quantities - artificial joints will be opened in Tianjin. The average price of the proposed hip joint will be reduced from 35000 yuan to about 7000 yuan, and the average price of the knee joint will be reduced from 32000 yuan to about 5000 yuan, with an average price reduction of 82%.

According to the results of several times of intensive procurement of artificial joints in various provinces, the price decline is basically About 80%. In this regard, Zhongtai Securities believes that the result of joint centralized purchase has been achieved, with a slightly better decline than expected, squeezing out more "moisture" from dealers, and domestic brands are expected to continue to expand their market share by virtue of cost performance advantages.

Artificial joint market may change

According to the data, China About 50% of people over 50 years old suffer from osteoarthritis, and about 80% of people over 75 years old suffer from osteoarthritis. According to the data of the Department of Orthopaedics, in 2018, the number of joint replacement cases in China was 588100, including 396500 hip joint replacement and knee joint replacement (53.91% domestic) and 191600 (less than 30% domestic market share).

However, the current price of domestic artificial joints ranges from several thousand yuan to more than ten thousand yuan, including ceramic hip joints (Especially powder pottery) price is high.

It is understood that artificial joint replacement is one of the effective means to treat femoral head necrosis, joint injury, osteoarthritis and other diseases caused by trauma, sports injury, degeneration and aging, which can greatly restore the joint movement function of patients and significantly improve the quality of life. Due to the complex classification and combination of orthopedic consumables technology, it is difficult to compete directly. It has been a difficult point for centralized procurement for a long time. The prices are obviously inflated, and patients have a heavy burden.

With the continuous expansion of market demand, there is no doubt that it has caused greater pressure on the medical insurance fund. Therefore, it is imperative that artificial joints be included in the centralized procurement.

However, in terms of the current artificial joint market in China, Chinese enterprises only occupy the national market 3. The localization level of artificial joint market is low. It is reported that the foreign-funded enterprises are mainly Jamay Bonnie Mae, Stryker, Johnson&Johnson, and Smith&Nephew, accounting for 74%. The largest sales of artificial joints in China are listed companies such as Weigao Orthopedics, Aikang Medical, and Chunli Medical.

Data shows that Chunli Medical In the 2020 annual report, its medical device revenue accounted for 99.99%, of which 96.8% came from joint prosthesis; The proportion of medical equipment of Aikang Medical is also high, 80% of its income comes from hip joint and knee joint, accounting for 55.1% and 24.9% respectively; Weigao Orthopaedics is no exception. The proportion of spine products and joint drugs reached 67.09%, 44.8% and 22.29% respectively.

It should be noted that at present, Chunli Medical and Weigao Orthopedics have successively The A-share listing has formed a "A+H" layout. In addition to the above three enterprises, Sanyou Medical, Dabo Medical and Kailitai are also unwilling to lag behind.

According to the data of Home Appliances, the localization rate of artificial joints is about 35.3%。 Among them, the localization rate of hip joint is about 53.9%, and that of knee joint is less than 30%. At present, with the implementation of centralized procurement of artificial joints, domestic leading enterprises are expected to achieve "price for volume", constantly expand market share and improve enterprise competitiveness.

The competitive pressure of domestic leading enterprises increases

After a round of centralized procurement reshuffle last year, domestic orthopaedic consumable enterprises have successively announced Performance report in 2021.

In which, Weigao Orthopaedics realized total operating revenue 2.153 billion yuan, up 18.06% year on year; The net profit was 704 million yuan, up 26.02% year on year; Chunli Medical realized a total revenue of 1.081 billion yuan, up 15.29% year on year; The net profit was 313 million yuan, up 10.44% year on year; Sanyou Medical realized a revenue of 593 million yuan, up 51.97% year on year; The net profit was 186 million yuan, up 57.2% year on year.

The reasons for the growth of its performance are almost all the recovery of the rising trend of the number of operations under the control of the epidemic situation, strengthening the development of sales channels, and actively responding to the purchase policy with volume.

Although they are orthopedic consumable enterprises, their main businesses are still different. Among them, Weigao Orthopaedics mainly covers three major orthopedic businesses: spine, trauma and joint; Chunli Medical focuses on joint prosthesis; Sanyou Medical is mainly engaged in spine implants and trauma implants.

But last year, Chunli Medical suffered a head-on blow when the artificial joint country failed to adopt the standard of knee joint. stay On September 14, 2021, in Tianjin National Artificial Joint Collection, Chunli Medical knee joint products reported the highest price in the whole market, and the brand was accidentally lost in three out of four cases. Although the three products of hip joint won the bid, the falling of the bid of knee joint still had an unneglectable impact on it and caused its share price to fall continuously.

At present, its share price has changed from In June 2021, the price of 34.95 Hong Kong dollars per share fell to 7.63 Hong Kong dollars per share in March this year, a drop of 78.16%.

The current situation of other enterprises is not good. Spine, as the absolute main force of Sanyou Medical, accounts for a considerable share of its revenue, but its The 2021 report also said frankly that the company has a single product structure and is actively improving. In the future, if the market demand for spinal implant consumables decreases significantly, and the company is unable to complete the research and development of new products or realize the market development of trauma products, the company's business performance will be adversely affected.

As we all know, the purpose of centralized purchase is to squeeze out the moisture in the sales link, and the products within the scope of centralized purchase will bid farewell to the era of high gross profit rate.

According to the data, In 2020, the sales expenses of orthopedic listed companies accounted for different proportions of operating income, with the highest being 47.6% and the lowest being 23.74%. The gross profit margin of orthopedic listed companies can reach 90% at the highest and 60% at the lowest.

Although in recent years, the market size of orthopedic implant medical devices in China has shown a growing trend year by year. In 2020, its market size will reach 35.3 billion yuan, which is expected to continue to grow in the next few years. It is expected that the market size of orthopedic implant medical devices will reach 40.4 billion yuan in 2021.

However, as centralized purchase begins to normalize, enterprises may also face a new round of challenges.