[ET Net News Agency, 7 December 2018] Jefferies Research noted that China's government
started receiving and negotiating tenders for centralized procurement on 6 December. No
official results from the authorities yet but it was widely circulated about the results
and in one case, entecavir, the price cut level was over 90%.
However, when more information was circulated, expected average price cuts were around
50%, largely in line with expectations, the research house said.
Average price cut level at around 44% but Jefferies expects this to go up.
Of the 31 products, 16 have more than three bidders and their average price cut level is
46.4%. The remaining 15 products have only two bidders with a price cut level of 38%.
Due to the official document released in mid-November, products with less than three
bidders would go into a negotiation round to meet with the average price cut level of the
products with three or more bidders. As such, Jefferies expects the price cut level of the
products with only two bidders to go up.
As a whole, it expects the overall price cut level to stay in line with previous market
expectations of 40-50%.
Jefferies believes it's a painful experience for Sino Biopharm (01177), but an expansion
opportunity for CSPC (01093). Fosun Pharm (02196) and Shanghai Pharm (02607) both have the
potential to win the tender for one product. The big winner for this tender process should
be Zhejiang Huahai (Shanghai code: 600521), which won six of the seven tenders with an
average price cut level of 45%. (KL)