Exclusive Competitive Advantage of Traditional Chinese Medicines Exists: Marketing Modes Tested

Business News Agency February 9th Following the NDRC's price cuts for foreign-invested drugs that were singly priced separately, rumors about price cuts for exclusive Chinese herbal medicines in the list of basic medicines were frequently mentioned in the market. In recent days, there was another definite news that the National Development and Reform Commission had already decided to cut prices for the exclusive species of Chinese medicine based on provincial-level price departments. Some analysts believe that although the specific price cuts are still unclear, there is no suspense about the "expanding" of price cuts to the exclusive category of traditional Chinese medicines.

“Since last year, the winds of price cuts have blew up on many occasions, and if price cuts are actually expected, it will certainly result in lower gross profit margins for enterprises, and it will also affect the investment of companies in the market. Can choose to take the initiative to deal with. Of course, the market has been expected to cut the price of exclusive species of Chinese medicine, coupled with the protection of the national policy, even if the price cuts, the expected rate will not be too much.” For the above news, Guangzhou Qixing Pharmaceutical Marketing Director Deng Jingzhan In an interview with a reporter from the “Pollic Economic News”, it was very calm.

Like Deng Jingzhan, many companies that hold proprietary varieties of Chinese medicine are also closely watching the latest developments.

How to balance the quantity and price

In fact, the price reduction of essential drugs is not the first time. As early as last October, the average price of 2349 specific formulations of basic drugs was reduced by 12%. The last round of price cuts of the National Development and Reform Commission aimed at investing in foreign research drugs has only just begun to take effect. Some experts believe that in the long run, price reduction is the main theme, but if the exclusive species of Chinese medicine does lower prices, it will have an impact in the short term but the market reaction will be milder.

According to Gan Rongfu, senior advisor of the operation and management department of Sinopharm Holding, the majority of the exclusive products in the list are based on exclusive products without competitors, such as Yunnan Baiyao, Sanjiu Weitai, and Ma Yinglong Hemorrhoids Acne Ointment. Under the impetus, China's grass-roots market began to gradually increase in volume, plus benefits from policy protection, and thus has greater discretionary pricing authority, and holds a dominant position in market competition.

“The price reduction is the trend. The original research drug is such that the exclusive species of Chinese medicine is no exception, but the margin is limited.” Gan Rongfu said.

In the interview, the reporter also noticed that the traditional Chinese medicine industry and the pharmaceutical sector as a whole are similar, sharing the dividends of the new medical reform, but also fall into the price and price dilemma.

According to the data monitored by the Proprietary Drug Analysis System in 16 major cities of the SFDA Southern Medical Economic Research Institute, the average selling price of Huang's Shengsheng Pills in sample hospitals was RMB 12.54, while the retail price of essential drugs was RMB 28, with an amplitude of 123.36%; Ma Yinglong The average price of musk acne cream is 4.47 yuan, the guide price is 9.3 yuan, and the amplitude is 107.95%; the average price of the quick effect Jiuxin pill is 18.17 yuan, the guide price is 23.6 yuan, and the amplitude is 29.90%. However, there is a fact that can not be ignored is that many of the company's competitive products are in the normal life cycle process.

Taking gynecological Qianjin Tablets as an example, in recent years, as Chinese herbal medicines prices have risen steadily, thousands of gold tablets have encountered development bottlenecks after sales revenue exceeded 300 million yuan in 2008, although they actively raised their ex-factory prices at the end of 2009 from 11 yuan/ The box was increased to 12 yuan/box, but the main profit margin dropped from 15.5% in 2009 to 9.9%. In this process, Xiaoke Pills also experienced a similar situation. In 2007, it achieved sales of RMB 518 million, an increase of 18.6% over the same period of last year (sales contribution increased by 10% and price increase contribution by 8%). In 2010, the operating income was RMB 490 million. In addition, with the current fierce competition in the diabetes drug market, manufacturers have begun to adjust their marketing strategies, focusing on the increase in market sales, which is the substantial increase in market share after removing the premium bubble.

In response, Ye Songtao, a pharmaceutical analyst at Changjiang Securities, believes: “Under the backdrop of irrational price hikes in raw materials, it is necessary to maintain the pricing advantages of exclusive products. The key is how to balance the quantity and price. Recently, foreign companies collectively withdrew from Shanghai Base. Behind the drug tendering event, the game tangled with price and sales is essentially a game, but with the further deepening of the drug price reform, this game will be amplified."

Marketing model preparation

It is understood that the 27 exclusive varieties entering the basic drug list account for a relatively small proportion of the sales revenue of its manufacturing enterprises. For example, Yunnan Baiyao entered the directory with 53.8% of its sales revenue; Xiaoke Pills accounted for Zhongyi Pharmaceutical Co., Ltd. The proportion of sales revenue is 16%. Whether the price cut will change its marketing model depends on whether the sales volume of the product can withstand the impact of price cuts.

Deng Jingzan told reporters: “If it is a fine-tuning, companies can only tap potentials and cut expenditures to reduce their prices. Under the premise of increasing raw material costs, if the production costs of some exclusive products are indeed higher, it is recommended that the form of commissioned processing be used to solve the cost problem. The problem is that the price reduction of pharmaceuticals will directly lead to a decline in the profitability of the manufacturers, which will directly lead to tight liquidity and increased financial pressure on the company. It is possible.At the same time, as the focus of marketing and product profit are continuously diluted, the flattening trend of marketing channels is increasingly clear, and a channel pattern with products as the main line and regions as the focus is being formed."

In fact, the special environment in which an exclusive variety depends on is changing: After a product is price-reduced, the company’s goals, expectations, mentality, and behavior will change. If this phenomenon becomes the norm, the company’s marketing model will not be far behind. .

"The business model is the profitable logic of a company." According to the analysis of a person in charge of a pharmaceutical and commercial company in Hebei Province, the price cut of exclusive species directly leads to the dilution of product gross margins, and the country's order in rectifying the pharmaceutical market has caused some companies' marketing channels to be blocked, and the pressure on enterprises has soared. “In the expectation of market price cuts, companies have started preparing for examinations. Some companies have begun to reform the marketing system, changed the provincial level channel manager to operate at the provincial level as the provincial manager’s responsibility system, channel sinking focuses on the grassroots market, and the third terminal is emphasized from the past. The idea of ​​'brand-driven sales' has been transformed into 'sales-driven branding'. Taking advantage of the end-user business, the product group will sink into the terminal, which is undoubtedly an important change in line with the current new environment."

In the interview, the above-mentioned persons generally expressed their concern for the development trend and channels of pharmaceutical retail pharmacies.

“However, it should be pointed out that if the impact of price factors drives the change of product marketing model, and in the process of vigorously promoting the value reconstruction of the exclusive variety supply chain, how to strengthen channel management and control, through streamlining the first-level and increasing the number of The quantity-rebuilding business structure is the first problem that pharmaceutical companies must solve at present,” said a company official.

"In order to rationalize the interests of all aspects of the supply chain, especially in recent years, sales performance has been declining. Enterprises that rely on prices to promote performance should pay attention to the characteristics of grass-roots markets, marketing strategies in the grass-roots drug market and the formation of sales teams. The terminal business covers the new rural cooperative medical system, urban community medical care, and pharmacies, providing products, providing services, and conducting health education for specific groups of people. Enterprises must make advances and reflect differences.” Gan Rongfu and Ye Songtao share the same view.