Abstract
This paper explores the impact of joining centralized drug procurement of China on the profitability of medical enterprises by the difference-in-difference (DID) model. When centralized procurement cannot bring enough cost savings to enterprises, the price competition caused by centralized procurement will lead to the decline of enterprise profits. In the short term, the negative impact of China's drug centralized procurement policy on the net profit of enterprises is not obvious in the year when enterprises win the bid. After the government officially purchases from pharmaceutical enterprises, the negative impact of the drug centralized procurement policy of China on the net profit of enterprises begins to appear gradually. Therefore, the generic drug manufacturers increase R&D investment and have their own heavy products of original drugs as soon as possible to enhance their core competitiveness.
Highlights
In order to study the profitability of medical enterprises after joining centralized drug procurement of China, this paper considers non-centralized procurement and centralized procurement and takes the former as the benchmark [30]
An important premise of the applicability test is that the net profits of the treatment group and the control group have the same trend before the centralized drug procurement policy is proposed
There are differences between the treatment group and the control group, it can be judged that the control group is appropriate as long as their development trend is consistent before the centralized drug procurement policy is put forward and the difference
Summary
On May 11, 2021, China’s National Bureau of Statistics released the data of the seventh national census. With the aggravation of aging, the number of patients with chronic diseases is increasing, and the high drug price leads to the increasing medical burden of patients and the country. Medical insurance cost control is a very important means to reduce the overall burden by controlling drug prices. China’s generic drugs and patent expired original drugs account for more than half of the market share in terms of sales quantity and amount. In order to promote market competition, drive the upgrading of the pharmaceutical industry and effectively reduce the drug burden of patients, the state launched the pilot of “4 + 7” urban drug centralized procurement in December 2018. For “4 + 7” centralized procurement, the State shall agree on the sales volume of drugs in advance, adopt
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