Bulk procurement brings down medical costs

The company has participated in every round of centralized procurement targeting medical consumables, including heart stents, artificial joints and spines, and artificial lenses since late 2020. Its sales revenue has been rising markedly for four consecutive years as of the end of last year and is expected to keep increasing this year.

Because the profit margin per unit has dropped, Bao said it is more than important to scale up manufacturing.

"In addition to joint products, we are looking to develop related materials to become a more comprehensive supplier," he said. "This year, we have also begun supplying our equipment in sterile packaging to make it more convenient for surgeons and meet emergency demands."

Mindray Orthopedics is a leading company in the industry with more than three decades of history.

Zhang Long, from the company's public affairs and marketing management department in Wuhan, said that the sector was highly profitable, so many manufacturers did not feel the pressure to streamline production and reduce unnecessary manufacturing costs.

Orthopedic surgeries also carry unique features. Some tools supplied by manufacturers are nondisposable and should be returned to storage for future use. For a single surgery, probably only a dozen out of 200 tools sent to the hospital will be used eventually, depending on the condition and physical shape of patients. As a result, the industry is confronted with complicated logistics issues.

Zhang said that the bulk buy program has motivated companies to explore innovative logistics solutions to cut costs, such as simplifying their network of supply chain agencies and establishing smart platforms to more efficiently track and manage the flow of equipment and consumables.

To satisfy the needs of sparsely populated and remote areas, Zhang said that the company plans to build more regional warehouses so that local partners can pick up products promptly and conveniently.

"In the future, we are looking to further ramp up our market share," he said. "One thing for sure at present is that the relatively disorderly competition in the orthopedic industry has been curbed."

Upon the two-year procurement agreement for artificial joints ending in April, the National Healthcare Security Administration initiated a new procurement bid in May.

Results show that 167 products from 54 companies were selected and the average price was further cut by six percent from the previous agreement.

wangxiaoyu@chinadaily.com.cn