I don’t know if my friends have prepared enough medicines recently. Anyway, the bad reviewer is watching live broadcasts every day to rush to buy supplies.
And the hardest thing to grab here is undoubtedly the current hard currency, the antipyretics represented by ibuprofen.
Since the release of the “Guidelines for Home Treatment of Patients Infected with New Coronavirus” on December 7, drugs such as ibuprofen and acetaminophen have been listed as commonly used drugs for fever symptoms, and various channels have been sold out.
A pharmacy staff in Shanghai said that ibuprofen was out of stock around December 10th.
On the social platforms, there are various strategies about buying ibuprofen one after another. Many netizens share how to stay on major platforms and wait for regular shipments.
Some people even changed their location to a small county in another place, and after buying the medicine, they threatened the delivery boy with a bad review to send it to the corresponding city. (I’m afraid it’s not medicine that’s missing, it’s virtue.) Under the rush of buying by the whole people, some demons and ghosts all ran out.
The shortage of medicines lasted for less than a week, and in a blink of an eye someone sold the antipyretics at an exorbitant price.
So much so that the EVE ibuprofen (3 boxes) imported from Japan, priced at 450 yuan, was sold out in overseas stores on major platforms.
It’s true that everyone is racing, but some are racing against viruses, and some are racing against drug dealers. However, this kind of explosive buying of ibuprofen can easily give everyone an illusion.
Isn’t the pharmaceutical company that produces ibuprofen making money crazy? You know, Jiuan Medical, a listed company in the pharmaceutical industry before, was once mediocre. Because of the trend of selling new crown test kits in the United States, its stock price rose nearly 20 times in just two months, and it once became The myth of wealth creation flocked by retail investors.
The most important thing is that they are not engaged in speculation, but a lot of cash cows earning foreign exchange. The net profit in the first three quarters of this year alone has increased by more than 300 times year-on-year. Three years ago, the total revenue was only 400 to 500 million, and the “small and micro enterprises” that often lost money have turned into 16 billion yuan in three quarters. (net profit) industry giants, just tell me how profitable it is.
As an API company for ibuprofen, Xinhua Pharmaceutical claims to have a 40% market share in China, and was once known as the leader in the concept of ibuprofen. Even BASF, an international chemical giant, has to be called the second brother when it comes to ibuprofen raw materials.
According to the practice of the A-share market, isn’t this a ten-fold big bull stock?
In fact, stockholders did have signs of following suit and speculating. In just 10 days, the share price of Xinhua Pharmaceutical doubled. But soon, this violent market came to an abrupt end.
It turns out that once everyone investigates, the production of ibuprofen does not have the elements to make quick money. First of all, pharmaceutical companies cannot expand their production lines at will. Because unlike other consumer goods, the expansion of pharmaceutical production is not a one-off thing.
For example, due to the requirements of relevant national regulations: when a pharmaceutical company wants to increase production, it needs to apply for a change in the production batch of the drug, but the change is a major change, and the registration application needs to provide 3-6 months of stability research data and report .
Taking a step back, even if these problems can be resolved urgently, pharmaceutical companies do not dare to expand production capacity blindly. After all, the demand for ibuprofen has been relatively fixed for a long time. It is foreseeable that after the drug rush at this stage passes, there will be a surplus stage, and the shelf life of ibuprofen as long as 1 to 3 years means that the demand for ibuprofen will drop sharply in the future.
That is to say, the current expanded production may not be able to recoup the cost, and may become negative equity. So how profitable is it to produce ibuprofen? According to public information, Xinhua Pharmaceutical and Henry Pharmaceuticals, as the two major oligarchs of ibuprofen raw materials, almost directly covered the supply of ibuprofen raw materials in China.
It looks like a leader, so it must be very profitable, right? NoNoNo, making ibuprofen is not very profitable. As a national medical need, medicine is part of social welfare. In China, this is a matter of people’s livelihood. Therefore, in order to allow more people to afford medicines, the only way is to lower the profits of pharmaceutical companies. However, it is unrealistic to comprehensively reduce the profit of medicines. This is not to make the donkey work again, but not to feed the donkey. For original research drugs, research and development of drugs is a huge expense. For example, there is a “Double Ten Law” in the American pharmaceutical industry, which means that it takes 10 years and 1 billion US dollars to develop a new drug.
Drugs are no longer profitable, and companies have no motivation to develop new drugs, which is also a serious problem. Therefore, the usual international practice is: the government strictly controls the profits of generic drugs (generic drugs are drugs whose patents have expired, and the patent period is about 20 years), while giving innovative drugs a space for independent pricing. In this way, while everyone can eat low-priced medicines, pharmaceutical companies are also willing to spend energy on making original research medicines. It is equivalent to saying that the state provides a high-profit period for new drugs developed by innovative companies, allowing you to recover R&D costs during this period.
But once your patent expires, for these generic drugs, you need to limit your profits.
In China, the upper limit of generic drug profits is generally around 10%. It just so happens that domestic ibuprofen is in the category of generic drugs. After all, the patent of ibuprofen expired as early as 1981. The drug profit of ibuprofen does not exceed 10%, which reversely compresses the profit of ibuprofen raw materials downstream of the industrial chain.
How much is this profit exactly? Although Xinhua Pharmaceutical did not disclose relevant data. However, according to the general value of the ibuprofen raw material medicine industry, the gross profit is about 30%, and there is not much left after excluding the seventy-eight eighty-eight expenses.
From the perspective of the average profit margin of the entire API industry, the net profit is even only around 8%. Considering that this also includes those APIs supplied to sky-high prices for new drugs, the net profit of ibuprofen APIs may be even lower.
Therefore, corresponding to Xinhua Pharmaceutical’s income from ibuprofen, it can only earn about tens of millions a year. (It’s not as good as Weilong who sells hot strips)
This means that whether it is raw materials or finished products, it is very difficult to make a lot of money. .
What’s more aggrieved is that, from a vertical perspective, Xinhua Pharmaceutical is the leader in the ibuprofen industry chain, so it doesn’t matter if its profits are limited. What about horizontal comparison? Ibuprofen API is a category that is not favored by pharmaceutical companies among APIs, and bulk APIs.
Bulk raw material medicine is the simplest kind of raw material medicine. Just like raw materials such as wood and petroleum, it is relatively easy to produce, and the cost can only be reduced by the scale effect. How low is the technical content? For example, recently there are college students who made this thing by themselves. Although the effect needs to be considered, isn’t it just that knowledge can change fate. Considering this level of difficulty, coupled with the background that the average profit margin of the entire API industry is only about 8%, it is difficult for Xinhua Pharmaceutical to make a breakthrough in the profit range of ibuprofen.
What a working emperor. Under the layers of buffs, the entire ibuprofen industry has entered a very embarrassing situation. I can’t increase production, and I won’t allow price increases. And the most downstream finished pharmaceutical companies are facing a huge threat. It should be known that there are more than 500 batches of ibuprofen that can be produced in China, but in fact there are only more than 100 companies that actually produce it.
Will the remaining 400 companies be eager to get a piece of the action? These are all threats from Chiguoguo. Looking at it this way, although the public’s response to the pharmaceutical industry is not very friendly, and even occasionally there are some rumors that are thought out and frightening.
But in fact, it is still relatively difficult for most companies to earn huge profits beyond the reasonable range. At least in the ibuprofen industry chain, every pharmaceutical company is a screw under the country’s grand strategy of “reducing national medical costs”, and most of them are earning money with conscience.
Of course, let’s look at it from another angle. As a leader in ibuprofen, Xinhua Pharmaceutical has explained what it means with real experience, “Technology is not necessarily the primary productive force, but without technology, you can’t make a lot of money.”
From this point of view, the A-share leader, which cannot be supported by the big sales of ibuprofen, as a classic case of “locking profit-seeking capital in the cage of the system”, has instead given us a little more recognition of the medical industry.
Of course, hand me the ibuprofen first.
Author: pass
EDIT: face thread
Cover: Xuanxuan
Sources of pictures and data:
Looking at 514 ibuprofen in the pharmacy, I’m silent World Bureau of Knowledge
After the price of ibuprofen reached 3,000 a bottle, the purchasers directly swept away the American pharmacy INSIGHT Vision
Production of 40% of the world‘s ibuprofen, Xinhua Pharmaceutical still does not make much money?Xiaobei reads the financial report
Yuanchuan Research Institute of Chinese Generic Drugs Behind “The God of Medicine”