(Yicai Global) Sept. 28 -- The price of orthopedic spine consumables was slashed by an average of 84 percent in China’s latest round of the centralized procurement of costly medical consumables held yesterday, taking market insiders by surprise.

Prices were beaten down by an average of 84 percent, generating savings of around CNY26 billion (USD3.6 billion), the National Healthcare Security Administration said yesterday. The selected products should be made available to Chinese patients by next February, it said.

Several Chinese medical device makers saw their stocks surge by double-digits yesterday in anticipation of more generous pricing. Company insiders told Yicai Global earlier that price reductions this time round are likely to be less than in the previous two bouts of group purchases of high-value consumables, as the rules this time are less strict. Previous rounds saw the price of coronary stents squeezed by 93 percent and that of artificial joints by 82 percent.

Over one million sets of consumables needed for surgeries of the cervical, thoracic and lumbar vertebrae, accounting for 90 percent of Chinese hospitals’ demand and worth around CNY31 billion (USD4.3 billion), were up for grabs. Some 171 foreign and Chinese medical device makers vied to have their products chosen, of which 152 were successful. One overseas firm dropped its prices by 92 percent to CNY4,800 (USD665) from CNY60,000 (USD8,312).

The bulk buy program mainly squeezes the profits of intermediary distributors and is for the benefit of patients, a number of winning bidders told Yicai Global. It does affect the profits of medical device makers and prevents them from being too mercenary.

Three of China’s top five suppliers of medical devices used in orthopedic implants are from the US. In 2019, New Jersey-headquartered Johnson & Johnson, Minnesota-based Medtronic, Weigao Orthopaedic Device, Michigan-headquartered Stryker and Shanghai Sanyou Medical accounted for 28.2 percent, 24.3 percent, 7.9 percent, 6.5 percent and 3.7 percent of the market respectively.

Imported products have a better design than the Chinese ones, but they are more pricey, an orthopedist told Yicai Global. This centralized procurement round will help Chinese brands replace overseas ones.

Editors: Liao Shumin, Kim Taylor