Volume 7 I've Been Here Chapter 1023 Medical Investment
The tiger cub quickened his pace, and when he was half a meter away from the wall, he pushed the ground with his right foot and took advantage of the momentum to fly into the air. Before he reached the highest point, he pushed the wall with his left foot again. When his body was about to reach the highest point, he jumped up again. When his hands climbed up the edge of the wall, he did a pull-up, lifted his foot and hooked it on the edge of the wall. Before he could stand up, he rolled over and fell down the other side of the wall.
The tiger cub adjusted its posture in the air, landing on its toes first. Then it leaned forward and pressed its hands on the ground. It stood there for a while, and when it felt the strength of its legs, it immediately stood up and ran away. After a while, it disappeared.
A quarter of an hour later, the tiger cub came to the door of a tobacco and paper shop in an alley, ordered a bottle of salty soda, took a sip, held it in his mouth for a while before swallowing it, and drank two or three sips in succession. When his breathing became smoother, the tiger cub drank the rest of the soda in one gulp, returned the bottle, paid the bill, then walked out of the alley, took out his cell phone, turned it on, and made a call.
"Nan Sheng, I'm exposed."
"How did you reveal it?"
"You got too close and people noticed."
"Oh, come back first."
"The car is still at the entrance of Tianfu Garden."
"Don't worry about it for now, South Bund, intersection...ten o'clock direction."
"I'll be there now."
After the two sides met, Nan Yi asked Hu cub and Tianxian to switch positions, and Tianxian continued to follow Lei Jian.
Surveillance is boring and requires luck. Tiger Cub was born in jungle warfare and his subsequent training was in security. It is not his professional skill to ask him to do surveillance, not to mention that he is alone and has no coordination, so it is no wonder that he fails.
Nan Yi did not blame him, but he felt a little unhappy. He had been in Shanghai for a few days, but the things he had were still a little short of what he had. He didn't know how long it would take.
Fortunately, many of the things Nan Yi needs to worry about have broken through the concept of space and do not necessarily require him to be on the scene to control them. He just needs to make a little sacrifice in terms of time difference.
At ten o'clock in the evening, Nan Yi was still listening remotely to a joint meeting held by several major pharmaceutical giants.
The theme of the meeting is to explore ways to get WTO members to reduce drug tariffs as soon as possible. To put it bluntly, it is to lower the price of drugs without sacrificing their own interests, so that "consumers" can benefit, stimulate their purchasing enthusiasm, and thus increase sales.
Every country has drug tariffs, which range from as high as 50% to as low as 0. The purpose of collecting tariffs is very simple: one is to protect the development of related domestic industries, and the other is to increase tax revenue. However, the first point can easily become meaningless and unnecessary.
There is no way. The cost and risk of drug research and development are very high. The revenue of several giants is often hundreds of billions of dollars, but the actual profit ratio is not high. Most of the funds have to be invested in research and development. There are thousands of rivers in the world, but you can only take a sip. This is not welcomed by most businessmen with ideals and aspirations.
If we treat medicines as ordinary commodities, cut R&D or let top students from the literature department serve as R&D leaders, abandon test tubes and flasks, make R&D literary, reduce production costs, concentrate limited funds on marketing, and invest more in advertising, then we will have the opportunity to increase profit margins by several hundred percent.
This model has low risk and high return, and is very popular with some people. Nowadays, there is a certain weight-loss drug on the market whose R&D manager is also the advertising manager. He has gathered a group of top students in the Chinese department. They sit together to brainstorm and "develop" the efficacy and cases. They repeatedly ponder every word ratio and carefully consider and test every punctuation mark to maximize the efficacy of the weight-loss drug.
Finally, after 17 years, 13 months, 32 days, 25 hours, 61 minutes and 60.99 seconds of hard work, enduring untold hardships, working all night long, passing by his home three times without entering, and not returning home for three years until his son was one month old, a professor and expert with a very high name finally developed a weight-loss drug with significant effects. Let the people be our witness, our drug is absolutely a good one.
Nan Yi put earphones in his ears and listened to the broad and empty content. The joint meeting was not a formal meeting. It was just a contact between friendly companies to test each other's ideas. If they really wanted to unite and work towards the goal, they still needed to screen partners and repeatedly run in.
A representative of a pharmaceutical company proposed an interesting idea of differentiated research to reduce competition among competitors. The general idea is that each giant has its own area of expertise, so they should be more restrained and not stretch their hands too far, and each should keep a little of their own territory...
Nan Yi was multitasking, listening with his ears while thinking about other things in his mind.
He thought of the innovative drug pricing rules that Japan had begun to implement. Before a new drug is launched on the market, the drug pricing committee first confirms whether there are similar drugs to the new drug. If there are similar drugs, the similar drug pricing method is used; if there are no similar drugs, the cost method is used to price the new drug.
The so-called similar drug pricing method is to price the daily expenses of new drugs consistent with the expenses of similar drugs, and on this basis give a premium based on innovation, practicality, market size and pediatric applicability.
The so-called cost-based pricing method takes into account multiple factors including new drug R&D costs, marketing costs, and management costs. Companies have greater autonomy in making decisions and their profits are greater.
It is not easy to develop new drugs with breakthrough significance. The price of drugs is restricted, and the operating environment of Japanese pharmaceutical companies has been under pressure, especially for small companies. The deteriorating operating environment has forced small-scale pharmaceutical companies to withdraw from the market.
At the same time, under tremendous pressure to survive, a wave of mergers and acquisitions began to emerge among large pharmaceutical companies. Many companies have joined forces through mergers, alliances and other means to gain economies of scale and form several clearly defined business systems. This market structure is similar to the "private plot" model that Nan Yi heard.
Japanese pharmaceutical companies have always been relatively or completely dependent on the domestic market, and not many have gone abroad. Only Takeda Pharmaceutical entered the overseas market in the 1960s, but the pace of expansion was not fast. It was not until the 1980s that the pace was accelerated. By last year, it was obvious that Takeda's strategy began to adjust and its sights were set on the world.
Takeda is a typical representative of Japanese pharmaceutical companies, and it can also be said to be a weather vane. As Takeda expands, other Japanese pharmaceutical companies will follow suit. Many Japanese pharmaceutical companies hold patented drugs with international competitiveness. After their international expansion strategies are launched, I believe their revenue will increase significantly.
Revenue is linked to both profit and stock price. There are many benefits in the upcoming wave of internationalization of Japanese pharmaceutical companies. Nan can use a combination of measures - Third Capital and Lizardmen invest in Japanese pharmaceutical companies, PY Securities operates the stock market, and if possible, short sell a certain pharmaceutical company. After all, the probability of drug accidents is still quite high, especially when someone is pushing for it.
Nan Yi wrote down three key words: Japan, investment, and stock market in the notebook. The space in his mind began to move westward, across the East China Sea and to the country.
Reform and opening up is like crossing a river by feeling the stones. Among the stones being felt are the United States, Britain, Germany, Japan, etc. Both in terms of economy and healthcare, China is constantly absorbing the experience of these pioneers and making use of it for its own benefit. As far as the pharmaceutical industry is concerned, Japan is a good benchmark for China.
The two countries have great similarities in population structure, medical policy, economic and cultural background, etc. Therefore, the trajectory and experience of Japan's pharmaceutical industry are of great reference value to China.
At present, Japan is already the country with the highest level of aging in the world. From the 1960s to the 1980s, the proportion of the elderly population over 65 years old increased by 5 percentage points. From 1980 to 1995, Japan entered a period of accelerated aging, and the proportion of the elderly population increased from less than 9% to nearly 15%.
Based on the current population structure analysis and Nan Yi's memory, there is no doubt that China will enter a period of accelerated aging in the near future. When facing this problem, we can completely learn from Japan, absorb advanced experience and discard the dross.
In terms of medicine, China will definitely implement a price reduction policy in the future, either through direct price reduction or medical insurance compensation.
In terms of innovation, Japan has gradually moved from Me-Better (innovation through imitation) targeting the domestic market to Best In Class (best in class) in the international market; while China has already shown signs of the Me-Better model, but influenced by the argument that it is better to buy than to make, as well as the reduction in financial subsidies for medical care in recent years, hospitals have moved towards the path of "using drugs to support doctors". While pharmaceutical representatives are entering a golden period of wealth, there will probably be a situation where imported patented drugs are given priority, while domestic imitations are tolerated.
As for whether it is possible to innovate through imitation, it is really hard to say. After all, the problems of too high R&D investment and too high risks are unavoidable, even if it is just an improvement.
For some companies, A may insist on investing huge amounts of money in research and development, turning the originally good financial statements into a mess. B is then ordered to save the company, but good news happens to come from the laboratory, and B becomes successful and famous, so A can do whatever he wants.
For other companies, forget it, just go to bed and spend some money to increase workers' benefits. If you add less cornstarch to cold medicine and don't mix western medicine with Chinese medicine, you can be considered a good person.
While joking, Nan Yi also understood the difficulty of drug research and development . Shengchen Pharmaceutical has been in operation for almost ten years, and its profits have always been decent. However, when it comes to investing in breakthrough drug research and development, it is really beyond its capabilities and will face many obstacles.
The shareholders have received dividends every year and have always been happy. Suddenly, they have no dividends to receive and have to give up what they have already received, and even risk their lives and property. It is conceivable that no shareholder would be happy about this, and probably only Nan Yi would vote in favor.
It's not that Nan Yi is so noble, but that he has a solid foundation and can withstand it. Moreover, if he expands in a malicious direction, being "B" is a good choice. When the shareholders have burned through their money and want to sell Shengchen Pharmaceutical at a low price, if there is a glimmer of hope in research and development, Nan Yi can just acquire the mess in full, and then spend money to write a story of perseverance and moving forward, and finally ushering in a miracle moment.
Then he said in a mean way that my success lies in persistence. When I was in the most difficult time, I sold blood. One second before success, I still planned to quit.
For Chinese pharmaceutical companies, one aspect is that they do not have the financial strength to invest in patented drug research and development, and another is that they do not have the motivation. In addition to the pharmaceutical companies themselves, insurance is also deeply restricting the development of patented drugs.
In addition to selling patented drugs from third-party biopharmaceutical companies, G2B also has an intermediary trading business. Simply put, it acts as an agent for some new and special drugs, and then opens up markets that pharmaceutical companies cannot open, and earns a little difference from it.
The cost of opening this difficult-to-open market can be imagined. In order to ensure profits, G2B will naturally choose some high-priced new special drugs when selecting drugs. As for the selection of target markets, it is inevitable to have good personal connections. The second thing is to see whether the commercial insurance market in the target area is prosperous and whether the public insurance participation rate is high.
The word "new" in high-priced new and special medicines means that they are most likely not included in the medical insurance catalogue, and all costs need to be borne by consumers themselves. The word "high-priced" means that it is likely that consumers will find it a bit difficult or even unable to afford it. If the commercial insurance market is not prosperous, the sales of drugs will also be relatively limited.
Ultimately, a big difference between patented drugs and generic drugs is cost.
Although patented drugs have higher technical standards, from a commercial perspective, generic drugs are low-cost and low-return, and are relatively affordable. Patented drugs have higher R&D investment costs and longer R&D cycles, making them a high-risk, high-return production model.
Due to the high initial investment costs and the fact that patent protection lasts only 20 years, the pricing of patented drugs is generally high.
If a domestic pharmaceutical company develops a new patented drug, it is difficult for it to enter the social medical insurance system immediately, and patients usually need to rely on commercial insurance or purchase it at their own expense. The coverage rate of domestic commercial health insurance is very low, which means that the market space for high-priced drugs is limited, and many patients may choose other alternative treatment options.
For pharmaceutical companies, the market risk of making patented drugs is indeed very high. When pharmaceutical companies want to develop new drugs, technology and processes determine whether they can do it and whether they can do it well, while the market and interests determine whether pharmaceutical companies want to do it.
Obviously, given the current domestic situation, pharmaceutical companies do not want to, cannot, and simply do not have the ability to carry out high-investment new drug development. Not only that, in fact, most domestic pharmaceutical companies cannot even produce generic drugs well.
There is a very important difference between medicines and general industrial products, that is, the imitation must be accurate. If the imitation is to produce general industrial products such as handbags, clothes, toys, etc., as long as the general proportions are consistent and the materials are similar, the finished product will not be too different.
However, the production of generic drugs requires that the dosage, safety, efficacy, quality, effects and indications are almost identical to those of imported drugs, that is, drug consistency.
When generic drugs are not consistent enough with patented drugs, it can easily lead to a series of problems such as different impurity levels, different absorption levels, and different side effects in the same drug.
However, the current domestic consistency review requirements for generic drugs are not high, which has led to many pharmaceutical companies producing inferior generic drugs at a lower cost and passing drug approval.
Since generic drugs produced at low cost also meet the standards, who would be willing to spend a large amount of money on production process and technology research and development?
Technology and R&D obviously cannot play a sufficient role in promoting the industry, and sales have taken their place. Whoever advertises well will have good sales, and major pharmaceutical companies focus their energy on marketing rather than making a good drug.
Over time, the pharmaceutical industry has become a routine, and the industry that was originally supposed to be driven by technology has become sales-driven. In terms of capital allocation, marketing also accounts for the vast majority. In this environment, R&D investment of less than 1% is actually very consistent with market rules for many pharmaceutical companies.
In this environment, although Nan Yi has always wanted to cast a wider net in the pharmaceutical industry, he has not put it into action. It's not that there are no good pharmaceutical companies worth investing in in China, but the good ones are well known to everyone. If you want to invest, most people will ignore you. If he wants to invest in the pearls covered in dust, he lacks a set of standards to distinguish the quality of pharmaceutical companies.
Standards that are very effective in both America and Europe will face the problem of not being able to adapt to the local environment once they are brought to China. Precisely because the domestic market is different from other countries and has its own strong individual characteristics, it has become one of the main reasons why Nan's industry is divided into two major blocks: China and others.
Nan Yi started a new line and wrote down three key words in the notebook: connections, region, and marketing. He believed that he might start from these three aspects to identify the investment potential of domestic pharmaceutical companies.
There is a high probability that the Indonesian rupiah will experience a major depreciation. It should be feasible to lend out the funds raised by Teng Bilian and borrow 200 billion rupiah from Indonesia in the name of Yiwan International. The handling fee is 50 billion, the loan is for three years, and the interest is 86 billion. Can the Indonesian rupiah depreciate by more than double?
With doubts, Nan Yi tapped a few times on the keyboard and pulled up information about Indonesia...
From 9:30 to early morning, Nan Yi waited until the joint meeting was over before he went to bed.
The next day, at 8 a.m., some people from Third Capital, Lizardman, the strategy team, and the financial team held a conference call to discuss the list of pharmaceutical companies worthy of investment.
The list is very long, and includes giants such as Merck, Wyeth, Hechter, Ciba-Geigy, Bayer, Pfizer, Warner-Lambert, Abbott, Eli Lilly, Bristol-Myers Squibb, SmithKline, Upjohn, Sandoz, and Roche. The reason why the financial team is also involved is that it is not possible to acquire shares in these giants just by wanting to. In short, if the selected targets can be acquired, then they will acquire shares. If not, they will go to the secondary market to buy them.
They won't force it, won't show too much aggression, and won't make any high-premium acquisitions. It's quite common for biopharmaceutical companies to seek capital increase from shareholders. Once you get the shares, you can't just sit back and wait for dividends. You might be asked to pay a large sum again at some point.
Nan Yi can remember the names of many best-selling and high-priced drugs, but he does not know the R&D funds consumed in the process. The R&D link is uncertain, and there is no 100% low investment and high return in the field of biopharmaceuticals.
A drug with total sales of tens of billions of dollars may only generate as little as one or two billion in net profit during the patent period. If spread over 20 years, the investment may not outperform low-risk financial products.
Nan Yi listened for the entire morning without expressing his own opinion.
In the afternoon, Nan Yi continued to listen to a conference call, the theme of which was the prediction of the possible situation after the foreseeable financial crisis in Southeast Asia and even across Asia, with the focus on which countries would seek help from the International Monetary Fund.
The IMF has four prescriptions: privatization, capital market liberalization, market pricing, poverty reduction strategies and free trade.
No matter which country seeks help from the IMF, it means opportunities for capital, big opportunities.
