Embracing the Change: Strategizing on Volume-based Procurement in China

Volume-based procurement (VoBP or VBP) started its rollout in China in 2018, featuring stiff competition and steep price cuts for mature drugs. More recently, VoBP has been broadening in scope and accelerating in pace. To make the best out of the inevitable, major pharmaceutical firms will need to strategize and prepare for upcoming rounds on both national and regional levels.

Volume-based procurement is a series of drug procurement policies carried out in China, aimed at encouraging generic substitutions and bringing down the cost of drugs that have passed their exclusivities.

In the first VoBP pilot in 2018, there were just 25 drugs impacted and piloted in 11 cities (“4+7” cities). However, the magnitude of price cuts went beyond most expectations. One generic company cut its Entecavir price by 94 percent to secure a spot in the game, sending shockwaves across the industry.

Since then, VoBP has rolled out at both national and regional…