(Yicai Global) Feb. 10 -- An alliance of 17 Chinese provincial-level medical institutions will hold a new bulk-buying round of orthopedic supplies early next month to deepen the reform of the procurement system for medical supplies and get better prices.

The group’s members cover most provinces in eastern China as well as some from the west. All public medical institutions in the alliance that bought orthopedic supplies last year will participate in this new round, according to a work plan released on the website of the Tianjin Medical Purchasing Center website yesterday.

It follows a similar bulk-buying round last October by 12 provincial public medical institutions, led by central Henan province. The latest group does not overlap with the areas covered by last year’s alliance.

“Generally speaking, most of the products in the centralized procurement are domestic supplies with a high substitution rate,” Zhao Heng, founder of medical strategy consultancy Latitude Health, told Yicai Global. The prices set last October will be the price ceiling for this round, he added.

The participating buyers and sellers will determine the price and quantity of products through two-way selection, Zhao said.

A total of 20,751 products from 71 companies were selected in the Henan-led round last year. It slashed the average price by 88.7 percent, while the steepest cut was 95.5 percent.

The March round will definitely achieve a significant reduction in prices, Zhao predicted. After two large-scale centralized purchases, the price of orthopedic trauma medical consumables will be even lower in the future.

Major overseas manufacturers, including Johnson & Johnson, Zimmer Biomet and Stryker, did not respond to the bid in last year’s round because of the drop in prices.

“The price drop is too large, and companies will not gain profit for product upgrades and new product research and development,” said the head of the R&D department of an overseas firm, adding that investment in product innovation may become less likely in the future.

The top 20 manufacturers in China’s orthopedic implant market accounted for 65.5 percent of the market in 2019, according to data from medical information platform Eshare.

Among them, six overseas firms, including J&J, Zimmer Biomet, Stryker, and Medtronic, had a combined market shares of 38.1 percent, with 14 domestic producers making up the remainder.

Editors: Tang Shihua, Peter Thomas