Turnaround in Chinese VBP Bidding... Domestic Implant Companies Perform Well

Osstem, Highest Quantity Bid
Dentium, Allocated 400,000 Sets
Korea Accounts for 63% of Supply Volume

[Asia Economy Reporter Myunghwan Lee] Domestic implant companies have been allocated a large volume of orders in China’s volume-based procurement (VBP) bidding.

On the 11th, Osstem Implant received the largest volume in the Chinese dental implant VBP bidding results. Osstem Implant announced that the awarded volume was 491,090 sets, the highest quantity among the bidding participants. Similarly, Dentium, another domestic implant company, was also reported to have been allocated about 400,000 sets in the VBP bidding results.

VBP is a policy by the Chinese government to directly purchase large quantities of pharmaceuticals and other products from companies to standardize prices. When the introduction of this policy was announced, it was considered the biggest variable affecting the performance of domestic implant companies. If implants are included in the VBP target, it naturally leads to a decrease in supply prices. Concerns that a drop in supply prices could worsen the profitability of these companies caused their stock prices to experience weakness.

Both companies were reportedly classified as Class A in the VBP bidding. Based on the bid price, 60% of companies that submitted the lowest bids are selected as Class A, while the remaining companies are included in Class B. Among the Class A companies, those ranked first to third can supply 100% of the demand from medical institutions, and those ranked fourth or lower can supply 90% of the demand.

According to the implant industry, five domestic companies and three Chinese companies were selected as Class A. This confirms that domestic companies performed well in the VBP bidding. According to Korea Investment & Securities, the country-wise share of secured implant supply volume was 63% for Korea, accounting for the majority. Chinese companies followed with a 12% share, and companies from other countries accounted for 25%. The bidding results are seen as an opportunity to reaffirm the competitiveness of domestic implant companies in the Chinese market.

Songhoon Jung, a researcher at Korea Investment & Securities, said, “(Domestic companies) showed competitiveness in terms of price by offering bid prices similar to Chinese implants,” adding, “Considering quality, clinical data, and economies of scale, Korean implant manufacturers are expected to maintain their competitive advantage.”

However, there are also concerns that the growth of Chinese companies could pose a threat in the long term. Chung Hyun Kim, a researcher at Mirae Asset Securities, pointed out, “In the long term, the growth of Chinese local companies is the biggest risk.”