How big is the impact?, An anti-corruption storm is coming! Over 150 hospital deans and secretaries were investigated within the year by the Hubei Provincial Commission for Discipline Inspection | Medical | Secretary
China Fund News Taylor
Hello everyone, the weekend's anti-corruption campaign for medicine has come back to life. A haze envelops the pharmaceutical industry: another representative has been arrested The academic conference has been suspended, and there are even rumors that the office has been shut down. In some cases, the pharmaceutical group has been disbanded
Medical anti-corruption storm strikes: multiple academic conferences postponed
![How big is the impact?, An anti-corruption storm is coming! Over 150 hospital deans and secretaries were investigated within the year by the Hubei Provincial Commission for Discipline Inspection | Medical | Secretary](https://a5qu.com/upload/images/cbfd27449517498183a9d8cd8ebe3f2c.jpg)
This weekend, everyone in the industry is discussing pharmaceutical anti-corruption. With the outbreak of the so-called "strongest ever" pharmaceutical anti-corruption storm, several pharmaceutical academic conferences have been postponed or cancelled recently, and notices have been issued to announce the postponement. Although the reasons for the postponement of the meeting vary, most industries believe it is related to this anti-corruption action.
Generally speaking, pharmaceutical companies may use conference sponsorship fees, expert lecture fees, training fees, and other means to cover their bribery with a "legal cover" by organizing academic conferences.
According to incomplete statistics from Cyberland, at least 155 hospital deans and secretaries have been investigated nationwide so far this year, exceeding twice the number of hospitals in the whole of last year. In addition to the deans and secretaries who fell from grace, there were also numerous department directors who were investigated.
![How big is the impact?, An anti-corruption storm is coming! Over 150 hospital deans and secretaries were investigated within the year by the Hubei Provincial Commission for Discipline Inspection | Medical | Secretary](https://a5qu.com/upload/images/5232347bdac918632c702e564693707c.jpg)
On July 25th, according to the website of the Shandong Provincial Commission for Discipline Inspection and Supervision, Lv Yongtao, former Party Secretary of the Third Hospital of Shandong Province, was suspected of serious violations of discipline and law and voluntarily submitted to the case for examination and investigation.
On July 29th, according to the Hubei Provincial Commission for Discipline Inspection and Supervision, He Shaobin, Vice President of Hubei University of Traditional Chinese Medicine and former President of Hubei Provincial Hospital of Traditional Chinese Medicine, is suspected of serious violations of discipline and law and is currently undergoing disciplinary review and supervision investigation by the Hubei Provincial Commission for Discipline Inspection and Supervision.
On August 5, according to the Xizang Autonomous Region Commission for Discipline Inspection, Tang Rongke, secretary of the Party Committee of the Xizang Autonomous Region Tibetan Hospital, was suspected of serious violations of discipline and was currently under disciplinary review and supervision by the Xizang Autonomous Region Commission for Discipline Inspection.
![How big is the impact?, An anti-corruption storm is coming! Over 150 hospital deans and secretaries were investigated within the year by the Hubei Provincial Commission for Discipline Inspection | Medical | Secretary](https://a5qu.com/upload/images/2dfeec2c52cc2c2854c8339831863921.jpg)
How big is the impact?
According to industry insiders, disbandment of groups, holidays, and recall of representatives for training have become a three piece set for pharmaceutical companies to cope with the current storm.
Even some pharmaceutical companies have requested that work discussions in work groups be temporarily prohibited. Two hours later, the group disbanded and changed to single line communication. All representatives work from home and are not required to visit customers.
![How big is the impact?, An anti-corruption storm is coming! Over 150 hospital deans and secretaries were investigated within the year by the Hubei Provincial Commission for Discipline Inspection | Medical | Secretary](https://a5qu.com/upload/images/b60415fd2becc271be3526ceb9905960.jpg)
Several foreign companies have disbanded academic conference project communication groups, and one company has also notified that they will no longer hold meetings or sponsor doctor meetings. Representatives can also stop visiting.
The anti-corruption efforts in the pharmaceutical industry are heading towards deeper waters. On July 28th, the website of the Central Commission for Discipline Inspection and the National Supervisory Commission announced that the Central Commission for Discipline Inspection and the National Supervisory Commission held a mobilization meeting to deploy disciplinary inspection and supervision agencies to cooperate in carrying out centralized rectification of corruption in the national pharmaceutical industry. It is mentioned that we must adhere to the joint investigation of bribery and bribery, concentrate our efforts on investigating a number of corruption cases in the pharmaceutical industry, and form a deterrent effect.
The meeting pointed out the need to adhere to the joint investigation of bribery and bribery, and concentrate efforts on investigating a number of corruption cases in the pharmaceutical industry, including unreasonable academic sponsorship. Recently, medical institutions in provinces and cities such as Guangdong, Guangxi, and Zhejiang have successively issued notices, stating that they will strengthen anti-corruption self-examination efforts, clear and correct unreasonable compensation and kickbacks.
![How big is the impact?, An anti-corruption storm is coming! Over 150 hospital deans and secretaries were investigated within the year by the Hubei Provincial Commission for Discipline Inspection | Medical | Secretary](https://a5qu.com/upload/images/bdd8a6050b7e5e32f24ea3a368d2b3da.jpg)
According to China News Agency, recently, the National Health Commission, together with the Ministry of Education, the Ministry of Public Security, the National Audit Office, the State owned Assets Supervision and Administration Commission of the State Council, the State Administration for Market Regulation, the National Medical Insurance Administration, the National Administration of Traditional Chinese Medicine, the National Bureau of Disease Control and Prevention, and the National Medical Products Administration, jointly held a video conference to deploy a one-year nationwide concentrated rectification of corruption in the pharmaceutical industry.
On July 25th, the draft amendment to the Criminal Law was submitted for review at the Fourth Session of the Standing Committee of the 14th National People's Congress. The draft increases the punishment for bribery crimes, adds provisions to punish corruption related crimes committed by internal personnel of private enterprises, and proposes that bribery in areas such as food and medicine, education and medical care should be punished severely.
Debon Securities analysis shows that last week, the pharmaceutical industry underwent a significant adjustment, ranking last among all industries. This is mainly due to the impact of medical anti-corruption policies, and there is currently a fermenting trend. We believe that healthcare anti-corruption is beneficial for the industry's medium to long-term development, but there is indeed some uncertainty in the short term. In terms of investment strategy, avoid the internal market in the short to medium term, and focus on areas with strong innovation, demand, and product strength in the medium to long term. Looking ahead, we believe that healthcare anti-corruption may be the last adjustment for the pharmaceutical sector: 1) People's demand for health will not decrease due to anti-corruption, the consumption attributes of medicine still exist, and healthcare expenditure continues to grow. From January to June 2023, healthcare expenditure increased by 18.2%; 2) The valuation is clear at the bottom. At present, the TTM valuation is about 26 times. Considering the impact of COVID-19, the downward space from the valuation bottom at the end of September 22 is limited; 3) Underallocation: According to the Q2 fund position analysis, the full fund position is around 7%. After a week of emotional release, we determine that the full fund pharmaceutical position may be within 5%, which is a serious underallocation; Overall, we believe that the pharmaceutical industry is avoiding policy impacts in the short term and is optimistic about innovative development in the medium to long term. Currently, the pharmaceutical industry has high odds and success rates, and it is worth focusing on:
![How big is the impact?, An anti-corruption storm is coming! Over 150 hospital deans and secretaries were investigated within the year by the Hubei Provincial Commission for Discipline Inspection | Medical | Secretary](https://a5qu.com/upload/images/473bb7dce1a771b6c48c11a174e332e5.jpg)
Bank of Communications International analysis shows that since the beginning of this year, the anti-corruption efforts in the medical field have been stricter than before, and the market is concerned about individual companies. However, under the supervision and punishment of multiple rounds of anti-corruption actions in the past, leading listed pharmaceutical/machinery companies have placed compliance operations in the top priority and formed a sales management system that relatively meets regulatory requirements. Therefore, we believe that in the short term, this round of anti-corruption will crack down on and eliminate some non compliant enterprises, but its impact on leading pharmaceutical and machinery companies with stricter compliance is limited; In the long run, this will further reverse the current situation of the pharmaceutical industry prioritizing sales over academia, reduce unreasonable competition, promote truly innovative products to stand out, and promote the healthy development of the innovative drug and device industry.