With the spread of COVID-19 worldwide and the acceleration of the population aging in China, the domestic pharmaceutical market is changing from "emphasizing drugs over devices" to "balanced development of drugs and devices". The market gap between medical equipment and drugs is gradually narrowing. In the future, the development potential of China's medical equipment market is huge, and the per capita medical equipment cost is expected to grow steadily.

        In this interview, we invite Huang Jian, General Manager of Sichuan Neptunus, to introduce the business model of Sichuan Neptunus, interpret the current situation of medical equipment sales industry and provide some insights into contract sales organization (CSO).

 

 

       Huang Jian, General Manager of Sichuan Neptunus Medical Technology Co., Ltd. (hereinafter referred to as "Sichuan Neptunus"). Sichuan Neptunus, a subsidiary of Neptunus Biology Holdings, is the core enterprise of Neptunus Biology's medical equipment business in Southwest China. Its business system covers hospital direct selling, commercial distribution, centralized distribution, third-party logistics, hemodialysis center and other medical services. It is a large-scale trading company integrating the sales, wholesale, warehousing + distribution + third-party logistics of medical equipment, consumables and equipment.

 

 

       In the past, there was precise division of work between dealers and manufacturers in the circulation of medical equipment. The former was responsible for selling the products of agents to hospitals, while the provision of services mainly falls on the supply chain, including purchase, delivery, invoicing, collection, etc. The manufacturers were responsible for the academic promotion of products before sales, as well as after-sales operation supporting and maintenance services.

 

 

       Now, the implementation of a series of medical reform measures such as two-invoice system and volume-based procurement will continue to keep the profit margin of dealers and manufacturers down, which is also a challenge to their after-sales services.

 

       In volume-based procurement, the state convenes manufacturers to bid according to the statistical quantity of bulk purchases. While realizing small profits but quick turnover, it can still guarantee a reasonable profit, but the profit margin cannot be guaranteed, Huang Jian said.

 

       For dealers in the medical industry, in the past, they only needed to provide targeted agency services for a certain product in several hospitals, and the profit rate obtained was enough to support the operation and development of the enterprises. However, under the current volume-based procurement environment, the profit margin becomes lower, and the amount of profit can be achieved only by completing the full sales volume. Therefore, this associated response also prompted dealers to help manufacturers distribute their products in more hospitals for the purpose of occupying a higher market share.

 

  

       As a business platform with centralized distribution capacity, Sichuan Neptunus, thanks to its advanced software and hardware strength in the industry, tries its best to cooperate with the implementation of national policies and systems. It is one of the first enterprises to obtain the third-party warehousing and logistics service qualification in Chengdu High-tech Zone, with a warehouse area of more than 4000 square meters.

 

       For small enterprises, it is costly to build standard independent warehouses that meet the standards, but the utilization rate is low. In order to meet the storage and distribution needs of small circulation enterprises in the region, Sichuan Neptunus provides third-party services to help solve their urgent needs in logistics and warehousing.

 

        When talking about the competition with the same type of medical equipment circulation enterprises, Huang Jian admitted that benign competition can stimulate market vitality, and in the face of domestic pharmaceutical circulation giants such as Sinopharm, Shanghai Pharmaceutical and other central enterprises, Sichuan Neptunus takes the road of differentiated operation.

 

        First, large circulation enterprises have famous brands and good reputation, and have been recognized by a wide range of medical institutions nationwide. Taking Sinopharm as an example, he explained that "Sinopharm mainly takes the centralized distribution mode as the focus to provide one-stop medical services. Other enterprises distribute their products to hospitals through the centralized distribution platform of Sinopharm, and the hospitals issue invoices to the enterprises."

 

        If Sichuan Neptunus follows a similar business model, it can neither break through nor highlight its own advantages and capabilities. For this reason, Sichuan Neptunus takes "direct selling  +  distribution" as its main business model, and with the support of a direct sales team composed of nearly 100 people, it serves the clinic to carry out product promotion and conference support, aiming at its own service orientation.

 

  

 

       Founded in 2018, Sichuan Neptunus is a subsidiary of Neptunus Biology Holdings, and it is dedicated to the construction of a circulation platform for medical equipment. Sichuan Neptunus entered the medical circulation industry as a product agent for foreign enterprise products without direct selling business. After nearly four years of development, its business has covered the supply and service of medical equipment in all departments of the hospital, and the sales of the company this year is expected to reach 1 billion.

 

 

 

       In Huang Jian's view, it is the tide of accelerating medical reform in China that accelerates the integration of enterprises with small scale and single business layout under volume-based procurement, which has created development dividends for private medical circulation enterprises such as Sichuan Neptunus.

 

      What are the reasons behind many medical equipment manufacturers choosing Sichuan Neptunus to provide services?

 

        Firstly, as a dealer of medical equipment in Sichuan, Sichuan Neptunus, benefiting from its abundant sales channels and legal compliance, has formed a closed-loop service route from purchasing to entering hospital and outbound delivering, and accumulated a certain service reputation;

 

       Secondly, the specialized marketing team of Sichuan Neptunus can accurately match the needs of hospitals, match products, and provide a series of supporting resources and overall solutions.

 

        Huang Jian said that when a number of different medical equipment products are promoted in hospital, the products that are most easy to promote are often the best-selling products, while the products with great promotion difficulty and potential market value are left, resulting in poor performance of sales data. As a result, not only the sales tasks set by the manufacturer can not be completed, but also the market value of the products can not be brought into play, resulting in the waste of the agency right obtained by the company through great efforts in the early stage.

 

        In order to avoid this phenomenon, Sichuan Neptunus reformed its sales structure. By analyzing the products it represented one by one, it split the sales team according to the products with different market positioning types, and formed professional sales teams focusing on subdivided product types to provide the most accurate sales services.

 

        So far, Sichuan Neptunus has established several precision sales teams, each of which has a clear positioning and sound organizational structure, and has formed a talent echelon including manager, supervisor, salesmen and logistics service personnel. Thanks to the early efforts, the business of Sichuan Neptunus has developed rapidly.

 

        Apart from this, Sichuan Neptunus has also expanded product packaging services for professional departments.

 

 

 

       Jian Huang took interventional therapy as an example. Besides professional clinicians and experts, this kind of surgical treatment also needs the support of specific products, and there are certain hardware requirements for the service organizations that carry out the treatment. Nowadays, many district and county-level hospitals are carrying out new surgical methods to strive for the promotion to tertiary class B general hospitals. Sichuan Neptunus can provide expert resources, product resources and manufacturer resources for these hospitals to carry out new treatment programs, form an information channel covering the whole service process, and help some new programs to be successfully implemented in local hospitals.

 

       Now, the service network of Sichuan Neptunus not only serves major mainstream hospitals, but also covers many districts and counties in Sichuan, forming a long-term development cooperation model.

 

 

 

       In European and American countries, CSO services have been popular in the biomedical industry for more than ten years. Due to the differences of national conditions, it was until the issuance of the "two-invoice system" in China, CSO was able to highlight its advantages in China. Due to the fact that in the early days, many enterprises used the name of CSO to issue invoices such as "consulting management services", "medical science and technology consulting", "information technology" , etc., which were inconsistent with the actual business activities, and participated in illegal acts such as commercial bribery together with pharmaceutical enterprises, many people still regard CSO as a non-compliance gray industry.

 

        However, Huang Jian has different opinions. He pointed out that the emergence of CSO conforms to the law of market development, and its service concept is completely reasonable and compliant. The whole sales process is divided into many nodes and stages. When a manufacturer or dealer is in the start-up stage, the business scale is small and the team can digest it independently. However, when the enterprise grows, the scale will increase, and the business volume will also increase rapidly, which makes the internal team unable to satisfy all the customers' needs in time. At this stage, CSO, as a third-party sales outsourcing service provider, can effectively help these enterprises alleviate or help them expand their business.

 

 

 

       In the future, Sichuan Neptunus will continue to improve the specialization of its clinical services, and improve the team service ability in logistics distribution. Meanwhile, it is also carrying out cooperation with some CSO enterprises.

 

       Firstly, we hope to take the lead in introducing a number of international and domestic excellent products first with the help of the cooperative relationship between CSO enterprises and upstream manufacturers;

 

       Secondly, CSO enterprises are expected to improve customer experience in social etiquette, sales skills and product academic promotion through professional training for salesmen, so as to further help manufacturers effectively conduct academic promotion and marketing planning.

 

        However, at present, many CSO companies cannot fully cover the functions of CSOs. Huang Jian sincerely hopes that in the future, the CSO industry can be further standardized through rectification, truly build a marketing platform with wide coverage and strong specialization, so as to help manufacturers introduce new products and let dealers focus more on their own strengths.

 

How circulation enterprises win in competition

It depends on fine division of work and

management to win the recognition of upstream and downstream.

 

       Huang Jian said that since the threshold of trade is lower than that of drug R&D, if there are no marketers to complete the marketing after obtaining the regional agency right of a product, it is difficult for the product to enter hospitals, let alone follow-up services. At this point, the importance of the CSO team's assistance becomes prominent.

 

       In his opinion, after eliminating all non-compliance links, the national volume-based procurement will definitely leave a certain profit space for services such as medical equipment academic promotion and expert consultation. Only in this way can the whole service chain run smoothly. As far as the current domestic medical equipment service situation is concerned, Huang Jian feels that the mind-set of ordinary people is changing rapidly, and their acceptance of new technologies and products of medical equipment is generally high. He also hopes to introduce more advanced technologies and products to the domestic market through the platform of Neptunus Biology, so as to bring better diagnosis and treatment experience services to patients.

 

       The medical industry is related to the national economy and the people's livelihood. There are preferential policies in many areas of China. Comparatively speaking, the support in Chengdu for medical equipment circulation enterprises is not very strong. He also hopes that in the future, the government can design policies more scientifically, and on the premise of reasonable compliance, give corresponding preferential subsidies to help enterprises develop better and effectively conduct the work concerning livelihood projects.