Wang Xinyue,Lin XiangpengSun XiaohuaWang Shuling

(1.School of Business Administration,Shenyang Pharmaceutical University,Shenyang 110016,China;2.Sinopharm holdings Shenyang Co.,Ltd.,Shenyang 110000,China)

Abstract Objective To study the policies of integrating medical resources and centralized drug procurement in China from 2018 to 2020,and to provide a reference for large pharmaceutical commercial companies to select partners.Methods Analytic hierarchy process (AHP) and fuzzy synthesis evaluation method were used to establish the index evaluation system and assign values to each index.Results and Conclusion According to the questionnaire survey data,the weight of each evaluation index was determined,and the evaluation results were obtained by using the fuzzy synthesis evaluation method.The selection of production enterprises by large pharmaceutical commercial companies includes five first-level indicators and 11 second-level indicators.They can provide a favorable reference for the selection of production enterprises by large pharmaceutical commercial companies against the background of complex pharmaceutical industry.

Keywords:large pharmaceutical commercial company;selection method;AHP;fuzzy synthesis evaluation method

1 Research background and significance

1.1 Research background

In recent years,in order to control medical insurance capital expenditures,China’s government has adopted centralized drug procurement.The prices of drugs in the list of medical insurance have become lower.The situation of the big pharmaceutical commercial companies that take the advantage of distribution to obtain profits becomes worse.As a large-scale pharmaceutical commercial company,how to ensure profit based on lowering drug prices is particularly important.In March 2018,the state established the National Healthcare Security Administration of the People’s Republic of China.In July of the same year,the National Healthcare Security Administration launched anti-cancer drug medical insurance negotiations.In October of the same year,the National Healthcare Security Administration issued “Notice on Class B Scope of Work-Injury Insurance and Maternity Insurance Drug Catalog”.According to relevant information,the average prices of 17 negotiated drugs dropped by 56.7% compared with the average drug retail price.Besides,the standard price paid for most imported drugs after negotiation was about 36% lower than the market price in neighboring countries or regions.In December 2019,the National Healthcare Security Administration clearly deepened the reform of the centralized drug procurement system,taking “quantity procurement,volume-price linkage,and integration of recruitment and procurement” as the goal to make drug prices return to a reasonable level.Therefore,the average price reduction ranges from 25% to 95%from the first batch to the fourth batch in the “4+7”centralized drug procurement.These policies have led to lower drug prices.Consequently,it is more difficult for large pharmaceutical commercial companies to increase their profits.

In order to promote the development of the pharmaceutical industry,improve the innovation capabilities of domestic manufacturers,the “National Drug Safety of Twelfth Five-Year Plan” took drug consistency evaluation as a drug quality requirement.Therefore,the government requires that the quality and efficacy of generic drugs should be consistent with those of the original drugs.The quality of generic drugs can meet the standards of the original research drugs has always been an important goal of drug production enterprises,which is also the key to survival and competition.For a potential manufacturer,product quality is the lifeline of the enterprise.Drug manufacturers must put drug quality first to avoid being eliminated from the market.

1.2 Research significance

For pharmaceutical commercial companies,the drug procurement process is closely related to corporate strategy,and drug procurement will directly affect the company’s earnings.Therefore,pharmaceutical commercial companies should carry out the dual coordination of suppliers and manufacturers in their business processes.Due to the “two-invoice system”,the state has reduced drug circulation links to cut the price of drugs.Therefore,the production enterprises have gradually become the main suppliers of pharmaceutical commercial companies.Selecting production enterprises as the business partner is an important part of the drug procurement management.This method will reduce the operating cost and increase the competitiveness of the commercial companies.Therefore,an objective evaluation and selection of production enterprises will have a great impact on the development of pharmaceutical commercial companies.

2 Theoretical research and literature review

In domestic research,Song Yuanfang,et al.[1]pointed out some problems in the book“Pharmaceutical Logistics and Health Care Supply Chain Management”.For example,there were a large number of pharmaceutical circulation companies with insufficient industry concentration.The wholesale drug prices were unreasonable due to active endpharmacies,and hospital capital occupation was high.Mou Rui,et al.[2]mentioned in the “Supplier Evaluation and Selection Decision Model Based on the Combination of SCM and ERP” that the first task in supply chain management was to choose the right suppliers.A modern enterprise must have a complete supplier evaluation and selection system.Yang Yang[3]mentioned in the article “Research on Supplier Selection and Optimization of M Company” that procurement was the core strategy of an enterprise,and a good supplier management plan could help enterprises carry out effective cost control and risk control to achieve profitability.Liao Cheng[4]used the Analytic Hierarchy Process (AHP) to establish a supplier evaluation system and selection model in“Evaluation and Selection of HK Company Suppliers Based on AHP” and discussed the limitations of the AHP.There are many studies on supplier selection methods in Chinese companies,but few are on the selection of production enterprises for pharmaceutical commercial companies.Therefore,how to establish a suitable selection mechanism for production enterprises is the key to increase the profits of pharmaceutical commercial companies,reconstruct the upstream supply chain,and improve corporate competitiveness and brand image.

In foreign studies,the quality function deployment(QFD) method is applied to the selection of production enterprises,and the fuzzy AHP is used to determine the importance of weights in QFD.The fuzzy AHP can more accurately reflect the needs of customers and provide an effective decision-making plan for selecting production enterprises by the pharmaceutical companies.There are many foreign models based on supplier selection,which can provide a multi-angle reference for the selection of production enterprises in this article.It can build a model of selection methods for production enterprises based on actual conditions.

3 Constructing the selection method of production enterprises based on AHP

3.1 Introduction to AHP

The AHP is used to assign values to the selection and evaluation system of pharmaceutical commercial companies for production enterprises.The AHP is a combination of qualitative and quantitative analysis proposed by the American operations researcher TL Saaty in the 1970s.As a multi-criteria decision analysis method,AHP can uniformly deal with the qualitative and quantitative factors in decisionmaking,which has the advantages of better systemic nature,simplicity and practicality[5].

3.2 The evaluation index model of production enterprises made by pharmaceutical commercial companies

The advantages and deficiencies of the evaluation model of production enterprises are analyzed through combing the literature on supplier evaluation methods and supplier management.Then,based on the actual situation of pharmaceutical distribution companies,a comprehensive evaluation index system is constructed by using the hierarchical method.The first level is the target level,and the second level is composed of five first-level indicators such as business scale,economic benefits,capital occupation,policy standards,and time efficiency.The third level has 12 secondary evaluation indicators.

Table 1 shows the structural hierarchy of the evaluation index system for the selection and evaluation of production enterprises by the pharmaceutical commercial companies.The second column in the table is the evaluation angle,and the third column is the evaluation index based on the comprehensive evaluation angle and data.

Table 1 Evaluation index of production enterprises made by large pharmaceutical commercial companies

3.3 Interpretation of indicators

The meaning and calculation formula of the evaluation index are as follows.

(1) Business scale.The business scale reflects the business scope of the production enterprise.The scale mainly includes two parts:customer classification and sales amount.Among them,customer classification reflects the number of terminals covered by production enterprise,referring to the number of drugs sold to health centers,pharmacies,individual clinics and other terminals.It indicates the market coverage of production enterprise.The sales amount refers to the sales of drugs from different suppliers,which can reflect the sale scale of the production enterprise.

(2) Economic profit.Income is the embodiment of asset value,and it is the profit obtained by production enterprise in the process of drug sales.The income mainly includes actual gross profit and compensation rebate.Among them,the actual gross profit is the balance of the revenue of the drug minus the cost,which needs to be accumulated by the manufacturer.Compensation is a refound statement reached between the pharmaceutical commercial company and the production enterprise.

(3) Capital occupation.Capital occupation refers to the running funds of pharmaceutical circulation enterprises,and some of the funds will be occupied.

(4) Policy standards.Due to the special nature of drugs,the state stipulates certain drugs are taken as innovative ones.The products of national centralized drug procurement are commonly used ones that can meet the basic medical and health needs.Therefore,the quality of drugs should be considered by the production enterprise.The above three evaluation indicators are the sum of the overall regulations of the drug.

(5) Time efficiency.The index corresponding to time efficiency is the average out of stock times or days and the number of days in transit,which need to be summed and averaged.

4 Using fuzzy synthesis evaluation method to carry out system evaluation and analysis

4.1 Introduction to fuzzy synthesis evaluation method

The fuzzy synthesis evaluation method was developed by Zade,a cybernetic expert from the University of California,after years of painstaking research.The basic principle is to determine the factor set and evaluation set of the judged object first,and then the weight of each membership and its membership vector is calculated to obtain the fuzzy evaluation matrix.Finally,the fuzzy evaluation matrix and the weight vector of the factors are calculated.Normalization processing is performed to obtain a comprehensive result of fuzzy evaluation.The key factors and comments are generally vague.The main steps of the fuzzy comprehensive evaluation method include the followings such as determining the evaluation factors,the evaluation level,constructing the evaluation matrix,determining the fuzzy weight A of the evaluation factors,obtaining the fuzzy comprehensive evaluation result vector B through synthesizing A in the evaluated R,and analyzing the result vector of the fuzzy comprehensive evaluation[6].

4.2 Representation of the evaluation index system

Suppose the total evaluation index set for selecting production enterprises isU,thenUcontains five first-level indicators,namelyU=｛U1+U2+U3+U4+U5｝.In the same way,the factor level of the secondary indexUmk=｛Um1,Um2,… Umn｝(m=1,2,…,n) is set for the comprehensive evaluation matrix.

4.3 Determination of the weights of evaluation indicators

The G1 method was proposed by Professor Guo Yajun of Northeastern University,which improves the AHP method without the need for consistency check[7].In the index concentration,the importance of each index is sorted in order,and the relational expression is obtained.The degree of importance between two adjacent indicatorsxk-1andxkcan be usedrk=(wk-1)/xk.k=m,m-1,…,3,2 to present.Weight coefficient isw m=wk-1=rkwk(k=m,m-1,…,3,2).rkassignments are as follows (Table 2).

Table 2 Reference table of rk assignment

4.4 Formulation of grading standards for evaluation indicators

A comment setV=｛5,4,3,2,1｝is set up,among which 1,2,3,4,and 5 represent the degree of pros and cons of the operation of the drug supply chain respectively.They mean very poor,poor,qualified,good,and excellent.Then the evaluation indicators can be quantified.

4.5 Solution and result calculation of evaluation matrix for selecting the production enterprises

The evaluators evaluate and score each evaluation index of the drug supply chain according to the setting of the comment set,and the evaluation vector of the evaluation index can be obtained,and then the evaluation matrix can be obtained.

According to the evaluation matrix,the weightWof the evaluation index and the comment vectorV,we can obtain：

Fuzzy evaluation value of secondary indexEij=Wij * Rij * V.

Fuzzy evaluation value of first-level indexEi=Wi * Ri * V.

According to the calculation,the evaluation value of different index factors can be obtained,and the problems in the selection process of production enterprises can be found.Then some corresponding countermeasures can be given for these problems,so as to optimize the selection of production enterprises.

4.6 Measurement and scoring of the evaluation index system

An evaluation index system and evaluation model have been established in this paper for selecting production enterprises by large pharmaceutical companies.Based on the results of the questionnaire survey,the evaluation scores of each evaluation index are calculated through the scoring of each evaluation index by some experts.Electronic questionnaire surveys were distributed to the purchasing personnel (purchasers and purchasing supervisors) of large pharmaceutical commercial companies.A total of 35 questionnaires were distributed and 30 were returned.The recovery rate was 85.7% and the effective questionnaires were 100%.After sorting out the questionnaire data,the membership degree of each evaluation index was obtained,as shown in Table 3.

Table 3 Membership degree of the selection index of production enterprises by large pharmaceutical commercial companies

Based on the G1 method,the importance of the indexUiis ranked first,and the order relationship is set as positive order.Then,the relative importance ratio is determined,namelyr2=1.2,r3=1.2,r4=1.2 andr5=1.4.They are calculated according to the above formulaw1=0.284 1,w2=0.197 3,w3=0.236 8,w4=0.164 4 andw5=0.117 4.In the same way,the weights of the second-level indicators are calculated.Since the third-level indicators have many types and the importance of each factor is similar,it is assumed that they have the same weight A.The specific results are shown in Table 4.

Table 4 Weight of primary and secondary indicators

According to the previously calculated evaluation index vector and evaluation weights,the fuzzy evaluation scores of the first and second levels are calculated,as shown in Table 5.

Table 5 Evaluation scores of primary and secondary indicators

From the above evaluation scores,it can be seen that the most important factor in the selection method of production enterprises by large pharmaceutical commercial companies is the scale of operation,followed by economic benefits,capital occupation,policy indicators,and finally time efficiency indicators.Therefore,the large-scale pharmaceutical commercial companies mainly consider the business scale for selecting production enterprises.

5 Conclusions and recommendations

The research results show that there are 5 factors in the first-level indicators,namely,business scale,economy profit,capital occupation,policy standards and time efficiency.The evaluation scores of the four indicators are greater than 3,which is between qualified and good.Time efficiency indicators below 3 mean that they are all between poor and qualified.Except for the factors of the amount of inventory,the quantity of products,the number of days for out of stock,and the number of days in transit,the other evaluation indicators of the secondary indicators are above qualified.Because the first-level indicators are relatively broad,this article focuses on the 4 secondlevel factors with poor scoring results.Combined with the evaluation index for selecting production enterprises,some countermeasures are put forward.

5.1 Paying attention to the dynamics of corporate inventory from the perspective of the supply chain system

In view of inventory,corporate management or related departments need to analyze the current inventory of products carefully to know the product supply dynamics and inventory structure.For the inventory management problem of enterprises in the supply chain,if the organizational structure of the enterprise does not change accordingly,it is difficult to solve the problem of inventory management when only the information system is adopted.Companies participating in the supply chain should assign the functions of their warehouse management to the general warehouse management of the supply chain.Only by surpassing the inventory management structure of individual enterprises can they fully enjoy the efficient coordination effect of the supply chain on inventory management.In inventory management,the original functional management is transformed into process management,which reduces the level of inventory management in the entire supply chain.Therefore,it can improve the efficiency of inventory management of the entire system.In view of the problem that the warehouse management department may cause damage to the interests of some companies after handing over their management authority,the method of mutual shareholding of supply chain companies can be taken to solve the problem of interest and ensure the benefits of different companies after unified inventory management,such as the validity period of products,the main sales channels,and the products near the expiration date.Through analysis and summary of the dynamic trend of inventory,we can effectively respond to changes in the inventory requirements of production enterprises and listed companies.

5.2 Establishing a quantity procurement mechanism and a quantity procurement group

A “4+7” national centralized drug procurement mechanism should be established to promote drug price reduction and quality improvement.First of all,centralized drug procurement reduces the cost of enterprises through multiple channels,including the cost for entering the hospital,medical institutions committing to repay in time,shortening the payment cycle and financing costs of pharmaceutical manufacturers,and cutting the promotion costs of production enterprises.Secondly,through the large quantity for low price method,we can ensure that after the price of drugs is reduced,the revenue of the pharmaceutical manufacturer will not decrease.When the drug manufacturer bids,the purchase announcement has clarified the volume of each product.The purchase volume shall be declared based on 60%-70% of the total amount of the drug used by all public medical institutions in the pilot area in the previous year.The variety is 30%-35% of the national market use of drugs,but companies that have not won the bid will only be able to compete for the remaining market share,thereby increasing the enthusiasm of pharmaceutical companies to bid.Thirdly,the medical insurance payment method should be reformed.No less than 30% of the special procurement budget should be prepaid to medical institutions in advance,and a medical insurance fund payment mechanism of total prepayment,surplus retention,and over-expenditure sharing should be established.At the same time,the use of selected drugs is included in the performance evaluation of medical institutions and medical staff to improve the enthusiasm and binding force of hospitals.The above-mentioned measures work together to promote the liberation of drug manufacturers from the disorderly competition of sales with commission.They can devote more energy to improving the quality of drugs and drug research and development,which can reduce drug prices and improve quality.Meanwhile,pharmaceutical companies should pay attention to the state’s purchasing dynamics and predict the information of next batch of products,such as the amount of special insulin or special biological drugs.Besides,they must analyze the number of consistent products adopted by the existing cooperative enterprises.When they get in touch with the above-mentioned companies in a targeted manner,they can formulate a regular communication plan to decide in advance and solve the problem of information asymmetry.

5.3 Establishing an inspection system for the logistics and distribution of production enterprises

The industrialization of the logistics distribution system refers to the centralization of logistics enterprises and the formation of a complete logistics industry,which can realize the scale benefits of logistics and zero inventory for production enterprises.The core of realizing the industrialization of logistics distribution is to establish an efficient logistics distribution center.However,because the construction of the logistics distribution system is a high-cost business,production enterprises should hand over the logistics and distribution services to a third-party logistics company,which will greatly reduce the cost of production enterprises.The logistic distribution days are managed in detail,especially the emergency handling capacity,and the normal delivery in winter,which will make the entire logistics distribution system traceable and predictable,effectively alleviating the inventory pressure of large pharmaceutical commercial companies.Therefore,it can improve the efficiency of capital operations.

Based on the fuzzy evaluation method,this paper constructs an evaluation model for the selection methods of the production enterprises by large pharmaceutical commercial companies.According to the results of the questionnaire,the evaluation scores of each indicator are obtained.For factors with lower evaluation scores,by increasing the weight of the selection method,we can effectively improve the quality of enterprise management and optimize the operation of large pharmaceutical commercial companies.