Lifetime ban! Several subsidiaries of Sinopharm, heavily fined

Banned from the market for life!

“Two subsidiaries of Sinopharm have been heavily fined.

In the past month, the Military Procurement Network has intensively issued multiple “Notice Announcements of Information Awareness”. More than 480 enterprises have been suspended from military-wide procurement qualifications due to violations in procurement activities, among which 61 are medical-related enterprises. It is worth mentioning that several more subsidiaries under Sinopharm have been severely punished.

What is even more severe is the “joint liability punishment” mechanism in the military procurement market: once the punishment is implemented, not only will the involved company be permanently prohibited from entering, but other enterprises under the name of its legal representative will also be restricted simultaneously.

Colluding in bidding and repeated violations!

“Sinopharm Group” subsidiaries have been punished one after another

Coincidentally, in addition to these two enterprises that are proposed to be “permanently banned” from participating in military procurement activities, there are also two subsidiaries under Sinopharm that have been suspended from participating in military procurement activities due to irregularities. They are Sinopharm Medical Devices (Xuzhou) Co., Ltd. and Sinopharm Holding Chongqing Taimin Pharmaceutical Co., Ltd.

Putting aside these enterprises that are still in the penalty public notice period, according to the inquiry of the military procurement dishonesty list, there are currently 26 subsidiaries of the “Sinopharm system” on the “blacklist” of the military procurement market, among which there are some large subsidiaries with astonishing annual revenues. In terms of the intensity of penalties, the penalty period is generally 2-3 years, involving procurement fields of multiple military services such as the Navy, Air Force, and Joint Logistics Support Force.

For now, among the four major pharmaceutical distribution giants, the subsidiaries of Sinopharm Group have the most prominent violations in the military procurement market.

Judging solely from the performance in the military procurement market, compared with Shanghai Pharmaceuticals, China Resources, and Jointown, the subsidiaries of Sinopharm have frequently been involved in illegal activities such as bid rigging and collusive bidding. This not only damages the reputation of Sinopharm Group but also has a negative impact on the fair competition environment of the market.

Behind this series of problems may lie the imperfection of the internal management mechanism and insufficient emphasis on compliant operations, leading some subsidiaries to take desperate risks for short-term interests.However, it also reflects that there are non-negligible loopholes in the compliant operation of Sinopharm.

The rectification of procurement in military hospitals is still ongoing!

For now, the rectification and governance of the military procurement market are continuing to deepen. In addition to subsidiaries of the Sinopharm Group, a number of medical device companies have recently faced severe penalties for procurement violations.

· On September 24, Shaanxi Aikang Medical Devices Co., Ltd. and Shaanxi Haimo Medical Information Technology Co., Ltd. were permanently prohibited from participating in the procurement activities of the Air Force’s materials, engineering, and services due to their suspected collusive bidding in an Air Force procurement project.

It is well known that since the military procurement website launched the “Material Service Procurement Rectification and Governance Zone” to collect problem clues, a special inspection campaign targeting “collusive bidding and false bidding” has been launched across the entire military.

· According to the data released in the latest “Report on the Development of China’s Military Medical and Health Undertakings”, by the end of 2024, the total number of hospitals within China’s active military system had increased to more than 130.

The equipment procurement market composed of more than 100 military hospitals is less affected by the centralized procurement policy in terms of procurement demand, and has a stable payment collection cycle. This unique advantage makes the military procurement market a must-compete place for medical device enterprises.

However, by the end of 2024, nearly 500 medical device enterprises in the medical field had been included in the dishonesty list due to violations in military procurement. From the perspective of violation types, collusive bidding and providing false materials are the main causes, reflecting that some enterprises still have a fluke mentality of “seizing the market through improper means”.

Nowadays, under the strict constraints of the “dynamic supervision + severe punishment for dishonesty” mechanism, in the face of the highly attractive “cake” that is the military procurement market, any opportunistic behavior will find it difficult to escape the fate of being eliminated by the market.

China is encouraging China end uses for more domestic products in latest years. Thus, more and more overseas manufacturers are planning localization in China. BradyKnows localization team has extensive experiences in facility establishment, audit, supplier evaluation, manufacturing, registration, and marketing in China. Pls feel free to let us know any questions on China entry via info@bradyknowsmedical.com

Source：Medical Device Distributors Alliance

Translated & edited：Bradyknown