Shandong Xinhua Pharmaceutical Company Limited(000756)
And
Zhongtai Securities Co.Ltd(600918)
Reply to the feedback on the application documents for Shandong Xinhua Pharmaceutical Company Limited(000756) non-public offering of shares (Revised Version)
Sponsor (lead underwriter)
Address: No. 86, Jingqi Road, Jinan, Shandong
December, 2001
catalogue
Question 1 4 question 2 14 question 3 30 question 4 42 question 5 43 question 6 45 question 7 66 question 8 82 question 9 eighty-five
About Shandong Xinhua Pharmaceutical Company Limited(000756) anti public offering application documents
Reply to comments
China Securities Regulatory Commission:
According to the requirements of your commission’s notice on one-time feedback on the examination of administrative licensing projects of CSRC (No. 211868) (hereinafter referred to as “feedback”), Shandong Xinhua Pharmaceutical Company Limited(000756) (hereinafter referred to as ” Shandong Xinhua Pharmaceutical Company Limited(000756) “, “issuer”, “listed company” or “company”) together with Zhongtai Securities Co.Ltd(600918) (hereinafter referred to as ” Zhongtai Securities Co.Ltd(600918) ” or “sponsor”) and Beijing Jingtian Gongcheng law firm (hereinafter referred to as “the issuer’s lawyer” or “the applicant’s lawyer”) and ShineWing Certified Public Accountants (special general partnership) (hereinafter referred to as “the issuer’s accountant” or “the applicant’s accountant”) have implemented the questions raised in the feedback one by one, and now the relevant matters are replied as follows for your review.
Note:
1. Unless the context otherwise requires, the interpretation used in this feedback reply is consistent with the due diligence report on Zhongtai Securities Co.Ltd(600918) non public development of A-share shares in 2021.
2. There may be a tail difference between individual data and relevant summary data in the reply to this feedback, which is caused by rounding in data calculation.
3. The font in this feedback reply represents the following meanings:
Bold: questions listed in the feedback
Song typeface: reply to the questions listed in the feedback
Bold italics: modifications to the responses to the questions listed in the feedback
About horizontal competition. According to the application materials, in March 2020, the state owned assets supervision and Administration Commission of Shandong Province transferred Shandong Lukang Pharmaceutical Co.Ltd(600789) national shares to Hualu holdings free of charge, Shandong Lukang Pharmaceutical Co.Ltd(600789) became a subsidiary controlled by Hualu holdings, the controlling shareholder of the applicant, and belonged to the pharmaceutical manufacturing industry together with the applicant. The applicant is requested to supplement: (1) further explain whether the basis that does not constitute horizontal competition is sufficient in combination with product technology, substitution relationship, customer overlap, end users, etc.; (2) whether the controlling shareholder and actual controller have taken practical and effective measures to avoid horizontal competition; (3) whether there is any breach of commitment and whether it is in line with the requirements Guidelines for the supervision of listed companies No. 4 – commitments and performance of actual controllers, shareholders, related parties, acquirers and listed companies of listed companies; (4) Whether the raised funds will be used for new horizontal competition and whether they comply with the measures for the administration of securities issuance of listed companies and other relevant provisions; (5) disclose the opinions of independent directors on whether the applicant has horizontal competition and the effectiveness of measures to avoid horizontal competition. The sponsor and the applicant’s lawyer shall check the above matters and express clear opinions.
reply:
1、 Further explain whether the basis that does not constitute horizontal competition is sufficient in combination with product technology, substitution relationship, customer overlap, end users, etc
Shandong Lukang Pharmaceutical Co.Ltd(600789) and the company belong to the pharmaceutical manufacturing industry, but the two enterprises are significantly different in terms of main products, product technology, main customers and end users. There is no substitution relationship and competition relationship between the main products of the two sides, as follows:
(i) The issuer is significantly different from Shandong Lukang Pharmaceutical Co.Ltd(600789) in terms of main business and main products
The company is mainly engaged in the development, manufacturing and sales of chemical raw materials, preparations and pharmaceutical intermediates. Its main products are antipyretic and analgesic drugs, cardiovascular and cerebrovascular drugs and central nervous system drugs; Shandong Lukang Pharmaceutical Co.Ltd(600789) is mainly engaged in the production and sales of antibiotic products, including antibiotic API, preparation products and veterinary antibiotics. The comparison of the issuer’s main business and main products with Shandong Lukang Pharmaceutical Co.Ltd(600789) is as follows:
The company’s main business products are large, and the proportion of sales revenue of main products in 2020
Lukang medicine mainly produces and operates antibiotics, spectinomycin hydrochloride industrial salt, penicillin sodium
Human antibiotics, raw materials cefazolin sodium, piperacillin sodium and ceftriaxone 21.16%
Semi synthetic antibiotic (including hemipine sodium, L-amlodipine besylate, acetyl
Spiramycin, veterinary agricultural synthetic) spiramycin, etc
Antibiotics, biological
Technical drugs and preparations: piperacillin sodium for injection 0.5g, cephalosporin for injection
Antibiotic related products: traxone sodium, penicillin sodium for injection and cefaclor 42.19%
Agent, medicine midding capsule, amoxicillin capsule, etc
Body (antibiotic, veterinary anti tylosin, 10% tylosin phosphate premixed 32.68%
Class), medicinal arboretin, 80% Tamiflu
Fat, glucose and others – 3.97%
Barbital, polycarbofel calcium, levodopa
Ibuprofen, meloxicam, tramadol hydrochloride
Chemical prorabeprazole sodium, ethoxylamide, enoxazole 42.72%
Materia medica, analgin, aminopyrine, antipyrine
Isopropyl antipyrine, caffeine, Pipemidic Acid
Engaged in the development and preparation of theophylline, aminophylline, aspirin, etc
Manufacture and sale of chemical glimepiride tablets, rabeprazole sodium enteric coated tablets
API, preparation, cetirizine hydrochloride tablets, diltiazem hydrochloride tablets
Issuer’s pharmaceutical intermediate aspirin enteric coated sustained release tablets, compound aminolimba
(antipyretic and analgesic preparations: bituo injection, compound licorice tablets, piracet 43.39%)
And other chantan injection, vitamin C injection, grape
Calcium gluconate injection, etc; Pharmaceutical trading company
Affairs
Purpuric acid, Chloropropionyl chloride and pyrazolone in medicine 10.39%
Intermediate body
Other technical services, real estate leasing, property services, etc. 3.50%
Note: Shandong Lukang Pharmaceutical Co.Ltd(600789) the above information mainly comes from Shandong Lukang Pharmaceutical Co.Ltd(600789) announcement information and interviews with relevant personnel of the company.
（2） The issuer is significantly different from Shandong Lukang Pharmaceutical Co.Ltd(600789) in terms of main product technology
Since its establishment, the company has been mainly engaged in the research, production and sales of antipyretic and analgesic drugs. On the basis of long-term independent R & D technology accumulation, the company has cooperated with Qingdao University of science and technology, China Pharmaceutical University, Institute of pharmaceutical biotechnology, Chinese Medical College and other units to focus on Antipyretic and analgesic products, cardio cerebrovascular products, central nervous products and other fields, Formed a series of core technologies. The main production process of the company’s API is chemical synthesis. The specific chemical structure of the target product is obtained through several steps of chemical reaction between the starting raw material and other compounds, such as condensation, substitution, acylation, redox, etc., and then the final API product is obtained through one or more steps of refining, such as decolorization, recrystallization, etc.
Shandong Lukang Pharmaceutical Co.Ltd(600789) on the basis of introducing foreign strain technology, mainly through independent research and development of production technology and process, a series of technologies have been formed around anti infection, veterinary drug antibacterial and other products. The production process of antibiotic API is hair refining → finished product packaging. There are significant differences between this technology and chemical synthesis process.
The main product technologies of the issuer and Shandong Lukang Pharmaceutical Co.Ltd(600789) are the core technologies accumulated in the long-term production and sales process. Combined with the actual situation of their respective production and operation, relevant technologies have been formed in the main product fields. There are significant differences in the main product technologies and process flows between the two.
（3） There is no substitution relationship between the issuer and Shandong Lukang Pharmaceutical Co.Ltd(600789) main products
The efficacy of the issuer’s main products is antipyretic and analgesic. Antipyretic and analgesic drugs are a class of drugs with antipyretic and analgesic pharmacological effects, as well as significant anti-inflammatory and anti rheumatic effects. Antipyretic and anti-inflammatory drugs are mainly aimed at aseptic inflammation, commonly known as “anti-inflammatory drugs”. An important feature of these drugs is that they do not have drug resistance.
The Shandong Lukang Pharmaceutical Co.Ltd(600789) production of antibiotics is mainly produced by bacteria, fungi or other microorganisms in the process of life. Antibiotics are a kind of antibiotics, which are only suitable for inflammation caused by bacteria, but not for other types of inflammation, such as allergic inflammation (such as contact dermatitis), allergic inflammation (such as allergic asthma).
（4） The issuer is different from Shandong Lukang Pharmaceutical Co.Ltd(600789) main customers
In the last three years, the company’s main customers include Briggs & Stratton international, F. Hoffmann Laroche AG, Zibo Zhongsheng Pharmaceutical Co., Ltd., revenueland Inc limited, Jinan Tongke Pharmaceutical Logistics Co., Ltd., Galpharm International Limited, Qingdao fengyuantang Pharmaceutical Co., Ltd., Mitsubishi Corporation, Beijing Jingdong century Information Technology Co., Ltd, Shandong Lukang Pharmaceutical Co.Ltd(600789) main customers include North China Pharmaceutical Company.Ltd(600812) , Guangxi Liuzhou pharmaceutical, Sinopharm group, Shenzhen Lijian pharmaceutical, Sanjiu pharmaceutical, Jointown Pharmaceutical Group Co.Ltd(600998) , Shandong Haiwang sunshine Cino Pharmaceutical Co., Ltd. There is no overlap between the top five customers of the company and the top five customers of Shandong Lukang Pharmaceutical Co.Ltd(600789) . However, the top 20 customers of the company coincide with the top 20 customers of Shandong Lukang Pharmaceutical Co.Ltd(600789) , specifically enterprises in the pharmaceutical circulation field such as Shaanxi Bikang pharmaceutical, Sinopharm group, Jointown Pharmaceutical Group Co.Ltd(600998) and China Resources medicine. Mainly under the influence of the “two vote system” and other policies, pharmaceutical manufacturers generally sell drugs through circulation and distribution companies in the industry. The overlapping customers of the above two parties are mainly national or regional well-known large-scale pharmaceutical circulation enterprises, which are in line with the characteristics of the industry.
The company’s antipyretic and analgesic APIs are mainly for downstream manufacturers in this field, Shandong Lukang Pharmaceutical Co.Ltd(600789) APIs are mainly for downstream antibiotic manufacturers, and downstream manufacturers are different; The company’s preparation products are mainly for patients with fever, inflammation and other symptoms caused by non bacterial infection and patients with digestive system diseases, mainly for human use. Among the Shandong Lukang Pharmaceutical Co.Ltd(600789) main preparation products, veterinary antibiotics account for a high proportion, and human antibiotics are mainly for patients with relevant symptoms caused by bacterial infection. There are great differences between the indications and the issuer’s products.
（5） The issuer is significantly different from Shandong Lukang Pharmaceutical Co.Ltd(600789) in terms of business positioning and development direction
According to the business development plan, Shandong Xinhua Pharmaceutical Company Limited(000756) is mainly positioned in the development direction of antipyretic and analgesic, cardio cerebrovascular, central nervous system and digestive system drugs; Shandong Lukang Pharmaceutical Co.Ltd(600789) is mainly located in the development direction of antibiotics, such as antibiotics, veterinary antibiotics, new anti infection, anti viral (treatment of hepatitis B and other diseases), agricultural drugs and so on. The two companies have different business orientation and development direction, and there is no competition relationship.
To sum up, Shandong Lukang Pharmaceutical Co.Ltd(600789) has no horizontal competition with the company.
2、 Have the controlling shareholders and actual controllers taken effective measures to avoid horizontal competition
On June 25, 2021, Hualu holdings, the controlling shareholder of the company, issued the letter of commitment on avoiding horizontal competition. The specific contents of the commitment are as follows:
“1. There is no horizontal competition between the company and its affiliated enterprises and Shandong Xinhua Pharmaceutical Company Limited(000756) ;
2. During the period of being the controlling shareholder of Shandong Xinhua Pharmaceutical Company Limited(000756) , the company takes necessary and possible measures according to law to avoid business or activities with horizontal competition and conflict of interest with Shandong Xinhua Pharmaceutical Company Limited(000756) main business, and urges other enterprises controlled by the company to avoid business or activities with horizontal competition and conflict of interest with Shandong Xinhua Pharmaceutical Company Limited(000756) main business.
The company has the ability to fulfill the above commitments. This letter of commitment shall take effect immediately after being signed by the company and shall continue to be effective during the period when the company has control over Shandong Xinhua Pharmaceutical Company Limited(000756) . ”
In order to effectively avoid horizontal competition, Hualu holdings further issued the following commitments on August 9, 2021:
“1. There is no horizontal competition between the company and other enterprises controlled by the company and Shandong Xinhua Pharmaceutical Company Limited(000756) ;
2. During the period of being the controlling shareholder of Shandong Xinhua Pharmaceutical Company Limited(000756) , the company takes necessary and possible measures according to law to avoid horizontal competition and interests with Shandong Xinhua Pharmaceutical Company Limited(000756) main business
