China’s largest pharmaceutical industry group is united with the leading companies of well-known traditional Chinese medicine, but the views of the industry are mixed
On April 7, Shanghai Pharmaceuticals Holding Co.Ltd(601607) announced that the issuance and underwriting summary and relevant documents of the company’s fixed increase projects had been filed and approved by the CSRC.
According to the disclosure, Shanghai Pharmaceuticals Holding Co.Ltd(601607) issued about 187 million shares and 666 million A-Shares to Shanghai Tandong Enterprise Consulting Service Co., Ltd., a wholly-owned subsidiary of Shanghai Shangshi, the controlling shareholder, and Yunnan Baiyao Group Co.Ltd(000538) strategic investors, respectively, at a non-public offering price of 16.39 yuan / share, with a total raised capital of about 13.975 billion yuan.
Among them, Shanghai Tandong and Yunnan Baiyao Group Co.Ltd(000538) respectively subscribed 3.065 billion yuan and 10.91 billion yuan, and the lock-in period of the issued shares was 36 months.
Shanghai Pharmaceuticals Holding Co.Ltd(601607) said that it would use 3 billion yuan to repay the company’s debts, and the rest would be used to supplement working capital.
Although the two pharmaceutical giants joined forces, the market response was flat. At the close of the day, Shanghai Pharmaceuticals Holding Co.Ltd(601607) a shares were reported at 21.97 yuan / share, down 6.79%; Hong Kong stocks fell 6.27% to HK $13.76 per share.
jointly Yunnan Baiyao Group Co.Ltd(000538)
According to the announcement, as early as May 12, 2021, the fixed increase plan disclosed by Shanghai Pharmaceuticals Holding Co.Ltd(601607) intends to raise no more than 14.384 billion yuan from Shanghai Tan Dong and Yunnan Baiyao Group Co.Ltd(000538) as strategic investors, of which Yunnan Baiyao Group Co.Ltd(000538) intends to subscribe no more than 11.229 billion yuan.
According to the disclosure of this fixed increase, it is expected that Yunnan Baiyao Group Co.Ltd(000538) will hold Shanghai Pharmaceuticals Holding Co.Ltd(601607) 1802% of the shares after the completion of this non-public offering of a shares; Shanghai Tandong is a wholly-owned subsidiary of Shanghai Shangshi, the controlling shareholder of the company. Therefore, Shanghai Tandong’s subscription of the company’s shares constitutes a related party transaction.
The completion of this offering will not lead to changes in the company’s control. Shanghai real estate group, Shanghai real estate and Shanghai Pharmaceutical Group are still the controlling shareholders of the company, and Shanghai SASAC is still the actual controller of the company; The Yunnan Baiyao Group Co.Ltd(000538) party will reasonably participate in Shanghai Pharmaceuticals Holding Co.Ltd(601607) governance and nominate one candidate for executive director, one candidate for non-executive director and one candidate for supervisor to the company.
According to public information, Shanghai Pharmaceuticals Holding Co.Ltd(601607) (hereinafter referred to as Shanghai Pharmaceuticals Holding Co.Ltd(601607) ) as one of the largest pharmaceutical industry groups in China, the company’s main business covers pharmaceutical industry, distribution and retail. It is reported that the scale of the company’s traditional Chinese medicine business sector has exceeded 7 billion yuan, with 7 key traditional Chinese medicine enterprises such as Shangyao medicinal materials, Hu qingyutang pharmaceutical and Zhengda qingqingbao, 3 National Confidential formulas, and 9 widely recognized core brands such as Shenxiang, Leishi, qingqingbao and Hu qingyutang.
Yunnan Baiyao Group Co.Ltd(000538) is a well-known leading enterprise of traditional Chinese medicine in the industry. It has national confidential formula and 7 subsidiaries of traditional Chinese medicine. It has created many star products such as toothpaste, aerosol and band aid from 0 to 1 in the field of traditional Chinese medicine health, and accumulated valuable experience in the field of traditional Chinese medicine health.
century old giant
Shanghai Pharmaceuticals Holding Co.Ltd(601607) was listed on the A-share market as early as 1994. It is a sample stock of CSI 300 and can definitely be said to be a giant in the industry. The company, formerly known as Shanghai No. 4 pharmaceutical factory, was founded in 1866 and has a history of more than 100 years.
From this point of view, Shanghai Pharmaceuticals Holding Co.Ltd(601607) itself is not poor in strength, but such a giant has a market value of only 62.458 billion yuan, while Yunnan Baiyao Group Co.Ltd(000538) has a market value of 100 billion yuan.
In terms of business, the pharmaceutical distribution business has been the main source of revenue for Shanghai Pharmaceuticals Holding Co.Ltd(601607) for many years. In 2021, its revenue reached 190616 billion yuan, accounting for 88.32%, but its gross profit margin was only 6.52%; The second is the pharmaceutical industry, with a revenue of 25.098 billion yuan in 2021. Although the gross profit margin reached 58.75%, the business accounted for only 11.62%. In terms of its sales region, it is mainly dominated by the Chinese market, accounting for nearly 99%.
Some investors pointed out that pharmaceutical circulation enterprises are “squeezed” by upstream and downstream. In order to achieve rapid development, they need to cooperate deeply and widely with upstream manufacturers to ensure product supply; On the one hand, accelerate the layout of downstream sales network and comprehensively establish cooperative relations with various medical institutions.
In the M & A expansion of Shanghai Pharmaceuticals Holding Co.Ltd(601607) , there are many high premium acquisitions, which also leads to the continuous surge of Shanghai Pharmaceuticals Holding Co.Ltd(601607) ‘s goodwill. In 2011, the goodwill of Shanghai Pharmaceuticals Holding Co.Ltd(601607) was only 2.989 billion yuan. After merger and integration, its goodwill has reached 11.239 billion yuan by 2021.
In addition, in recent years, the debt of Shanghai Pharmaceuticals Holding Co.Ltd(601607) has continued to increase, and the asset liability ratio has risen year after year. By 2021, its debt asset ratio has reached 63.68%. The huge debt will also cause a large accumulation of interest expenses in the financial expenses. According to the data of the 2021 annual report, the financial expenses alone will reach 1.245 billion yuan.
Although heavily in debt, Shanghai Pharmaceuticals Holding Co.Ltd(601607) still invested heavily in the research and development of innovative drugs. According to the data of the annual report, in its innovative drug pipeline, 6 are in the stage of critical research or clinical phase III.
However, at the same time, the R & D of innovative drugs can not bring immediate gains. Since the increase of R & D investment, from 2018 to 2020, Shanghai Pharmaceuticals Holding Co.Ltd(601607) R & D expense rates were 0.7%, 0.7% and 0.9% respectively, while the net interest rate has been lower and remained below 3%.
can complement
Yunnan Baiyao Group Co.Ltd(000538) the enthusiasm for cross-border investment is obvious to all in the industry.
The annual report shows that in 2021, Yunnan Baiyao Group Co.Ltd(000538) achieved an operating revenue of 36.374 billion yuan, an increase of 11.09% year-on-year; The net profit attributable to shares was 2.804 billion yuan, a year-on-year decrease of 49.17%, which was the first decline in the net profit of Yunnan Baiyao Group Co.Ltd(000538) in recent 10 years.
In 2021, Yunnan Baiyao Group Co.Ltd(000538) invested in 9 stocks, including Xiaomi group and Jiangsu Hengrui Medicine Co.Ltd(600276) etc., with varying degrees of losses. Among them, the investment in Xiaomi group lost more than 1.4 billion yuan, Jiangsu Hengrui Medicine Co.Ltd(600276) lost 220 million yuan, and the cumulative loss of 9 stocks was nearly 2 billion yuan.
From the perspective of business segment, the former giant of traditional Chinese medicine achieved the second industry position of toothpaste in China due to cross-border daily chemical products, and Yunnan Baiyao Group Co.Ltd(000538) became the leading enterprise in China’s large health industry.
However, at the same time, the problems of low R & D investment and weak innovation ability in the traditional Chinese medicine industry also perplex Yunnan Baiyao Group Co.Ltd(000538) . According to the financial report data, the R & D investment of Yunnan Baiyao Group Co.Ltd(000538) in 2021 was 331 million, only 16.65% of Shanghai Pharmaceuticals Holding Co.Ltd(601607) .
From the perspective of innovative products, the only outstanding variety of Yunnan Baiyao Group Co.Ltd(000538) traditional Chinese medicine products is trauma. Some investors doubt that Yunnan Baiyao Group Co.Ltd(000538) has weak innovation ability, and its advantages in traditional Chinese medicine are “chicken ribs” for Shanghai Pharmaceuticals Holding Co.Ltd(601607) who wants to develop innovative drugs.
Reporters also noted that in 2021, Yunnan Baiyao Group Co.Ltd(000538) completed the acquisition of Yunnan Baiyao Group Co.Ltd(000538) group medical technology Hefei Co., Ltd., 12 newly established Yunnan Baiyao Group Co.Ltd(000538) days Catering Management Co., Ltd., Yunnan Yun Yao flavor and fragrance Co., Ltd., the report added 13 subsidiaries. At the same time, it is also marching into the fields of medical beauty, oral care and new retail health services, skin science and so on.
Can such cooperation really be beneficial to Shanghai Pharmaceuticals Holding Co.Ltd(601607) China? The reporter asked about Shanghai Pharmaceuticals Holding Co.Ltd(601607) aspects, but as of press time, no reply was received.
