Sell cash cows cherished Ming, Conn Bay (600572. SH) desperate bet
The once-popular health business of pharmaceutical companies is becoming a chicken rib.
On December 8, Conn Bei issued an announcement that the transfer of 42% of the equity of the subsidiary Cherish ming has now been 5 intended transferees, and the proposed transaction amount is 1.68 billion yuan. Once the deal closes, ConnBey's stake in Zhenjieming will drop from 80% to 38%.
Cherishing Ming is a fairly good asset in the current Conn Bay genealogy, and rushing to sell it may affect the development of the company. Conn Bei said that the valuation of 4 billion yuan of Zhenming Company is not low, and the transferee also has ophthalmic resources to support the future development of Zhenming.
Although Conn Bei has the consideration of letting Cherish Ming's independent listing, he did not choose to introduce war investment, but chose to transfer equity, which more or less shows the emptiness of Conn Bay's current family foundation.
In Kang Enbei's view, the Chinese medicine industry is becoming more and more difficult, and the transfer of Cherishing Ming's equity is also a decision after careful consideration: "All aspects need money." In addition to research and development, the newly supplemented funds can also acquire some good equity."
Selling and selling, Conn Bay needs money
Before transferring the equity of Zhenjieming, Kang Enbei successively transferred 100% of the equity of its Guizhou Beite and 25% of the equity of Deere Pharmaceutical this year, including the transfer of a lending company.
Guizhou Beit is having to sell. Beit's core variety "Danshen Chuanqiazine Injection" has been monitored and has been withdrawn from the provincial medical insurance, and Beit is in a state of suspension; Deere Pharmaceutical is regarded as an inefficient asset by Kangbei because of its lack of competitive products.
However, Cherish Ming Company is completely different from the above two companies and is a veritable high-quality asset.
"If you want to have good eyesight, cherish Ming every day", the popular advertisement has still brought considerable income to Cherish Ming Company.
In 2020, the sales of the top ten ophthalmic drugs in China's public medical institutions fell across the board, with the highest decline of nearly 20%. Cherishing Ming suddenly emerged, and the sales revenue of the ophthalmic series brand rose by nearly 60%.
In February 2021, Zhen Ming's sodium hyaluronate eye drops won the bid for the fourth batch of national collection. According to the audit report released by Conn Bay, in the first half of 2021, The revenue of Cherishing Ming reached 516 million yuan, with a revenue increase of 35.92%. In the business map of Conn Bay, the eye products business has been second only to the core product "Enteritis Ning" series, and is the second largest business segment of the company.
The sale of Zhenming's equity will not only cause ConnBey's control to be reduced, but also affect the distribution of profits, thereby weakening Connbe's future profitability. In this regard, Kang Enbei said: Cherish ming is relatively mature. Transfers at a better price level are also well thought out.
Conn Bay needs money, and the third quarter report of 2021 shows that Conn Bay currently has less than 1 billion yuan on the book, which is already at a 10-year low. It is understandable that cash reserves are insufficient during the business expansion period; but the current Conn Bay is in a very uncomfortable period of business contraction.
"Internal planning requires a lot of money", the Health Bureau learned that in order to eliminate the problem of competition in the same industry on Chinese medicine tablets, Kang Enbei signed a transfer and acquisition commitment with Inter Group and Zhejiang University of Chinese Medicine, which needs to complete the relevant equity transfer before November 2022, and also involves some asset acquisitions promised to shareholders.
In addition, Conn Bay also wants to carry out foreign investment and mergers and acquisitions, and the Health Bureau has learned that Conn Bay has done feasibility studies for a number of projects.
Chinese medicine research and development is cautious, and investment and mergers and acquisitions are bold
KangBei hopes that the efforts to innovate in Traditional Chinese medicine will involve the development of some classic recipes.
But in fact, ConnBey's research and development investment is not high. In 2020, the company's R&D expenses were 180 million yuan, accounting for 3.11% of total revenue; in the first half of 2021, R&D expenses were 0.8 billion yuan, only 2.6% of total revenue.
The low investment in research and development is the current situation of the entire Chinese medicine industry. In the first three quarters of this year, baiyun mountain (00874) research and development expenses of 600 million yuan, accounting for 1% of the total revenue, the same situation is also Buchang Pharmaceutical, the first three quarters of the research and development investment of about 1.7%, To ling pharmaceutical, Tasly slightly better, not more than 10%.
A person close to Kang Enbei once told the Health Bureau that it is really not so easy to make innovative chinese medicines. New drugs in the Chinese medicine category are difficult to approve.
Another Chinese medicine company source also expressed the same view on the Health Bureau: chinese medicine application for new drugs is much more stringent than before, and research and development also has certain risks.
In August this year, the China Journal of New Drugs published an article on the status quo of the approval of traditional Chinese medicines in China, and through combing, it was found that between 2015 and 2020, the number of applications for the registration of new chinese medicine drugs showed a significant decline. The number of new drugs of 1 to 4 types in 2019 is even 0, and in the general direction of the state's strong support for the development of traditional Chinese medicine, the research and development enthusiasm of traditional Chinese medicine enterprises is not as high as imagined.
Research and development is too difficult, and ConnBey is more willing to buy.
In September this year, Kangbei spent 100 million yuan to acquire the "Yellow Marshmallow Flower Oral Patch" of Shandong Pharmaceutical College, hoping to reprocess it and turn it into its own new drug product. In addition, the secondary development of old varieties is also more concerned about Conn Bay. Conn Bay believes that there is also a lot to be done to excavate some regional old varieties and improve market share.
But one of the problems that ConnBey has never been able to get around is collection. This year, the collection of proprietary Chinese medicines in 19 provinces and cities has begun, and according to the plan, the nationwide collection and collection of proprietary Chinese medicines next year is also very likely to be carried out.
Chinese medicine companies represented by Kang Enbei have vowed to develop great health, but consumer goods and drugs are not a road number, and enterprises that transform consumer goods have not been too successful. ConnBey himself said that prescription drugs are impossible to give up.
At present, many Chinese medicine companies are promoting consistency evaluation. It will take a certain amount of time for the collection to be carried out and landed, and this empty window period is extremely critical. Whether it is relying on independent research and development or relying on foreign investment, we must find another foothold.
Kang Enbei believes that the chronic disease market needs traditional Chinese medicine, but it needs more accurate marketing.
Text | David
Operational | Mo Yu Xi
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