Jichuan Pharmaceutical Pudi blue anti-inflammatory oral liquid walked off the "altar": star drugs withdrew from provincial medical insurance, can the development of daily chemical product lines become a new growth point?

China Times (www.chinatimes.net.cn) reporter Yu Na reported in Beijing

The pharmaceutical market is changing, and the current dynasty is a "king fried" product, and the Ming Dynasty may walk down the altar.

According to an announcement issued by Hubei Jichuan Pharmaceutical Co., Ltd. (hereinafter referred to as "Jichuan Pharmaceutical") on July 7, the main varieties of Pudilan anti-inflammatory oral liquid and protein ferric succinate oral solution of Jichuan Pharmaceutical Group Co., Ltd., a wholly-owned subsidiary, were withdrawn from the Hebei Provincial Medical Insurance Directory on June 30.

As one of the few listed children's medicine companies in China, Pudilan Anti-inflammatory Oral Liquid is the main product of Jichuan Pharmaceutical, which is mainly used clinically for mumps, pharyngitis, tonsillitis, boils and so on. Relevant information shows that Pudilan anti-inflammatory oral liquid is the exclusive dosage form of Jichuan Pharmaceutical, which was listed in 2003 and has accumulated sales of more than 10 billion yuan.

According to the announcement, according to the notice issued by the Hebei Provincial Medical Security Bureau and the Hebei Provincial Human Resources and Social Security Department on adjusting the "Hebei Provincial Basic Medical Insurance, Work Injury Insurance and Maternity Insurance Drug Catalogue (2020 Edition)", in order to ensure the continuity of the medication of the insured, a six-month transition period is set for the transferred drugs, and the transition period ends on December 31, 2021, and the reimbursement is made according to the original policy during the transition period.

Affected by this, the closing of the day of the announcement, Jichuan Pharmaceutical fell 2.89% to 17.11 yuan / share. More critically, Pudilan anti-inflammatory oral liquid has not yet been included in the national medical insurance, and now withdraws from hebei provincial medical insurance, what kind of impact will it have on the company's operating performance?

On July 12, Jichuan Pharmaceutical said in a written reply to the "China Times" reporter that the specific sales scale of drugs is not only affected by the medical insurance payment policy, but also affected by factors such as product efficacy, brand influence and user recognition. The company's Pudilan anti-inflammatory oral liquid has been selected into nearly 40 national and provincial related disease treatment guidelines and expert consensus, more than 500 clinical evidence-based medicine, with accurate clinical efficacy and safety, but also has a certain brand influence and user recognition. In Hebei Province, the sales amount of Pudi blue anti-inflammatory oral liquid in 2020 is about 110 million yuan, and withdrawing from provincial medical insurance in the short term will not have a greater impact on the company's performance.

Star medicine eclipsed

Jichuan Pharmaceutical successfully "backdoor" listed through Hongcheng shares in 2013, and since then it has begun to make great progress, and from 2013 to 2018, Jichuan Pharmaceutical's revenue and net profit have maintained an annual growth rate of more than 20%.

Public information shows that there are more than 30 approvals for the production of pudi blue preparations, of which the tablet approval is the largest, the capsule is second, but the oral liquid approval is only unique to Jichuan Pharmaceutical, and the Pudilan anti-inflammatory oral liquid of Jichuan Pharmaceutical also has a variety of awards and endorsement halos, which has become an important driving force in the period of rapid development of Jichuan Pharmaceutical.

In 2019, Jichuan Pharmaceutical suddenly "stalled", with revenue of 6.922 billion yuan, down 3.83% year-on-year; net profit of 1.623 billion yuan, down 3.84% year-on-year, the first time in the past 6 years of listing, revenue and net profit fell.

The decline in sales of the core product Pudilan anti-inflammatory oral liquid is the main reason for the change in the performance of Jichuan Pharmaceutical in 2019, coupled with the stricter supervision, which has led to this star drug walking off the altar.

At the end of 2018, the State Food and Drug Administration issued an announcement on modifying the prescription drug instructions for pudilan anti-inflammatory preparations (tablets, capsules, oral liquids), adding nausea, vomiting, bloating, abdominal pain, diarrhea, fatigue, dizziness, etc.; Skin rash, itching allergies and other adverse reactions, clearly pointed out pregnant women and children with allergies, spleen and stomach deficiency and cold people with caution.

Subsequently, the market sales of Pudilan anti-inflammatory oral liquid fell in response. According to the annual report, compared with 2018, the output of Pudilan anti-inflammatory oral liquid of Jichuan Pharmaceutical In 2019 fell by 40%, and the sales volume fell by 24% year-on-year. In 2019, the company's heat and detoxification products (mainly Pudi blue anti-inflammatory oral liquid) revenue of 2.348 billion yuan, down 14.27% year-on-year.

Entering the 2020 year, the sales of Pudi blue anti-inflammatory oral liquid have not stopped. According to the annual report, in 2020, the company achieved operating income of 6.164 billion yuan, down 11.17% year-on-year; net profit attributable to shareholders of listed companies was 1.277 billion yuan, down 21.30% year-on-year; among them, the revenue of detoxification, pediatric and respiratory products decreased by 8.84%, 31.94% and 34.97% respectively over the previous year.

In this regard, Jichuan Pharmaceutical's annual report said that during the reporting period, the company's operating income and net profit have declined year-on-year, mainly due to the impact of the new coronavirus pneumonia epidemic isolation measures, in the first half of the year, some hospital routine outpatient clinics failed to receive normal treatment, pediatrics and other departments of outpatient volume fell by a large margin, while the sales of pharmacies were also adversely affected, the company's heat and detoxification products (mainly pudi blue anti-inflammatory oral liquid), respiratory system products (mainly for three pieces, Huanglong cough suppressant granules) and pediatric products (mainly pediatric soy sauce clear heat granules) sales revenue decreased from the same period last year.

New growth points to fill losses?

This time, The withdrawal of Jichuan Pharmaceutical Anti-inflammatory Oral Liquid from provincial medical insurance actually has early signs.

On August 20, 2019, the National Medical Insurance Bureau and the Ministry of Human Resources and Social Security issued the Catalogue of Drugs for National Basic Medical Insurance, Work Injury Insurance and Maternity Insurance, which requires: "All localities should strictly implement the Catalogue of Drugs, and must not formulate their own catalogues or use alternative methods to increase the drugs in the catalogue, nor may they adjust the limited scope of payment for the drugs in the catalogue." For the class B drugs that were increased in accordance with the regulations in the original provincial drug list, they should be gradually digested within 3 years. ”

When the "2020 Annual Report" was released in April this year, Jichuan Pharmaceutical also said: "The company's pudi blue anti-inflammatory oral liquid, protein iron succinate oral solution and other products are not included in the national medical insurance directory, and have been included in some provincial medical insurance directories." If the above products have not yet entered the national medical insurance directory in the future, they may face the risk of withdrawing from the provincial medical insurance directory in the next 3 years. ”

It can be seen that Jichuan Pharmaceutical is also promoting product research and development and further expanding its product line. In 2020, it obtained three drug production approvals for praukapride succinate tablets, ropivacaine hydrochloride injection, and concentrated solution for levetiracetam injection, and obtained 3 health care product approvals of Kangxuyuan brand Ganoderma lucidum spore powder, Sanchi propolis grape seed tablets, and Ganoderma lucidum lion's head mushroom capsules; Pudilan Koyan ning bacteriostatic oral ointment, Pudilan Pubikang bacteriostatic spray, Pudilan bacteriostatic hand sanitizer, Pudilan Koyaning oral mousse 4 new daily chemical products listed.

In addition, according to the news of Panorama Network, on June 24, Cao Longxiang, chairman of Jichuan Pharmaceutical, said at the 2020 annual performance briefing that the company is currently vigorously developing the daily chemical business, aiming to apply the efficacy of the company's Pudilan anti-inflammatory oral liquid "anti-inflammatory, antibacterial and anti-viral" to daily chemical products.

The annual report of Jichuan Pharmaceutical mentions the company's development strategy, focusing on the five major areas of "pediatrics, respiratory, digestive, gynecology and stomatology", consolidating and developing the Chinese and Western pharmaceutical industries, and cultivating the industries of traditional Chinese medicine cosmeceuticals and traditional Chinese medicine health products.

So, can the daily chemical product line of Pudilan anti-inflammatory oral liquid become a new growth point?

Jichuan Pharmaceutical said in a reply to this reporter that the company's daily chemical business mainly revolves around Pudi Bluetooth paste, mouth spray, gargle and other products, and has flagship stores for sale on e-commerce platforms such as Tmall, Jingdong, and Douyin. According to the data disclosed in the company's 2020 annual report, Jiangsu Pudilan Daily Chemical Co., Ltd., the main body of the company's daily chemical sales business, had an operating income of 50.2226 million yuan and a net profit of 5.7875 million yuan in 2020.

People in the industry are more optimistic about another exclusive variety of Jichuan Pharmaceutical, pediatric soy sauce clear heat granules, the main treatment of children's wind fever cold, in the field of children's cold proprietary Chinese medicine with a market share of 40% ranked first, 2019, 2020 sales are about 1 billion yuan. The annual report shows that Jichuan Pharmaceutical is also increasing the layout of the product line of pediatric soy sauce clear heat particles, and in 2020, the non-public issuance of A-share shares raised 1.384 billion yuan, of which the direction of use includes the "annual output of 720 million bags of small baby soy sauce clear heat particle project".