Sourced from Visual China
With the advancement of the comprehensive reform measures of "separation of medicine", the market policy in the hospital has been tightened, and more and more prescription drugs have begun to flow out. Faced with the new out-of-hospital market cake, retail pharmacies have embarked on a frenzied M&A model aimed at improving their competitiveness to carve out more market share.
Recently, Yixintang (002727. SZ), Jianzhijia (605266. SH) and Dashenlin (603233.SH) and other listed companies "mergers and acquisitions" have started again, and the number of stores acquired by the head bosses of chain pharmacies is often more than 100, with a transaction volume of hundreds of millions of yuan.
This means that the integration of the chain pharmacy industry has been further accelerated, and under the tide of mergers and acquisitions, the head enterprises of chain pharmacies have entered the scale of 10,000 stores, and the industry concentration has been further improved. However, it should also be noted that the current chain rate of pharmacies in mainland China is close to 60%, and the chain of pharmacies has entered the "deep water area", and the marginal benefits brought by mergers and acquisitions are far less than before. Therefore, in the process of mergers and acquisitions, it is more necessary for enterprises to work hard to screen the quality of the target, otherwise it may cause a "goodwill thunderstorm" if they are not careful.
The head pharmacy has entered the era of "10,000 stores".
On December 28, Yixintang issued a number of announcements, announcing the acquisition of 40 store assets and inventories of Hechuan Red Sun, 71 stores of Hainan Yuananlong Pharmaceutical Supermarket Chain, 17 stores of Tianjin Fuyuan Pharmaceutical Chain, etc., with a total of more than 200 stores and a transaction price of more than 200 million yuan.
Coincidentally, on December 27, Jianzhijia announced that the company intends to acquire 100% of the equity of Chongqing Hongrui Lebang with its own funds of 137 million yuan, involving the number of 190 stores.
Also in December, Dashenlin said that it would acquire 15% of the shares of Chongqing Wanjiayan Pharmacy with an acquisition amount of 30 million yuan. At the same time, the announcement said that the total amount involved in the purchase of assets by Dashenlin for 12 consecutive months was 685 million yuan.
As one of the leading chain pharmacies, the common people (603883. SH) is not far behind. At the end of October this year, the people said that they planned to acquire 35% of the shares of Baixinyuan, with a transaction price of 215 million yuan. In addition, Yifeng Pharmacy (603939. SH), Sotama Civilians (301017. SZ) and others are also accelerating their "horse racing" in this merger and acquisition war.
As of the end of the third quarter of 2023, the number of stores in Laobaimin, Dashenlin, Yifeng Pharmacy and Yixintang was 13,100, 13,000, 12,400 and 10,000 respectively, and the corresponding number of new stores in the first three quarters was 2,709, 2,948, 2,240 and 802 respectively.
In other words, the total number of new stores in the first three quarters of the four major pharmacy chains was as high as 8,699.
Data source: regular reports of listed companies, etc.;
Looking at the long run, we know the speed of chain pharmacies "opening up territory". In 2015, Yixintang only had 3,490 stores, and at that time, there were 1,483 stores and 1,065 stores of Yixin Pharmacy and Yifeng Pharmacy respectively, and the number of Dashenlin stores that had not yet been listed at that time was less than 2,000, and by the end of 2019, the number of stores of Yixintang, Laobaimin, Yifeng Pharmacy and Dashenlin reached 6,266, 5,128, 4,752 and 4,702 respectively.
Chain pharmacy mergers and acquisitions into the "deep water area"
Behind the "crazy M&A wave" is the continuous and in-depth promotion of the comprehensive reform of pharmaceutical separation, the in-hospital market prescription drugs flow into the out-of-hospital market, and the scale of the out-of-hospital market increases, attracting a number of chain pharmacies to accelerate the development of the market.
And in the wave of mergers and acquisitions in recent years, there have been cases of Yixintang, the former "big brother of chain pharmacies", losing the market because he failed to participate in mergers and acquisitions at the first time, which has formed the model of catching up with me today.
However, it should also be noted that the chain rate of pharmacies in mainland China has soared from 34.6% in 2012 to 57.8%. The marginal benefits of current mergers and acquisitions are worth pondering.
According to the State Food and Drug Administration's "Annual Data on Drug Supervision and Administration Statistics (2022)", the total number of retail pharmacies in the country in 2022 will be 623,000, with a chain rate of 57.8%, and the market share of the top 100 chain sales scale will account for 55.83%.
The increase in the chain rate also means that the industry concentration has been further improved. According to data from Minenet, the sales proportion of the top 100 chains increased from 252.3 billion yuan in 2021, accounting for 44%, to 280 billion yuan in 2022, accounting for 46%, and the proportion of stores increased from 20.3% in 2021 to 22.7% in 2022.
However, focusing on pharmacies, the performance increase brought about by mergers and acquisitions in recent years is not satisfactory. Taking Yixintang as an example, the company's revenue in the first three quarters was 12.81 billion yuan, a slight increase of 6.55% year-on-year, and the net profit in the same period was 686 million yuan, a slight increase of 1.26% year-on-year.
M&A is a double-edged sword, which can only expand the scale and seize market share for the company, and the B side may bring the hidden worry of goodwill impairment to the company.
Yixintang's goodwill data comes from the company's third quarterly report
At the third quarter of this year's performance exchange meeting, Yixintang was asked by investors about the related risks: "Is there an impairment risk of the company's goodwill of about 1.5 billion yuan?" In this regard, the company's executives only responded: "On the whole, the merger and acquisition price is relatively reasonable, and the premium part will form goodwill." ”
(This article was first published in Titanium Media APP, author|.) Zhang Haixia)