Relying on the sale of drugs for the treatment of diabetes and skin diseases, the annual income is 167 million.
Author | Liu Junqun
Editor丨Li Baiyu
Source | Bronco Finance
A small pill involves many upstream and downstream enterprises. From the perspective of the ecological map of the industrial chain, it includes upstream chemical API enterprises, pharmaceutical packaging enterprises, pharmaceutical equipment enterprises, midstream chemical drug preparation enterprises and downstream pharmaceutical circulation enterprises.
Behind this is a huge market. According to the data of the "National Bureau of Statistics", in the first half of 2023, the main business income of industrial enterprises above designated size in the mainland pharmaceutical manufacturing industry will be about 1.25 trillion yuan, and the total profit will be 179.45 billion yuan.
In this context, Shanghai Yan'an Pharmaceutical Yangpu Co., Ltd. (hereinafter referred to as "Yan'an Pharmaceutical"), a comprehensive pharmaceutical company, submitted a report to the Beijing Stock Exchange to sprint for an IPO. Yan'an Pharmaceutical belongs to the chemical drug preparation industry, mainly engaged in the research and development, production and sales of chemical drug preparations, APIs and pharmaceutical intermediates.
In September 2016, Yan'an Pharmaceutical (839010. NQ) was listed on the New Third Board. According to the latest financial report, in 2023, the company's performance will grow steadily, achieving operating income of 432 million yuan, a year-on-year increase of 33.79%, and net profit attributable to the parent company of 75.43 million yuan, an increase of 33.12% year-on-year, and a net profit increase of more than 30%.
However, in addition to the annual report, 2023 is actually not "peaceful" for Yan'an Pharmaceutical, and the company once attracted market attention due to the delay in the release of the third quarterly report, the failure to disclose information on special investment terms, and the illegal short-term trading of Qiu Huizhen, one of the actual controllers.
Now, Yan'an Pharmaceutical has come to the door of the IPO, can it successfully complete this "leap to the door"?
Revenue and net profit declined in 2022
Rely on pharmaceutical preparations to support half of the country
With the increasing importance of people's health, the demand for drug development and production is also increasing. Under the favorable situation, some chemical and pharmaceutical companies have begun to sprint to the capital market.
Yan'an Medicine is one of them. According to the prospectus, Yan'an Pharmaceutical's main products are chemical preparations, APIs and pharmaceutical intermediates.
It should be noted that APIs belong to the upstream of finished drugs, which are the basic substances that constitute the pharmacological effects of drugs, and cannot be taken directly by patients, while pharmaceutical intermediates are the key raw materials of APIs. Chemical preparations belong to the downstream of APIs, which are made in various dosage forms (including: tablets, pills, powders, injections, etc.) and finally provided to patients.
Among them, the pharmaceutical preparations produced by Yan'an Pharmaceutical cover many drug fields such as digestive system, diabetes, skin, anti-infection and respiratory system. The company's preparation products mainly include anti-inflammatory and analgesic compound beclomethasone camphor cream, norfloxacin capsules for intestinal infection, and chewable calcium tri-combination tablets for the treatment of calcium deficiency, while APIs and pharmaceutical intermediates include thymol for anti-inflammatory and analgesic, sodium benzoate for making food preservatives, etc.
Source: "Prospectus"
From the perspective of product type, Yan'an Pharmaceutical's main business income categories include preparations, raw materials, authorized production license fees, etc.
Among them, the revenue of preparation products supports half of Yan'an Pharmaceutical's total revenue. From 2020 to 2023, the sales revenue of preparation products will be 190 million yuan, 165 million yuan, 167 million yuan and 250 million yuan respectively, accounting for 60.15%, 48.64%, 51.83% and 58.78% of the current revenue respectively, first declining and then rising.
Among them, six types of preparations, including anti-inflammatory and analgesic compound beclomethasone camphor cream, anti-inflammatory and analgesic ointment, omeprazole enteric-coated capsules for relieving heartburn symptoms caused by excessive gastric acid, compound methoxamine capsules for the treatment of bronchial asthma, metformin hydrochloride tablets for the treatment of diabetes, and norfloxacin capsules for intestinal infections and typhoid fever, constitute the main source of revenue for Yan'an pharmaceutical preparations. In 2022, these 6 types of preparations will bring 161 million yuan of revenue to Yan'an Pharmaceutical, accounting for 96.41% of the total revenue of preparation products.
Source: "Prospectus"
In the same period, the sales revenue of raw materials accounted for 39.49%, 37.33%, 25.69% and 31.39% of the company's total revenue, respectively, showing a trend of first declining and then rising. The company also has an income from authorized production license fees, and the revenue of this business in 2022 will be 70.2996 million yuan, accounting for 21.77%. However, in 2023, the business income will only be 7.0876 million yuan, accounting for 7.6%.
On the whole, Yan'an Pharmaceutical's performance also showed ups and downs. From 2020 to 2023, the company's revenue will be about 317 million yuan, 339 million yuan, 323 million yuan and 432 million yuan respectively, and the net profit in the same period will be about 35 million yuan, 49.4 million yuan, 49.3 million yuan and 75 million yuan respectively.
It is worth mentioning that from 2020 to 2023, Yan'an Pharmaceutical's gross profit margin will show an upward trend, with 43.86%, 48.32%, 51.08% and 51.39% respectively. Despite this, Yan'an Pharmaceutical's gross profit margin is not high compared with other peers in the prospectus. Taking 2022 as an example, Yan'an Pharmaceutical's gross profit margin is only higher than Hainan Haiyao's 43.18%, which is lower than that of Chengyi Pharmaceutical, Huana Pharmaceutical and other companies in the same industry.
Source: "Prospectus"
Yan'an Pharmaceutical explained that due to insufficient independent research and development, the proportion of generic drugs in mainland China is relatively high. Coupled with the rise of labor costs and environmental protection inputs, the cost of drug production has risen, and the country's medical insurance cost control and homogeneous competition have led to a decrease in drug sales prices, resulting in a decline in the overall gross profit margin.
Yan'an Pharmaceutical also warned of the risk of declining gross profit margin. The company said that if the proportion of business revenue with low gross margin increases in the future, or the gross profit margin of some businesses declines, it will adversely affect the company's profitability.
Gross profit of "authorized production license fee" is as high as 96%
In addition to the preparation products that account for half of the revenue, from 2020 to 2023, the sales revenue of raw material products will be 125 million yuan, 127 million yuan, 83 million yuan and 136 million yuan respectively, accounting for more than 25% of the company's total revenue. The company also has an income from authorized production license fees, and the revenue of this business will decrease from 70.2996 million yuan in 2022 to 7.0876 million yuan in 2023, accounting for 7.6% from 21.77%.
It is worth mentioning that the "authorized production license fee", one of the main businesses, corresponds to a sales gross profit margin of more than 96%.
According to public information, authorized production refers to the authorization of the enterprise to the manufacturer, so that the manufacturer produces the product, and the enterprise charges a certain authorization fee to the manufacturer, and the authorization fee is usually paid according to the sales volume of the product.
Yan'an Pharmaceutical's authorized production can be traced back to August 2016. At that time, Tianjin Junan Biopharmaceutical Co., Ltd. (hereinafter referred to as "Tianjin Junan") had the drug production approval number of the oral hypoglycemic drug "gliclazide sustained-release tablets". Yan'an Pharmaceutical commissioned Tianjin Junan to carry out a study on the consistency evaluation of the quality and efficacy of "gliclazide sustained-release tablets".
"Gliclaclazide sustained-release tablets" is a commonly used hypoglycemic drug in clinical practice, the main effect is to lower blood sugar, usually used for the treatment of type 2 diabetes, the cost of a box of drugs usually ranges from 40 yuan to 100 yuan.
Source: Canned Gallery
According to the International Diabetes Federation (IDF), the number of adult diabetics in the world reached 537 million in 2021, with a prevalence of 10.5%, and the number of adult diabetics in the world is expected to rise to 783 million by 2045. As one of the important oral hypoglycemic drugs, "gliclazide sustained-release tablets" has a large market demand.
Drug consistency evaluation research is a high-standard requirement that generic drugs must be consistent with the whole process of "management consistency, intermediate process consistency, quality standard consistency, etc.".
At that time, the two parties signed the Technology Development (Entrustment) Contract and the Technology Development Supplementary Agreement, and agreed that after Tianjin Junan completed the work, it was necessary to transfer the drug marketing authorization holder (hereinafter referred to as the "Holder") to Yan'an Pharmaceutical.
In December 2020, gliclazide sustained-release tablets passed the consistency evaluation, and at this time, Tianjin Junan should have transferred the holder to Yan'an Pharmaceutical.
However, in February 2021, the product won the bid for the fourth batch of national centralized procurement, which also broke the original transfer plan of the two parties. Because the product failed to complete the change of holder before the national centralized procurement of the winning bidder, and during the national centralized procurement, there is a requirement that the holder of the winning drug cannot be changed.
As a result, Yan'an Pharmaceutical decided to collect the authorized production license fee from Tianjin Junan according to a fixed proportion to obtain the sales proceeds of the product.
According to the prospectus, in 2021, 2022 and the first half of 2023, Yan'an Pharmaceutical will collect 46.1479 million yuan, 70.2996 million yuan and 29.4996 million yuan from Tianjin Junan from authorized production license fees, respectively. This revenue has made Tianjin Junan firmly in the list of the company's top three customers since 2021.
During the same period, the gross profit generated by the authorized production license fee was 44.6342 million yuan, 68.262 million yuan and 28.535 million yuan respectively. In 2022 alone, Tianjin Junan contributed 41.38% of the gross profit to Yan'an Pharmaceutical.
In the same period, the income from authorized production license fees was 46.1479 million yuan, 70.2996 million yuan and 29.4996 million yuan respectively, accounting for 13.6%, 21.76% and 15.57% of the current operating income respectively.
Source: "Prospectus"
According to the prospectus, Tianjin Junan, which was established in 2001, is the controlling shareholder of Yan'an Pharmaceutical. Before August 2023, Tianjin Junan was 95% owned by Wang Xueliang, one of the actual controllers of Yan'an Pharmaceutical.
Until March 2023, Tianjin Junan successfully changed the marketing authorization holder of gliclazide sustained-release tablets to Yan'an Pharmaceutical. In August of the same year, Tianjin Junan's inventory was sold, and Yan'an Pharmaceutical no longer charged authorized production license fees.
This also attracted the attention of the Beijing Stock Exchange, which asked Yan'an Pharmaceutical to explain the reasons why Tianjin Junan did not transfer the drug marketing authorization holder to Yan'an Pharmaceutical and participated in the centralized procurement bidding after passing the consistency evaluation.
Yan'an Pharmaceutical replied that Yan'an Pharmaceutical considered that it could obtain a larger market space and realize economic value through centralized drug procurement. At the same time, in order to ensure the economic interests of Yan'an Pharmaceutical, it will not be affected by the transfer of marketing authorization holders.
Later, Yan'an Pharmaceutical considered the problem of peer competition with Tianjin Junan, and Wang Xueliang, one of the actual controllers, promised to cancel Tianjin Junan, and planned to complete the cancellation before December 31, 2023. At present, the industrial and commercial information platform Aiqicha shows that the company has been "cancelled".
Industry insiders said that due to the high proportion of authorized production license fees provided by Tianjin Junan to Yan'an Pharmaceutical to total profits, at present, Tianjin Junan has stopped providing Yan'an Pharmaceutical with this fee, and if this income is excluded in each period of the reporting period, the company's revenue and net profit may shrink.
The actual controller and his wife are deeply involved in the medical field
The company has been warned for violating the letter disclosure
Behind Yan'an Medicine is a couple born in the 60s.
In July 1986, Wang Xueliang, one of the actual controllers, graduated from the School of Pharmacy of Shanghai Medical University and worked as a teacher in Putuo District Health School. The other actual controller is Wang Xueliang's wife Qiu Huizhen, who graduated from the Department of Pharmacy of Shanghai University of Traditional Chinese Medicine, and was also a teacher at the Putuo District Health School at that time.
In 1990, Wang Xueliang, who had been a teacher for 4 years, joined the Huxi Branch of Shanghai Pharmaceutical Company as a deputy manager in the marketing department. Subsequently, he successively held key positions in Shanghai Sifu Pharmaceutical Co., Ltd. (Sino-foreign joint venture), Shanghai Hua's Medical Dressing Co., Ltd., and Hong Kong Zhongda Pharmaceutical Co., Ltd.
After more than 10 years in the pharmaceutical industry, Wang Xueliang decided to acquire Shanghai Yan'an Pharmaceutical Co., Ltd., which has a history of more than 100 years, in 2006, and then successively acquired Shanghai Yan'an Pharmaceutical (Hubei) Co., Ltd. and Zhenjiang Jiansu Biopharmaceutical Co., Ltd.
Source: Canned Gallery
Compared with her husband's hard work experience in the business world, his wife, Qiu Huizhen, chose to continue her postgraduate studies. In 1991, she joined Shanghai Industrial Kehua Biotechnology Co., Ltd. as the director of the hepatitis B laboratory, and later worked at Shanghai Fosun Pharmaceutical (Group) Co., Ltd. Until 2008, she became a director of Yan'an Pharmaceutical.
In 2016, the two worked together to send Yan'an Medicine to the New Third Board. According to the prospectus, Wang Xueliang directly holds 46.15 percent of the company's shares and controls 5.95 percent of the company's shares through Tibet Tianxiahe; Qiu Huizhen directly holds 9.47 percent of the company's shares and controls 10.03 percent of the company's shares through serving as the executive partner of Tibet Jiuying; and Wang Shouchen, the son of Wang Xueliang and Qiu Huizhen, directly holds 2.68 percent of the shares.
Therefore, Wang Xueliang, Qiu Huizhen and their concerted actors, Tibet Jiuying, Tibet Tianxiahe and Wang Shouchen, control a total of 74.28% of the company's shares through direct and indirect holdings.
Source: Canned Gallery
However, "family-owned enterprises are very prone to a "one-word" situation, which is not conducive to the long-term development of the company. Industry insiders said. Yan'an Pharmaceutical has been taken by the National Equities Exchange and Quotations Company for self-regulatory measures of verbal warning due to violations of letter disclosure.
In January 2022, Yan'an Pharmaceutical failed to timely disclose the relevant announcements on the application for public offering of shares and listing guidance and filing, which constituted an information disclosure violation, and the company and related responsible entities were taken by the national stock transfer system to take self-regulatory measures of verbal warnings;
It is worth noting that Qiu Huizhen was also fined for illegal short-term trading.
According to the company's announcement, on August 30, 2022, Qiu Huizhen sold 965,000 shares of Yan'an Pharmaceutical, and from December 21 to 29 of the same year, she bought 5.585 million shares of Yan'an Pharmaceutical three times, which constituted illegal short-term trading. In this regard, the National Equities Exchange and Quotations Company issued warning letters to Qiu Huizhen on February 10, 2023 and September 8, 2023 respectively.
"Listed companies are suspected of violating the rules of information disclosure, which will affect the company's market integrity and market image. Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, said.
Yan'an Pharmaceutical, which is actively seeking an IPO, can get out of the quagmire of internal control and create brilliance like when it was listed on the New Third Board?
Have you ever heard of APIs?What do you know about APIs and preparations?Let's talk in the comment area!