Produced by | Bullet Finance
Author | Meng Xiangna
Edit | Hu Fangjie
American Editor | Qianqian
Audit | Ode
Yibai Pharmaceutical is in trouble.
Recently, Yibai Pharmaceutical received the "Administrative Penalty Decision" issued by the Guizhou Food and Drug Administration and the "Notice of Administrative Supervision Measures" issued by the Guizhou Securities Regulatory Bureau, and was notified to immediately suspend the production and sales of Aidi injection products.
When the Guizhou Provincial Food and Drug Administration inspected Yibai Pharmaceutical, it was found that the company was suspected of a number of violations such as not operating in strict accordance with the process regulations in some processes during the extraction of Aidi injection.
The Guizhou Provincial Food and Drug Administration filed a case for investigation in accordance with the law, among which it is planned to fine and confiscate more than 3.83 million yuan to Dou Qiling, chairman of Yibai Pharmaceutical.
However, the company did not timely disclose the relevant information that the suspension of production of the company's main product (Aidi injection) may have an impact on the company's operation, so it received the "Decision on Administrative Supervision Measures" from the Guizhou Supervision Bureau of the China Securities Regulatory Commission, and the CSRC took the supervision and management measures of issuing warning letters to Dou Qiling, Dou Yaqi and Xu Miao, and recorded them in the integrity file of the securities and futures market.
Since the beginning of this year, the company's senior management team has also changed when the company's business has undergone great changes. In February this year, Xu Miao, deputy general manager and secretary of the board of directors of the company, and Lang Hongping, vice chairman and co-president of the company, resigned one after another.
With the suspension of core products and the resignation of two senior executives, the future of Yibai Pharmaceutical is still full of concerns.
1. The core products were discontinued due to violations, and the loss in the first quarter exceeded 70 million
The Aidi injection involved in this incident is the core product of Yibai Pharmaceutical.
It is understood that Aidi injection is an anti-tumor traditional Chinese medicine injection, the main ingredients are cantharid, ginseng, astragalus, eleutherococcus senticosus, and the indications cover primary liver cancer, lung cancer, rectal cancer, etc.
According to the information disclosed in Yibai Pharmaceutical's 2014 financial report, Aidi Injection is a secret-level state secret technology and a second-class protected variety of national traditional Chinese medicine. It can be seen that it has a certain market position in the domestic Chinese patent medicine market.
According to the content of the "Administrative Penalty Decision", there were a number of violations in the production process of Eddy Injection: part of the process of extracting medicinal materials was not operated in accordance with the approval process, the cantharids were directly fed and decoctioned and extracted without net preparation, and some process steps in the batch production records were inaccurate, the production records were incomplete, the contents filled in were incomplete, and the production process of each batch of products could not be traced.
According to relevant laws, the Guizhou Provincial Food and Drug Administration imposed a fine of 2 million yuan on Yibai Pharmaceutical, and fined Dou Qiling, chairman and legal representative of the company, Liang Jianqiong, the person in charge of production, and Deng Sixiong, the person in charge of quality, 3.836 million yuan, 1.686 million yuan, and 684,600 yuan respectively.
This is not the first time that Eddie injection has been exposed to quality problems.
In 2015, the Jiangxi Provincial Food and Drug Administration issued the second phase of the drug quality announcement of the year, exposing a batch of drugs with quality problems, and Eddie Injection was on the list due to visible foreign bodies.
However, in this year, Aidi Injection still achieved sales of 54.53 million pieces, and the winning bid price in medical institutions was 21.85 yuan ~ 31.83 yuan / piece. If calculated in this way, the sales revenue of Aidi injection is at least 1.2 billion yuan. In 2016, the sales volume of Eddy injection increased to 61.65 million.
In recent years, with the successive advent of innovative anti-tumor biological drugs and targeted drugs, as well as the impact of factors such as medical insurance policies and centralized procurement of Chinese patent medicines, the sales volume and revenue of Aidi injection have declined.
From 2020 to 2023, Aidi Injection contributed revenue of 737 million yuan, 690 million yuan, 480 million yuan, and 473 million yuan, accounting for 21.6%, 21%, 17.6%, and 16.8% of Yibai Pharmaceutical's revenue, respectively, showing a downward trend.
However, it can be seen that Aidi Injection has contributed about 20% of the revenue to Yibai Pharmaceutical, and the suspension of Aidi Injection will have a greater impact on Yibai Pharmaceutical's operating performance.
In the first quarter of 2024, Yibai Pharmaceutical's revenue was 570 million yuan, down 16% year-on-year, and its net loss was 71.41 million yuan, turning from profit to loss year-on-year. The main reason for the decline in performance was the suspension of production and the sharp decline in revenue of Eddy Injection.
According to the Notice of Administrative Supervision Measures, the Food and Drug Administration required Yibai Pharmaceutical to immediately suspend the production and sale of Aidi injection products. Yibai Pharmaceutical also said that as of now, the company's Aidi injection has stopped production, and there is uncertainty about whether it will be produced in the future.
It is worth noting that in the first quarter of 2024, Yibai Pharmaceutical did not timely announce the relevant information about the suspension of production of Aidi Injection.
Until April 13 this year, Yibai Pharmaceutical announced that the company received the "Decision on Administrative Supervision Measures" from the Guizhou Supervision Bureau of the China Securities Regulatory Commission for failing to disclose the impact of the suspension of production of the company's main products on the company's operation in a timely manner. The China Securities Regulatory Bureau took the supervision and management measures of issuing warning letters to Dou Qiling, Dou Yaqi and Xu Miao, and recorded them in the integrity file of the securities and futures market.
It is the responsibility and obligation of the listed company to disclose information in a timely manner, and the documents or reports disclosed by the listed company will have a certain impact on the judgment of investors, and investors have the right to claim compensation if they fail to perform their information disclosure obligations in a timely manner and cause investors to suffer investment losses due to their failure to perform information disclosure obligations in a timely manner.
Yibai Pharmaceutical's series of violations put the company at risk.
2. There are sequelae of high-premium acquisitions, and goodwill impairment has caused huge losses
Judging from the past six years, Yibai Pharmaceutical's performance is not ideal.
In 2018, the company's revenue reached 3.88 billion yuan, the highest in the past six years. In the next five years, there was a fluctuating downward trend, with revenue falling below the 3 billion mark in 2022 to only 2.7 billion yuan, and in 2023, revenue rose slightly by 3% to 2.82 billion yuan, but it was still lower than the level from 2018 to 2021.
In terms of net profit, the company's performance is also not optimistic. In 2018 and 2022, Yibai Pharmaceutical also suffered losses, with net losses attributable to the parent company of 730 million yuan and 430 million yuan respectively. In 2023, Yibai Pharmaceutical will turn losses into profits, achieving a net profit attributable to the parent company of 103 million, but it is still less than half of that in 2021.
The reason for the loss of Yibai Pharmaceutical is related to the impairment of goodwill in which it calculates the increased amount. In 2018, Yibai Pharmaceutical made a provision for goodwill impairment of 1.019 billion yuan, and in 2022, it made a provision of 614 million yuan.
The large-scale and continuous provision for goodwill impairment has to start with the acquisition of Yibai Pharmaceutical.
In 2012, Yibai Pharmaceutical took "one ship, two wings" as its development strategy, and gradually developed "health medical services" and "health products and services" around "pharmaceutical manufacturing".
Around 2015, Yibai Pharmaceutical put forward the strategy of "focusing on large tumors and embracing the Internet", and since then, it has frequently carried out extended mergers and acquisitions under this strategy.
Generally speaking, goodwill is the premium that a company incurs when it acquires other businesses. Yibai Pharmaceutical has accumulated a high amount of goodwill due to past acquisitions at high premiums.
As of December 31, 2023, the original value of goodwill in Yibai Pharmaceutical's consolidated statements was as high as 2.17 billion yuan, and the book value of goodwill at the end of the period was 164 million yuan. In other words, Yibai Pharmaceutical has accumulated a goodwill impairment of 2.005 billion yuan.
(Photo / Yibai Pharmaceutical's 2023 financial report)
Among them, the goodwill impairment of Deyang Cancer Hospital was 203 million yuan, the goodwill impairment of Yibai Women's Pharmaceutical Manufacturer was 460 million yuan, and the goodwill impairment of Tianjin Zhongsheng Haitian Pharmaceutical was 540 million yuan, accounting for 60% of the total goodwill impairment.
Taking Deyang Cancer Hospital as an example, in 2021, Yibai Pharmaceutical acquired 70% of the equity of Deyang Cancer Hospital for 336 million yuan. However, the year before the acquisition, that is, in 2020, Deyang Cancer Hospital had a revenue of 118 million yuan and a net profit of only 13.42 million yuan. Yibai Pharmaceutical acquired Deyang Cancer Hospital at a high premium, confirming the original value of goodwill of 284 million yuan.
It has only been a year since the completion of the acquisition, but the performance of Deyang Cancer Hospital has changed. In 2022, Deyang Cancer Hospital's revenue will be 120 million yuan, a year-on-year decrease of 11.7%. net profit was 11.21 million yuan, down 52% year-on-year.
Therefore, in 2022, Yibai Pharmaceutical will raise the price of Deyang Cancer Hospital for a one-time goodwill impairment of 203 million yuan, in addition, Yibai Pharmaceutical will also provide for the impairment of goodwill of Chang'an Pharmaceutical and other companies, which will lead to a large loss for the company.
In the case of large changes in performance, the senior management team of Yibai Pharmaceutical has also undergone a "big change".
Since 2023, the company's director Zhai Jiangtao, independent directors Zhang Wu, Gu Weijun, Wu Haomin, deputy general manager Yi Chongqin, and quality director Huang Caihe have all resigned due to the change of the board of directors, and Lang Hongping, vice chairman and co-president, and Xu Miao, deputy general manager and secretary of the board of directors, have resigned for personal reasons.
The performance is not satisfactory, the senior management team has changed greatly, how will Chairman Dou Qiling lead Yibai Pharmaceutical to bail out?
3. The founders and their wives parted ways, and the chairman's daughter took on important responsibilities
Looking back on the development history of Yibai Pharmaceutical, it is inseparable from two people - Dou Qiling and Ye Xiangwu.
In 1994, the husband and wife founded Guizhou Miaoling Pharmaceutical Co., Ltd., the predecessor of Yibai Pharmaceutical.
In 2004, Yibai Pharmaceutical was listed on the Shanghai Stock Exchange, and Dou Qiling and Ye Xiangwu were the controlling shareholders and the second largest shareholder of the company, respectively, and the shareholding ratio of the two was as high as 40%.
But it's hard to start a business, and it's even harder to keep a business. At the beginning of 2009, Ye Xiangwu successively resigned as chairman and director of Yibai Pharmaceutical.
In February 2009, Yibai Pharmaceutical held a general meeting of shareholders to consider the proposal to transfer 97.02% of the equity of Shanghai Baijiayi Pharmaceutical Co., Ltd., a subsidiary of Yibai Pharmaceutical, to Ye Xiangwu at a price of 99.03 million yuan.
After the completion of the acquisition of Shanghai Baijiayi, Ye Xiangwu set up his own portal, and later changed the company's name to Jingfeng Pharmaceutical, and completed the backdoor listing in April 2015, becoming a competitor of Yibai Pharmaceutical.
After Dou Qiling and Ye Xiangwu parted ways, Yibai Pharmaceutical faced continuous controversy, and Dou Qiling was more like treating Yibai Pharmaceutical as an "ATM". She was exposed to obtaining company funds through false contracts, and also tried to sell 6 of her properties to listed companies at a high premium.
(Photo / Photo Network, based on VRF protocol)
On November 13, 2018, Yibai Pharmaceutical announced that Yibai Investment, a subsidiary of Yibai Pharmaceutical, planned to invest 162 million yuan to acquire 6 properties in the names of Dou Qiling and her daughter Dou Yaqi.
According to the appraisal price, the purchase amount of these 6 commercial houses totaled 72 million yuan. However, Dou Qiling and Dou Yaqi plan to sell at a price of 162 million yuan, so as to "arbitrage" the price difference of 90 million yuan for the listed company.
However, after the acquisition attracted the attention of the exchange, in January 2019, Yibai Pharmaceutical announced the termination of the asset transfer agreement.
In June 2019, Yibai Pharmaceutical announced that Dou Qiling obtained 32.9487 million yuan of the company's funds by signing a false engineering contract or agreement with a third party. The above-mentioned funds were arranged for the purchase of furniture, home improvement supplies, etc., and the delivery address was the residence of Dou Qiling, the actual controller of the company, in Beijing and Guiyang.
Due to the existence of the above-mentioned false engineering contracts or agreements, the company's relevant information disclosure documents from 2013 to 2018 were untrue. Yibai Pharmaceutical, its actual controller, Dou Qiling, and three senior executives were issued warning letters by the Guizhou Securities Regulatory Bureau. However, Dou Qiling later returned the arbitrage funds to the company.
It is worth mentioning that as of February 8, 2024, the controlling shareholder Dou Qiling has pledged a total of 130 million shares of Yibai Pharmaceutical, accounting for 70% of the company's shares and 16.39% of the company's total share capital.
Today, Yibai Pharmaceutical's share price is hovering around 4 yuan, down 50% from the beginning of 2022. The stock price fluctuates greatly, and Dou Qiling's high equity pledge ratio is like a sword hanging from the top, increasing the risk of liquidation.
At present, Chairman Dou Qiling also intends to hand over the company to her daughter Dou Yaqi to take care of. According to the data, Dou Yaqi was born in January 1984 and is Dou Qiling's only daughter.
Dou Yaqi has served as the vice chairman of the board of directors of the Company since September 2019 and the general manager of the Company since May 2021. She also serves as the executive director and general manager of Beijing Yibai Pharmaceutical Research Co., Ltd. and the chairman of Guizhou Yibai Health Pharmaceutical Co., Ltd.
Facing the double pressure of stock price and performance, can Dou Qiling and Dou Yaqi, mother and daughter, lead Yibai Pharmaceutical out of the predicament?
*The title image in the article comes from: Camera.com, based on VRF protocol.