The gross profit margin is much higher than that of its peers, the product business is single, and there are litigation disputes with the third largest customer, not only that, but the former executive of Shimei Pharmaceutical is also the company's fourth largest customer executive.
According to the Shenzhen Stock Exchange, Jiangxi Shimei Pharmaceutical Co., Ltd. (hereinafter referred to as "Shimei Pharmaceutical"), which is seeking to be listed on the Growth Enterprise Market, recently updated its IPO prospectus, and the sponsor is Guojin Securities.
According to the prospectus, the number of shares issued in the public offering does not exceed 35 million shares, and the funds to be raised are 608 million yuan, of which 245 million yuan will be used for the research and development and industrialization construction project of chiral antihypertensive drugs, 230 million yuan will be used for the construction project of Shandong innovative drug research and development and preparation production base, and 133 million yuan will be used for the construction project of Shandong Kexin API production base.
From the perspective of the listing process, on February 28, 2023, Shimei Pharmaceutical's IPO was accepted by the Shenzhen Stock Exchange, newly accepted on June 28, 2023, replied to the first round of inquiries in January 2024, and updated again to inquiries on June 29, 2024. Reviewing the prospectus and previous inquiry letters, it was found that Shimei Pharmaceutical has received great attention in terms of new customers, gross profit margin, single product risk and litigation disputes of large customers.
Gross margin divergence from peer trends is subject to regulatory inquiries
Founded in November 2002, Shimei Pharmaceutical Co., Ltd. is an innovative pharmaceutical enterprise with R&D as the core driving force, focusing on the R&D, production and sales of generic drugs, improved innovative drugs and innovative drugs, and providing customers with one-stop comprehensive services such as transformation of independent R&D technological achievements, entrusted R&D (CRO), customized production and commissioned processing (CDMO).
According to the prospectus, during the reporting period, the company achieved operating income of 147.909 million yuan, 184.1911 million yuan and 403.489 million yuan, with a compound growth rate of 65.17% from 2021 to 2023, and the net profit attributable to shareholders of the parent company was 51.5365 million yuan, 75.5831 million yuan and 208.0222 million yuan respectively, and the company's performance grew rapidly. In particular, in 2023, the company's revenue and net profit will both double, and Shimei Pharmaceutical told Discovery.com that the key factors are mainly due to the rapid growth of pharmaceutical R&D and customized production business and chemical preparation production and sales business.
It is worth noting that from the perspective of main business, Shimei Pharmaceutical's main business mainly includes pharmaceutical R&D and customized production business and chemical preparation production and sales business. According to the prospectus, during the reporting period, the revenue of pharmaceutical R&D and customized production business accounted for 57.92%, 51.68% and 50.38% respectively, of which the revenue from the transformation of independent research and development technology achievements accounted for 48.02%, 38.09% and 42.16% respectively.
During the same period, the gross profit margin of the company's main business was 81.79%, 83.63% and 89.71% respectively, of which the gross profit margin of pharmaceutical R&D and customized production business was 81.60%, 90.58% and 91.50% respectively, and the gross profit margin of chemical preparation production and sales business was 82.05%, 76.2% and 87.9% respectively. The industry average was 72.84%, 69.07% and 68.35% respectively, and the gross profit margin deviated from the industry trend. In this regard, Shimei Pharmaceutical replied that the gross profit margin of the company's pharmaceutical R&D and customized production business is higher than the average gross profit margin of comparable companies in the same industry, mainly due to the relatively high proportion of the company's independent R&D technology achievement transformation business revenue.
The prospectus also shows that Shimei Pharmaceutical has the risk of a single product. During the reporting period, the production and sales revenue of chemical pharmaceutical preparations was 62.2364 million yuan, 88.9207 million yuan and 200 million yuan, and the sales revenue of levamlodipine besylate tablets accounted for 100%, 100% and 99.14% of the production and sales revenue of chemical pharmaceutical preparations, respectively.
In this regard, Shimei Pharmaceutical said that the main reason for the product concentration of the company's chemical preparation production and sales business is that levamlodipine besylate tablets are the company's core commercial products, and in 2022 and 2023, affected by the selection of centralized procurement, the company's sales volume of levamlodipine besylate tablets has increased significantly, so it accounts for a relatively large proportion. The company's other two industrialized products, perindopril indapamide tablets and perindopril tert-butylamide tablets, are in a steady development stage. In view of this, the company will continue to develop perindopril indapamide tablets and perindopril tert-butylamine tablets, and according to the business strategy and market demand, choose the opportunity to commercialize the independent research and development projects to enrich the company's commercial varieties.
The new large customer went to court in less than a year due to a technology transfer dispute
According to the prospectus, Shimei Pharmaceutical added more large customers during the reporting period. During the reporting period, 9 of the 15 companies in the list of the company's top five customers were new major customers.
It is worth mentioning that among the top five customers in 2023, Tongji Pharmaceutical, the third largest customer, only cooperated for the first time in March 2023, and obtained the customer's market development and customer R&D project needs, and signed a contract with it for the transformation of R&D achievements of sildenafil citrate oral disintegration tablets with an amount of 33 million yuan. The above-mentioned approval document for sildenafil citrate oral disintegration tablets was issued on June 27, 2023, and the results have been transformed, and the drug is produced by the company.
(New information on top 5 customers: Prospectus)
However, the project was subsequently confronted by the two parties due to contract disputes over technology transfer. According to the prospectus, during the reporting period, there was a contract dispute between the issuer, Shandong Innovation and Tongji Pharmaceutical regarding the "Technology Transfer Contract" of sildenafil citrate oral disintegration tablets (specification: 50mg).
On November 22, 2023, Tongji Pharma filed a lawsuit with the Wuhan Intermediate People's Court for the relevant contract disputes, and the issuer and Shandong Innovation filed a counterclaim with the Wuhan Intermediate People's Court on January 14, 2024. As of the date of this Prospectus, the aforesaid litigation has been tried but no judgment has yet been rendered. Shimei Pharmaceutical and its subsidiary, Shandong Innovation, have taken active measures to respond to the matters involved in the above-mentioned litigation, but in view of the fact that the above-mentioned litigation cases have not yet been decided, the actual impact of the relevant cases on the issuer's operating results is subject to the final judgment of the court.
According to Tongji Pharmaceutical's announcement, the company believes that Shimei Pharmaceutical "did not cooperate with the change of the rights and interests of sildenafil citrate oral disintegration tablets MAH and the production site, and required Tongji Pharmaceutical to pay an additional 5 million yuan for the MAH change fee, which was subjectively malicious and constituted a breach of contract." ”
In this regard, Shimei Pharmaceutical told Discovery.com that the situation alleged by Tongji Pharmaceutical did not really exist, and Tongji Pharmaceutical unilaterally requested to terminate the contract and should compensate for the corresponding losses.
The former executive has the same name as the fourth largest customer executive and continues to have related business
In addition to the litigation dispute with Tongji Pharmaceutical, the third largest customer, Huanghai Pharmaceutical, a new customer of Shimei Pharmaceutical during the reporting period, only appeared once in the list of the top five customers, and was the fourth largest customer in 2021, with a sales amount of 6.7122 million yuan, and it is also a customer of Shimei Pharmaceutical's pharmaceutical R&D and customized production business.
At the same time, the prospectus and the reply to the inquiry letter show that Huanghai Pharmaceutical has been the top five customers of Shimei Pharmaceutical's entrusted R&D services since 2020.
The national enterprise credit information publicity system and the industrial and commercial information queried by the enterprise check all show that Huanghai Pharmaceutical, which is also located in Shandong Province with Shandong Innovation, a wholly-owned subsidiary of Shimei Pharmaceutical, is currently the legal representative, director and general manager of Liu Yajuan; The change registration information also shows that Liu Yajuan will become a director in January 2023 and become the legal representative and general manager in May.
It is worth mentioning that Liu Yajuan of Huanghai Pharmaceutical has the same name and surname as a "mysterious" former director and vice president of Shimei Pharmaceutical. According to the prospectus, from the end of December 2021 to around November 2022, Liu Yajuan served as a director (non-independent director, until November 22) and deputy general manager (until October 28) of Shimei Pharmaceutical, with a term of office of less than one year. At the second extraordinary general meeting of shareholders in 2022, the company resigned as a director for personal reasons, and the company by-elected Zhao Lijun (executive deputy general manager of the company and its wholly-owned subsidiary Shandong Innovation), at which time Liu Yajuan has resigned as deputy general manager for personal reasons.
It should also be noted that Liu Yajuan, the current helmsman of Huanghai Pharmaceutical, also bumped into a former director and deputy general manager of the A-share company Guanhao Biotechnology (300238). According to the announcement on the completion of the re-election of directors and supervisors and the appointment of senior executives issued by Guanhao Biotech on March 13, 2020, the resume of Liu Yajuan, the new non-independent director and deputy general manager, is: "Vice Chairman of the Policy and Regulation Professional Committee of China Chemical Pharmaceutical Industry Association; Member of the Academic Group of Drug Clinical Trials of China Association for the Promotion of Pharmaceutical Innovation; He is a member of the CMAC Committee of Chinese Medical Affairs. Before 2012, he worked in Anyang No. 1 Pharmaceutical Factory and Xi'an Janssen Pharmaceutical Co., Ltd. in Henan Province, and served as Deputy General Manager and Vice President/General Manager of Academic Center in Qingdao Huanghai Pharmaceutical Co., Ltd. from 2012 to 2020. From 2018 to January 2020, he served as chairman and general manager of Qingdao Huanghai Pharmaceutical Management Co., Ltd.; From 2019 to January 2020, he served as a director and deputy general manager of Qingdao Haiji Biopharmaceutical Co., Ltd. ”
So, is Liu Yajuan, the former director and deputy general manager of Shimei Pharmaceutical, the same person as Liu Yajuan, the current legal representative, chairman and general manager of Huanghai Pharmaceutical, a major customer of the company? Whether these two Liu Yajuan and Liu Yajuan, the former director and deputy general manager of Guanhao Biology, are just famous, it is worth paying attention to.
In addition, is there any special circumstance behind the company's sudden appointment of Liu Yajuan as the company's director and deputy general manager, and Liu Yajuan's sudden resignation for personal reasons less than a year later? According to the company's disclosure, during Liu Yajuan's tenure in the company, she was the director, supervisor and senior officer with the highest annual salary in 2022, with an annual salary of 713,400 yuan in 2022, which is tens of thousands of yuan more than the 650,000 yuan annual salary of Jiang Hong, the actual controller, chairman and general manager.
In response to the above questions, Shimei Pharmaceutical told Discovery.com that due to Liu Yajuan's industry experience and industry reputation, the company appointed her as a director, deputy general manager and in charge of preparation sales business, so the salary level is high. Liu Yajuan's identity is like a professional manager, and her entry into Shimei Pharmaceutical and her subsequent departure are based on her own considerations, and there is no special arrangement with the company.
Finally, the prospectus shows that as of the signing date of the prospectus, the controlling shareholder and actual controller of the issuer is Jiang Hong. Jiang Hong directly holds 57.562 million shares of the company, accounting for 54.82% of the company's total shares. At the same time, Jiang Hong, as the executive partner of Honghui Investment, holds 86% of the property share of Honghui Investment, thus indirectly holding 16.38% of the company's shares, and Jiang Hong directly and indirectly holds a total of 71.20% of the company's equity.
(Reporter Luo Xuefeng, financial researcher Zhou Zizhang)