Another "second generation" son inherits his father's business.
On October 12, Dongya Pharmaceutical issued an announcement on the completion of the re-election of the board of directors and the board of supervisors. According to the announcement, after the company's general election, Chi Zhengming will no longer serve as the company's director and chairman, and the new chairman and general manager will be replaced by Chi Cheng.
According to public information, Chi Zhengming and Chi Cheng have a father-son relationship, and the two hold a total of 47.85% of the shares of East Asia Pharmaceutical. Since 2002, Chi Cheng has successively worked in a number of pharmaceutical companies, including East Asia Pharmaceutical, and held important positions.
It is understood that Dongya Pharmaceutical was successfully listed at the end of 2020 and raised 884 million yuan to expand production scale and improve R&D capabilities, but it suffered a performance decline in the first year of listing. Although there will be a correction in 2022 and 2023, entering 2024, Dongya Pharmaceutical's financial position is still under pressure. It also means that this time Chi Cheng will withstand the pressure of declining performance, either to turn the tide and block the decline, or to still struggle in the quagmire of declining performance.
Young "Expedition"
It is not uncommon for the "second generation" to inherit the family business, and most of them have high hopes.
In January 2023, Wu Xingyu succeeded his father Wu Jian as the chairman of the fourth board of directors of Dawn Airlines; In February 2023, Semir Apparel, which has been established for 27 years, ushered in the change of "helm" for the first time - the founder Qiu Guanghe stepped down in a low-key manner, and his son Qiu Jianqiang took over; In January 2024, Shi Lei succeeded his father Shi Mingda as the chairman of Tongfu Microelectronics, a leading manufacturing enterprise in Nantong; In September 2024, Hou Yameng, the "second generation" of the post-85 generation, will take over the position of general manager of Proya...... These "second generations" usually have a high degree of education and rich management experience, and can lead the company to continue to develop after taking over.
Born in 1984, Chi Cheng became a supervisor of Sanmen East Asia Pharmaceutical in Zhejiang Province in 2002, and he was not yet 18 years old.
In 2006, he was promoted to assistant general manager of Zhejiang Dongya Pharmaceutical Co., Ltd., and two years later was appointed deputy manager of Dongya Pharmaceutical. Since then, he has also served as a director and deputy general manager of the company.
In 2015, Dongya Pharmaceutical completed the share reform, and Chi Cheng served as the company's director and deputy general manager, and from October 2021 to this change, he served as the company's director and general manager.
Along the way, Chi Cheng has accumulated considerable professional quality and management experience, which has laid a solid foundation for the development of East Asia pharmaceutical industry in the future.
However, taking over the family business also faces many challenges and tests, such as the distrust of old employees and conflicts with their parents' business philosophy. For Chi Cheng, on the one hand, he needs to deal with the pressure of the company's performance and achieve strategic transformation and upgrading; On the other hand, he also has to lead the company to continue to innovate and develop and maintain its leading position in the industry.
There are gaps in cost control
The company's performance is undoubtedly the first "hole" to fill after Chi Cheng took office.
Dongya Pharmaceutical, which was listed in 2020, staged a performance "face-changing" drama in the first year of listing. According to the data, in 2020, the company's revenue was 880 million yuan, a year-on-year decrease of 10.77%; net profit was 115 million yuan, down 31.99% year-on-year.
In 2021, the company's performance continued to decline, and its performance in 2022 and 2023 showed significant improvement and rebound, with a net profit of 121 million yuan in 2023. This year, East Asia Pharmaceutical handed in the worst "report card" in history, with a net profit of only 32.47 million yuan in the first half of the year, a sharp drop of 40.54% year-on-year. In this regard, East Asia Pharmaceutical explained in the financial report that the sharp decline in net profit was caused by the year-on-year increase in the company's management expenses and R&D expenses.
According to public information, Dongya Pharmaceutical is a technology enterprise focusing on the research and development, production and sales of chemical raw materials and pharmaceutical intermediates. The products mainly cover antibacterial drugs (β-lactams and quinolones), anticholinergic and synthetic antispasmodic drugs (tramebutine maleate), antifungal drugs for skin and other drug fields.
Since the beginning of its listing, Dongya Pharmaceutical has been criticized by the outside world for its own R&D capabilities, and the company's R&D expense ratio has always been at a low level in the industry. For a pharmaceutical company, the lack of R&D capabilities is equivalent to telling everyone, "I don't have core competitiveness." Therefore, over the years, Dongya Pharmaceutical has continued to increase its investment in R&D, and it has been higher year by year.
According to the financial report data, from 2021 to 2023, the R&D expenses of East Asia Pharmaceutical will be 37 million yuan, 45 million yuan and 82 million yuan respectively. In the first half of 2024, Dongya Pharmaceutical's R&D expenses will be 44 million yuan, a significant increase of 41.97% year-on-year, and the increase in R&D will also increase the sales of the company's main drug products.
At the same time, the company's management expenses also increased significantly to 80 million yuan in the first half of the year, an increase of 31.05% year-on-year, which proves that Dongya Pharmaceutical has great omissions in R&D cost control and the company's daily operating cost control.
Reducing costs and increasing efficiency is a problem to be solved
While continuously strengthening its core competitiveness and strengthening the "high wall" of research and development, Chi Cheng may want to make the company "throttle".
It is understood that in addition to government incentives and subsidies, listed pharmaceutical companies can usually "reduce the burden" by optimizing supply chain management, improving production efficiency, controlling R&D and marketing expenses, strengthening financial management and cost accounting.
Supply chain management is a key part of cost control for pharmaceutical enterprises. By strengthening strategic cooperation with suppliers and realizing the collaborative optimization of raw material procurement, manufacturing, logistics and distribution, etc., the supply chain cost can be significantly reduced.
Improving production efficiency is to improve production efficiency and product quality by introducing advanced production equipment and automation technology, optimizing production processes and processes, and training and motivating employees, thereby reducing labor costs and manufacturing expenses.
In terms of controlling R&D and marketing expenses, marketing channels and promotional strategies can be optimized through fine-grained management of R&D projects and budgets.
In this regard, Yunnan Baiyao operates in a more effective way. It is reported that Yunnan Baiyao adheres to comprehensive budget management, gives full play to the value creation ability of management accounting in enterprise management, and promotes the tandem connection of strategic management and comprehensive budget by building a comprehensive budget management system under the guidance of strategy, so as to achieve the organic growth of strategy and the orderly growth of performance.
According to the data, in the first half of 2024, Yunnan Baiyao achieved operating income of 20.455 billion yuan, a year-on-year increase of 0.72%; the net profit attributable to the parent company was 3.189 billion yuan, a year-on-year increase of 12.76%; The net cash flow from operating activities was 3.261 billion yuan, a year-on-year increase of 44.82%.
In addition, it is also necessary to establish a sound cost accounting system to carry out detailed accounting and control of the cost of raw material procurement, manufacturing, logistics and distribution.
For East Asia Pharmaceutical and Chi Cheng, how to flexibly use and find strategies suitable for the company's own development to truly reduce costs and increase efficiency is still a topic.