Per reporter: Chen Xing, Jin Zhe Per editor: Chen Junjie
On the seventh day of the Chinese New Year, Sun Yifei (pseudonym), the owner of a medium-sized chain pharmacy in Zhuzhou, wrote in the circle of friends after the first round of golf after the opening of the year, "100 separate shots in the year of the ugly cow, happy high ball, win health". In an interview with the Daily Economic News, he was on his way to the golf course.
Few people in the industry can be as free as Sun Yifei. In the past four or five years, the chain pharmacies listed with the help of capital power have accelerated mergers and acquisitions and expansion, the survival gap of small shops has become smaller and smaller, there are more and more loss-making stores, and some self-employed people simply quit their employees to get up early and go dark to guard the store in order to save labor costs.
But in the secondary market, chain pharmacies give shareholders a good return. As of the close of trading on February 23, 2021, the total market value of Yixintang, Yifeng Pharmacy, Ordinary People and Da ginsenglin is about 168 billion yuan, which is about 7 times that of the time of listing. Since 2018, more than 2/3 of the outstanding shares of these listed companies have been tightly held by hundreds of institutions. This situation came to an abrupt end in the fourth quarter of last year, the target labeled "pharmaceutical e-commerce" in the primary market was more popular, and several chain pharmacy stocks in the secondary market were reduced by the institution's "clearance" type, and the shareholding ratio fell below 6%, the lowest point in the past three years. But on the other hand, the total market value of the newly listed JD Health has exceeded HK$500 billion, and Tesco has also risen by nearly 10 times after listing.
Does e-commerce want to revolutionize the life of a pharmacy? Is the chain pharmacy plate still fragrant? The capital change at the beginning of the new year has made large chains and small and medium-sized physical pharmacies stand together again, and they cannot predict whether the crazy influx of capital into pharmaceutical e-commerce will make the industry reshuffle again.
Anxiety in small and medium-sized pharmacies:
There are more and more loss-making stores, and some people say that "outsiders want to subvert the industry"
"I'm the only one in the Zhuzhou pharmacy owner who has time to play golf because everyone else is anxious and busy." Sun Yifei did not say this to show off, he had already used playing as an emotional outlet.
Sun Yifei has been in the industry for nearly 20 years and has experienced all kinds of anxiety, Zhuzhou is one of the most competitive areas in the country's pharmacies, with more than 1,000 stores in the city of more than 4 million people, and Sun Yifei has more than 150.
Since a few years ago, chain pharmacy listed companies have begun to expand rapidly, either through direct acquisitions or "barbarians" to encircle and suppress, in a county only on an old street of several hundred square meters flagship store, and then paved two or three small shops around, immediately become the first local brand.
Li Qiao is a witness to this drastic change, he runs a pharmacy on a small road in the East Second Ring Road of Chengdu's Chenghua District, and there are six or seven pharmacies within a distance of less than a kilometer, five of which hang signs of chain pharmacies such as "Yixintang" and "Neptune Star". Compared with the lively scene of the chain pharmacy store with bright lights and continuous music, the façade of LiQiao, which is only more than 50 square meters and the owner sits alone, is particularly deserted.
In the past, when it was booming, Li Qiao invited five or six salesmen, and two people to cash in, and then the chain pharmacies opened one after another, and the monthly salary increased by hundreds and one thousand, and he poached his clerks. For large chains, this little expense is nothing, but a small boss like Li Qiao can't afford it. In recent years, the new regulations for each pharmacy to be equipped with a licensed pharmacist, Li Qiao calculated, this expenditure is equivalent to two or three sales money, coupled with the store rent, labor every year, he had to decide to go out to see the store - from 8 a.m. to 10 p.m.
Natural selection, survival of the fittest, this is the inherent law of survival in nature, but what makes small and medium-sized pharmacy owners unacceptable is that they expected chain pharmacies as "big brothers" to promote the outflow of prescriptions and expand drug sales in the out-of-hospital market, but the reality is that these chains open stores and acquire with high intensity, and accelerate the internal volume of channels.
Data show that from 2010 to 2019, the total sales volume of China's pharmaceutical circulation industry increased from 708.4 billion yuan to 2,366.7 billion yuan, an increase of 234.09%. According to the sales of each terminal in 2019: the sales of drugs in the terminal market of retail pharmacies were 419.6 billion yuan, accounting for 23.37%, and public hospitals and primary medical institutions are still the majority.
In the face of large chain pharmacies rushing to raise funds, the survival of small and medium-sized pharmacies is becoming increasingly difficult. Industrial Securities Research Report shows that in 2019, 35.3% of retail pharmacy store sales increased by more than 5%, while 44% of store sales fell by more than 5%. More than 60% of small stores with a monthly turnover of less than 50,000 showed significant negative growth, and the survival of the fittest intensified.
A pharmacy owner told the "Daily Economic News" reporter: "The cake is so big, it eats your share, rather than as a dragon head to lead everyone to make the cake bigger." The chain's large-scale acquisition of hundreds of square meters and thousands of square meters of facades will affect the business of small and medium-sized pharmacies around it. This influence is not only reflected in the price, there are many invisible things, their right to speak can allow manufacturers to directly not supply nearby stores, can take the exclusive agent. ”
Zhang Le (pseudonym), the head of a pharmacy in Hunan, also can't understand the "wrap-up" industry competition before and after, and there was only one pharmacy in the area of 3,000 people before, but now it has shrunk to 1,000 people. Many times the stores of large chains are opened with these local pharmacies, not to mention their own brands, price advantages, but also to dig people in their stores, and there are few talents in small places, which is a huge impact on the stable operation of pharmacies.
According to the data of prospective economists, in recent years, due to the rapid development of the pharmaceutical retail industry, the threshold for the establishment of pharmacies is low, and the number of pharmacy stores has increased rapidly, resulting in an overall downward trend in the number of single-store service visits, and the average store service population in 2018-2019 has decreased by 6.79% and 6.38% year-on-year, respectively, with 2854 person-times/stores and 2672 person-times/stores, respectively.
What Li Qiao felt deeply was the intangible brand and digital management of the chain pharmacy. He recalled that in the past, setting up a table at the door of the store to promote can always attract many nearby residents, and the effect of this half a month can be three or four times the usual sales, but now the chain pharmacy has special people to do public accounts, manage registered members, have preferential information directly pushed, coupled with upstream procurement advantages, varieties and low prices, how to compete?
The price advantage of chain pharmacies has also caused dissatisfaction among single pharmacies, because the chain pharmacies listed are affordable pharmacies, which are 30% to 50% cheaper than the original pharmacies, violating the "unspoken rules" in the industry. Previously, Yifeng Pharmacy and ordinary people even encountered the fierce behavior of newly opened stores being "smashed" by opponents.
"How can the personal financial strength be compared to capital, can only say that the life is lived, earn less, try not to lose, and go home to retire to the pension." After saying this, Li Qiao finally received the first customer to come to the door during the interview, which was close to 11 a.m. at this time.
Compared with them, Sun Yifei, as a "passer-by", reacted flatly to the fierce competition in the industry, and he was even more annoyed with those "outsiders". Sun Yifei noticed that the most people who come to pharmacies now are takeaway workers riding motorcycles and electric vehicles, and the platform sends the customer's drug purchase orders to pharmacies and riders, and the pharmacy dispenses goods and the riders pick up the goods.
"Outsiders are disrupting the industry." This is the biggest pressure sun Yifei faces, and the traditional process of selling drugs is completely broken by the Internet.
In order to alleviate anxiety, Sun Yifei came up with the idea of cautiously opening new stores and guarding his own acre and three points of land. "When the store opened to more than a hundred, we maintained this level for about four or five years. And we have never been out of Zhuzhou, and we do not plan to go out in the future. ”
Anxiety in chain pharmacies:
At the end of last year, the organization was greatly reduced, and the campaign has reached version 2.0
The "outsider" in Sun Yifei's mouth is a delivery man who shuttles through the pharmacy. Standing behind the delivery man is the capital that tries to get a return from it. This is the 2.0 version of the retail pharmacy campaign, that is, who can open the last mile of O2O. The 1.0 version of the campaign is a number of pharmacies between listed companies.
With the help of listing platform financing, the stores of chain pharmacies have grown by leaps and bounds. According to the statistics of the "Daily Economic News" reporter, after 5 years of listing, the number of stores of Yifeng Pharmacy as of the end of September 2020 exceeded 5500, with a net increase of about 4700, with an average of 2 to 3 stores per day. The number of stores for the common people increased from 999 at the time of listing to 6177, and the number of stores in Dashanlin increased from 2409 to 5541. From the listing to the present, the number of stores in the three listed companies has reached 12,000.
Obviously, these newly merged stores continue to "transfuse" for listed companies in terms of revenue and profit indicators. Wind data shows that from 2015 to 2019, the compound annual compound annual growth rate of Revenue and Profit of Yifeng Pharmacy was 35.74% and 31%, respectively, and less than 10 of the more than 3800 listed companies could maintain such a high growth rate. The compound annual growth rates of revenue and attributable net profit of the people in the same period were 20.62% and 16.08%, respectively.
From the absolute value of the analysis, the revenue growth of chain pharmacies matches the speed of store expansion. In terms of the number of stores, Yifeng Pharmacy has increased by about 6 times compared with the pre-market level, and the corresponding revenue growth has also reached 5 times.
Because of this, in the eyes of capital, chain pharmacies are more like consumer enterprises, and small and medium-sized pharmacies are "separated by a wall" or turned to a street, and the large chain is like a giant magnet, sucking away the customer flow that belongs to small and medium-sized pharmacies. The standard replicable large-scale business model can continuously generate revenue, which is a fairly stable investment target.
Since 2016, Yifeng Pharmacy has been a heavy stock favored by institutions, accounting for more than 60% of the outstanding shares, and at the end of June 2020, Yifeng Pharmacy still has nearly 400 institutions holding 378 million shares, accounting for 73.64% of the outstanding shares of Yifeng Pharmacy in the current period. The people's "hugging" behavior is more obvious, and since the second quarter of 2018, institutional shareholding has even exceeded 80%.
However, the "Daily Economic News" reporter noted that in the fourth quarter of last year, a number of institutions collectively "ebbed" the chain pharmacy plate. According to the statistics of Oriental Wealth Choice, at the end of September 2020, 48 institutions held 341 million shares of Yifeng Pharmacy, accounting for 66.34% of the outstanding shares, and 50 institutions held 302 million shares of the people, accounting for 72.51% of the outstanding shares.
By the end of December 2020, the institutional shareholding ratio of Yifeng Pharmacy has dropped to 2.56%, and the people have dropped to 5.47%. At the end of June 2020, the institutional shareholding accounted for 59.10% of the outstanding shares of the large ginseng forest, but only 3.58% was left at the end of the year.
"What is clear is that the fourth quarter will definitely reduce holdings." He Shan, director of R&D of Senrui Investment, told reporters that because fund companies will only disclose the top ten positions, this statistic shows that most funds adjust their positions in chain pharmacies, but they are not necessarily cleared, and it is expected that the online channels will impact the institutions of offline pharmacies.
What made the attitude of institutions change was precisely the 2.0 version of the campaign after the capital entered the game. He Shan said that because the investment logic has changed after the epidemic, the market expects that online traffic will further catalyze more people to buy drugs online, and institutions have diverged over the long-term line of chain pharmacies.
Li Ping (pseudonym), who has long studied pharmaceutical investment, also holds the same view. He said that Internet medical treatment has partially shifted customer traffic, and the long logic has been tested, while the online concept of Jingdong Health and Drug Tesco listing is extremely hot. "Although these retail pharmacies have flagship stores on the platform, they still contribute traffic to Internet medical companies." From the perspective of the industry, the market share of Internet medical care has become higher and higher, and the share of pharmaceutical circulation has decreased significantly. ”
Anxiety across the industry:
Will brick-and-mortar pharmacies be "revolutionized" by e-commerce?
This is the "desertion" that has never been encountered since the chain pharmacy plate was listed. However, from the perspective of capital flow, it seems that capital has not changed its preference for "drug selling business", but has turned the bow of the ship towards the third-party drug sales platform with Internet attributes.
At the end of 2020, JD Health was listed on the Hong Kong Stock Exchange, with a total market value of HK$506 billion so far, almost 2.5 times the sum of the four major A-share pharmacies. Not only that, Ali Health and Ping An Good Doctor also had a big increase during the epidemic last year. In January this year, the listed drug Tesco created a 986.12% increase in 4 trading days after listing, and a brokerage source said that the reason for the surge in drug Tesco is that it is different from the traditional pharmaceutical circulation service provider, and the company uses the Internet and big data technology, which has imagination space.
The topic of whether the chain pharmacy business will be "revolutionized" by e-commerce has never stopped. A few years ago, Xie Zilong, chairman of the people's board, even stated that if the policy is liberalized, only one single pharmacy can apply for an online sales prescription drug license, which is a "disaster" for physical pharmacies.
In fact, Yifeng Pharmacy, the people, Yixintang and Dashenlin all included the development of e-commerce into the plan when they were listed, but since 2014, pharmaceutical e-commerce has gone through several ups and downs, especially after the introduction of the new regulations prohibiting online sales of prescription drugs in 2017, the prospects of pharmaceutical e-commerce have become more and more bleak, and these head companies have basically opened flagship stores on third-party platforms, mainly third-party traffic.
On January 11 this year, the official micro of the National Medical Insurance Bureau announced the "Interim Measures for the Designated Management of Medical Security in Medical Institutions" and the "Interim Measures for the Designated Management of Medical Security in Retail Pharmacies", which were interpreted by the industry as a major benefit for pharmaceutical e-commerce.
In this regard, the relevant people of the people said in an interview with the "Daily Economic News" reporter that the above policies set the tone for the fixed-point management of pharmacies' medical insurance, and the pilot of pharmacies in various places is expected to accelerate. The Medical Insurance Bureau clarified in its interpretation that the circulation of prescriptions and the online sale of prescription drugs are not equivalent, and what is regulated in the current measures is the mode that prescriptions that meet the regulations can be transferred to physical pharmacies to pick up drugs or distributed by physical pharmacies, while the relevant policies for online prescription drugs need to be studied and clarified by the relevant competent departments. This time, it is clear that physical pharmacies are the main body of prescription circulation, which relieves the concerns about Internet competition in the market. The gradual advancement of the prescription outflow policy shows the determination of the national medical reform to land.
Nowadays, chain pharmacies have collectively suffered institutional reductions, and the capital market does not love the traditional way of selling drugs?
The reporter noted that the reason why chain pharmacies are favored is mainly due to the double optimism about the outflow of prescriptions and mergers and acquisitions. Referring to the concentration of the pharmacy industry in developed countries, it is conservatively estimated that the concentration of China's retail pharmacy industry has at least 3 times to 5 times more room for improvement. For the out-of-hospital market, some insiders previously expected that the scale of China's prescription outflow market in 2020 may reach 250 billion yuan.
Zou Kanglu, chairman of Sichuan Derentang Pharmaceutical Chain Co., Ltd., is not so optimistic, arguing that policymakers must subjectively want to promote the outflow of prescriptions, but one factor that limits the outflow of prescriptions is that there is no national-level government public prescription circulation platform, and in fact prescriptions do not flow.
He further emphasized that coupled with medical insurance to encourage medical institutions to use collection varieties, if medical institutions exceed the use of collection varieties, medical insurance funds will be encouraged, which makes medical institutions use collection varieties as a means of profit or cost support, so there are many practical restrictions on prescription outflow. However, the judgment given by the listed chain pharmacy is very different. The relevant people of the people stressed that taking the varieties with quantity procurement as an example, for the varieties selected in the winning bid, the company can obtain almost the same purchase price as the hospital, and sell as a suction and drainage variety with the pricing of the surrounding public hospitals, and the sales in the pharmacy eliminate the transportation costs to the hospital, the hospital registration fee and the time cost of the hospital consultation for several hours, which has a certain competitive advantage.
In addition, for the varieties that have not won the bid and have not participated in the procurement of quantities, especially the foreign-funded original research drugs, the company still guarantees the supply of drugs and sells them at reasonable prices. Compared with the hospital's collection of varieties under the pressure of volume can only provide a small number of generic drugs, the people's pharmacy provides a huge space for customers in terms of selectivity.
Judging from the situation learned by the reporter, the above two aspects still have a large landing space, and are full of challenges, the increase in industry concentration is the trend of the times, industry competition and elimination shuffle will be further intensified, will the institutions that retreated at the end of last year return to the pharmacy plate?
The general answer for brokers is to continue to be bullish. Huachuang Securities Research Report pointed out that from the current development of the O2O model, the local pharmacy has a high density, complete varieties and reasonable prices of large chains to obtain more O2O diversion. O2O essentially introduces the customer flow of some small and medium-sized pharmacies into large offline chains, while the reduction of customer flow of small and medium-sized pharmacies further promotes the logic of concentration improvement, and the logic of "strong and strong" in pharmaceutical retail is consolidated.
"Will online disrupt the offline?" I think it's a long process. Li Ping believes that the performance forecast of several major pharmacies is still very good, the pharmacy sector is one of the few areas that benefit from medical insurance control fees, and large chains can maintain good performance growth through integration.
But for small and medium-sized pharmacies, the future may become more and more difficult.
Zou Kanglu said that in the future, the living space of small and medium-sized chain pharmacies and single pharmacies will become narrower and narrower. "Because after the funds in the personal medical insurance account are used up, the designated pharmacies will definitely be included in the overall planning, and will not be rolled out in such a large area as now, and the future designated pharmacies may be reduced by more than two-thirds, for pharmacies that are not included in the scope of the overall planning, there are only two roads, either closing the door or transforming." This process will take about three to five years. ”
In this regard, Huang Xiuxiang, executive deputy director of the Policy Research Institute of the China Association of Pharmaceutical Materials, also said that the key to the outflow of prescriptions is the separation of medicines, that is, hospital operation, doctors' income and drug sales are not related, but now the hospital is still mainly through the collection of warranty funds, pharmaceutical distribution companies commercial rebates to maintain hospital operations, in this ecology most of the small and medium-sized pharmacies are very sad. After the introduction of the two measures, industry supervision has become stricter, and it is expected that some small and medium-sized chain pharmacies may withdraw from the medical insurance fixed-point qualification. In addition, goods outside the medical insurance catalog cannot be sold by card, and the impact on these pharmacies will be very large.
In the view of many operators interviewed, the development of the pharmaceutical retail industry should still avoid low-end competition within this channel, and should promote the outflow of prescriptions. But on the other hand, they also need to accept the O2O model reengineering brought about by Internet technology.
At present, small and medium-sized chain pharmacies have begun to join hands to find more survival opportunities. The Growth Pharmacy (Hunan) Branch of the China Association of Pharmaceutical Materials organized the association platform through the group organization, eliminated the intermediate links and directly supplied, reduced the procurement cost, and realized the control of sales and price control. For this kind of "self-help", Sun Yifei believes: "This form of solidarity and mutual assistance is actually to tie everyone together through the bond of capital or the bond of interest appeal, which is an attempt, but because the organizational form is still relatively loose, whether it can be successful or not depends on the trader."
Journalist's Note
There is no end to business innovation
The increase in concentration is the key feature of an industry from the embryonic and extensive stage to full competition and mature development. The pharmacy industry is going through this process, and its performance is the disappearing "mom-and-pop shops", small pharmacies and single stores, and chain pharmacy companies that continue to race around.
For chain pharmacy companies, it is normal business logic to rapidly expand the scale and seize the share with the blessing of capital, but for those small and medium-sized pharmacies, capital is urging them to make the choice of closing their doors or struggling to survive.
In the interview, there are pharmacists who pay attention to industry policies every day, small bosses who re-see the store after retirement to save labor costs, and business owners who decide to let go of anxiety and play golf to enjoy life. The fates of individuals are very different, but what is the same is the development process of the industry behind it and the capital forces that accelerate this process.
However, capital seeks profits. At a time when the listed companies of chain pharmacies are enjoying the dividends brought by capital, capital seems to have gone towards a brighter sunrise. There is no end to business innovation, and perhaps only by building sustainable and self-innovating business models before the crisis comes is the only way to avoid sacrificing under the industry.
(The right to disseminate information network of this work belongs to Shenzhen Tencent Computer System Co., Ltd. and shall not be reproduced without authorization.) ）
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