China's largest pharmaceutical group assets reorganization

The reorganization of assets of the group's long-awaited group company (hereinafter referred to as Sinopharm Group) finally kicked off.

On the evening of October 20, Sinopharm Accord Pharmaceutical Co., Ltd. (000028.SZ, hereinafter referred to as Sinopharm Co., Ltd.) issued a notice of suspension of major events, saying that the actual controller of Sinopharm Group and the controlling shareholder of Sinopharm Holding Co., Ltd. (01099.HK, under Called Sinopharm Holdings) is planning major events involving the company's business operations. The company's stock will be suspended from the market opening on October 21.

At the same time, Hyundai Pharmaceutical (600420.SH), another A-share listed company under the China National Pharmaceutical Group, also issued a suspension announcement, saying that it had received notice from an indirect controlling shareholder, Sinopharm Group, that Sinopharm Group is planning major events involving the company's business operations. It involves major asset restructuring.

Sinopharm Group, established in November 1998, is China's largest medical and health industry group directly managed by the State-owned Assets Supervision and Administration Commission of the State Council. It focuses on the distribution, retail, R&D and production of health-related products such as preventive treatment and diagnostic nursing. It owns 10 wholly-owned or controlled subsidiaries and 6 listed companies such as Sinopharm, Sinopharm, Tiantan Bio, Hyundai, Sinopharm, and Chinese Medicine, among which Sinopharm and China TCM are listed on the Hong Kong stock market.

As one of the first six pilot companies of the “four reforms” of the SASAC, the pilot project of Sinopharm Group was approved by the SASAC in early February of this year. It will develop a mixed-ownership economy and perform senior management selection and performance assessment on the board of directors. And salary management pilots.

People in the industry believe that because of their relative strength, state-owned enterprise reforms are expected to be “better” for listed companies of Sinopharm Group.

Despite the intensive release of medical reform policies this year, the pressure for survival in the pharmaceutical industry has intensified, and the growth rate of the industry has slowed down. In the first half of this year, Sinopharm has achieved an operating income of 128.14 billion yuan, a year-on-year increase of 10.34%, and a net profit attributable to the parent company of 387 million yuan. The year-on-year increase of 10.91%.

Deeply cultivating the "Guangzhou-Guangzhou" Sinopharm Accord, has achieved full coverage of hospitals in Guangdong, Guangxi and Guangdong, and the local pure-selling business share exceeds 18% and 24% respectively. A research report of CICC believes that asset reorganization will bring about sufficient upward flexibility for Sinopharm, and the anticipated expansion of mergers and acquisitions is expected to restart.

Sinopharm Co., Ltd. has attached great importance to its controlling subsidiary, Sinopharm. In July 2013, Sinopharm Co., Ltd. subscribed for the additional issuance of shares of Sinopharm Co., Ltd., and its shareholding ratio rose from the previous 38.33% to 51%. The remaining 49% of the shares were held by Fosun Group. In view of this, Tian Jianqiang, an analyst at CITIC Securities, believes that in the future, Sinopharm and Sinopharm are expected to fully implement multi-faceted operations such as equity incentives, employee ownership, and outreach and acquisitions.

As the largest distributor and retailer of pharmaceuticals and health care products in China, Sinopharm relies on its nationwide distribution and distribution network to provide distribution and value-for-money services for pharmaceuticals, medical device consumables and other healthcare products at home and abroad. . As of June this year, Sinopharm's subordinate distribution network has covered 31 provinces, autonomous regions, and municipalities across China, including 12,850 hospitals (of which 1,752 are tertiary hospitals), 100,803 small-scale end customers, and 65,413 retail pharmacies.

Currently, Sinopharm's national pharmaceutical distribution logistics network includes four hub logistics centers, 42 provincial logistics centers, and about 100 city-level logistics outlets, with a total of more than 240 outlets. In the field of pharmaceutical distribution, Sinopharm has the largest market share in the country, with a market share of 12.7%.

In the first half of this year, Sinopharm achieved operating revenue of RMB 111.06 billion, up 16.8% from the same period of last year, and net profit also increased by 30.6% year-on-year to RMB 1.91 billion.

Although Sinopharm had already introduced strategic investors as early as 2009, Wang Jun, an analyst at BOC International, believes that appropriate equity incentives and reasonable internal adjustments, such as the integration of pharmaceutical industry operations, will further boost profits.

Modern Pharmaceuticals is a high-tech pharmaceutical company with chemical raw materials, new drug preparations and biopharmaceutical products. It has 5 subsidiaries and 3 production bases. Its official website stated that the company's scale and profitability rank among the top 10% in Shanghai's pharmaceutical industry.

In the first half of this year, Hyundai's total revenue was 1.442 billion yuan, an increase of 5.21% year-on-year, and the net profit attributable to the parent company was 123 million yuan, a year-on-year increase of 20.25%.

Compared with other listed companies under Sinopharm Group, Hyundai Pharmaceutical's “State-owned Gene” is more pure, and its largest shareholder Shanghai Medical and Engineering Institute is wholly-owned by Sinopharm Group. Therefore, Tan Dingyuan, an analyst at Huaan Securities, believes that modern pharmaceuticals have greater potential for mixed reform and stronger capital operation expectations.

Right now, the reform of state-owned enterprises is accelerating. With the exception of the Sinopharm Group, the “Total Iron” mixed reform program has also taken the lead in the first step. China Railway Group (601390.SH) intends to inject the equity of the related subsidiaries of the industrial manufacturing sector into the China Railway Second Bureau to replace the existing assets and businesses of the China Railway Second Board, but the scope of the assets involved has not yet been finalized.

The industry generally believes that China Railway and Sinopharm have entered the asset restructuring track, which is a substantial breakthrough in the state-owned enterprise reform after the top-level design plan was announced. It is expected that there will be greater progress in the future.