Active withdrawal of the network or for the pharmaceutical company's 2020 performance "buried thunder"

May 25, Shanxi Province drug bidding procurement network hung out two notices, including Chenxin Pharmaceuticals, Chengdu Teo Pharmaceutical Group, Shi Pharmaceutical Group, Ha Pharmaceutical Group, Shenwei Pharmaceuticals and other 25 enterprises applied to withdraw the direct hanging network product platform registration qualification, involving 66 drug regulations, enterprises also made a national unified non-supply commitment. The removed mesh drugs include sodium chloride injections, double yellow-linked particles, etc.In fact, since last year, the market value of many listed companies with underlying drugs has begun to turn downwards, except for a brief rise during the outbreak, compared with some of the direct outbreak-related beneficiary stocks. The divestment of the listed companies may be one reason for their share price slump.

pharmaceutical companies helpless to withdraw the network Chenxin pharmaceutical industry has the greatest impactAmong the removed drugs, including sodium chloride injections, sodium glucose chloride injections, etc. Among them, some of the rules belong to the basic infusion, such as Chenxin Pharmaceuticals sodium chloride injection (100ml:0.9g), glucose injection (250ml:12.5g); Such as the double yellow-linked particles (no sucrose), famotidein injection (2 ml: 20mg), the provincial centralized tender for non-essential drugs, such as Chengdu Teo Pharmaceutical Group's hydrochloric acid Benaspri tablets (10mg) and so on.In addition, double yellow-linked particles, kramycin capsules and other clinical large varieties are also among them.Among the 66 products, Chenxin Pharmaceuticals and its controlling subsidiary Chen Xinfudu Pharmaceuticals (Wensing) removed the largest number of drugs, a total of 22 products of the drug application to withdraw from the network, including 4 standard sodium chloride injections, 5 standard glucose chlorine Sodium chloride injection, 8 standard glucose injections, as well as sodium biclofenate eye drops, tobmycin eye drops, qumimi new creams, hydrochloric acid ampledine eye drops, famotidein injections (2ml:20mg).Secondly, Shi Pharmaceutical Group, its Three Companies of Euro-Italian Pharmaceuticals, Zhongno Pharmaceuticals and Yinhu Pharmaceuticals have a total of 8 kinds of pharmaceutical products 12 product regulations to apply for withdrawal of the network, of which 9 for the provincial centralized tender for the winning basic drugs, 2 for the provincial centralized tender for the winning non-essential drugs.Chenxin Pharmaceuticals' 2019 annual report shows that the company achieved a cumulative operating income of RMB4,113 million, an increase of 8.00% over the same period in 2018, and a net profit of RMB515 million, an increase of 2.19% over the same period in 2018. Small-capacity injections achieved operating income of 878 million yuan, an increase of 19.61 percent over the same period in 2018, while gross margin increased by 6.88 percentage points over the same period. Drops and pastes achieved operating income of 284 million yuan this year, up 14.05 percent from the same period last year, and gross margin increased 2.16 percent from the same period last year. The company's exclusive packaging of PP ampoule products sales increased by 87.78 percent year-on-year.Chenxin Pharmaceuticals has performed so well, but the market has given it a price-to-earnings ratio of only 16.4 times and a price-to-earnings ratio of less than 1.5 times, and perhaps the continued withdrawal of the drug has become one of the reasons why its share price is difficult to rise.

bid price is too low Raw material costs skyrocketing Pharmaceutical enterprises into a dilemmaThe main reason for enterprises to apply for the removal of the network is that the variety is no longer profitable.It is a common phenomenon in the pharmaceutical industry in recent years for pharmaceutical enterprises to apply for product cancellation. On January 8th this year, Hainan Province's Pharmaceutical Centralized Purchasing Center issued a notice that since April 2019, a total of 250 drug withdrawal applications have been accepted, 171 of which have been discontinued due to rising production costs, lack of normal supply, production line modification, production line stoppage and other reasons.In recent years, the monopoly phenomenon of RAW drugs is serious, the price has skyrested, in addition to the relevant departments of the state should step up the fight, the most critical is to liberalize the API filing system.Drug companies hang up the network and then withdraw the label, which means that pharmaceutical companies have chosen to scrap the label.What are the consequences of drug waste? It is understood that once the drug scrapping, withdrawal of the network means that will exit the market, lost the original market share, its cost is naturally not small. In addition, in accordance with the relevant rules of tendering and credit management, these production enterprises may also be included in the list of unperforming enterprises, and other provinces may abandon such enterprises, these enterprises will continue to participate in the bidding opportunities will become very slim.On April 23 this year, Hainan Provincial Public Resources Trading Service Center issued a "notice on the publicity of the part of the new hanging network and withdrawal of drug information", the notice mentioned that aweitic acid tablets, quepib tong tablets, lithium carbonate tablets, heparin sodium injection, hydrochloric acid bubikain injection 5 drugs due to rising costs, apply for removal of the net.Not only Hainan, Sichuan, Fujian, Zhejiang, Gansu and other provinces this year have appeared in the pharmaceutical companies to voluntarily scrap the label or withdraw the situation of hanging the net. Why do companies risk being included in bad records and exit the market? Industry insiders say that enterprises to withdraw from the market is also a last-order.   On the one hand, these drugs are too cheap for companies to give up without profit. In recent years, because raw materials and production costs are rising year by year, drug prices are too low, pharmaceutical companies profits are small or even can not make money.   The decline in drug prices has been the general trend. For example, Hubei Yixiong Xiangrui Pharmaceuticals' nephritis tablets (0.36g x 100 tablets) have a winning bid of 20.35 yuan in Sichuan in 2018, while their winning bid in Jilin in 2011 was 24 yuan;   Sichuan Province for the pharmaceutical online trading production and operation enterprises have provisions, violations of contractual agreements and other acts, a violation, to give 10 working days of rectification period, during which the suspension of the products involved in the network qualification;   The Measures for the Administration of Bad Records for the Centralized Procurement of Pharmaceuticals in Inner Mongolia Autonomous Region stipulate that there are circumstances stipulated in Article 11 for pharmaceutical production and operation enterprises and their agents, and interviews, circulars, warnings and serious warnings shall be given according to the serious weight of the circumstances. Refusal to correct, has caused serious consequences, included in the procurement of poor supply records, cancel all products of the enterprise in the autonomous region drug harvesting platform trading qualifications. If the enterprise and its legal representatives do not accept the application for centralized procurement within 2 years from the date of publication, the public medical and health institutions at all levels participating in centralized procurement in the whole region shall not purchase their products in any form within 2 years, and the contract for purchase and sale has been signed from the date of publication of the bad records.   In fact, for pharmaceutical companies, giving up a provincial market means giving up the national market. Many pharmaceutical companies in order to ensure that after two years can re-enter the market, chose to withdraw the network, not to the national market commitment.   As a result, more and more drug withdrawals this year are likely to be one of the biggest uncertainties about 2020 results for many listed companies. (
Pharmaceutical News Agency)
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