Bankruptcy and reorganization of well-known pharmaceutical companies

How can Chinese medicine companies smoothly "turn over"

01 Once tied with Tongrentang and Hu Qingyutang

On September 8, Qichacha APP showed that Guiyang Dechangxiang Pharmaceutical Co.

Image source: Enterprise Chacha

According to the official website of Dechangxiang, before the liberation, Dechangxiang, Tongrentang, Hu Qingyutang, etc.

It is reported that Dechangxiang’s main business is the production and sales of various medicaments.

Dechangxiang's bankruptcy and reorganization were not without warning

In July 2020, Guizhou Sanli announced that it intends to increase capital in Hanfang Pharmaceutical and Dechangxiang Pharmaceutical through cash, and intends to pay a deposit of RMB 100 million to the asset controller to obtain no more than 51% of the equity

Jiaying Pharmaceutical also announced the termination of the acquisition of Dechangxiang

In February 2018, Jiaying Pharmaceutical announced that it intends to purchase 99.

However, on September 3, 2019, Jiaying Pharmaceutical announced that it would terminate the planning of major asset restructuring.

On September 2, according to Leju Finance and Economics, Dechangxiang Pharmaceutical had been involved in 36 judicial cases.

02 The challenge of Chinese medicine companies is coming

According to the Beijing News, as of August 31, 71 listed Chinese medicine companies have released their 2021 semi-annual reports, of which only six companies including *ST Kangmei, Jiyao Holding, and Guangyuyuan are at a loss

According to the data from the company check, the number of registrations of Chinese "Chinese medicinal materials" related companies is decreasing since this year: in 2018, the number of registrations was 129,000; in 2019, the number of registrations declined; in 2020, the number of registrations was 119,000, an increase of 6.

On the one hand, due to its dazzling performance in the epidemic, the recognition of Chinese medicine at home and abroad has been greatly improved, and unprecedented development opportunities have been ushered in.

In 2020, the new version of the Pharmacopoeia was issued, which puts forward higher standards for the quality of Chinese herbal medicines.

In addition, stricter restrictions on the use of traditional Chinese medicine injections have also affected the operations of some companies

In December 2020, the latest 2020 version of the medical insurance drug catalog restricts 37 traditional Chinese medicine injections such as Acanthopanax Senticosus Injection and Guanxinning Injection, which can only be used in medical institutions above the second level.

In addition to the above-mentioned influencing factors, Chinese medicine companies are currently under pressure from the centralized procurement of proprietary Chinese medicines.

Generally speaking, people in the industry generally believe that the current is a critical period for the development of the Chinese medicine industry.
A group of pharmaceutical companies that cannot keep up with the development of the industry will be eliminated, and those who smoothly "turn over" will enter a new realm of development
.

03 How to smoothly "turn corners"

Facing external challenges, Chinese medicine companies are also seeking their own breakthroughs
.

Cyberlan Consulting Beijing Shengshikanglai Chinese Medicine Marketing Planning Company Chairman Shen Yong, there are currently three common modes for pharmaceutical companies to seek breakthroughs
.

The first is to develop into the big health field, and develop health care products and "food" brand products, such as Jiangzhong Monkey Mushroom Biscuits launched by Jiangzhong Pharmaceutical;

The second is to continue to develop the in-hospital market.
Relevant pharmaceutical companies need to increase investment in scientific research, develop large varieties of traditional Chinese medicines, and strive to enter the medical insurance catalogue and the basic medicine catalogue;

The third is to develop orphan drugs and enter the fields of gynecology, pediatrics, and rare diseases.
This development method is relatively rare, but the state has supporting policies in related fields
.

Regarding how pharmaceutical companies choose the path that suits them most among the many development directions, Shen Yong believes that the first thing to consider is whether the company's original channel advantage is a hospital or a pharmacy.
The company should continue to develop based on its original advantage
.

The second is to consider the fierce competition in the market.
Some fully competitive markets, such as gastrointestinal digestion, cardiovascular and cerebrovascular diseases, and respiratory diseases, are not recommended for companies to enter; niche markets such as pediatrics, dentistry, ear diseases, and skin diseases can be based on their own conditions.
Development
.

The last is whether the raw materials are stable.
If the raw materials are uncontrollable, the development status will be restricted
.

It is understood that Dechangxiang had previously entered the field of industrial hemp, and its subsidiary Guizhou Dechangxiang Chinese Medicinal Plants Co.
, Ltd.
acquired and obtained a 70% controlling stake in Binchuan Relink
.
Binchuan Relink was the largest industrial hemp plantation enterprise in Yunnan Province at that time, holding nearly 20 planting licenses
.

De Changxiang said that industrial hemp is also a kind of Chinese medicinal material in a sense, and it has a very wide range of applications for neurological diseases such as epilepsy
.

As we all know, Yunnan Baiyao is also developing its industrial hemp business
.
In addition, industrial hemp may also be one of the opportunities that Jiaying Pharmaceuticals intended to acquire Dechangxiang.
The industry believes that the entry into industrial hemp will bring Jiaying Pharmaceuticals better development
.

However, the situation is different for pharmaceutical companies at different stages of development
.
Shen Yong told Cyberland that if the company's current operating conditions are already in trouble, its development must be more cautious
.
Perhaps it is an alternative way to survive with broken arms, sell non-core assets, and obtain cash flow
.

For example, more than ten years ago, Dongsheng Group, the old owner of Guangyuyuan, was also in a dilemma of being auctioned
.
At that time, the Dongsheng Group sold all its assets, and only retained the old name of Shanxi Guangyuyuan as a "tinder".
Later, it made a comeback and became a classic case in the industry
.