How should traditional Chinese medicine companies spin off traditional Chinese medicines and transform them?

On March 22, Livzon Pharmaceutical announced that it plans to acquire 40% of Tianjin Tongrentang held by Tasly Holding Group as a financial investor for 724 million yuan.

"An old Chinese medicine company that is transforming" sells its investment equity in Chinese medicine to "an old Chinese medicine company that is transforming.

01 Tasly: ​​Selling profitable, riding the wind and waves when transforming

This is Tasly's first sale in 2021.

Contradicting the name of Beijing Tongrentang, Tianjin Tongrentang is not a "waiting for leisure.

The predecessor of Tianjin Tongrentang was the Tianjin No.

According to Southern Weekend reports, Tianjin Tongrentang has gone through 8 equity transfers, and finally all state-owned shareholders withdrew, replaced by the Zhang Yansen family (also under the Hongrentang and Goubuli) and the Tasly Holding Group's industrial fund.

The financial report shows that its 2020 revenue was 818 million yuan, a year-on-year increase of 10%; the net profit attributable to shareholders deducting non-recurring gains and losses was 157 million yuan, a year-on-year increase of 12.

This is exactly complementary to Tasly's core product.

This may be one of the reasons why Tasly chose to enter Tianjin Tongrentang at that time.

On January 28, 2016, Tianjin Tasly Health Industry Investment transferred 40% of Tianjin Tongrentang’s shares through an agreement and became the company’s second largest shareholder.

Tianjin Tasly Health Industry Investment is an investment platform just established in 2015.

Although it is not possible to know the transfer price, during the holding of Tianjin Tongrentang, Tasly's health industry investment has benefited a lot.

Recently, Tianjin Tongrentang once again submitted application materials for IPO on GEM and received guidance to Tianjin Securities Regulatory Bureau.

In the face of such a "sweet potato", why did Tasly sell it?

Perhaps the expectations of Tianjin Tongrentang's listing are not high.

Now it's all over again, Tasly chose to withdraw.

For Tasly itself, there may be another reason-strategic need.

In October 2012, Yan Kaijing took over.
Tasly’s next year's revenue increased by 18.
89% year-on-year, non-net profit increased by 37.
52% year-on-year, and the net market value increased by 15.
8 billion yuan.
The market value growth hit a record high in 11 years.
The following is the annual major equity acquisitions and sales of the company after Yan Kaijing took over Tasly:

Through these dynamics, the transformation of Tasly after the second generation takes over is visible to the naked eye.
The most obvious is the change in slogan.
In 2013, Tasly’s development keyword was “one core with two wings”.
In 2017, this keyword disappeared in the annual report.
Instead, it promoted the coordinated development of modern Chinese medicine, biological medicine, and chemical medicine.
".
From core to synergy, it is not so much the "retreat" of traditional Chinese medicine, as it is the focus of Tasly in chemical and biological medicine.

Beginning in 2013, Diyi Pharmaceuticals, which now serves as Tasly's "chemical medicine factory", has been taken over.
Currently, Diyi has undertaken the production of Tasly's APIs and chemical preparations.
It has a manufacturing platform for chemical raw materials (anti-tumor API and common API) with an annual output of 300T, and a manufacturing platform for ordinary solid preparations and anti-tumor solid preparations with an annual output of 2.
2 billion tablets (tablets), including temozolomide capsules, dexzopiclone, and Lai More than 20 chemical preparations such as Nopril Hydrochlorothiazide Tablets.

In 2015, through acquisitions and capital increase, Tasly Biopharmaceuticals were deployed.
By 2018, Tasly Biopharmaceuticals will be officially independent, and a preliminary pattern of coordinated development of Chinese medicine, chemical medicine and biological medicine will be formally formed.
In 2019, some unnecessary sectors will be cut off and focus on the development of these three Piece.

On that day, Snickers' development map was clearly on paper, and its sales purpose was also clear at a glance.

02 Diversified business and the chairman's medical "empire"

On March 23, Livzon Group announced its 2020 annual report.
At the same time, its parent company Joincare also announced that Livzon Group will acquire 40% of Tianjin Tongrentang held by Tasly for RMB 724 million.

After the transaction is completed, Livzon Group can cooperate with Tianjin Tongrentang in the development of Chinese medicine business, and can realize corresponding investment income through its cash dividends or IPO listing.

After the announcement, there were divergent opinions.
Some people questioned why Livzon did not focus on innovative drugs? Some people think it is good for health, this is another wise investment by Zhu Baoguo.
.
.

In fact, as Big Pharma, Livzon Group certainly sees the dividends of innovative drugs, but the former "Glory" API and Chinese medicine sectors do not conflict with innovation.
The all-rounder in the "big health" industry may be its true layout.

Livzon Group’s annual report shows that the total revenue in 2020 is 10.
52 billion yuan, of which chemical preparations business accounted for more than 50%, API business accounted for 23.
32%, Chinese medicine accounted for 11.
54, and diagnostics and reagents accounted for 13.
22%.
Among the chemical preparations, the digestive tract and gonadotropins accounted for 23.
63% and 18.
27% of total revenue, respectively.

Obviously, chemical preparations are the main source of Livzon Group’s performance.
It also pointed out in the annual report that “The Group has entered a new stage of innovation-driven development.
The innovative drug ilaprazole series products, as well as the high-barrier complex preparations of acetic acid for injection Prorelin microspheres continue to grow at a high rate.
"

As we all know, the 1.
1-type new drug ilaprazole has always been the flagship product of Livzon Group.
In 2020, the ilaprazole series products are also the main driving force for its performance.
Under the influence of the epidemic, the sales of Livzon Weisanlian and Livzon Dele have both declined, and the annual sales of ilaprazole are 1.
765 billion yuan.
A year-on-year increase of 81.
2%.

As the first proton pump inhibitor independently developed by a local company, ilaprazole entered the medical insurance catalog through a 40% price reduction through the national talks in 2019, and its competing products, omeprazole and pantoprazole, were also involved in the collection at the beginning of the year.
It can be seen that there is still room for imagination in the market for ilaprazole with annual sales of nearly 2 billion yuan.

In terms of chemical preparations, in addition to ilaprazole, Livzon Group has a number of innovative products under development.
Among them, the fastest-growing triptorelin acetate microspheres for injection have entered clinical phase III.

So, when innovative products bring such huge growth, is it true that there is no focus on innovative drugs as investors questioned?

But in fact, it's not.

In addition to chemical preparations, raw materials, Chinese medicines, reagents and biological medicines, Livzon Group has carried out a "clear" layout.

According to the data from Tianyan Check, Livzon Group has a number of holding subsidiaries, and the raw materials, traditional Chinese medicine, reagents and biological medicine businesses are all subordinate to each subsidiary.
For example, Livzon Pharmaceuticals, Xinbeijiang and Fuzhou Fuxing, which are controlled by Livzon Group, are all API companies.

The reagent business is in the hands of subsidiary Livzon Reagent, which accounts for 39.
43% of the equity.
The annual report shows that Livzon reagents will have revenue of 1.
393 billion yuan in 2020, and the total annual revenue of Livzon Group's reagent business will be 1.
383 billion yuan.
Livzon Group has announced its spin-off of A-share listing in August 2020.

Livzon Group’s monoclonal antibody biopharmaceutical layout, which has attracted much attention from the outside world, is in charge of Livzonumab.
The annual report shows that in terms of biological drugs, recombinant human chorionic gonadotropin for injection has been reported for production; recombinant humanized anti-human IL-6R single The Phase III clinical trial of Clone Antibody Injection has been enrolled, and delivery will be reported soon; Phase Ib/II registration clinical trials of recombinant humanized anti-PD-1 monoclonal antibody thymic carcinoma for injection have completed 2/3 enrollment.

As for the Chinese medicine business involved in this equity exchange, Livzon Group originally owned two holding subsidiaries, Everbright Pharmaceutical and Limin Pharmaceutical Factory.

Let's look at the specific products of Livzon Group's traditional Chinese medicine business.
The large variety of Shenqi Fuzheng injection from the subsidiary Limin Pharmaceutical Factory will have a total sales of 606 million yuan affected by the epidemic in 2020, down 25.
81% year-on-year, while China Everbright Pharmaceutical's antiviral particles Sales of 462 million yuan, an increase of 52.
02% year-on-year.

The main products of Tianjin Tongrentang, which Livzon Group acquired 40% of its shares by Livzon Group for RMB 724 million, are Chinese patent medicines such as Nephritis Rehabilitation Tablets, Xuefu Zhuyu Capsules and Vascular Rehabilitation Tablets, which can play a synergistic effect.

The layout of Livzon Group is actually inseparable from the influence of its chairman Zhu Baoguo.
According to Tianyan Check data, Joincare has a 23.
43% stake in Livzon Group, and the actual controller of Joincare’s largest shareholder Shenzhen Baiyeyuan Investment Co.
, Ltd.
is Zhu Baoguo, with 90% of the equity.

In the 1990s, Zhu Baoguo, who made his fortune with "Mrs.
Oral Liquid", has completed his medical "empire" through large-scale mergers and acquisitions in the past 20 years.
In 1997, he acquired Haibin Pharmaceutical and entered the antibiotic field.
In 2004, his antibiotic product meropenem accounted for half of the domestic market.
In the market, Joincare has also built the world's largest antibiotic production base.

After being listed in 2001, Joincare’s predecessor, Mrs.
Tai Pharmaceuticals, raised 1.
7 billion yuan.
In 2002, it won the largest shareholder seat of Livzon Group with 427 million yuan.
Zhu Baoguo once recalled, “This is the most exciting one in my life.
It’s more exciting to me than my wife’s listing.
"

The diversified Livzon Group did not stop Zhu Baoguo's mergers and acquisitions.
In 2007, Zhu Baoguo spent another 600 million yuan to enter the environmentally friendly enzymatic (biological fermentation) process to produce 7-aminocephalosporanic acid (the raw material of cephalosporin).
In 2012, the company set its sights on inhalation preparations and established subsidiaries such as Shanghai Fangyu and Healthy Yuan Respiratory, and deployed large varieties of respiratory inhalation preparations such as compound ipratropium bromide and levalbuterol hydrochloride.

Extracted from the deal between Livzon Pharmaceuticals and Tasly, the difficulty of the 2020 epidemic may make more companies understand the way of future development.
As competition intensifies, traditional pharmaceutical companies need to spin off and acquire to complete rapid transformation and new innovations.
Companies need funds to support development.
Therefore, whether it is traditional pharmaceutical companies to merge and acquire domestic start-up pharmaceutical companies for transformation, or horizontal expansion of bio-upstarts to acquire start-up pharmaceutical companies or alliances with traditional pharmaceutical companies, the next few years will be turbulent, and the "big fish" will surely rise by storm.