Huahai Pharmaceuticals' first three quarters of results are soaring sales costs are decreasing

a number of pharmaceutical companies, sales costs are falling sharply

the performance of well-known pharmaceutical companiesOctober 20, Huahai Pharmaceuticals released the first three quarters of this year's results. According to the announcement, from January to September 2020, the Company achieved revenue of RMB4.87 billion, up 21.41% YoY, and net profit attributable to shareholders of listed companies was RMB841 million, up 64.23% YoY.In the overall drug market sales growth rate of the environment, Huahai's performance growth is rare.According to the announcement, Huahai Pharmaceuticals net profit increased significantly from a year earlier, mainly domestic preparations and API sales significantly increased the impact: First, domestic preparations are mainly with the promotion of centralized procurement, the company relies on the expansion of the Alliance region to select opportunities, product market coverage has been rapidly improved, thus affecting a substantial increase in domestic preparation sales;Under the influence of this year's new crown epidemic, pharmaceutical listed companies have become a bright spot, from the company that has now published the third quarter report, more than half of the enterprises forecast an increase in net profit, especially its products due to the impact of the outbreak increased sales.However, the capital market has ups and downs, some pharmaceutical listed companies in the context of the epidemic performance growth is considerable, but some of the weak degree of relevance of the sub-sector enterprises performance or pre-decrease, or continued losses, or the first loss. For example, three tablet companies, Shenzhou Cell, Zee-Yu Pharmaceuticals and Consino, all said they expected to continue to lose money from the beginning of the year to the end of the next reporting period because the company does not yet have drugs on the market.

sales costs are decreasing byIt is worth noting that Seber Blue combed Huahai Pharmaceuticals' third-quarter report data found that the company's total operating costs increased by 3.2% YoY, but sales expenses shrank significantly, by 37% YoY in the third quarter of 2020 and 4.1% YoY in the first three quarters of 2020.According to Huahai Pharmaceuticals' semi-annual report for 2020, it has participated in the centralized procurement of drugs in the 4-7 cities organized by the state, the centralized procurement of drugs in the regions of cross-regional alliances, and the centralized procurement of drugs in the second and third batches of drugs in various provinces and cities throughout the country. As of the half-annual report disclosure date, the company has a total of 12 products winning the bid. And in the third round of national collection, Huahai Pharmaceuticals has three products successfully won the bid. Some analysts believe that it may be due to participate in the volume of procurement reasons, resulting in the company's sales costs plummeted.Not only Huahai Pharmaceuticals, from the current disclosure of listed pharmaceutical companies in the third quarter of 2020 schedule, there are many are sales costs fell.For example, according to Prop Pharmaceuticals' third quarter 2020 report, the company's total operating costs increased by 2.2% YoY, butthe current sales expenses decreased by 39.8% compared with the previous period;Combing Kun Pharmaceutical Group's third quarter 2020 report found that its sales expenses in the third quarter of 2020 decreased by 58.2% YoY, while sales expenses decreased by 61.5% YoY in the first three quarters of 2020.In fact, this year due to the outbreak, will indeed have a certain impact on the marketing of pharmaceutical companies. But for pharmaceutical enterprises, the impact of their sales costs, from the volume of procurement has been continuous fermentation, transformation into an inevitable choice for survival, sales costs gradually decline is also an inevitable trend.Last June, the Ministry of Finance and the Health Insurance Bureau issued a notice to jointly verify the financial problems of 77 pharmaceutical companies, with a focus on sales costs.Recently, a number of listed pharmaceutical companies received the Shenzhen Stock Exchange issued the 2019 annual inquiry letter, asking for a separate explanation of the proportion of academic promotion fees in sales costs, sales expenses rate is at a reasonable level in the industry, and whether there are commercial bribery or to facilitate commercial bribery.Enterprises want to gain an advantage in volume procurement, enterprises should squeeze out "moisture", in the optimization of personnel structure, a large sales team into the first part of the adjustment. Take Xinlitai, which previously participated in the national drug centralized procurement, whose 2019 annual report showed that xinlitai's sales staff fell by about 20% from 2,108 at the end of 2018 to 1,666.   In addition, since the pattern of volume procurement ensures the use of the selected drugs, the sales costs of the enterprise are reduced by volume exchange. According to the People's Daily, the average sales staff of selected products in key enterprises was reduced by 49%, and the proportion of sales expenses to sales amount fell from 40% to 5% to 10%. (Cypress Blue)