Ruikang's device business is selling 7 billion yuan a year, and the president has revealed his next steps

As one of the few pharmaceutical circulation enterprises in China that have completed the national layout, Ruikang Pharmaceutical founder and president Zhang Renhua recently told China Securities News in an exclusive interview that the company will further improve the business network and product line layout on the basis of the existing 31 provincial platforms, and grow into a national platform, data, scientific and technological medical circulation service enterprises. Especially in the field of medical devices, the company has formed a certain competitive advantage, and strive to become the head of the leading enterprises.1, follow-up mergers and acquisitions focus on model innovation target
according to the introduction, Ruikang Pharmaceutical since 2016 for the "two-vote system" policy to make corresponding adjustments, the procurement channels will move up, increased directly from the production enterprises one vote procurement ratio. In medicines, this proportion has increased to 80 per cent by 2017 and to 92 per cent by the first half of 2018, and in the first half of 2018 to 40 per cent, with plans to increase to more than 80 per cent by the end of the year. Downstream sales, always adhere to the medical institutions to carry out pure sales business. This means that Ruikang Pharmaceuticals is fully prepared for the two-vote system.
Zhang Renhua said that the implementation of the "two-vote system" for the company is more good, on the one hand, the company from the beginning of the choice of direct sales business model, directly for hospital terminal sales;
data show that since the launch of the national extension merger and acquisition in 2015, Ruikang Pharmaceuticals has acquired 129 subsidiaries and completed the layout of 31 provincial platforms nationwide under the model of "mergers and acquisitions and partners".
For the outside world's concerns about the goodwill risk arising from large-scale mergers and acquisitions, Zhang Renhua said that the company's equity price is paid in three years, if the underlying enterprises can not complete the operating performance of gambling will not constitute goodwill impairment risk; The vast majority of previous acquisitions have exceeded their target growth targets, with only two noting goodwill impairments.
For the next phase of the merger plan, Zhang Renhua said that the stage of large-size acquisition has passed, 2018 is mainly to find out the missing, improve the business network and product line layout, tend to look for new business models, so as to absorb its innovative advantages, to empower the existing 31 provincial business platforms.
talks about the trend of consolidation in the industry, she believes that 95% of the U.S. pharmaceutical circulation market is occupied by the three giants of Mackenzie, Meiyuan Bergen and Cardi, China's hinterland is vast, GSP standards vary from province to province, it is difficult to achieve such a high concentration of the industry, but the top 10 companies accounted for more than 60% of the market share is still available. With the increase of the concentration of circulation enterprises and the implementation of centralized procurement, the bargaining power of upstream manufacturers of pharmaceutical equipment will also be enhanced.
with the gradual progress of medical reform, medical institutions to control the proportion of drugs and prescription out of the implementation, since 2017, Ruikang Pharmaceuticals increased the coverage of the retail pharmacy market. Zhang Renhua revealed that the current retail pharmacy revenue accounted for about 12% of Ruikang's overall revenue, and strive to increase the proportion to more than 20%.
it is worth mentioning that Ruikang Pharmaceuticals has fully launched SAP system to implement data tracking, to achieve fine management, there are now more than 80% of the business scale to complete SAP online, the country is expected to complete all online by September.2 and Q2 cash flow is expected to improve month-on-month
Ruikang Pharmaceuticals in recent years in the field of medical devices ink more, business map of medical device sales revenue as a proportion of operating income increased year by year, in 2017 has reached 31.48 percent.
Zhang Renhua said that the pharmaceutical circulation industry market size of nearly 2 trillion yuan, with the industry development market concentration continues to improve, the current from a period of high-speed growth to a period of steady growth. China's equipment circulation industry has greater advantages than the pharmaceutical circulation industry in terms of growth space, profit margin, terminal service value, integration space and so on. China's 2017 equipment circulation market is only about 430 billion yuan, only 20% of the size of the drug circulation market, with reference to Europe and the United States equipment, drug circulation 1:1 market size, with great room for growth. Moreover, China's equipment has just embarked on the road of integration, the current concentration is low, the head of the large-scale leading enterprises call out.
She said that the three giants of National Medicine, China Resources, Shanghai Medicine in the field of drug circulation occupies an absolute advantage, Ruikang Pharmaceutical in recent years has chosen the equipment business as a breakthrough cut entrance, currently in the field of equipment circulation has formed a competitive advantage, especially has become a leader in the field of testing reagents.
data show that Ruikang Pharmaceutical's 2017 equipment business revenue reached 7.33 billion yuan, of which the inspection business revenue reached 4.23 billion yuan. The plan for 2018 is for the inspection business to achieve pre-tax sales of 8 billion yuan.
Relative to the pharmaceutical business 5%-10% gross margin, the gross margin of equipment circulation is higher, can reach 10%-35%, but the disadvantage of the equipment business is that the downstream payment period is longer than the upstream payment period, the account period difference is longer, which also to some extent led to ruikang pharmaceutical operating cash flow is more tight.
data show that in the first quarter of 2018, Ruikang Pharmaceutical's operating cash flow was -2.35 billion yuan. Zhang Renhua revealed that this is mainly due to the intensive acquisition in the previous period, the acquisition of the target balance sheet brought accounts receivable, advance payments, while the equipment business grew faster, and in preparation for the second quarter and other reasons, this situation is expected to "the second quarter will be significantly improved month-on-month."
addition, it was revealed that in strengthening the distribution network layout at the same time, Ruikang Pharmaceutical also plans to start layout upstream of drugs, equipment research and development section. In the field of IVD, for example, the company plans to set up an industry fund to invest exclusively in upstream IVD product manufacturers. (China Securities News)