Sinopharm looking for M & A opportunities

Morgan Stanley met with the new management of Sinopharm Holdings (01099) and published a research report It believed that the new management would make a smooth transition It is expected that the change of management direction will be slight The new chief executive will focus on internal integration and operational efficiency improvement to cope with the change of policy environment and maintain the "overweight" rating of the group Sinopharm will improve the efficiency of management, capital investment, logistics and network next year so as to maintain a stable profit margin when the gross profit rate falls, the report said In addition, the report mentioned that Sinopharm's management pointed out that the current market share is about 12% It is believed that there are still many opportunities for acquisition and merger in the future, including the network expansion of second to third tier cities and the strengthening of market position In addition, Sinopharm will also look for opportunities to expand health services, that is, hospital business, and drug manufacturing business will not be the future development direction of the group There will be small foreign pharmaceutical companies entering the Chinese market Shenwei Pharmaceutical (02877) target price was lowered by 13%, from 15 yuan to 13 yuan, and the "neutral" investment rating was reiterated Shenwei pharmaceutical's weak performance in the first nine months reflected the group's difficulty in achieving double-digit growth in revenue and net profit, the report said In the third quarter, the sales of injection products increased by 4.7% year on year, indicating that the hospital sales were affected by anti-corruption and price reduction However, the circulation time of over-the-counter drug sales channels is longer than expected Management acknowledged that third quarter sales, especially Shuxuening and Shenmai, were affected by anti-corruption In addition, traditional Chinese medicine injections were not added to the list of basic medicines last year, reflecting the controversy over the use of traditional Chinese medicine injections In April this year, the mainland media misreported that Chaoyang Hospital in Beijing banned traditional Chinese medicine injections, after which the hospital clarified that it had not used traditional Chinese medicine injections The bank believes that the price of Qingkailing and Shenmai products of Shenwei pharmaceutical industry is under pressure and there is limited space for them to go up, because senior hospitals use more authorized drugs and use traditional Chinese medicine injections conservatively The bank expects Shenwei pharmaceutical industry to bear the pressure of gross profit rate because of its more cheap product portfolio and its current gross profit rate is higher than average.