The price of core varieties has increased year by year. How to play next

[chinapharma.com news] under the general trend of multiple increases in the prices of precious traditional Chinese medicine, the new round of price increases on May 27 did not seem to attract much attention The scarcity of raw materials gives Pian Zihuang a reason to increase the price, but it is also a double-edged sword The supply risk and price risk of raw materials also become the problems that Pian Zihuang may encounter next (how to play with the rising prices of core varieties year after year? Picture source: Baidu pictures) On May 27, 2017, Zhangzhou pianzehuang Pharmaceutical Co., Ltd issued a notice saying that "in view of the increase of the main raw materials and labor costs of pianzehuang products, the company decided to increase the retail price of the company's leading product pianzehuang from 500 yuan / capsule to 530 yuan / capsule from the date of the announcement, and the supply price will be increased accordingly." The new news is that the pharmaceutical industry in Zhangzhou is going to terminate the implementation of an investment plan called "the industrial park in Zhangzhou" According to the announcement information, the investment plan was passed as early as July 2012, involving 1070 mu of land and a total investment of about 1.6 billion yuan Its main purpose is to solve the production capacity problems faced by the company However, the company's sales of generic drugs in recent years did not meet the expectation, and the production capacity problems faced by the sales growth of generic drugs can be solved through two ways, i.e technical transformation and outsourcing Therefore, the project with an actual investment of only 200 million yuan has been stopped Behind the two kinds of products that are obviously in different situations are the typical polarization of the sales of the pharmaceutical products in Zhangzhou According to the data from Shenwan Hongyuan, from the perspective of sales proportion, the revenue of Pianzihuang series products has reached more than 90%, and the rest is the general medicine varieties including yindanpinggan capsule However, the gross profit rate also shows a similar distribution law: the gross profit rate of the product series is close to 90%, while the gross profit rate of the generic drug varieties is about 10% 1 The price of core varieties has been increasing year by year Under the general trend of increasing the price of precious traditional Chinese medicine, the new round of price increase on May 27 did not seem to attract much attention This is the 14th price increase since 2005 Before March 2005, the price of Pianzihuang was only 125 yuan, but now, the price has increased to more than four times, to 530 yuan According to the analysis of Shenwan Hongyuan, similar to the five-year price increase from 2008 to 2012, this year's price increase may continue for more than five years, and the terminal price increase may be close to double With the increase of price, the sales volume is falling instead of falling In June 2016, pianzehuang also experienced a round of price increase, from 460 yuan / capsule to 500 yuan / capsule However, according to the 2016 annual report data of Zhangzhou pianzehuang pharmaceutical, the company's receivables were not affected In 2016, the company realized a total operating revenue of 2.309 billion yuan, with a growth rate of 22.45% over the same period One of the most important reasons for this is the strong brand position that Pian has established As a top secret Chinese medicine, the image orientation of the traditional precious Chinese patent medicine of Pianzihuang has been deeply rooted in the people's mind Although its propaganda effect is clearing away heat and toxin, cooling blood and removing blood stasis, eliminating swelling and pain, etc., but in the folk, its effect has been passed on extremely miraculous At the same time, Pianzihuang is also one of the few drugs allowed to use natural musk, which further enhances its scarcity and rarity What's more, compared with tongrentang'an gongniuhuang Wan and Yunnan Baiyao, Pianzihuang has no competitors in the subdivision field According to Shenwan Hongyuan analysis, although babaodan and pianzehuang of Xiamen traditional Chinese medicine factory come from the same door, there are big differences in indications and positioning, so they do not constitute competition, which also determines pianzehuang's monopoly position in the market However, the scarcity of raw materials gives Pian Zihuang a reason to increase the price, but it is also a double-edged sword The supply risk of raw materials and the price risk of raw materials also become the problems that Pian Zihuang may encounter next According to the annual report, as the main raw material natural musk of Pianzihuang is the key planning and management room of the state, the natural musk used in the company's production mainly comes from the rationing approved by the State Administration Although the current national rationing quantity is relatively fixed and can maintain the current basic production scale, with the increasing shortage of natural musk in stock, the natural musk rationed by the state can not meet its production Demand that can expand As a result, Zhangzhou Pianzihuang has gradually increased its investment in research projects such as artificial breeding of musk deer, live extraction of musk deer, population reproduction of musk deer, disease control, etc., and set up two companies for artificial breeding of musk deer However, because musk deer belongs to wild animals, in addition, special sites need to be built, so it is difficult to cultivate them on a large scale 2 The poor performance of general medicine is different from the main position of the series products of pianzehuang From the perspective of the income structure of Zhangzhou pianzehuang pharmaceutical industry, the proportion of general medicine is only 4%, which is less than the proportion of 11% of daily cosmetics products However, in July, 20127, pianzehuang decided to adopt the investment plan of pianzehuang Industrial Park One of the plans is to use 300 mu of land for the construction of the company's new production base The main purpose is to solve the production capacity problems faced by the company The original plan is to expand the production capacity of other generic drugs except pianzehuang through the construction of the industrial park project, and reduce business risks to ensure sustainable development Among them, the production capacity of pianzehuang in the industrial park is equivalent to that of the original, while the production capacity of drugs other than pianzehuang is expanded However, according to the announcement, one of the reasons for the final decision to terminate the investment plan of the industrial park is that its sales of generic drugs in recent years have not met expectations In terms of the current product structure, the general drug products of pianzehuang are mainly concentrated in yindanpinggan capsule and other products However, for the general drug sales growth fails to reach the expected goal, the reason given by pianzehuang is "the change of pharmaceutical industry environment and the intensification of market environment competition." Secondly, for the production capacity problems caused by the increase of general medicine sales, Pian Zehuang solved them in two ways: technical transformation and outsourcing For toothpaste and other daily chemical products, pianzehuang adopts the light asset operation mode, including the establishment of Zhangzhou pianzehuang Shanghai Jiahua oral care Co., Ltd with Shanghai Jiahua United Co., Ltd in February 2016, and the production of its products is entrusted to a third party 3 Layout of M & A fund It is worth noting that in addition to making efforts on core varieties, in recent years, pianzehuang has also made a lot of actions in the field of M & a funds in the medical field The main idea it relies on is pianzehuang's "one core and two wings" strategy, that is, taking the production of traditional Chinese medicine as the leader, taking health care drugs, health food, functional drinks, cosmetics with special efficacy and daily chemical products as the two wings, and taking medicine as the two wings Products circulation, e-commerce as a supplement For a long time, the pharmaceutical industry of Zhangzhou, which is mainly engaged in the series of products, is facing the shortage of natural musk as its main raw material However, due to the influence of sales channels, its sales of daily necessities, cosmetics, general medicine and other products have no obvious performance, so it also actively layout the large health industry At present, it has five industrial M & a funds Through the way of "listed companies + PE", it connects external resources with internal resources through the extension expansion Among them, the fund jointly launched by Pianzihuang and Beijing Qingke in 2015, with a scale of 500 million At the same time, the marketing pattern is also changing In addition to the traditional regional distribution, chip also introduced the VIP sales model and Experience Hall sales and other innovative marketing models This part is due to the relatively positioning of Pian Zihuang itself, which determines that its sales target is mainly the customer group with good economic conditions, high consumption ability and health care Therefore, through the VIP membership system, it provides personalized services to maintain the customer group The marketing of experience hall is carried out by cooperating with circulation enterprises in airports, urban commercial areas, etc., so as to improve the awareness of the social consumer groups for the brand of Pianzihuang, and improve the desire to buy products.