Three major directions for mergers and acquisitions in the pharmaceutical industry

At present, the value of domestic pharmaceutical circulation in the pharmaceutical industry is far from being tapped. According to statistics, the total market value of the entire commercial pharmaceutical industry in China is only over 400 billion yuan, which is still less than half of Suning, the home appliance retailer.

However, the “staking place” in the field of pharmaceutical circulation has opened up, and the top three pharmaceutical and commercial companies—Sinopharm, Shinsang Pharmaceutical, and Kyushutong—have moved frequently in the capital market. They all hope to complete the nationwide step by step faster. Network layout for better channel resources.

Sinopharm, China’s largest pharmaceutical and commercial company, spent RMB 2 billion in the first half of the year on mergers and acquisitions in the Mainland. The establishment of a pharmaceutical logistics distribution center in Xinjiang in the second half of the year and investment of RMB 5 billion in Hubei have made it the first country in China to have a nationwide Both municipalities and municipalities have a distribution network.

After the completion of the internal integration of the new drug, through mergers and acquisitions on the East China market has been a comprehensive layout; Kyushu General in this channel competition before the white-hot, after two failed to backdoor listing, caught the capital market express train. In August of this year, Kyushu Pass approved the IPO, plans to issue no more than 150 million shares, and landed on the Main Board Shanghai Stock Exchange.

Fierce expansion

In 2009, the state launched a new medical reform, and clearly stated that it would increase the concentration of the pharmaceutical distribution industry. Now, the highly anticipated "2010-2015 National Pharmaceutical Distribution Industry Development Plan" has been completed and is about to be introduced. In planning countries will encourage drug distribution companies to merge and restructure, encourage the development of retail chain operations, and cultivate national and prefecture-level cities. Leading aircraft carrier companies hope to generate 1 to 2 hundred billion enterprises and 20 ten billion enterprises.

The support of policies will become a huge driving force for mergers and acquisitions in the pharmaceutical distribution industry. Although the new 12th Five-Year Plan encourages market competition in the pharmaceutical industry and hopes to avoid administrative practices, in fact there are large-scale pharmaceutical groups with state-owned assets that have more resources and stronger capital strength, and the expansion speed is fierce.

Sinopharm Group, a subsidiary of Sinopharm Group, listed in Hong Kong in 2009. It is currently the largest pharmaceutical and commercial company in China with a market share of more than 10%. It covers more than 7,800 large and medium-sized hospitals and owns and operates China's largest pharmaceutical distribution network.

Since the beginning of this year, Sinopharm has first achieved a breakthrough in Chongqing, an important southwestern city. In April, it reached a preliminary agreement with Chongqing's private pharmaceutical giant Changye. All of Changye's wholesale business was injected into state-owned Chongqing - the joint venture will have 67% stake in Sinopharm and Changye 33%. The original 1000 chain pharmacies in Changye are still operating independently, but they have reached a cooperation agreement with Guoda Pharmacy, a subsidiary of China National Controls.

In the northeast, Sinopharm acquired Dalian's wholesale and retail chain assets of Meiluo Pharmaceutical; in East China, there are rumors that Sinopharm will reorganize Nanjing Pharmaceutical, the fourth largest pharmaceutical distribution company in the country, although Nanjing Pharmaceuticals recently responded positively that both parties do not Direct contact, but this does not stop Sinopharm's ambition to expand in East China.

Kyushutong is the only private enterprise among the top three pharmaceutical and commercial companies in the country. It is also the only company with national channels in the privately-owned pharmaceutical distribution companies.

For Kyushu Express, being in the field of pharmaceutical circulation, on the one hand, it will encounter great financial needs when laying networks at all levels. On the other hand, how to enter the mainstream hospital channel has always been the bottleneck it cannot overcome.

Therefore, from the outset, Kyushu Express has taken a unique development path: It chose to serve pharmaceutical wholesalers, retailers, and small hospital clinics first, adopting large-scale, fast-moving, low-cost differentiation strategies to expand the market. In 2009, Kyushu Express achieved sales revenue of 22 billion yuan, total assets of more than 7 billion yuan, and more than 70 subordinate companies.

However, in the pharmaceutical circulation industry, the industry’s average profit margin has been only about 1% for many years. Kyushutong’s profit margin is lower than that of Sinopharm Group and the new drug, because it takes the low price path.

This year's IPO will provide Kyushu with funding for the next expansion. However, with the expansion of the nationwide distribution network, whether it can transform into high-end channels such as hospitals will be another difficult problem for Kyushu.

According to the statistical ranking of China Pharmaceutical Business Association in 2009, in 2009, Sinopharm Group ranked first with sales of 65 billion yuan, and it was in an absolute leading position in the field of pharmaceutical circulation; Shanghai Pharmaceutical Group ranked second with sales revenue of 34.8 billion yuan. Although from the perspective of financial strength and existing resources, private pharmaceutical commercial enterprises are at a disadvantage, Wu Jiantao believes that private pharmaceutical companies have flexible decision-making and agile market response, and their core competitiveness will be greatly improved in the future.

Full industry chain mergers and acquisitions start

The development of a new drug not only requires strong financial support, but also has a long cycle and huge risk of failure. Therefore, the pharmaceutical circulation field has become a visible “cake” in the short term, and pharmaceutical companies have stepped in.

However, for the army of the central enterprises, in addition to focusing on the circulation of pharmaceuticals, it also uses internal and external integration to extend the upstream and downstream of the industrial chain, hoping to become a comprehensive pharmaceutical industry predators.

At the end of last year, Shanghai Pharmaceuticals, Chinese and Western Pharmaceuticals, and Shangshi Pharmaceutical reorganized the plan. After the completion of the integration, the new Pharma will become a pharmaceutical group with a full industrial chain including pharmaceutical R&D, manufacturing, distribution, and retail. Among them, business sector will account for two-thirds, and industrial sector will account for one-third. The goal of the new drug is to generate more than 45 billion yuan in revenue in 2012.

More than half a year later, China Resources Pharmaceutical Group and North Pharmaceutical Group's pharmaceutical assets were restructured. With a sales revenue of RMB 26.9 billion in 2009, the Beijing Pharmaceutical Group will be incorporated into China Resources Group. It will surpass Shanghai Pharmaceutical Group in terms of asset size and sales, and become the second largest pharmaceutical group in China. With Sinopharm, New China Resources, and New Drugs, the three major central government forces will soon set off a frenzy of mergers and acquisitions in the entire industry chain.

Pan Weidong, chief accountant of the CSPC, is responsible for the company's investment and mergers and acquisitions. He told reporters that there are three main types of mergers and acquisitions: one is to be able to enrich its own industrial chain; the other is to have scale, low-cost, high-quality features; The third is the integration of the pharmaceutical circulation market network.

In the pharmaceutical industry, Pan Weidong is very optimistic about biopharmaceuticals, anticancer drugs, Chinese medicine preparations, and some new drugs with development potential.