Fosun Pharma was the first to reduce its holdings, but the pharmaceutical business grew against the trend, can it revitalize its glory in the future?

On September 2, Fosun Pharma announced that shanghai Fosun Hi-Tech (Group) Co.
, Ltd.
(hereinafter referred to as "Fosun Hi-Tech"), the company's controlling shareholder, plans to reduce its holding of no more than 3% of Fosun Pharma's total share capital by means of centralized bidding and block trading
.
Calculated according to the total share capital of the company on September 2, that is, no more than 80.
0897 million A shares
.
If calculated based on the closing price of 40.
21 yuan per share on September 2, the reduction plan will be fully implemented, and the reduction will be cashed out by about 3.
221 billion yuan
.

It is reported that this is the first time that the controlling shareholders of Fosun Pharma have reduced their holdings
since its listing in 1998.
It should be known that in the past 10 years, Fosun Pharma has been repeatedly increased by the controlling party 6 times, of which 5 occurred in 2016 to 2021 after the "stock market crash" in 2015, which is equivalent to increasing its holdings once a
year.

A stone stirred up thousands of waves, and the news came out that Fosun Pharma's stock price fell to a halt
the next day.
Later, on the evening of September 6, Fosun Pharma issued another announcement that the company's executive directors and some senior management personnel, totaling 18 people, will increase their holdings of not less than 460,000 shares of the company (including A shares and/or H shares).

Investment and pharmaceuticals walk on two legs, and investment falls into the dilemma of increasing income and not increasing profits

Investing and pharma walking on two legs has always been a development feature
of Fosun Pharma.
In the past ten years, Fosun Pharma has participated in multiple rounds of financing
for 110 projects.
Therefore, for a long time, investment income has accounted for a fairly high proportion
of Fosun Pharma's current net profit margin.
According to enterprise investigation data, as of August 16 this year, Fosun Pharma has invested in 9 cases this year, with a total amount of more than RMB1.
7 billion, involving medical imaging intelligent devices, in vitro diagnosis, stem cell therapy, cancer hospitals, new drug research and development and pension institutions
.

According to the financial report for the first half of 2022, Fosun Pharma achieved revenue of 21.
340 billion yuan, an increase of 25.
88% year-on-year; The net profit attributable to the shareholders of the listed company was 1.
547 billion yuan, down 37.
67% year-on-year, showing a phenomenon
of increasing revenue without increasing profits.
The main reason is that due to market volatility, Fosun Pharma's holding of BNTX (BioNTech Corporation) shares has caused losses
.

Back in 2020, Fosun Pharma invested 326 million yuan to buy about 1.
58 million shares of German biotech shares, which together with Pfizer developed a new coronavirus vaccine, occupying most of the new crown vaccine market in Europe and the United States
.
This is fosun pharma's third largest equity acquisition transaction in the past 10 years, in 2020 and 2021, BioNTech stock price increased by 140% and 216% respectively due to the new crown epidemic, and as of the end of 2021, this investment has brought more than 2.
2 billion yuan to Fosun Pharma
.

However, with the weakening of global new crown concept stocks, bioNTech stock prices have continued to decline since 2022, which has also directly affected the performance
of Fosun Pharma.
Although the revenue in the first half of the year was 21.
340 billion yuan, an increase of 25.
88% year-on-year, the net profit fell by 37.
67%
year-on-year.
The BNTX shares held by Fosun Pharma made it lose 1.
555 billion yuan
.

The pharmaceutical business has improved

Compared with the failure in investment, Fosun Pharma's pharmaceutical sector has improved
.
Fosun Pharma's revenue contributions to pharmaceuticals, medical devices and medical diagnosis and healthcare services in the first half of 2022 were RMB14.
327 billion, RMB4.
043 billion and RMB2.
918 billion respectively, an increase of 16.
97%, 42.
51% and 58.
24% respectively over the same period of the previous year; The gross profit margin of the corresponding business was 54.
57%, 34.
45% and 17.
68%
respectively.

Fosun Pharma 2022H1 financial report

As the only domestically produced trastuzumab currently on the market, Fosun Pharma's Hanquyou was first approved in the European Union in July 2020 and approved in China in August 2020, creating multiple "firsts" in domestic monoclonal antibodies
.
The birth of HanQuyou has met the huge and urgent drug needs of domestic HER2-positive breast cancer patients
.

Since its listing, Hanquyou has received many authoritative recognitions for its "high quality", and has been recommended
by domestic authoritative diagnosis and treatment norms and guidelines such as the "Breast Cancer Diagnosis and Treatment Guidelines of the Chinese Society of Clinical Oncology" and the "Guidelines and Norms for the Diagnosis and Treatment of Breast Cancer of the Chinese Anti-Cancer Association".
It is worth mentioning that as early as the end of 2020, the drug was included in the national medical insurance directory, reducing the economic burden on patients and making the market no longer completely dominated by the original research, thereby significantly reducing the price of biological drugs and benefiting
patients to the greatest extent.
In the first half of this year, Hanquyou achieved a cumulative sales revenue of 813 million yuan, an increase of 150.
15%
year-on-year.

Hanlikang (rituximab injection) was officially approved by NMPA in February 2019 for the registration of new drugs, mainly for the treatment of non-Hodgkin lymphoma, becoming the first drug in China to be developed and approved for marketing in accordance with the national guidelines for biosimilars, enriching the treatment options for
patients with hematological tumors.
In the first half of this year, Hanlikang achieved sales revenue of 819 million yuan
.

Su Kexin (Avalopopipapine maleate), the first innovative small molecule drug introduced by Fosun Pharma, is used for adult patients with chronic liver disease-related thrombocytopenia who undergo diagnostic procedures or surgery at the selected stage, and Su Kexin brings the world's leading clinical treatment program
to patients with thrombocytopenia associated with chronic liver disease in China.

On December 28, 2020, Su Kexin was officially included in the national medical insurance directory, and from March 1, 2021, Su Kexin's medical insurance standards were implemented, comprehensively improving the availability of clinical treatment for
patients.
Su Kexin is also active in the fields of thrombocytopenia (CIT) caused by tumor chemotherapy and immune thrombocytopenia (ITP
).
In the first half of 2022, Su Kexin achieved sales revenue of 360 million yuan
.

In the pharmaceutical sector, Fosun Pharma has six core products, namely anti-tumor and immunomodulatory core products, anti-infection core products, metabolic and digestive system core products, cardiovascular system core products, central nervous system core products, APIs and intermediate core products
.

The COVID-<> business was mixed

Since the emergence of the new crown epidemic in 2020, Fosun Pharma has made frequent moves in the layout of anti-epidemic products, involving new crown testing reagents, new crown vaccines, new crown drugs, etc
.
In terms of COVID-19 vaccines, Fosun Pharma introduced BioNtech's mRNA COVID-19 vaccine - Fubitai (BNT162b2
).
In March 2021, Fubitai was included in the vaccination program of the Hong Kong and Macau SAR governments in China, and in September 2021, it will be vaccinated
in Taiwan.
In 2021, Fubitai achieved sales revenue of more than 1 billion yuan, becoming one of Fosun Pharma's three preparation products with an annual sales scale of more than 1 billion yuan
.

However, as of now, Fubitai is still doing Phase II clinical trials
to enter the Chinese mainland market.
It can be said that Fupitai has completely missed the Chinese mainland of the new crown epidemic seedling dividend, and with the gradual disappearance of the global new crown epidemic seedling dividend and the inner volume of vaccine production, the imagination space that Fubitai can bring to Fosun Medicine has been very limited
.

In terms of COVID-19 drugs, in January and March 2022, Fosun Pharma was licensed to produce MPP (Drug Patent Pool Organization) and supplied Merck for ORAL drug Moldupiravir to low- and middle-income countries in the global agreed region, as well as generic and Ritonavir combinations of Pfizer's oral covid-19 drug Nirmatrelvir, with a licensed production scope including APIs and finished drugs
.

In July this year, Fosun Pharma signed an agreement with Real Bio, the latter's Azfudine will be exclusively commercialized by Fosun Pharma as China's first approved domestic oral small molecule new crown pneumonia treatment drug, this investment is a pullback
.
Moreover, in the preliminary review list of drugs for the adjustment of the 2022 medical insurance drug list of the National Medical Insurance Bureau just released, Azfedine tablets are also among them
.

Further, in the first half of the year, Fosun Pharma's innovative drug product sales increased, which will become the focus of Fosun Pharma's development in the
future.
Although in the short term, the reduction of controlling shareholders may have an impact on the stock price; However, in the long run, how Fosun Pharma grasps the future growth point may be the key
.

References:

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Global liver disease burdens and research trends: Analysis from a Chinese perspective.
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