North China Pharmaceutical transformation seven-year itch: performance is difficult to improve three times in two years

After a series of litigation disputes, high-level changes and so on, the domestic veteran raw materials pharmaceutical company North China Pharmaceuticals did not accidentally hand over a declining report card. Recently, North China Pharmaceuticals announced that it expects to reduce its net profit by 50%-70% year-on-year in 2017. North China Pharmaceuticals in 2011 began the strategic transformation from API to pharmaceutical preparations, but from the current point of view, North China Pharmaceuticals transformation path is not smooth, anti-infective products are still the company's main source of revenue. According to the analysis, in the pharmaceutical field is in the state of industrial structure upgrading, industrial adjustment and environmental protection pressure, North China Pharmaceuticals need to invest more energy to successfully transform.Results decline
North China Pharmaceuticals' latest earnings forecast shows that net profit attributable to shareholders of listed companies is expected to decrease by 27 million to 38 million yuan in 2017 compared with the same period last year (statutory disclosure data), a decrease of 50%-70% yoY. North China Pharmaceuticals said the decline was mainly due to lower debt restructuring gains, illiquid asset disposals and government subsidies received in the current period compared with a year earlier.
in recent years, the performance of North China Pharmaceuticals has been not very optimistic, Beijing Business Daily reporter read the company's financial results found that, In 2014-2015, North China Pharmaceuticals' revenue showed a downward trend, down 24.42% and 15.87 percent year-on-year, respectively, to achieve a net profit of -30.54 million yuan and 2.4 million yuan, respectively.
Beijing Business Daily reporter learned that North China's pharmaceutical revenue situation is not ideal mainly due to the adjustment of product structure and relocation, environmental upgrading, as well as pharmaceutical and other logistics business revenue reduction. Guo Fanli, a well-known economist and financial commentator, told the Beijing Business Daily that since 2014, North China Pharmaceuticals has been under more serious environmental pressure, and every year the financial report mentions the operational risks posed by rising environmental standards, specifically on revenue, which has also been "troubled" by environmental restrictions, shutdowns and relocations. "With rising human and environmental costs in recent years, the small profit margins of API have been further squeezed, and North China Pharmaceuticals' performance has naturally declined."
November 2016, the Shijiazhuang government issued the Implementation Plan for the Implementation of the Sword-cutting Action, which calls for the implementation of inventory management in the pharmaceutical industry and other industries, and in principle all volatile organic matter production processes are discontinued. It is understood that the production of volatile organic matter is more pointed to raw materials, especially chemical raw materials production, in its production process will produce exhaust gas, waste water, waste slag, waste composition is complex, more serious harm.
, North China Pharmaceuticals issued a notice that received shijiazhuang City government departments issued the "Shijiazhuang City Air Pollution Prevention and Control Dispatch Order", requiring all pharmaceutical companies in the city to stop production, without the approval of the municipal government may not resume production. The shutdown lasted until early 2017 and resulted in a $54.93 million reduction in the company's 2016 profit.
In view of the specific reasons why North China Pharmaceutical's net profit is not ideal in recent years, the company's future strategic planning and the current relocation progress and environmental protection management progress, Beijing Business Daily reporter repeatedly called North China Pharmaceuticals and sent the interview outline to the company's mailbox, but as of the time of writing did not receive the relevant reply.the transformation of
by environmental policy pressure, overcapacity and high production costs, in recent years, the transformation of API enterprises is very common. North China Pharmaceuticals is a traditional API enterprise, has been one of the largest pharmaceutical enterprises in China, and created a history of large-scale production of antibiotics in China.
In the late 1990s, North China Pharmaceuticals was struggling to slow down market competition and poor management, and in 2009 Yan Zhong Energy, a member of the State-owned Assets Supervision and Administration Commission of Hebei Province, restructured North China Pharmaceuticals to carry out reforms. Around 2011, North China Pharmaceuticals began a strategic transformation, from API to preparation drugs, and announced the "innovation-driven development, from API to preparation drug transformation" strategic transformation, the development of "anti-infection, anti-tumor, cardiovascular and immunomodulation" four key areas, while taking into account large health, eye drops and other therapeutic areas, so that product positioning to high profit, high value-added transfer. In 2015, North China Pharmaceuticals in the annual report of the main business products into anti-infection, kidney disease and immunomodulation class, cardiovascular class and pharmaceutical intermediates.
, from the current point of view, North China Pharmaceuticals from the success of the transformation there are still some distance, the company's main source of income is still anti-infected products. Financial data show that in 2015-2016, North China Pharmaceutical Anti-Infected Products achieved revenue of 4.229 billion yuan and 4.313 billion yuan, respectively, accounting for 54% and 53.98% of total revenue, respectively.
An analyst, who did not want to be named, said that although North China Pharmaceuticals has been committed to transformation in recent years, but still did not get out of the "circle" of antibiotics, the current state restrictions on antibiotics, the state restrictions on the use of antibiotics in the medical field, which to some extent led to the performance of North China Pharmaceuticals affected.
Guo Fanli said that since 2011, North China Pharmaceuticals began the transformation of the curtain, the following years the main composition has also changed, the proportion of preparation products has gradually increased. However, North China Pharmaceutical gross margin volatility is very large, in recent years, operating income decline, asset-liability ratio of more than 60%, asset turnover rate for many years less than doubled, did not complete a good operating system.
Beijing Business Daily found that in 2014-2016, North China Pharmaceutical's balance sheet ratio was 66.3 percent, 67.1 percent and 67.9 percent, respectively. This is significantly higher than the 44.9 per cent of shares held in the same industry in 2016, and 32.5 per cent and 35.6 per cent of Lizhu Pharmaceuticals and China Resources.pressure in the future
in addition to environmental pressure, North China Pharmaceuticals is also facing the impact of frequent changes in the company's senior management. In February 2017, North China Pharmaceuticals announced that Guo Zhouke, chairman of the company, had applied to the board of directors for personal reasons to resign as director and chairman of the company. This is the third time in two years that North China Pharmaceuticals has changed its coach, and this time it is only four months after the resignation of its incoming chairman.
high frequency change of handsome action attracted the industry's higher attention at the same time, but also attracted the attention of the Shanghai Stock Exchange. In February 2017, North China Pharmaceuticals received an inquiry letter from the Shanghai Stock Exchange requesting disclosure of the specific reasons for the frequent change of chairman in the short term, as well as whether the frequent change of chairman of the company in the short term has an impact on the company's strategic stability, business development, business performance and other specific circumstances.
analysis, in the face of the dramatic changes in the market environment, North China Pharmaceuticals needs a stable and capable leadership level to ensure that the response measures can be effectively implemented. However, the frequent changes in the top level of North China Pharmaceuticals, resulting in North China Pharmaceuticals difficult to implement long-term effective measures, to a certain extent, leading to the north China Pharmaceutical transformation is difficult, performance is difficult to cheer up.
under the pressure of increasing environmental protection and frequent changes in the top level, North China Pharmaceuticals hopes to find new profit growth points in areas such as health food. According to a December 2017 announcement by North China Pharmaceuticals, in order to meet the needs of business development, North China Pharmaceuticals intends to increase the scope of business leasing, biotechnology products technical advice, health food and special medical use formula food research and development, processing, production and sales.Guo Fanli,
, said that at present, North China Pharmaceuticals is facing strong environmental pressure and product pressure, increase health food and other projects, will help North China Pharmaceutical transformation and upgrading, reduce the pressure of the decline in raw materials and pharmaceutical profits. However, because the sales channels of health food and medicine are completely different, North China Pharmaceuticals into health food, need to create new marketing methods and channels, in addition, drugs are the promotion of doctors, and health food sales need to be recognized by consumers, coupled with health food quality requirements and drugs inconsistent, North China Pharmaceuticals in obtaining consumer recognition and adjustment of quality awareness need to pay more effort. (Beijing Business Daily)