Top 20 pharmaceutical companies in cash flow!

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At present, as more and more profitable companies are driven to death by debt, the capital market’s emphasis on corporate cash flow is also undergoing fundamental changes.

Because in his view, if a company has cash flow problems, no matter how good the company’s assets and profitability are, there will be a risk of bankruptcy

Therefore, cash flow management is no longer just a part of corporate financial management, but also a necessary foundation for corporate survival and development

The pharmaceutical industry is under high cash flow pressure and frequent financial problems

Nowadays, on the one hand, due to the pandemic, which has had a great impact on the production and sales of enterprises, on the other hand, the gradual implementation of pharmaceutical reforms has caused the cash flow problems of domestic pharmaceutical companies to become prominent.

Fundamentally, it mainly comes from the company's long-term account receivable backlog, rapid M&A investment and other reasons

Accounts receivable accounted for too high proportion, and cash flow dilution was serious

Over the years, the structure of China’s pharmaceutical industry has been dominated by the buyer’s market, and the basic situation of the imbalance between the two parties eventually led to the industry’s excessive proportion of accounts receivable compared to other industries, and under normal circumstances, more than 30% The above-mentioned corporate accounts receivable accounted for more than 50% of revenue, and even individual corporate accounts receivable grew faster than the total annual revenue during the period

As for the reason, it may be due to the natural advantages of hospitals over the status of pharmaceutical companies, or the over-emphasis of enterprises on meeting the needs of hospitals, which has contributed to the increasing number of credit and mortgage loans in hospitals

In the list of "Top 10 accounts receivable in revenue in the first half of 2021", Zixin Pharmaceutical ranked first with 771.

It is worth noting that the thriving Kangtai Bio, Watson Bio and other companies also appeared on the list, ranking the bottom two with 172% and 169% of revenue respectively

Among them, Watson Biologics has attributed the large increase in accounts receivable in recent years to the delayed collection of the 23-valent pneumonia vaccine and 13-valent pneumonia vaccine, which led to the delayed collection of funds, and said that the CDC vaccine product procurement funds are government budgets.

M&A transformation steps are too big

For some companies that are eagerly pursuing transformation and expansion, the best way to quickly develop and seize the core track is undoubtedly to cast a net of investment and mergers and acquisitions

Ruikang Pharmaceutical, the titled "M&A God" in the industry, is an inconspicuous example.

After a series of operations, the revenue and stock price rose sharply, but also brought unprecedented financial pressure to Ruikang Pharmaceutical.

It now appears that in this era of iterative industrial upgrading and steady advancement of pharmaceutical reforms, compared with the various forecasts for the future of the industry, the layout is far inferior to solid upgrading and focus on innovation

The homogeneity of bio-innovative enterprises is serious, and it is a science to balance R&D investment and cash flow

Some institutional analysts pointed out that the current cash reserves of many bio-innovative companies have an average of about 5 years to "maintain their livelihood"

And how to balance R&D investment and cash flow balance point has become the first problem that most start-up companies need to face, especially in today’s era when "innovation homogeneity" is extremely serious, and differentiated competition is not only reflected in the product pipeline.

From the perspective of balancing R&D investment and cash flow, investors hold different opinions.
One believes that compared with other industries, the R&D investment of pharmaceutical companies is much more important than cash flow.
Instead of hoarding a large amount of cash flow to deal with risks, It is better to use resources in the R&D investment in strategic planning; the two believe that in the current critical stage of medical reform, the trend of cash flow corporate value has become a decisive factor for the success of most transformational enterprises and start-ups
.

Leading companies have obvious cash flow advantages, and innovation and transformation are "full of confidence"

Of course, in addition to the above-mentioned companies with larger cash flow problems, the pharmaceutical industry also has many target companies with obvious cash flow advantages and good pipeline layout
.

Most of these companies are leading companies in their respective fields, and have many years of business history.
While the listed drugs are abundant, the sales volume has also increased year-round
.

In the first half of 2021, the amount of cash flow (except for equipment), Zhifei Biological, became the top of the list with absolute advantage, followed by Yunnan Baiyao, Xinhecheng, Baiyunshan and other established pharmaceutical companies
.

It is worth mentioning that the overall cash flow growth of Zhifei Biology has been exceptionally good in recent years.
The cash flow in the first half of 2019-2021 was 160 million, 400 million and 6.
53 billion, with a five-year compound growth rate of 337.
73%
.
The cash rate for the first half of the year was 91%, an increase of 91 percentage points year-on-year, and monetary funds exceeded 5 billion
.
And the 6.
53 billion cash flow does not include the money from the accounts receivable in the first half of the year
.

According to related reports, the main reason for the surge in financial data of Zhifei in the first half of the year is undoubtedly the increase in the amount of new crown vaccines.
However, in fact, the domestic sales during the first half of the year were not profitable, and the overseas markets with more performance space were Zhifei.
The real target of flying creatures
.
Now that the Phase III clinical data has been obtained, which meets the WHO export standards, foreign orders have begun to be received one after another.
Especially due to the current shortage of vaccines in some third world countries, the market space is relatively larger.
It is expected to be released this year.
In half a year or next year, various financial data will also be further improved
.

But at the same time, with such ample cash flow, Zhifei’s R&D investment and revenue ratio is only about 6%.
Compared with the previous enterprises, the gap is still obvious.
It is hoped that Zhifei can increase its subsequent R&D investment.
Effectively create its own industrial moat
.

Summarize

To sum up, at the key node of the transformation of the medical reform, the pharmaceutical industry, whether conservative or innovative, is crossing the river by feeling the stones.
No one can guarantee that the path under his feet is correct.
If the process is supported by this strong cash flow, the success rate may be higher in comparison
.

As mentioned before, the trend of cash flow corporate value has gradually become the key to the success of most corporate transformations
.