What does Fosun Pharma need to cross the threshold of 100 billion dollars?

June 2, Shanghai Fosun Pharmaceuticals (Group) Co., Ltdannounced that its board of directors had recently received a written resignation letter from Li Jianqing, who applied to resign as vice president for personal reasonsAccording to the data, Li Jianqing is vice president and general manager of operations and management department of Shanghai Fosun Pharmaceutical Industry Development Co., Ltd., which is mainly responsible for industrial investment and pharmaceutical industry investmentFrom its past curriculum vitae, it is Shenyang Pharmaceutical University pharmacy major graduate, before that, Li Jianqing has worked in the Stone Pharmaceutical Group and its enterprises, because of good at marketing and co-ordination, by the Stone Pharmaceutical Group reuse, promoted to the company's assistant president, vice presidentAfter joining Fosun Pharma in November 2003, after years of climbing, the annual report shows that January 21 this year was just appointed as the company's vice president, and then less than half a year, but leftAccording to Fosun Pharma's official announcement, this is the fifth executive to resign since 2020, including Hequn Yin, vice president of drug development at Fosun Pharma, who joined Fosun Pharma in February 2019, and Liang Jianfeng, a non-executive director of Fosun Pharma in June 2019Dai Kun, vice president of Fosun Pharma in March 2018, and Wang Can, a non-executive director who joined Fosun Pharma in June 2016, can be seen as not long, some less than a year, of which Li Jianqing is the longest of theseAlthough past announcements show that fosy pharma leaves several executives almost every year, the frequency with which five executives have left in the first half of this year has been highThe report also mentions that Li Jianqing also serves as a director of Shanhe Pharmaceuticals, a listed company on the Shenzhen Stock Exchange, while Shanghai Fosun Pharmaceutical Industry Development Co., Ltd., the second largest shareholder of Yamahe Pharmaceutical Stakes, took a stake in the company on December 28, 2009, with an investment of 23.5248 million yuan and a 20% stake in itThis is the first time foer pharma has thrown an olive branch into the pharmaceuticalaccessoriesindustry, from investment to the listing of Yamhea Pharmaceuticals and last year to a decade-long sell-off - in fact, after that, Fosun Pharma's frequent foreign expansion investments have made it look more like an investment company, as some in industry call it the PE of the pharmaceutical industryHowever, not every investment has been as profitable as Yamfu Pharmaceuticals, and Fosun Pharma does not seem to have waited as longFosun Pharma and Hengrui are considered the two biggest pharmaceutical companies in China, but Hengrui Pharma's market capitalisation has long exceeded 400 billion yuan, while Fosun Pharma, which has long been considered undervalued, has been stuck at the door of a hundred billion-dollar market capitalisationThe secondary market is faltering
this year's outbreak, Fosun Pharma in ventilators, ambulances, mobile CT, diagnostic reagents are in short supply, performance is quite eye-catching Shares of listed companies, such as the one that supplies mask ventilators, have doubled in market value, while Fosun Pharma still has a market capitalisation of only $80 billion But compared with the rising share prices and performance of most of its peer-to-peer pharmaceutical companies, Fosun's performance is clearly disappointing and unmatched by its industry position 　　In particular, as the domestic pharmaceutical industry as the two leading listed companies Fosun Pharma and Hengrui Pharmaceutical performance and valuation differences are becoming more and more obvious At present, Fosun Pharma PE is only 25 times, while Hengrui has reached 78 times Today, Fosun Pharma is a pharmaceutical manufacturing and research and development as the core, the business covers the pharmaceutical health industry chain of listed companies At current valuations, Fosun Pharma is clearly undervalued, but the problem is that the secondary market is holding back 　　To some extent, the two different strategic paths have created the situation today, with Hengrui relying on innovation-driven and Fosun relying relatively on mergers and acquisitions 　　According to the 2019 annual report data of Fosun Pharma, a of merger sushone, the company achieved operating income of RMB28.585 billion, up 14.72% YoY, while net profit was RMB3.322 billion, up 22.66% YoY, and total assets and net assets were RMB76.12 billion and RMB31.888 billion respectively In terms of net profit and total assets, Fosun Pharma's profitability is undoubtedly at the forefront of pharmaceutical listed companies However, there are also those who argue that Fosun's earnings will shrink sharply if investment income is left aside 　　According to the annual report, its investment income in 2019 was RMB3.565 billion, accounting for 79.33 percent of operating profit and 107.31 percent of net profit, respectively The investment income of the company mainly comes from two parts: the income generated by the long-term equity investment accounted for by the equity method is RMB 1,431 million, and the investment income from the disposal of long-term equity investment is RMB 1,741 million Fosun Pharma's investment income from the disposal of long-term equity investments in the current year was RMB1,741 million, mainly from the sale of its shares in Concord Medical 　　The sale of The Rand is just one of many cases in which Fosun Pharma has made cash-selling operations 　　Fosun Pharma is a native industry owned by Fosun Group capital tycoon Guo Guangchang, alongside real estate Fosun Pharma, formerly known as Fosun Industries, was founded in 1994 and ipheld on the Shanghai Stock Exchange in 1998 At first, Fosun Pharma and Hengrui Pharmaceuticals and other pharmaceutical companies similar, independent research and development, production and sales, the main business for diagnostic reagents 　　It was before and after the IPO in 1998 that Fosun Pharma's business logic changed, and in the pharmaceutical industry began to implement a controlling-based merger and acquisition, the acquisition of the then-fist products, with high-yield pharmaceutical companies However, the holding acquisition not only put into operational resources there is also the problem of integration, easy to drag down the company's performance 　　The pharmaceutical industry PE 2002-2003, Fosun Pharma through the holding of mergers and acquisitions, won Chongqing Pharmaceutical Suyou and Guilin Pharmaceuticals, the conversion track to become a hepatitis, malaria pharmaceutical giant However, it is from this time on, Fosun Pharma's industrial investment logic has changed, gradually from "business-oriented, holding-oriented" to "investment-oriented, equity-oriented", that is, to do PE things 　　In fact, Fosun Pharma's parent company is to play the role of investment bank, the main tasks include, by the parent company to concentrate the idle funds of each subsidiary, to optimize the allocation
of funds between the subsidiaries; 　　As you can see, Fosun Pharma invested in multiple companies and bred them to go public For example, yams and rivers medicine auxiliary, Fuhong Hanxuan and so on Some people think that Revival Pharma is a typical need to spin off valuation of the enterprise, if the hands of Fosun Pharma in the company split look at For example, Fu Hong Hanxuan, revival Kate, these realcore core values of the platform is currently loss-making, dragging down the performance of the entire listed company 　　Through mergers and acquisitions, Fosun Pharma extends its business tentacles from initial diagnostic reagents to listed companies covering the entire pharmaceutical health industry chain For example, Harmony is a typical case under fosun Pharma's equity participation logic 　　Harmony Home is an important part of Fosun Pharma's high-end clinic layout Previously, Fosun Pharma, through its wholly-owned subsidiary, Fosun Industrial, shared 42% of The Rapatiat's shares with PE agency Detai Investment, with the remaining shareholders taking the remaining 16% of the shares In recent years, the harmony family expansion layout of the first-tier cities, large investment, has not been profitable, has begun to drag down listed companies It is said that Fosun Medicine and harmony at the top also have differences of opinion Against this background, after more than a year of negotiations, Fosun Pharma transferred its shares to THE NYSE-listed company NFC Fosun Pharma's apparent loss of patience with the massive exit of Concorde Medical by selling hHH and Healthy Harmony GP shares means the end of a decade of cooperation between the two sides 　　While Fosun Pharma has earned some investment through the transfer of Harmony, it has also revealed that Fosun Pharma's assets under PE's obsession with mergers and acquisitions could also weigh on the company's performance According to statistics, from 2010 to 2010, Fosun Pharma invested in a total of 11 hospitals 　　In 2017 alone, Fosun Pharma issued nine foreign investment announcements, launching a 65% stake in Smykon, 100% of Tridem Pharma, 69.25% of Hanyu Shengtechnology, 60% of Shenzhen Hang Seng Hospital, Zencity Hospital, Dixin Medical, BNI, Lisit Pharmaceuticals and other companies, involving a total of about 5 billion yuan 　　According to the annual report, by the end of 2018, Fosun Pharma has nine subsidiaries acquired through its establishment or investment, and 24 subsidiaries acquired by mergers of non-controlled enterprises, all of which are directly or indirectly controlled At the same time, Fosun Pharma also has a joint venture (50% holding), 19 joint ventures (participating enterprises) Together, these enterprises form the "medical sector" and "investment sector" of Fosun Pharma Fosun Pharma has been suffering from capital criticism because foe-fi pharma has too many subsidiaries and equity in the platform, the equivalent of a pharmaceutical industry fund 　　Goodwill is high
Fosun Pharmaceuticals has relied on investment returns in recent years According to the financial results, in 2015-2018, the company's investment income was RMB2,347 million, RMB2.125 billion, RMB 2,307 million and RMB 1,815 million, respectively, accounting for 95.41%, 75.73%, 73.85% and 67.02 percent of net profit, respectively 　　Specifically, Fosun Pharma's net profit in 2018 was RMB2,708 million, while its investment income was RMB1,715 million In 2018, The Hong Kong Stock Exchange listed company Guopharma Holdings achieved a net profit of 9.4 billion yuan, SPED 52.88 percent, Fosun Pharmaceuticals' stake in Sinpmark 49%, or Fosun Pharmaceuticals indirectly held 25.91 percent As a result, SP's investment alone has brought more than 2 billion yuan to Fosun Pharma 　　But the continued acquisitions over the past decade have made Fosun Pharma a listed company with high goodwill Company's quarterly report data show that its business reputation at the end of March was 9,094 million yuan, its size in the A-share pharmaceutical companies listed companies ranked second, after Shanghai Pharmaceuticals (601607 SH) of 10.79 billion yuan Fosun Pharmaceuticalgoodwill consists of 19 assets, both domestic and overseas For these acquired assets, Fosun Pharma disclosed only two of its assets in its 2019 report, including Indian assets Gland Pharma Limited ("Gland Pharma" and Jinzhou Ohong Pharmaceutical co., Ltd.), with goodwill of RMB3.976 billion and RMB946 million, representing a total of RMB4.922 billion, or 54.60 per cent of total goodwill 　　In 2019, Fosun Pharma has made a $60 million goodwill impairment provision for Aohong Pharmaceuticals However, in contrast to the significant increase in goodwill, Fosun Pharma's performance during this period did not increase significantly In fact, Fosun Pharma also showed the general law of VC, PE: the 28 law, only a very small number of projects can be profitable, exit, the vast majority of the proceeds from several of them 　　How can the hundreds of billionthresholds pass? 　　Fosun Pharma itself acknowledges that the main factors of the decline include four aspects: first, fosy-star Zhi, Fosun Hongtron and other innovative incubation platforms, as well as early losses of U.S and European subsidiaries; It is clear that pharmaceuticals is an industry that requires long-term investment in research and development, and this is clearly at odds with the rapid exit of PE investment returns 　　But in terms of market capitalisation, the performance of PE investment sources and does not support a pharmaceutical company's long-term, and frequently changing executives have led Fosun Pharma across the 100 billion-dollar market cap threshold