When the reshuffle of the super 100 billion infusion market accelerates

the first half of 2020, the new crown outbreak raged, allowing the large infusion industry to survive a difficult winter. The industry's "Big Three" Colum Pharmaceuticals, Shi Shisi Pharmaceuticals and China Resources Shuanghe all saw their first-half results decline.To a large extent, changes in the performance of leading infusion enterprises are closely related to the ongoing outbreak. Public data show that in the first half of 2020, the new crown epidemic has affected the normal diagnosis and treatment work of medical institutions, the cumulative number of medical institutions in January-May was 1.143 billion, down 24.30% from the same period last year, the number of operations also decreased significantly, resulting in the first half of the sales of large infusion products decline, sales revenue fell sharply. Sales revenue at all three companies fell by double digits in the first half of the year from a year earlier.However, as the industry leader, all three companies have taken measures to actively respond to the impact of the outbreak. Although the strategy is different, but all three enterprises have chosen to increase research and development investment. In particular, Colum Pharmaceuticals 10.37 percent of revenue was committed to research and development in the first half of the year. This also shows from one side that the industry leader has similar considerations for the future direction of the large infusion industry entering the period of deepening integration.

01 Colum Pharmaceuticals: Increased investment in research and development in the downturn, new drugs against the trend of growthOn August 30th Colum Pharmaceuticals announced its first-half results for 2020. 2020H1 achieved revenue of RMB7.231 billion, down 18.95% YoY, and net profit of RMB203 million, down 72.15% YoY. The financial report attributed the decline in first-half results to four points, the first of which was that the new crown outbreak led to a decline in sales of infusion and non-infusion products, and a decrease in gross margin.Specifically, the company's infusion products achieved operating income of 3,793 million yuan, down 26.76 percent year-on-year, while non-infusion products revenue of 3,252 million yuan, down 11.36 percent year-on-year. Although the overall business sector showed a downward trend, but the new drug sector volume is rapid, the first half of the sales amount reached 922 million yuan, an increase of 22.90% over the same period last year, bucking the trend. For the new drug sector, Colum Pharmaceuticals has also set up a professional self-employed team of more than 700 people.Colum Pharmaceuticals chose to continue to invest more in research and development in the face of declining first-half results. In 2020H1, Colum invested 769 million yuan in research and development, up 15.48 percent year-on-year, and the proportion of research and development investment in sales revenue reached 10.37 percent. At the same time, Colum Pharmaceuticals' research and development results during the reporting period, a total of 12 drugs have been approved for market since 2020. Among them, onnitride tablets and cephalosporading capsules were evaluated by consistency, and the pipeline of men's, autoimmune diseases and diabetes products was expanded by hydrochloric acid dapositin tablets, tofatin tablets, and Engele net tablets.Colum Pharmaceuticals has also made good progress in the research and development of innovative drugs, and key advances have been made in major varieties. The semi-annual report shows that during the reporting period, 13 innovative drug varieties entered the clinical stage and carried out 18 clinical studies, mainly in the field of malignant tumors, autoimmune, anesthesia analgesia, mental nerve and other major diseases, and plans to promote 14 clinical research varieties in the second half of the year and accelerate the promotion of 7 key varieties. Among them, PD-L1 single anti-A167 key Phase II clinical research is in the data cleansing stage, is expected to become its first declared production of innovative drugs.

02 Shisi four drugs: business structure diversification, non-large infusion performance brightOn August 25th, Shiste Pharmaceutical Group announced its company's results for the six months ended June 30, 2020. The report said the group's production and operations were severely affected by the new crown outbreak, with years of rapid growth disrupted and sales and profits falling significantly. The report showed that Shistyo Pharmaceuticals achieved sales revenue of RMB1.617 billion, down 19.5% YoY, and net profit of RMB224 million, down 52.7% YoY.Shisi Pharmaceuticals is one of the three enterprises in the infusion business in the largest proportion of revenue, its large infusion field of all products sales revenue declined. In the first half of 2020, the sales volume of stone four drugs was about 482 million bottles, a decrease of about 38% year-on-year. Among them, non-PVC standard soft bags achieved revenue of 558 million yuan, down 32.4% YoY, erect bag revenue of 144 million yuan, down 49.5% YoY, plastic bottle sales of 270 million yuan, down 26.1% YoY, glass bottle infusions of 101 million yuan, down 55.6% YoY. However, the share of large infusions is declining, with 2020H1 accounting for about 66% of total revenue, compared with 84.8% in the same period in 2019, and the company's business is more diversified to share the impact of the outbreak.On the other hand, Shisi pharmaceutical non-large infusion business performance is generally outstanding, but also to some extent offset the decline in the performance of large infusions. Sales of ampoule products in the first half of the year were RMB266 million, up about 104.6% YoY. Ampoule products have maintained a high growth rate since 2018, with full-year 2019 revenue of RMB348 million, up 207.7% YoY. To this end, Shisi pharmaceutical in the first half of 2020 also built a new 10 ml PP ampoule water needle production line project, further expand the production capacity of characteristic small-capacity injection products.Other products achieved sales revenue of 223 million yuan, up 108% YoY, mainly from the antiviral drug Abildo and RAW drug sales contribution. Abidor hydrochloric acid capsules as a broad-spectrum antiviral drug in the outbreak of antiviral effect has been affirmed, included in the national "new coronavirus pneumonia diagnosis and treatment program", but also included in the national 2019 version of the health insurance directory. During the outbreak, Abidore was allowed to enter 27 provinces and cities to prevent and control the epidemic product catalog or prevention and control of drugs green channel, the first half of the sales revenue of 50.64 million yuan, 19 times higher than the same period last year. In the second half of 2019, Shishu Pharmaceutical invested 4 billion yuan in the Construction of Hebei Guangxiang Pharmaceutical API Project in Bohai New Area, but the production capacity of Hebei Guangxiang Pharmaceuticals was not fully released in the first half of this year due to the impact of the outbreak. The earnings report defined the API business as another important segment of the Group's development following the injections, and there are plans to consolidate the API business into a spin-off of the domestic securities market.In terms of research and development, research and development costs in 2020H1 amounted to RMB74.75 million, an increase of 26% over the same period last year, with research and development spending accounting for about 4.62% of sales revenue. Since the core of Shisi Pharmaceutical's business is large infusion, its research and development scale is relatively small in the three. The report shows that Shisi Pharmaceuticals further promoted the progress of innovation drug and generic drug research and development and generic drug consistency evaluation in the first half of the year, and reported a total of 72 research and development projects, including three consistent evaluations and a clinical application for a new class of NP-01, which is also the first declared innovative drug of Shisi Pharmaceuticals 03 China Resources Double Crane: Infusion and chronic disease business decline, plus code research and development look forward to transformationAccording to China Resources Shuanghe august 25 released the 2020 in-year report, its first-half operating income of 4.15 billion yuan, down 14.77 percent year-on-year;Among the three business platforms, sales revenue from the slow disease and infusion business decreased, except for the fact that revenue from specialist business remained flat compared with the same period last year. Among them, the infusion business was the most seriously affected by the outbreak of new crown pneumonia, revenue decreased by 25% YoY, basic infusion sales decreased the most, reached 27%;China Resources Shuanghe did not disclose specific figures and percentages of revenue for each of the three business platforms, but according to previous results since 2015, its non-infusion business revenue has exceeded the infusion business, and is increasing year by year. Although the most affected infusion business is no longer the revenue core of China Resources Shuanghe, but as a leading enterprise in the large infusion industry, infusion business is still the basis for the long-term development of China Resources Shuanghe, for its follow-up pipeline research and development and strategic transformation to provide a stable guarantee of cash flow.   In the face of declining performance, China Resources Shuanghe also chose to increase investment in research and development. Research and development spending on 2020H1 increased by 30.53 percent year-on-year to 110 million yuan, but research and development investment was not a high proportion of sales revenue, at 2.65 percent. Financial results show that China Resources Shuanghe in 2019 identified a research and development innovation strategy to continue to increase investment in research and development, plans to achieve research and development innovation transformation in three stages. Since 2020, the company has achieved positive results in research and development innovation, with 2 approvals for generic drug conformity evaluation, 2 approvals for generic drugs, and 8 consistent evaluation or declaration of generic drug projects. Up to now, the company has 9 products through the consistent evaluation. (E drug manager)