Germany Exhibition Health Epitaxy Mergers And Acquisitions In Many Fields To Find A Fulcrum

Recently, the German development fair issued the "framework agreement on equity purchase" progress announcement. Due to the expiration of the framework agreement and supplementary agreement, the two sides failed to reach an agreement on specific cooperation matters and agreed to terminate their cooperation after consultation. This is also the first attempt by the company to extend the merger after the expansion of the main product "ah le" (Atorvastatin Calcium Tablets).

It should be noted that the impact of the purchasing policy on the volume of purchases has led to a decline in the performance of the company. Relying on a single generic drug, it is difficult to bring growth to the company, and the initiative to launch multiple fields also shows the company's urgent desire to find the next "ah le".

With volume purchases, performance plummeted.

In December 29, 2019, the state organ's centralized procurement and use joint procurement office announced the detailed rules for the purchase of new varieties. The volume purchase involves a total of 33 varieties. With the progress of quantity purchasing, the profit margins of generic drugs enterprises have been continuously compressed. The cost control of generic drugs enterprises will become more and more important, and innovative pharmaceutical enterprises will usher in opportunities for development. And relying heavily on generic drug development, health has to find new profit growth point.

The main business of German exhibition is the research, production and sale of drugs. The subsidiary company Jialin pharmaceutical is an asset that the company has invested in the major asset reorganization in 2016. The core product "alle" is produced by Jialin pharmaceutical. The indications for atorvastatin calcium are hypercholesterolemia and primary hypercholesterolemia. The original drug Lipitor was developed by Pfizer Inc. The administrative protection of Lipitor was terminated in March 30, 2007. "Ah le" is the first product in China to pass the consistency evaluation of atorvastatin calcium, and successfully entered the first batch of "4+7" urban concentration belt purchase.

In recent years, the sales volume of "ah le" has shown a steady upward trend. However, with the gradual implementation of the "4+7" urban belt procurement in March 2019, the substitution effect of generic drugs on high priced raw drugs has been gradually highlighted. According to the Chinese Pharmaceutical Association business data, in May 2019, the company's main product "ah le" sales volume increased significantly in the "4+7" area. It has become the "4+7" area sample hospital atorvastatin calcium drug market share.

It is worth noting that the sales price of "ah le" has dropped sharply due to the influence of the purchasing policy of the purchasing quantity. The operating income of Jialin pharmaceutical in the first half of 2018 and the first half of 2019 was 1 billion 661 million yuan and 922 million yuan respectively, with net profit of 442 million yuan and 257 million yuan respectively, and the operating income and net profit of the reporting period decreased by 44.50% and 41.78% respectively.

The double drop in revenue and net profit shows that the company is hard to sustain its growth by relying on generic drugs. In September 24, 2019, the exit from the expansion of the company's collection expanded the company's dependence on "ah le".

Build its own product line and find out the next "ah le" in many areas.

The loss of the core power of Germany's development and health has to change strategy quickly, and it intends to make up for the lack of growth momentum through the way of extensive mergers and acquisitions. However, the merger and acquisition process seems not smooth sailing.

In September 25, 2019, German exhibition health and Beijing Jinsheng Investment Center (limited partnership) conducted preliminary consultations on the acquisition of Jincheng medicine shares and signed the framework agreement.

Judging from its main business, Jincheng pharmaceutical business mainly covers three major areas, including pharmaceutical intermediates, bio pharmaceutical raw materials and terminal preparations. The main business is the production, research and development and marketing of ceftriaxone powder preparation, cephalosporin side chain intermediates, specialty raw materials, terminal preparations for women and other related drugs.

The German exhibition health is optimistic about the future prospects of Jincheng medicine, and for its own business integration needs, it intends to acquire 25.05% of the underlying company's shares, and the transaction price is estimated at RMB 21-26 billion, and the payment method is cash.

In November 4, 2019, the two sides still had the intention to continue to promote the acquisition transaction, and then signed the supplementary agreement. The supplementary agreement was valid until January 4, 2020. But as of due date, the two sides failed to reach an agreement on specific cooperation matters, so cooperation was also terminated.

In addition, Germany exhibition health also actively attacked industrial hemp, modern disinfection technology industry and cancer innovative medicine field.

In November 19, 2019, the German exhibition health and Han Zhong Business Management Group Co., Ltd. and HMA Investment Group Co., Ltd. signed the equity transfer agreement between Germany exhibition great health Limited by Share Ltd and Han Zhong Business Management Group Co., Ltd., hemp Investment Group Co., Ltd. and Yunnan Su Ma Biotechnology Co., Ltd. in Chaoyang District, Beijing. The company bought 20% stake in Yunnan Hemu Biotechnology Co., Ltd., which was held by hemp investment, and the transaction price was 100 million yuan. In December 31, 2019, the company completed the relevant industrial and commercial registration procedures for the acquisition of Yunnan Ma Ma Biotechnology Co., Ltd.

In September 24, 2019, de exhibition health signed with Dai Yanzhen, Beijing Changjiang medicine and technology limited liability company and its major shareholder, "investment letter of intent for Limited by Share Ltd and Dai Yanzhen and Beijing Changjiang medical science and Technology Co., Ltd.". Changjiang pulse company is a pioneer enterprise in the field of modern disinfection technology in China. It is a professional service provider for professional disinfection in medical disinfection, public health, food hygiene and other fields. In December 25th, the two sides signed a supplemental agreement and agreed to extend the original contract by three months, due to the completion of the audit and assessment.

In December 16, 2019, the company signed the "Beijing Oriental bio pharmaceutical Polytron Technologies Inc capital increase agreement" with the Beijing orient bio pharmaceutical Polytron Technologies Inc (hereinafter referred to as "Beijing Orient") and its shareholders. The cash company invested 300 million yuan to subscribe to the target company to add 36 million 150 thousand new shares, and the shareholding ratio was 23.22% after the increase. The company said that this investment will help the company to further layout the field of cancer innovative drugs, expand product pipelines, promote the integration of company's resources and capabilities, and tap new profit growth points.

Beijing Eastern has slightly owned three new First in Class cancer drugs, including the VGX-3100 project (a new drug for cervical precancerous lesions caused by phase 3 clinical HPV16/18), ABC 511&FC project (for the treatment of recurrent high-grade gliomas), ABC-177 project (using the most advanced CRISPR-Cas9 gene editing technology to remove T cell inhibitory receptors, and relieving the inhibition of CAR-T cell immunosuppression). However, no income has yet been formed, and net profit in 2018 and 2019 is -2411.59 yuan and -11019.95 million respectively in 1-8 months. The book value of the benchmark date in August 31, 2019 was 335 million 924 thousand and 900 yuan, the assessed value was 1 billion 11 million 442 thousand and 300 yuan, the appreciation value was 675 million 517 thousand and 400 yuan, and the appreciation rate was 201.09%.

With the development of purchasing policy with quantity, generic drugs will not be able to satisfy the pursuit of profits for enterprises. The German exhibition health tries to change the waterway, enriches the product pipeline to cater for the policy direction, then whether we can find the next "ah le" is worth looking forward to.