Every reporter Lin Zichen, every editor Yang Xia
Income accounts for nearly 50%ProgressivejackpotThe gross margin of products has declined continuously, the capitalization proportion of R & D investment is close to 75%, and related party transactions are expected to increase 11 times ⋯⋯.
Nearly two months after the release of the annual reportProgressivejackpotOn the evening of May 21, North China Pharmaceutical (Rights Protection) (600812Progressivejackpot.sh, share price 5Progressivejackpot.09 yuan, with a market capitalization of 8.733 billion yuan) replied to the regulatory work letter previously issued by the Shanghai Stock Exchange. According to the announcement, there has been a year-on-year decline in the sales price or sales volume of many of the company's products after the state organized centralized volume procurement (referred to as "National Mining"), resulting in a drop of nearly 8 percentage points in the gross profit margin of anti-infective products.
Although according to the capitalization time of pharmaceutical evaluation, Huabei Pharmaceutical has as many as 270 R & D projects that meet the capitalization conditions, but the company's financial situation is still not optimistic. by the end of 2023, the monetary capital is only 988 million yuan, and the total current liabilities are 10.269 billion yuan.
In order to optimize costs, the company's related party transaction volume is expected to increase 11-fold in 2024, including 368 million yuan purchased from related parties and 400 million yuan sold to related parties.
The decline of gross profit margin of anti-infective products in the fourth year is greatly affected by national mining.
The reason why the Shanghai Stock Exchange sent regulatory work letters to Huabei Pharmaceutical is likely to be related to the company's poor performance. According to the annual report, in 2023, the company achieved operating income of 10.12 billion yuan, net profit of 4.8903 million yuan, deducting non-net profit of-45.2326 million yuan, and non-net profit for four consecutive years.
In terms of products, the income of anti-infective products accounts for nearly 50%, but the gross profit margin has declined year after year, decreasing by 2.02%, 5.04%, 3.13% and 7.89% respectively from 2020 to 2023 compared with the same period last year. The combined income of cardiovascular and cerebrovascular products, vitamins and healthy consumer goods accounted for only 4.63%, while the gross profit margin increased by 18.02% and 10.98% respectively. It is worth noting that the annual gross profit margin of cardio-cerebrovascular products, vitamins and healthy consumer goods fluctuates greatly. the gross profit margin of the former is-7.75%,-20.85%, 15.10% and-6.93% respectively from 2019 to 2022, while that of the latter is-20.99%, 1.46%,-2.84% and 5.60% respectively.
The company said that the decline in gross profit margin of anti-infective products is mainly caused by the decline in national postharvest sales prices and sales compared with the same period last year, which is in line with the industry trend. Specifically, amoxicillin sodium clavulanate potassium for injection of North China Pharmaceutical was selected in the eighth batch of national mining. Because seven companies in this country selected the product, the market share of the company's products decreased greatly after the bid was executed in July 2023. The gross profit was reduced by 114 million yuan. In addition, the winning price of cefotaxime sodium for injection and amoxicillin sodium clavulanate potassium for injection decreased by 250 million yuan and 82.0732 million yuan respectively.
As for the significant increase in gross profit of cardio-cerebrovascular, vitamins and healthy consumer goods, it is mainly related to the hypertension drug "L-amlodipine benzenesulfonate tablets" and eye protection single product "lutein ester tablets".
The company said that the sales revenue of L-amlodipine besylate tablets was 219 million yuan, the gross profit increased by 61.8282 million yuan to 125 million yuan, and the gross profit margin increased by 19.37 percent to 57.30 percent. The main reason is that the sales price of the product decreased by 5.0778 million yuan, but the sales volume increased and the purchase price of raw materials decreased, increasing the gross profit by 8.3351 million yuan and 58.5709 million yuan respectively.
In addition, lutein ester tablets achieved sales revenue of 132 million yuan, gross profit increased by 28.8589 million yuan to 42.2973 million yuan over the same period last year, and gross profit margin increased by 9.44% to 32.02%. The main reason is that the sales price of lutein ester tablets increased, the sales volume increased, and the cost decreased, and the gross profit increased by 14.5578 million yuan, 13.0974 million yuan and 1.2037 million yuan respectively.
The financial pressure is great, and the volume of related party transactions is expected to increase 11 times this year.
In addition to poor performance, poor credit rating is also a hard wound for North China Pharmaceutical. Since 2021 due to "insufficient capacity" cut off supply and collection, the company has been on the list of dishonesty for three consecutive years, and has been rated as a "serious" untrustworthy pharmaceutical enterprise.
In order to optimize the company's product structure and enhance its core competitiveness, the company has continuously increased its R & D investment, with a total R & D investment of 1.782 billion yuan in the past two years, of which 1.173 billion yuan occurred in 2023, a sharp increase of 92.51%, and the capitalization accounted for 74.65%, an increase of 10.32% over the same period last year.
In addition, the time point of capitalization of R & D expenditure of Huabei Pharmaceutical is drug evaluation, while the capitalization standard of companies in the same industry is to obtain relevant approval documents (such as "clinical trial approval", "drug registration approval", etc.), to meet the pilot test conditions, to complete the intangible asset so that it can be used or sold in technical feasibility as the judgment basis or similar time point, are later than drug evaluation.
In response, Huabei Pharmaceutical listed 270 R & D projects that have met the capitalization conditions, some of which have been developed for many years but are still in the stage of preclinical research. Important capitalized R & D projects include the R & D project of recombinant anti-rabies virus antibody combination, the recombinant anti-human vascular endothelial growth factor monoclonal antibody injection project, the recombinant human anti-human tumor necrosis factor (TNF- α) monoclonal antibody injection project and the LCZ-696 project.
The company explained that the main reason for the different capitalization standards is that R & D projects are at different stages, R & D processes and processes are not the same, and the possibility of forming results is also different. Drug maturity evaluation is recognized as a milestone in the field of pharmaceutical research and development, and it is the possibility for candidate drugs to become productive, safe and effective drugs, involving a series of important physical and chemical properties. It is proved that the drug has the possibility of proprietary medicine and the ability to generate income, so the time point of capitalization is reasonable.
In this regard, the annual audit accountant of North China Pharmaceutical agrees. However, the reporter noted that North China Pharmaceutical is under great financial pressure. By the end of 2023, the asset-liability ratio was 70.08%, with monetary funds remaining only 988 million yuan, and current liabilities totaling 10.269 billion yuan.
In order to optimize costs, the company expects the volume of related party transactions to increase to 865 million yuan in 2024, an actual increase of 794 million yuan over 2023. Specifically, in order to reduce procurement costs, North China Pharmaceutical can carry out liquid sugar and other business with North China Pharmaceutical Group Co., Ltd. (referred to as "related parties"). It is estimated that the annual production of raw materials (liquid sugar, methyl ester, white granulated sugar), packaging materials (PVC, tropical aluminum) and labor insurance (daily chemical sundries) and other related transactions of 368 million yuan.
In addition, if the import and export trade conditions of Tianjin Company are better than the company's existing import and export trade conditions, North China Pharmaceutical and its subsidiaries can integrate resources and screen varieties with Tianjin Company to carry out cooperation in penicillin industrial salts and other pharmaceutical intermediates (including but not limited to self-production), and plans to carry out annual cooperation of 400 million yuan.
Cover picture source: Visual China