0874 - Guangzhou Baiyunshan Pharmaceutical Holdings : HKG

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0874 - Guangzhou Baiyunshan Pharmaceutical Holdings : HKG

Posts by Fennec » Mon Oct 12, 2020 10:54 pm

Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited researches, develops, manufactures, and sells Chinese patent and Western medicines, chemical raw materials, natural and biological medicines, and chemical raw material intermediates in the People’s Republic of China and internationally. It operates through four segments: Great Southern TCM, Great Commerce, Great Health, and Others. The company is also involved in the wholesale, retail, import, and export of Western medicines, Chinese medicines, and medical apparatus, instruments, and equipment; investment in health industry with medical care, health management, health maintenance, elderly care, etc.; and research and development, production, and sale of beverage, food, healthcare products, pre-packaging food, dairy products, etc., as well as tea, ganoderma spore oil capsules, lozenges, tortoise herb jelly, etc. It also provides commercial services; and advertising services. As of December 31, 2019, it had 108 retail chain pharmacy outlets, which included 33 Cai Zhi Lin pharmacy outlets, 35 Jian Min pharmacy outlets, 21 GPC Prescription Pharmacy outlets, 17 Hainan Guangyao Chenfei Pharmaceutical outlets, and 2 Hainan Guangyao Chenfei Pharmaceutical Chain outlets. The company was formerly known as Guangzhou Pharmaceutical Company Limited and changed its name to Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited in August 2013. Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited was founded in 1997 and is based in Guangzhou, China.


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Re: Guangzhou Baiyunshan Pharmaceutical Holdings [HKG:0874]

Posts by Fennec » Sun Oct 18, 2020 9:53 am

Business Summary:
The Group is principally engaged in: (1) the research and development, manufacturing and sales of Chinese and western patent medicine, chemical active pharmaceutical ingredients (API), natural medicine, biological medicine and chemical API intermediates; (2) wholesale, retail and import and export of western and Chinese pharmaceutical products and medical apparatus; (3) research and development, production and sales of great health products; and (4) investment in health industry with healthcare, health management and health nursing, etc.

Performance for the year:
In 2019, the Group’s revenue amounted to RMB64,951,778,000, increased by 53.79% year on year; the total profit was RMB4,128,533,000, increased by 2.73% year on year; the net profit attribute to shareholders of the Company was RMB3,188,885,000, decreased by 7.33% year on year and the net profit attributable to the shareholders of the Company after deducting non-recurring items was RMB2,746,248,000, increased by 28.84% year on year.

Business Review
Without taking into account the income generated from the acquisition of equity interest in GP Corp. and Wang Lao Ji and the gain on change in fair value, the operating results of the Group during the Reporting Period increased as compared with 2018, mainly due to: (1) during the Reporting Period, all business segments of the Group further developed, and its principal business recorded steady growth. In particular, WLJ Great Health, a wholly-owned subsidiary of the Company, achieved significant growth of profit arising from the implementation of cost control and price maintenance measures and the receipt of government grants; (2) during the Reporting Period, as a result of including the income of GP Corp. and Wang Lao Ji in the scope of consolidated financial statements for the Company, the revenue and profit from principal business of the Group has increased as compared with the corresponding period of 2018.

During the Reporting Period, the Group made solid progress in the following aspects.

Firstly, the Group continued to focus on the “Big Products” to enhance the driving force for development.
1)Focusing on “Big Products”, the Group continued to enhance efforts in building channels and promoting “Big Products”, and cultivated “fashionable Chinese medicine” and “Diva brands” to further increase the sales of products and enhance the momentum to drive the development of business segments. During the Year, sales of “Big Products” including Zi Shen Yu Tai Pill, Cefixime series, Cephalopropylene series, Cefpiramide, Ke Te Ling series, Jin Ge, and Ke Gan Li Yan Oral Solution, achieved significant growth.

2)During the Reporting Period, the Group continued to advance the business connection with the top 100 chain stores such as Laobaixing Pharmacy (老百姓大藥房), Yifeng Pharmacy (益豐大藥房), Yi Xin Tang (一心堂), Jinkang Pharmacy (金康藥房), etc. in an orderly manner to increase the sales of products.

3)The Group further promoted the internal resources integration of the Great Southern TCM, leveraged the distribution network and logistics advantages of the Great Commerce to strengthen industrial and commercial cooperation within the Group, and brought into play the synergy generated between the Great Southern TCM and the Great Commerce, which brought about mutual promotion and advancement and in-depth fusion between the two business segments of the Company.

Secondly, the Group continued to implement “one core product with diversification” as the core product strategy, deepened the channels, thoroughly developed the core idea of “Ji Culture”, and created diversified new products to enhance the comprehensive competitiveness of the Great Health segment, and consolidate the Company’s market position in the industry.

1)The Group explored the connotation of “Ji Culture” and continuously strived to build Wang Lao Ji into a new symbol for auspicious culture. During the festivals including the Spring Festival and MidAutumn Festival, WLJ Great Health successively launched the use of slogans such as “drinking red-can Wang Lao Ji to enjoy an auspicious year (過吉祥年,喝紅罐王老吉)”, “drinking red-can Wang Lao Ji to enjoy family reunion in Mid-Autumn Festival (中秋團圓,喝紅罐王老吉)” and carried out public welfare activity “Let love go home in time (讓愛吉時回家)” on social media platforms such as Douyin, WeChat, Moment of Wechat, and applets, etc., which increased the brand value and promoted brand recognition among consumers.

2)The Group consolidated and optimized the Group's brand rejuvenation strategy, actively developed new products, and diversified the Group's new products to create incremental markets. In order to expand the Group's market share in the young consumer market, WLJ Great Health launched multidimensional and multi-media brand rejuvenation marketing activities, including increasing the product’s applications in response to the summer marketing slogan “the hotter, the better (越熱越愛走出去)” and using a new celebrity spokesperson to launch online and offline promotion in the core market. At the same time, the Group actively developed new products and accelerated the diversification of new products. During the Reporting Period, the new product Wang Lao Ji “Ci Ning Ji” series and Wang Lao Ji Jasmine Flavor Herbal Tea were officially released for sale.

3)The Group further developed channels and promoted cost control and price maintenance. During the Reporting Period, WLJ Great Health further refined channel management, improved the efforts to build good image, and standardized the implementation standards in terminals to increase ultimate market share. In addition, WLJ Great Health continued to control cost and maintain price, reduced channel costs, and stabilized the prices of products in an orderly manner, which effectively improved profitability.

Thirdly, further implementing the core strategy of “further development + expansion”, the Group accelerated the transformation and upgrading of the Great Commerce.
1)Adhering to the terminal-oriented strategy, the Group accelerated the expansion of health institution business segment, and increased the proportion of hospital terminal sales. During the Reporting Period, GP Corp., a holding subsidiary of the Company, firmly grasped the development opportunities arising from the GPO and volume-based purchase in Guangzhou, Shenzhen and other places, and put great efforts to develop the health institution business segment, and the Group achieved a significant increase in the proportion of GPO orders in hospitals, and a sharp increase in the proportion of hospital terminal sales. Cai Zhi Lin focused on the TCM decoction-piece segment and the development of TCM decoction-piece products, and strengthened the distinctive TCM decoction-pieces services such as decoction and identification of TCM which increased the market share of TCM decoction-pieces in hospitals, and helped achieve remarkable growth of sales of TCM decoction-pieces in health institutions.

2)The Group further increased retail outlets and regional coverage, and opened DTP Pharmacies to promote further growth in retail business. As at the end of the Reporting Period, GP Corp. has 75 retail outlets in total and the retail stores achieved rapid growth in sales throughout the Year. Cai Zhi Lin continued to build the characteristic “TCM medical center”, and actively explored and developed the “medicine + doctor” TCM chain model.

3)The Group optimized the capital structure, improved the quality of operation, and reduced operation risks. During the Reporting Period, in order to further expand the financing channels, GP Corp. carried out the asset-backed securitization of accounts receivables and in December 2019, the phase 1 asset-backed special scheme was successfully established. As at the end of the Reporting Period, the accumulated assets sold under the asset-backed securitization of GP Corp. amounted to RMB1.889 billion. The Company also officially launched the overseas spin-off listing of GP Corp. in September 2019, so as to further expand the financing channels of GP Corp.

Fourthly, guided by “characterization and differentiation”, the Group strived to enhance the market expansion capabilities of the Great Medical Care segment. During the Reporting Period, Guangzhou Baiyunshan Hospital partnered up with Guangdong 999 Brain Hospital to establish a healthcare alliance and a children treatment and rehabilitation center. It also worked with the team of Guangdong Second Traditional Chinese Medicine Hospital to build a TCM rehabilitation department, and actively developed partnership projects in postpartum and eldercare services, etc. At the same time, the Group continued to cultivate new forms of medical device businesses and continued to lay a solid foundation for medical device business development.

Fifthly, the Group vigorously promoted the project of “driving the development of enterprises by science and technology”, making breakthroughs in scientific and technological innovation. During the Reporting Period, the “Canine Experimental Animal Resource Database” of the Guangyao General Institute was selected as the only canine experimental animal resource platform in China and became a technology resource sharing service platform of the Group. As at the end of the Reporting Period, the Group has 10 national scientific research platforms and 39 provincial scientific research platforms. Furthermore, Xing Qun, Jing Xiu Tang, Guang Hua, Guangzhou Han Fang, and Tian Xin were rated as the National Intellectual Property Superior Enterprises (國家知識產權優勢企業) in 2019. Wang Lao Ji’s “Pneumatic Pill Packaging Machine (氣動式丸劑包裝機)”, Ming Xing’s “Removal Method of Toxic Components of Brucea Javanica Oil (鴉膽子油毒性成分的去除方法)” and HWBYS “Ethyl Acetate Extract of Persimmon Leaf for Preventing and/or Treating Glycolipid Metabolism-Related Disease (柿葉乙酸乙酯提取物用於預防和╱或治療糖脂代謝相關疾病)” obtained the 21st China Patent Excellence Award. Chemical Pharmaceutical Factory and Wang Lao Ji passed the national intellectual property rights management system certification (國家知識產權管理體系貫標認證). Jing Xiu Tang was awarded the title of “Innovative Enterprise in Guangdong Province (廣東省創新型企業)” and “Guangzhou Innovation Benchmarking Enterprise (廣州市創新標杆企業)”. Chen Li Ji was awarded the title of “Innovative Enterprise in Guangdong Province”.Guangxi Ying Kang was awarded the titles of “Gazelle Enterprise in Guangxi Province Province (廣西瞪羚企業)”, “Technology Innovation Demonstration Enterprise in Guangxi Province (廣西技術創新示範企業)” and “Top 100 High-tech Enterprise in Guangxi Province (廣西高新技術企業百強)”.

During the Reporting Period, the Group applied for a total of 8 production approvals and supplementary application approvals, obtained 1 approval for clinical research, and 13 production approvals (including supplementary application approvals). The Group obtained 17 Chinese patents for inventions, 8 utility model patents and 1 foreign invention patent authorization. The Group won 1 first prize, 1 second prize, and 2 third prizes of provincial and ministerial science and technology award (省部級科學技術獎), and 3 China Patent Excellence Awards, 5 companies of the Group were rated as National Intellectual Property Superior Enterprises and 4 companies were rated as Guangdong Intellectual Property Demonstration Enterprises.

Sixthly, the Group steadily carried out related work in capital operations and external mergers and acquisitions. During the Reporting Period, the Company successfully completed the purchase of the “Wang Lao Ji” series trademark assets by cash, and thus resolved the separation of trademark use rights and ownership of “Wang Lao Ji” series products. The Group commenced related work in the overseas spin-off listing of GP Corp., focusing on expanding financing channels for the Great Commerce segment. A number of investment mergers and acquisitions have been carried out to accelerate business expansion and promote scientific research and innovation.

Seventhly, the Group improved the safety production management system and comprehensively implemented quality control. During the Reporting Period, the Group carried out special internal control evaluation on quality inspections, and comprehensive quality inspections on subsidiaries, off-site workshops, and commission points, strictly assessed accountability, and thereby establishing a “big safety (大安全)” management mechanism to ensure the stable operation of the Group.

Eighthly, the Group continued to strengthen the implementation of party building, strategy, appraisal, regulation, cost, risk, safety and environmental protection, etc., continued to strengthen internal management, further improved the internal audit system, and implemented “risk control and efficiency enhancement” to improve management effectiveness.

Development strategy and annual work plan for year 2020
The year 2020 is a transitional year from the “13th Five-Year Plan” to the “14th Five-Year Plan” and is also a year for the “leapfrog reform” of the Group. In 2020, based on its own actual conditions, the Group will carry out the following works:

(i)The Group will continue to focus on “Big Products” to promote the robust development of the Great Southern TCM segment in an all-round way. The Group will focus on strengthening the brand promotion and channel construction of the “Diva brands” to enhance the sales of products; the Group will vigorously promote the inclusion of the Group’s products into the National Medical Insurance Catalogue and Essential Drug List, promote resource integration, and increase market share in hospitals; the Group will strengthen cooperation with the top 100 chain stores and regional chain stores, strengthen the linkage between the Great Southern TCM segment and the Great Commerce segment, make use of the advantages of distribution resources and network, and promote the sales of drugs.

(ii)The Group will adhere to the development strategy of “one core with multi-elements”, increase efforts to develop series of products, and promote the breakthrough development of the Great Health segment: the Group will focus on strengthening the development of channels for Wang Lao Ji Herbal Tea, explore the Wang Lao Ji Herbal Tea gift market, vigorously expand the market share of bottled products, and consolidate the market position of knock-out products; the Group will, based on the Group's corporate culture, consolidate the market position of core products; the Group will leverage the brand advantage of Wang Lao Ji to create new products, and increase market share of potential products from various aspects such as market operation, channel promotion, and quality control.

(iii)The Group will take “characterization” as the guide to optimize the allocation of resources in the segments and accelerate the transformation and development of the Great Commerce segment. The Group will take the opportunity of the overseas spin-off listing of GP Corp. To promote the optimized allocation of resources and characteristic development of the Great Commerce segment; the Group will continue to leverage the advantages of terminal network, and accelerate business expansion while consolidating the regional advantages in Guangdong and Hainan provinces; the Group will, relying on the characteristic advantages of the TCM products, expand the standardized planting base of TCM materials, and steadily promote the distribution of the “medicine + doctors” chains of Cai Zhi Lin.

(iv)Taking “differentiation” as the main goal, the Group will seek new momentum for the development of the Great Health segment including specialties, postpartum services and elderly care services to build a differentiated medical service industry and actively explore new cooperation models for medical device business.

(v)The Group will further increase investment into scientific research and build a high-level scientific research and innovation system. The Group will continue to increase research and development investment, and accelerate the research and development in innovative drugs, biopharmaceuticals, high-end generic drugs, etc. The Group will recruit more leading talents and innovation teams, and improve the system for talent cultivation, evaluation and incentive. The Group will deepen the integration of science and research and the integration of scientific research resources, and optimize the construction of scientific and technological innovation platforms.

vi) The Group will continue to promote the integration of production resources, accelerate the construction of industrial bases, and build a modern and intelligent production system;we will further improve the Group’s quality control system, strengthen the dual assessment of persons in charge of quality and quality authorized persons, and further enhance efforts in safety production and quality control.

(vi)The Group will continue to promote capital operations and investment mergers and acquisitions to promote extensional development. The Group will push forward the overseas spin-off listing of GP Corp., optimize the capital structure, and broaden financing channels; the Group will actively promote investment and mergers and acquisitions in various segments to effectively leverage social capital to achieve the Group’s extensional development.

viii) the Group will continue to strengthen basic management and risk control, and build an efficient risk management system. The Group will further improve the internal control system, carry out a special inspection on risk management, and strengthen the normalized management of internal risk control.

Potential challenges and risks
In 2020, the three-medicine (medical treatment, medical insurance and medicine) linkage will be smoother and the medical reform will be accelerated. The state’s centralized drug procurement program will be promoted nationwide, and the price of drugs will drop significantly. The monitoring system for rational drug use will be improved, and the inspection of drugs will be intensified. The implementation and promotion of a series of new policies such as the tightening of fee control by medical insurance, the National Medical Insurance Catalogue, the tilting of DRGs Payment model to cost-effective innovative drugs have brought challenges to the development of the Group’s traditional business.

The Group will pay close attention to the implementation and promotion of new policies and make strategic deployments in advance. For the corresponding measures, please refer to the information regarding the changes in industry policies and impact in “(4) Analysis on the pharmaceutical manufacturing industry operation information” under “2. Circumstances of the Operation during the Reporting Period” in the section headed “IV Discussion and Analysis of Operation” of the 2019 annual report.

At the beginning of 2020, the outbreak of COVID-19 coronavirus epidemic (“the epidemic”) brought more uncertainties about the production and operation of the Group, and the extent of the impact depends on the progress, duration and implementation of policies of control and prevention in different places towards the epidemic. The Group will be continuously focus on the development of the epidemic, evaluate and actively respond to the influence in the financial statements and operation results of the Group.

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Re: Guangzhou Baiyunshan Pharmaceutical Holdings [HKG:0874]

Posts by Fennec » Wed Oct 28, 2020 7:32 pm

Baiyunshan Pharmaceutical General Factory and WuXi AppTec signed a cooperation agreement for a category 1 innovative drug project


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