Our reporters Zhang Yue and Cao Xueping report from Beijing.
According to the announcement of the Shenzhen Stock Exchange, more than a year after submitting the application documents, Sichuan Creed Pharmaceutical Co., Ltd. *** hereinafter referred to as "Creed") chose to withdraw its application for listing on the GEM.
From 2020 to 2022 and the first half of 2023 (hereinafter referred to as the "reporting period"), the main products sold by Creed are Tanduspirone Citrate Capsules, Sodium Valproate for Injection and Tizanidine Hydrochloride Tablets, and the total proportion of the three generic drugs in the main business revenue is89% and 8705%, which is the main ** of the company's revenue and profit.
During the reporting period, Creed's operating income was 55.7 billion yuan, 68.8 billion yuan, 90.8 billion yuan, 5$6.7 billion; The net profit was 10.7 billion yuan, 14.8 billion yuan, 20.9 billion yuan, 1$2.9 billion.
Regarding the reasons for the withdrawal of the IPO application and the future listing plan and other related issues, the reporter of "China Business Daily" sent a letter to Keruide, saying that based on the current market environment and the specific situation of the company, the company has adjusted the listing plan. In the future, Creed will take the opportunity to start the declaration again to promote the company to the capital market. As of the latest reporting period (January to June 2023), Creed's performance meets the previously declared listing standards, and the company will fulfill its information disclosure obligations in accordance with relevant laws and regulations in the future according to the listing progress.
It is worth noting that from 2020 to 2022, Creed will hold more than 160,000 offline self-promotion academic conferences, and the average number of self-promotion academic conferences held per day in the past three years was 4412 games, 5062 games, 5088 games.
In addition, Creed's former promotion service provider Yi Long Ruilei was involved in the situation of virtual ***. In 2021, the (2021) Chuan 1324 Xingchu No. 11 Criminal Verdict of the Yilong County People's Court of Sichuan Province mentioned that 11 companies established by natural person Fei Haiyan had falsely issued ordinary VAT invoices to 44 pharmaceutical companies across the country without actual business dealings. According to the announcement, the competent tax authorities have determined that there is no fictitious or untrue situation in the commercial business activities corresponding to the relevant invoices obtained by Creed in 2018. Creed obtained the aforesaid false VAT invoices in good faith.
Promotion costs are of concern
Creed has adopted different promotion models for different products. During the reporting period, Tanduspirone Citrate Capsules, Sodium Valproate for Injection and Tizanidine Hydrochloride Tablets were selected by their own marketing teams for promotion, and academic promotion was carried out for the entrusted promotion service providers of Micuronium Chloride Injection.
According to Creed's announcement, the meetings under the independent promotion mode are mainly composed of offline meetings. In 2020, there were 16,051 small conferences, 30 medium-sized conferences, and 22 large-scale conferences, totaling 16,103 academic conferences. In 2021, Creed held 18,359 small conferences, 84 medium-sized conferences, and 33 large-scale conferences, totaling 18,476 conferences. In 2022, there will be 18,512 small conferences, 30 medium-sized conferences, and 29 large-scale conferences, totaling 18,571 meetings. The average number of meetings organized by Creed sales staff per month is 2-3.
According to the implementation subject, the fee for academic promotion activities can be divided into those implemented by promotion service providers, third-party professional institutions and self-organized.
In the previous inquiries of the Shenzhen Stock Exchange, the promotion expenses of Creed have also attracted the attention of the Shenzhen Stock Exchange. During the reporting period, the marketing expenses of Creed were 12.4 billion yuan, 16.2 billion yuan, 22.1 billion yuan, 13.9 billion yuan, accounting for the proportion of main business income respectively54% and 2454%。
In terms of commissioned promotion, according to Creed's announcement, more than 10 companies are among the top ten promotion service providers of Creed in 2022 and from January to June 2023. According to the announcement, from January to June 2022 and 2023, the average amount of department meetings and city meetings held by Creed promotion service providers will be 0120,000 yuan, 0120,000 yuan and 0340,000 yuan, 0350,000 yuan, during this period, Henan Zhixing Pharmaceutical*** hereinafter referred to as "Zhixing Pharmaceutical") only provides promotion services for Creed, and the departments and cities provided by Zhixing Pharmaceutical for Creed will be at the same level as the annual promotion service provider.
In 2022 and the first half of 2023, Zhixing Pharmaceutical's promotion service fee for the promotion of Keruide's product Micurium chloride injection is 242$960,000 and $461670,000 yuan. According to Creed's announcement, in 2022, the number of department meetings, city meetings, market research, and channel construction held by Zhixing Pharmaceutical will be respectively, and in the first half of 2023, they will be respectively. However, according to the information of the national enterprise credit information publicity system, the number of insured people in Zhixing Pharmaceutical in 2022 is only 3. In addition, Longchang Sangu Consulting Services, Lu'an Pengzhan Enterprise Management and other enterprises also have a small number of insured people or even 0 insured people during the cooperation with Creed.
For issues related to product promotion, Creed said that the company covers medical institutions and other terminals for academic promotion activities in the way of "independent promotion, supplemented by ** promotion". Since the core products belong to the first imitation or exclusive in China, the original manufacturers have basically not carried out preliminary market education in China, and the company's promotion activities are in line with the clinical use characteristics of the products and their life cycle changes. For the selection of Zhixing Pharmaceutical as a promotion service provider, it is commercially reasonable to cooperate after passing the qualification review according to the promotion service provider management system. Regarding the specific situation of the large number of offline meetings held during the reporting period, Creed did not reply directly.
The risk of centralized procurement is high
According to the Creed prospectus, the company's main products have a certain competitive advantage in the industry segment. Tanduspirone citrate capsules, sodium valproate for injection, and tizanidine hydrochloride tablets are the first imitation in China, the second imitation in China, and the first imitation in China.
From 2020 to 2022, the proportion of Tanduspirone Citrate capsules in China will remain at about 80%; Sodium valproate for injection accounts for about 10% of the overall sales of sodium valproate preparations in China, ranking third in the subdivision; Tizanidine hydrochloride tablets basically enjoy the market share of tizanidine customized agents in China.
At present, the gross profit margin of Creed's main business is more than 92%, but the company's three trump card products may face centralized procurement pressure in the future.
According to the announcement, among the company's three main products, the high gross profit margin of sodium valproate for injection (lyophilized powder injection) is expected to be unsustainable because the sodium valproate variety was included in the national centralized procurement but the company did not win the bid; Tanduspirone citrate capsules have not yet been included in the national volume procurement catalog, but in the future, if the tanduspirone citrate varieties are included in the national centralized procurement, the gross profit margin of tanduspirone citrate capsules will decline to a certain extent; The possibility of tizanidine hydrochloride varieties being included in centralized procurement in the short term is low, and the sustainability of high gross profit margin is strong. According to the composition of the company's existing main products, the gross profit margin of the company's main business will face a certain risk of decline.
In the eighth batch of national centralized procurement, the concentrated solution of sodium valproate injection did not win the bid, and the winning bid price of other manufacturers decreased by 84 compared with the highest effective bid71%—93.85%, a large price reduction. According to Creed's estimates, the overall sales of the company's sodium valproate varieties (including lyophilized powder injection, water injection and new oral solution in 2023) in 2023 may increase from 27.8 billion yuan fell to 1300 million—1400 million yuan, and may decline further to 10 million yuan in 2024.
In addition, Creed also said in the announcement that Tanduspirone citrate capsules have not yet passed the consistency evaluation. If the tanduspirone citrate variety is included in the national centralized procurement, according to the estimate, the overall sales of the company's tanduspirone citrate varieties (including capsules and tablets) will also decline to a certain extent in 2024.
In terms of the market competition pattern of products, Creed announced that at present, 15 imitation manufacturers in China have been approved for marketing of sodium valproate injection concentrated solution, and another two imitation manufacturers hold sodium valproate injection concentrated solution in the marketing application stage. In addition, the manufacturers in China that have obtained the approval for the production of tanduspirone citrate include the original manufacturers Sumitomo Pharmaceutical, Creed, Peking University Pharmaceutical Co., Ltd. *** and Lanxiha Sanlian Pharmaceutical***, and 6 imitation manufacturers of tanduspirone citrate tablets are in the marketing application stage. There are basically no similar generic products in Tizanidine Hydrochloride Tablets in China (except for Creed, only Jiangsu Yabang Epsen Pharmaceutical Co., Ltd. has the registration approval document for this variety, but its products have not passed the consistency evaluation).
Creed said that the company's main varieties cover anxiolytics, antiepileptic drugs, and central muscle relaxation oral preparations, and the market demand of the industry is in the process of continuous release. In order to cope with the impact of centralized volume procurement, the company is focusing on cultivating varieties such as mideonium chloride injection and milnacipran hydrochloride tablets in the introduction and growth stages, and continues to improve the efficiency of product marketing and sales. At the same time, a variety of high-end generic drugs and improved new drugs in the field of central nervous system are deployed around "drugs + devices". At present, Creed has 18 major research projects focusing on central nervous system diseases, and most of the products are relatively advanced in the industry or have certain commercial prospects. With the steady progress of the R&D process, the varieties under research will be approved for marketing in the future, and the company is expected to usher in new growth points on the basis of the original core products.