Commercial value of the regional pharmaceutical business focused on the regional market highlights – Medical Business – Pharmaceutical Industry
Circulation of medicines development in China can be divided into two phases.
Because too much emphasis on the history of the welfare nature of the pharmaceutical industry, before joining the WTO, Chinese wholesale area is restricted area of private capital and foreign capital, state-owned and state holding enterprises in the number of pharmaceutical wholesale and commercial sales were up 90% share. However, the control process in the Decentralized weaken or even disappear, the original complete three domestic pharmaceutical wholesale system is broken up into thousands of closely integrated with the local pharmaceutical wholesale enterprises. As a "good care" on behalf of pharmaceutical distribution companies in the over-protection of both the local government can not grow up can not die, making the whole field of medicine circulation was high cost and low efficiency, low service quality of the "two low and one high" features. This led directly to the domestic pharmaceutical distribution business in 2002 as many as 170 000, total 203.4 billion yuan sales income, the annual turnover of more than 20 million yuan less than 400. Direct economic indicator is the cost of medicine circulation rate of 11.5%, net profit was only 0.5%, the majority of enterprises in a loss situation.
Join the WTO, with the gradual liberalization of medicine circulation, private capital and foreign capital began to gradually involved. In accordance with China's accession to WTO commitments, to December 11, 2004, China's pharmaceutical distribution business will be open to foreign investment, to December 11, 2006, in addition to more than 30 chain stores do not allow foreign ownership of retail enterprises, the rest drug distribution industry will be fully open foreign investment, no equity restrictions. Meanwhile, pharmaceutical distribution due to its characteristics of weak profits, and gradually turned from the darling of the marginalization of the local government. Role in a variety of factors, market competition has intensified, survival of the fittest mechanism into play, such as Kyushu through the promotion of private pharmaceutical distribution companies such as the rapid rise.
Worthy of our attention is that in this fierce competition, some based on the local, steady expansion of the economic value of regional medical business continue to improve. For example, a pharmaceutical commercial companies, although only the size of sales of more than 30 billion, but its gross margins as high as 10%, significantly higher than the industry average of 6% to 7% level; net profit margin was 2.5%, well above the industry an average of about 1% level. The company expanded through acquisition in recent years has accounted for 80% of the hospitals in the province distribution share; the same time, more than one thousand pharmacies throughout the province, is the absolute king of the province's drug retail. At the same time the company occupied the pharmaceutical distribution system in an absolutely dominant position on the terminal greatly increased the bargaining power of hospitals. Accounts receivable turnover days is far better than similar indicators of pharmaceutical commercial enterprises.
This type of regional business enterprise with the intensive cultivation of the local market, firmly grasp the end customer, as pharmaceutical manufacturers and hospitals a real bridge, and obtained much higher than the industry's profitability. Meanwhile, the terminal control of this absolute advantage, making the company's future profitability great room for improvement there.
The one hand, companies can form their own production or OEM, not obvious in the brand's expansion in the field of generic drugs. By reducing the flow of the middle part, and most common drug of brand awareness is not strong companies also avoid the cost of the course in the promotion of increased problems. In fact, the combination of commercial production of generic drugs to bring a regional corporate profits would be much higher than that of a single commercial or industrial. A southwest Pharmaceutical companies With the region's strong business and greatly reduce cost of sales ratio of industrial products, was given a much higher than the industry average net profit margin of sales.
The other hand, the strong regional pharmaceutical distribution business enterprises in the field of medicine integration process, access to the forward and attack back and defend the good position. Can either form an alliance with a regional advantage for expansion, but also in the future M & A up for sale business. The strength of regional status, its valuation would be much higher than the average big but not strong commercial circulation enterprises.
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