Minsheng Health, the parent company of 21 Gold Vita, has been affected by a number of factors, such as a high degree of dependence on 21 Gold Vita for revenue, rising prices of raw materials due to monopoly, and a "circle of friends" throughout the Zhejiang pharmaceutical sector.
"Doing advertising, I am very cautious. Fame is given by the audience, to be responsible for everyone.21 gold vita, 21 years of excellence, healthy millions of families. This is also a responsibility, 21 gold vita, family health, our responsibility." In 2005, Ni Ping, a household name and host, contributed her first commercial to the equally famous 21 Gold Vita.
Hangzhou Minsheng Health Pharmaceutical Co., Ltd (hereinafter referred to as "Minsheng Health"), which develops and produces 21Gold Vita, was founded in 1926 as one of China's four earliest western pharmaceutical factories. Like the other three - Xinyi, Xinya and Hai Pu, Minsheng Health has experienced a series of ups and downs and restructuring and reorganization, and finally came to the doorstep of the capital market. 2021 the last day of the year, Minsheng Health submitted an IPO application, with a "seniority" of 36 years old, counting from the 1985 introduction of 21 gold vita.
When Minsheng Health submitted its IPO application on the last day of 2021, with a 36-year-old "seniority" counting from its introduction in 1985, it knocked on the door of the Growth Enterprise Market (GEM) with its 21st Golden Vita.
When the 26-year chairman of the real controller Zhu Fujiang said, his career has three dreams: one is to achieve zero breakthrough in the innovative drugs, get a class of innovative drug approval; two is to sell the company's production of prescription drugs to the U.S.; three is to lead the company listed. The first two dreams have been realized, so what about the third?
Monopolized API
According to the official website of the State Drug Administration, there are only five manufacturers of vitamin D2, namely, Sichuan Neijiang Huixin Pharmaceutical Company Limited, Northeast Pharmaceutical Group Company Limited, Jiangxi Gannan Haixin Pharmaceutical Company Limited, Sichuan Yuxin Pharmaceutical Company Limited and Nanjing Sea Whale Ltd.
And Minsheng Health's main suppliers of vitamin D2 - Hebei Guangyiyuan Pharmaceutical Co. and Tibet Junjian Pharmaceutical Co. - are shown on the State Drug Administration website as "drug business enterprises," apparently as distributors.
And one of the manufacturers, Northeast Pharmaceuticals (000597.SZ), was the subject of an anti-monopoly investigation by the Liaoning Provincial Bureau of Market Supervision in November 2019, and was reported in November 2018 to be "maliciously controlling" APIs. The market believes that the soaring prices of APIs, and even the creation of monopoly, or related to environmental regulation.
In 2017, the competent authorities of pharmaceutical enterprises in accordance with the "Chinese People's Republic of China **** and the State Environmental Impact Assessment Law" on the rectification of pharmaceutical enterprises, set off the pharmaceutical enterprises "environmental assessment storm." on April 1, 2018, China's environmental protection tax was formally levied.
According to the "Key Emission Unit List Management Provisions (Trial)", API manufacturing and pharmaceuticals are included in the list of key emission units in the water environment and the list of key emission units in the air environment, respectively. In this context, many API companies were forced to withdraw from the market or rectify the transformation, the price of APIs soared.
On January 25, 2021, the Heilongjiang Provincial Health Insurance Bureau issued the "Notice of Heilongjiang Province on the Publication of Information on Partial Withdrawal of Drugs from the Grid", which said that, according to the applications submitted by the enterprises, 369 drugs will be removed from the grid on the initiative of the province of Heilongjiang, of which 153 drug manufacturers explicitly pointed out the reasons for the withdrawal of the grid, "related to the cost." .
And in the second half of 2021, the monopoly situation of APIs is expected to improve. in November 2021, the National Antimonopoly Bureau (NAB) issued the "Anti-Monopoly Guidelines on the Field of APIs" (hereinafter referred to as the "Anti-Monopoly Guidelines" on the first day of its official listing, prohibiting operators of APIs with competitive relationships from entering into the horizontal monopoly agreements stipulated in Article 13 of the Anti-Monopoly Law. Horizontal Monopoly Agreement.
For example, it is prohibited for API producers and other operators with competitive relationship to agree on the quantity of API production, quantity of sales, sales price, sales target, sales area, etc. through joint production agreement, joint purchase agreement, joint sales agreement, joint bidding agreement and so on.
It is also prohibited for API manufacturers and other API operators with competitive relationship to reach an agreement not to produce or not to sell APIs, and other API operators to give compensation; at the same time, the Antimonopoly Guidelines also prohibit API operators and the counterparty of the transaction with the vertical monopoly agreement as stipulated in Article 14 of the Antimonopoly Law.
It is not permitted for an API operator to implement direct fixing of resale price and limitation of minimum resale price to an API distributor, a pharmaceutical manufacturer, etc. through contractual agreements, verbal agreements, written letters, e-mails, notices of price adjustments, etc., or to implement disguised resale price restriction to an API distributor, pharmaceutical manufacturer, etc. by means of fixing the profit of a distributor, discounts, and rebates, etc., etc.
From 2018 to 2020, the gross profit margin of Minsheng Health's main product, Multi-Vitamin Elemental Tablet 21 (21 Gold Vitamin), will be 70.42%, 68.38% and 67.90%, respectively.
The company said the main reason for the 2.04-percentage-point decrease in gross profit margin in 2019 compared with 2018 is the increase in raw material prices, which led to a 16.20-percent year-on-year increase in its unit cost compared with 2018. Anti-monopoly storm in the field of APIs, and whether it can open the imagination of Minsheng Health gross profit margin space?
Also 21 gold vita
As a well-known product in China's vitamin industry, 21 gold vita contributes almost more than 90% of Minsheng Health's revenue. And in order to maintain the reputation of its fist product, as well as pulling in other new products, Minsheng Health spends a larger share of its annual advertising dollars than its peers.
From 2018 to the first half of 2021, the company's advertising expenses accounted for 21.25 percent, 16.35 percent, 21.69 percent and 20.56 percent of revenue, while comparable listed companies in the same industry, Jiangzhong Pharmaceuticals (600750.SH) and Tangchenbijian (300146.SZ), had an The average values were 11.65%, 12.92%, 13.16% and 11.03%.
However, the company said that the absolute amount of advertising expenses of comparable companies is much larger than that of the company, and the comparable companies have larger revenues and significant scale effects, so the advertising expenses accounted for a lower proportion of revenues.
Circle of friends throughout the field of medicine in Zhejiang
The prospectus shows that the company's real controller is Zhu Fujiang, Zhu Yuqi father and son, Zhu Fujiang as chairman of the company, indirectly controlling 92.00% of the company's equity.
Zhu Yuqi as a director of the Company and employee shareholding platform Jingniu management, Jingyi management, Ruimin management managing partner Minsheng Houze executive director and general manager, holding controlling shareholder Minsheng Pharmaceuticals 3.97% of the shares and Ruimin management of 5.61% of the capital contribution. And in the listing counseling on the eve of the other minority shareholders, behind no lack of "big brother".
In March 2021, on the eve of the listing counseling, the company added four new external shareholders, respectively, Puhua Lingju, Shuo Bo investment, Qixing investment and and allied medical wisdom, are "optimistic about the development of the company as well as the expected return on the IPO and the intention to invest". In which Qixing Investment can be said to be Zhejiang merchants "big brother gathering place" - one of the partners Shen Farrong, the founder of Xingxiang Park, its Yi Nian Health specializing in high-end health management.
Partner Cai Shaoying served as a supervisor of the Kang Enbei (600572.SH) Group, the partner list of Zhejiang Laiyi investment behind the listed company stood Zhejiang Pharmaceuticals (600216.SH), the partner of the health of the investment upward traceability is the founder of the micro-medicine Liao Jieyuan, in addition, but also involves the Wanma shares (002276.SZ), Jingxin Pharmaceuticals (002020), and the company is also involved in the development of a new pharmaceutical industry, and the company is also involved in the development of the new pharmaceutical industry. In addition, it also involves Wanma shares (002276.SZ), Jingxin Pharmaceuticals (002020.SZ), Shouxiangu (603896.SH), and a number of listed companies.
And Qixing Investment's fund manager, Zhejiang Zheshang Jianjian Investment Property Management Co., Ltd, showed a circle of friends list that also includes Dian Diagnostics (300244.SZ), Int'l (000411.SZ), Asia-Pacific Pharmaceuticals (002370.SZ), Shulan Medical, a company co-founded by academician Li Lanjuan and her husband, academician Zheng Shusen, and Hangzhou's oldest medical brand, Shulan Medical. Shulan Medical, and Hangzhou's long-established Chinese medicine hall Hu Qingyu Tang.
But the Zhu family, father and son, have no intention of sharing the fruits of their labors of the previous years with their friends -- the prospectus shows that on March 9, 2021, before March 26, when the new shareholders complete their share entry procedures, the company will use Feb. 28, 2021 as the base date to Distribute cash dividends. That is to say, this dividend directly divided up the first three years of saving the "family background".
New shareholders into the former controlling shareholder Minsheng Pharmaceuticals 100%, Minsheng Pharmaceuticals by Minsheng Pharmaceuticals 78.21%, Zhu Fujiang in Minsheng Pharmaceuticals shareholding of 53.36%, and Zhu Yuqi in the Minsheng Pharmaceuticals shareholding of 3.97%.
In summary, revenue is highly dependent on 21 gold vita, raw material prices are rising due to monopoly, "circle of friends" all over the Zhejiang pharmaceutical field big brother of Minsheng Health, can realize the long-awaited listing dream?