I. Discussion and analysis of the operating situation
(a) Fertilizer and chemical business
During the reporting period, affected by the epidemic and the international situation, the market, the first half of the domestic market for urea as a whole was a "convex The overall domestic urea market in the first half of the year showed a "convex" trend, but the downturn in the market for more time than the time of the rise. As of June 28, the average price of domestic urea at 1,677 yuan / ton, compared with the average price of 1,670 yuan / ton at the beginning of the year, a year-on-year decline of 7 yuan / ton. From the analysis of production and demand, the trend of international urea prices, as well as the macroeconomic situation, the overall trend of petrochemical products, the urea market in 2020 is not very optimistic, and is expected to be inferior to 2019.
In the first half of 2020, China's methanol market overall weak operation. Affected by the new crown pneumonia epidemic, the resumption of work in many cities and enterprises has been repeatedly delayed, resulting in supply and demand are affected to varying degrees. Upstream main plant inventory continues to accumulate, poor logistics and downstream demand continues to be light, inventory pressure gradually accumulated under the part of the device planned parking or reduce negative. The downstream device feedstock supplement is insufficient and product inventory accumulation under the start-up is also limited, the main olefin plant one after another parking maintenance, oversupply situation is difficult to alleviate, superimposed on the international crude oil plunge driven by the depth of the port spot downward, the market panic spread. Compared with previous years, in the first half of 2020, China's methanol market is basically in a weak downward phase, mainly concentrated in the range of 1375-2515 yuan / ton, down 9.8%-36.5% compared with last year.
During the reporting period, the company took active countermeasures according to the market-related situation:
First, strengthen management, improve quality and efficiency. The full implementation of 6S management, enhance the scientific and standardized on-site management work. in June successfully passed the evaluation and certification of the measurement system, which provides an effective guarantee for the subsequent lean management. On this basis, the company actively benchmarking advanced, optimize production indicators, the consumption is down. At the same time, Tongzi chemical internal further strengthen the safety work, the first half of the company increased the hidden danger investigation and management efforts, the staff to strengthen the safety training and learning, and to the intrinsic safety as the goal of promoting the automation of production equipment, and further enhance the production and operation of the safety management level.
Secondly, the annual overhaul was completed in March 2020, realizing the smooth operation of the two lines of ammonia and alcohol, and adjusting and optimizing the key process indicators, and currently realizing the daily output of liquid ammonia of about 1,080 tons, a year-on-year increase of 9.06% compared with 2019, and the daily output of methanol of about 1,100 tons a year-on-year increase of 7.02% compared with 2019.
Third, in terms of technical reform and technological initiatives, we actively developed new products and projects. In order to further reduce costs and increase efficiency, extend the industrial chain, and enhance the enterprise's ability to withstand risks: ① Use the existing people, machines, materials and materials to build a new automotive urea project (capacity of 50,000 tons/year), has completed the filing procedures and equipment selection, etc., and is scheduled to go into operation in August. ② plans to build 100,000 tons of compound fertilizer project, has completed the field leveling and bidding work, plans to put into production at the end of this year. ③Newly built coal conveyor belt and automatic coal unloader project, improve the efficiency of coal transfer, reduce costs, is expected to save about 15 million yuan per year coal transfer costs. ④Continuing to promote the energy-saving renovation project of boiler induced draft fan and powder discharge fan permanent magnet fan, 6 wind turbines can save 1.2 million RMB of electricity cost per year, and the payback period is about 1.4 years. ⑤ Continuing to push forward the hydraulic turbine renovation project, the renovation of 3 sets of turbines can save 1.21 million yuan of electricity cost per year. ⑥Completed the technical reform plan for the expansion of the thermal power boiler plug clearing machine and gasification coal slurry pump, and signed the contract. ⑦Automated palletizer and loading system were enabled. ⑧ Starting from June, we began to implement the technical reform work of non-powered dust removal and unattended work in stages, which can effectively improve the working environment and labor efficiency.
During the reporting period, Tongzi Chemical realized an operating income of 636,246,200 yuan, a year-on-year decrease of 102,703,200 yuan, or 13.9%. The main reason for the decrease in operating income was that the selling prices of the main products urea and methanol decreased by 10.64% and 25.95% respectively compared with the same period in 2019; Tongzi Chemical realized a total profit of RMB 4,445,500 yuan, turning a loss into a profit.
(ii) Pharmaceutical Manufacturing Business
In the first half of 2020, the company overcame the impact of the new coronavirus epidemic on to the business operations, under the premise of good protective measures and to ensure the health of the staff, at the end of February, began to resume work and resume production, making full use of the advantages of the Internet information technology, most of the positions are able to go to work, the enterprise resumption of production and to protect the supply of the market has played a positive The report also shows that the company has been able to resume production and safeguard market supply.
During the reporting period, the company's pharmaceutical business work is mainly:
First, the company's glimepiride tablets in the first order to win the bidding of the state procurement (GY-YD2019-2), the bidding period of three years. The company in the first half of the year to take advantage of glimepiride tablets won the bid distribution, to drive the sales of other products, from the state procurement distribution implementation of more than three months, sales growth is obvious, in the protection of the provincial and regional medical terminals have been won the bid distribution premise, the marketing team to take advantage of the company's glimepiride winning the bid price is low, to fight for market share in non-winning areas, in the retail market glimepiride tablets to take advantage of the physician prescription driven
The brand position of Glimepiride tablets is being enhanced.
Secondly, the company is actively promoting the GMP certification of methimazole raw material production and resumption of production of methimazole enteric-coated tablets, from the point of view of the current public information, methimazole tablets (5mg) is the national shortage of drugs catalog varieties, market demand is tight. 2020 May 12 Sheng Ji Tang Pharmaceuticals in accordance with the requirements of the relevant regulations and requirements of Guizhou Provincial Drug Administration applied for the resumption of production, July 29 received the consent of the Sheng Ji Tang Pharmaceuticals methimazole tablets, and the production of the Sheng Ji Tang pharmaceutical products. On July 29, it received a letter of consent for the listing and sale of Mercaptoimidazole Enteric-coated Tablets of Shengjitang Pharmaceutical. At present, the company can carry out production by purchasing raw materials from legal sources and sell them after passing the inspection.
Third, the marketing aspect of the company continues to adhere to the construction of its own team of ideas, the use of glimepiride tablets won the bid, and the establishment of partnerships with large commercial nationwide, recommending the company's second-line varieties. We insist on results-oriented, strengthen internal management, deepen marketing management reform, improve market refinement management, according to the characteristics of the product sales in each province and the bidding situation, the sales of various places, counties (municipalities), customer terminals to analyze one by one, to find out the market gaps, to analyze the strengths and weaknesses of the competing products, and to formulate the company's product sales competition strategy. OTC" network, the company continues to play "chronic disease management cooperation" advantage, to cultivate the enterprise cooperation loyal customers, to ensure that the company's sales sustainable growth.
Fourth, to protect the supply of pCms raw materials, the company Chonglou detoxification tincture into the national health insurance catalog, the market demand situation is better, but at present the price of the raw material Chonglou is still high, which seriously affects the product's market coverage and terminal promotion. In the first half of this year, the company began to cultivate the original medicinal materials of Chonglou, and vigorously develop the cultivation of Chonglou with the cooperation mode of the company and the farmers, so as to provide a guarantee for the supply of raw materials of Chonglou detoxification tincture in the future.
During the reporting period, Sanctuary Pharmaceuticals*** produced 18.36 million boxes of drugs, an increase of 27.50% over the same period last year. Among them: 17.06 million boxes (sticks) of Western medicines, an increase of 29.24% over the same period last year, 1.31 million boxes (bottles) of traditional Chinese medicine, an increase of 10.08% over the same period last year, health care products are not produced due to relocation, and the production of medical devices has been stopped. Sales of drugs 17.01 million boxes, an increase of 17.80% over the same period last year, realizing operating income of 116.19 million yuan, a decrease of 38.66% over the same period last year. Among them: Western medicine 16.01 million boxes (sticks), an increase of 30.91% over the same period last year, realizing operating income of 104.53 million yuan, a decrease of 32.54% over the same period last year, 1 million boxes (bottles) of traditional Chinese medicine, a decrease of 51.92% over the same period last year, realizing operating income of 11.66 million yuan, a decrease of 59.95% over the same period last year, and realizing net profit of 7.03 million yuan, a decrease of 85.41% over the same period last year. 85.41%.
Second, the possible risks
1, fertilizer chemical industry
Raw fuel coal supply risk: the national policy of production capacity and strengthen the coal industry safety supervision, resulting in a significant decline in coal production in Guizhou Province, the company needs to purchase a large number of raw fuel coal in the north, due to the limitations of capacity, which may lead to the device production capacity can not be brought into full play.
Risk of rising raw material coal prices: The company is currently purchasing large quantities of Shaanxi Yulin bituminous coal, and many domestic enterprises using anthracite as raw material are heavily transforming their installations to use Shaanxi bituminous coal. Although the overall coal prices will not rise in the next two years, the use of bituminous coal in the chemical industry is increasing gradually, which may lead to a rise in bituminous coal prices, resulting in the increase in the cost of production of the company's products.
Environmental regulation risk: Although the company has been committed to environmental protection investment, increased a number of sets of environmental protection management facilities, and strict implementation of laws and regulations relating to environmental protection, but with the strengthening of environmental protection regulation, and Tongzi chemical production units less than 10 kilometers from the county, the company may be due to the environmental protection reasons lead to a further increase in environmental protection investment, and may be due to the state of the device accident, the environmental emissions do not meet the standards, which affects the production capacity of the device. The company may further increase the environmental protection investment due to environmental protection reasons, and the environmental protection emission may not meet the standard due to the accidental state of the device, which may affect the capacity of the device.
Product market risk: the fertilizer market in 2020, is a competition for the stock market, the situation of oversupply continues, the decline in sales has become the new normal for the operation of many enterprises, the competition will be extremely fierce. 2019 Central Document No. 1 for the first time put forward to achieve a negative growth in the use of fertilizers, as of the end of 2019, there are already 15 provinces across the country announced that the use of chemical fertilizers in the region to achieve a negative growth, with some areas declining for several consecutive years. This marks the peak of China's fertilizer usage has passed, officially entering the era of negative growth, and the usage will continue to decrease.
Risk of large fluctuations in methanol prices: The geopolitical impact on oil prices in 2020, as well as large imports of methanol from abroad, may cause domestic methanol prices to remain at a low level, leading to a significant decline in the company's expected profits.
2, medicine and pharmaceutical industry
Industry policy risk: the pharmaceutical industry is one of the most profound influence by the policy of the industry, with the strengthening of the national health care system reform, strict regulation of the pharmaceutical industry, the industry in the field of industry consolidation, the transformation of the business model is inevitable. Medical reform policy will directly affect the development trend of the entire pharmaceutical industry, the implementation of the national procurement in the country, "consistency assessment", production quality supervision, environmental protection and other policy measures are also directly related to the entire pharmaceutical industry's production costs and profitability, which in turn affects the company's production and operation. As China's pharmaceutical market is vast and huge development potential, attracted the world's major pharmaceutical companies have entered, while other industries are also competing to get involved, coupled with the original domestic pharmaceutical manufacturers around the country, resulting in a large number of domestic pharmaceutical manufacturers, market fragmentation, market concentration is relatively low, so that the market competition continues to intensify. Domestic pharmaceutical manufacturing enterprises are increasingly competitive, liberalization of drug prices, the implementation of health insurance payment price and other related reform measures are being gradually implemented, these factors increase the risk of uncertainty in the price of the products of pharmaceutical manufacturing enterprises. 2020, in the face of the speed of health care reform, the increase in the number of varieties of the national procurement, the two-invoice system, the growth rate of medical expenses control, restriction of auxiliary medicines, the price adjustment of the health insurance payment, GMP flight inspections into the normalization of a series of policy implementation and promotion, are all The implementation and promotion of a series of policies have brought challenges to the company's pharmaceutical production and operation. With the introduction of the new environmental protection law and other new regulations, environmental protection requirements are increasing, especially for pollutants, API production of pollutant emissions control increased, will increase the company's production safety, compliance and environmental governance risks.
Risk of research and development: new drug development is a high investment, high risk, long cycle of work, the quality of personnel requirements, from the start of the national consistency evaluation of generic drugs, the frequent launch of new drug R & D related policies, new drugs on the market increased more uncertainties, Sanctuary Pharmaceuticals to the production of chemical-based R & D enterprises, the new drug Acarbose, Metformin Hydrochloride Extended-Release Tablets, etc. varieties are currently in the clinical trial and review stage, and it is uncertain whether the new products can complete the development and registration as expected.
Other risks: Sheng Ji Tang pharmaceutical production, operation and raw material procurement costs, production cost control is closely related to the chemical raw materials in recent years, glimepiride, acetyl glutamide procurement costs have risen year by year, the company's exclusive varieties of Chonglou detoxification tincture, compound tincture of Chonglou of the Chinese raw materials Chonglou has been the price of high, energy, power, labor costs rise, will bring the enterprise product profitability decline The risk of the decline in profitability of the product.
Third, the core competitiveness analysis of the reporting period
1. Fertilizer chemical industry:
1.1 brand and channel advantages: the company's leading product "red" brand urea in the industry has a high reputation."" Red" brand urea has a high market share in Guizhou, with strong brand effect and high brand loyalty of end customers. The company's "red" brand urea long-term operation in Guizhou, control of financial strength, inventory strength, terminal channel control of a strong dealer team, not only can resist the penetration of foreign brands on the edge of the market in Guizhou, but also to lead the market price, with the role of the price weathervane.
1.2 Main products and geographic location advantages: Tongzi Chemical has an annual output of 300,000 tons of ammonia, 300,000 tons of methanol, 520,000 tons of urea, with a by-product of 100,000 tons of ammonium sulfate, 20,000 tons of sulfur production capacity. Tongzi Chemical adopts the world's most advanced Texaco technology, the quality of methanol can be on a par with the quality of natural gas plant, high quality quality assurance of Tongzi Chemical methanol sales downstream channels are more abundant, in addition to the traditional downstream formaldehyde, dimethyl ether, Tongzi Chemical high quality methanol quality can also be used in the field of polyformaldehyde, MTBE, chloromethane and other fine chemicals. Tongzi Chemical is located in G75 Lanhai Expressway traffic, conducive to radiation Guangxi market, and adjacent to Sichuan, Chongqing. Guangxi market price is higher domestically, is the most important sales market of Tongzi Chemical, Tongzi Chemical utilizes the advantage of Guangxi alcohol return trucks, radiation to Guangxi market has a strong market competitiveness, Sichuan and Chongqing market as the second important market of Tongzi Chemical, relying on the strong logistic ability, in the case of large inventory can quickly relieve the pressure of inventory.
1.3 Production Technology Management Advantage: The operation and management level of the company's existing fertilizer plant has always been in the forefront of the industry, and the energy consumption control is at the advanced level of similar plants; the company's long-term and unremitting production safety management and excellent production technology backbone team have maintained a higher level of production technology management and ensured the plant's long-cycle and low-cost operation.
2. Pharmaceutical pharmaceutical industry:
2.1 varieties of resource advantages
2.1.1 Diabetes Drugs Professional Advantage:
Sanctuary Pharmaceuticals diabetes product line covers most of the varieties of oral preparations, in the diabetes drug market segments have a strong competitive advantage in the market, the main products are Metformin Hydrochloride Tablets, Metformin Hydrochloride Enteric-coated Tablets (0.25g, 0.5g), glimepiride tablets (2mg, has passed the consistency evaluation, and won the first bidding position in the national procurement), rosiglitazone hydrochloride tablets, gliclazide tablets (II), glipizide tablets, etc., a complete range of categories, and they all belong to the national 2019 version of the medical insurance catalog varieties, coupled with the brand advantage of Sanctuary Pharmaceuticals in the field of diabetes for more than 20 years, the adherence of consumers is The brand advantage in the field of diabetes for more than 20 years has resulted in high consumer compliance.
2.1.2 National exclusive Miao medicine, patent varieties
Shengjitang Pharmaceutical has five exclusive patented varieties, Chonglou detoxification tincture, compound Chonglou tincture, gallbladder capsule, nine dragons detoxification capsule, Bo Sex Health film, of which, compound Chonglou tincture, Bo Sex Health film belongs to the national support for development of gynecological and pediatric varieties.
2.1.3 Neurological drugs
Sanctuary Pharmaceuticals has three varieties of neurological drugs Acetylglutamide Injection (exclusive specifications), Donepezil Hydrochloride Tablets, and Venlafaxine Hydrochloride Tablets, of which Donepezil Hydrochloride Tablets and Venlafaxine Hydrochloride Tablets belong to the 2017 version of the national medical insurance varieties (Class B) varieties.
2.1.4 Characteristic proprietary Chinese medicine varieties
Cortex Eucommiae belongs to Guizhou Taoist medicinal herbs, with high production and good quality, and Shengjitang Pharmaceuticals has the advantage of the exclusive specification resources of sugar-free Cortex Eucommiae granules, whose functions are to replenish the liver and kidney, strengthen the tendons and bones, stabilize the fetus, and lower the blood pressure. It has definite efficacy in women's pregnancy with fetal restlessness, preeclampsia, and hypertension.
2.2 Brand Advantage
Shengjitang Pharmaceutical owns a number of well-known provincial products, including "Shengping" Glimepiride Tablets, which won the first bidding position in the national procurement (GY-YD2019-2) and gained the first position in the sales of the hospital prescription market, and "Shengmin" Rosiglitazone Hydrochloride Tablets, which won the first bidding position in the national procurement (GY-YD2019-2) and gained the first position in the sales of the hospital prescription market. Rosiglitazone Hydrochloride Tablets and Metformin Hydrochloride Enteric-coated Tablets of "Shengtu" were awarded as Guizhou Famous Brand Products; "Shengmin" Rosiglitazone Hydrochloride Tablets and "Shengtu" Metformin Hydrochloride Enteric-coated Tablets were awarded as Guizhou Famous Brand Products. "Shengmin" Rosiglitazone Hydrochloride Tablets and "Shengte" Metformin Hydrochloride Enteric-coated Tablets were awarded as Guizhou Famous Trademarks respectively. After more than 20 years of unremitting efforts, Shengjitang Pharmaceuticals has a high reputation in the field of diabetes, and has been awarded the "Top 100 Private Enterprises in Guizhou Province 2018" and other awards.
2.3 Marketing network advantage: after nearly 20 years of development, Sanctuary Pharmaceuticals has established a perfect sales network, Sanctuary Pharmaceuticals has reasonably used the marketing strategy, scientific and standardized guidance for enterprise marketing work, to broaden the market channels, Sanctuary Pharmaceuticals sales network is subdivided into the prescription business, the network of grassroots hospitals and the OTC chronic disease service sales system, in particular, the OTC chronic disease service by using the company's Diabetes chronic disease education academic counseling system, and a number of large domestic chain enterprises to establish a cooperative relationship, consolidate the corporate brand, with the implementation of the national "hierarchical diagnosis and treatment" policy, Sanctuary Pharmaceuticals chronic disease service advantages will be more obvious.
2.4 Quality Advantage: Shengjitang Pharmaceuticals has always been in accordance with GMP standards for the organization of production, the development of a comprehensive quality management system, quality management system in line with the "ISO9001: 2008" standard, and strict implementation of the relevant national drug standards. Shengjitang Pharmaceuticals in accordance with the production quality management standard organization of production, production of all aspects, especially the key quality control points to take strict quality control measures, that is, from the import of raw and auxiliary materials to semi-finished products, the final product of the entire manufacturing process control, to eliminate possible contamination and errors, to protect the quality of drugs.