I. Discussion and Analysis of the Operational Situation
2020 is an extremely special year, and the sudden epidemic of Xinguancangpneumonia has brought significant challenges to the company's normal production and operation. In the face of the new situation, the company grasps the industry trend, focuses on the outstanding problems restricting the development, and takes positive measures to cope with the situation, on the one hand, orderly promote the resumption of work, production, production; on the other hand, focusing on promoting cost reduction and efficiency, adjusting the business strategy at the right time, looking for a turnaround in the crisis, and comprehensively implementing the company's annual budget targets.
From January to June 2020, the Company achieved a cumulative operating income of RMB 6.212 billion, basically the same as the same period of the previous year, and a net profit attributable to shareholders of the listed company of RMB 327 million, a decrease of 12.29% compared with the same period of the previous year.
During the reporting period, the Company mainly carried out the following tasks:
(1) Strengthening strategic leadership and clarifying the implementation path
The Company comprehensively implemented the construction of the strategy system, and enhanced the scientific, standardization and sustainability of the strategy. The company has established a complete cycle framework system consisting of strategic objectives, overall development plan, sub-plan, work plan, "JYKJ" system, planning evaluation and optimization, etc., and clarified the implementation path. We have started the preparation of the implementation plan for the construction of the "Strategy, Planning and Programming" system, which covers the construction of industrial integration, mergers and acquisitions, investment, international business development, emerging business development, comprehensive budget management system and internal control system, in order to guide the implementation of the "14th Five-Year Plan".
(2) Continue to promote industrial integration, and strive to promote synergistic landing
Under the framework of the medium- and long-term strategic planning, accelerate the promotion of industry chain integration, and further open up the industrial chain barriers from raw materials to preparations, accelerate the integration of production capacity and resources, and through the linkage of enterprises to form the integration of raw materials, pharmaceuticals, and preparations of the supporting programs, has achieved the optimization of nearly 30 varieties of articulation and improve synergistic quality and efficiency; marketing integration, with the CRM data, and the development of a comprehensive budget management system. In terms of integration, the CRM data system accelerates the integration of marketing, comprehensively supervises and improves the compliance management system, accelerates the construction of the marketing system to adapt to the new situation, and focuses on improving the control of sales channels, policy affairs, brands and terminals.
(C) Promote technological innovation, promote endogenous development
The company continues to implement the "innovation-driven" development strategy, increasing R & D investment during the reporting period, R & D investment increased by 14.69% year-on-year. The company has adopted focused project management, key supervision and full control mode to promote the consistency evaluation work. During the report period, 4 varieties of diclofenac sodium extended-release tablets, cefdinir dispersible tablets, cefixime granules and clarithromycin tablets passed the consistency evaluation, and 3 projects were declared for consistency evaluation. As of the disclosure date of this report, the Company's cumulative 8 varieties (10 items) of drugs have passed the consistency evaluation, and dexmedetomidine hydrochloride injection is deemed to have passed the consistency evaluation. During the reporting period, the company applied for 14 new patents (including 7 invention patents and 7 utility model patents), and obtained 8 newly authorized invention patents.
(D) Improve the level of operation, enhance risk control
The company continues to implement the strategy of large varieties, to adopt a "one product, one policy" implementation plan, to strengthen academic and brand promotion, to develop online cooperation, and continue to optimize the layout of the large varieties; in-depth development of lean management, strengthen the work of cost reduction and efficiency gains, cost control as the core, focus on site management, improve the OEM, and to improve the efficiency and effectiveness of the company's products. The company has formed a lean production management system by focusing on on-site management, improving OEE, and optimizing processes; it has continued to promote quality and efficiency, implemented financial control, effectively reduced capital costs, and reduced the sales and management expense rate by 3.88 percentage points year-on-year; it has optimized its organizational structure, strengthened its business implementation, sorted out major risks, and completed the rolling assessment of the risk pool in the improvement of its internal control system.
(E) highlighting the party's leadership, to ensure that the three basic construction
The company adhere to the political construction of the party as the overall leader, to deepen the results of the theme of education, in order to grasp the shortcomings of the strong weakness as the goal of in-depth research, to solve the salient problems; to strengthen the grass-roots level of party construction, strict implementation of the "three big" decision-making procedures, and earnestly implement the "three basic construction", "three big" decision-making procedures. The "three bases of construction", firm beliefs of the majority of party members, optimize the internal environment of the enterprise; the full implementation of the requirements of strict governance of the party, to enhance the level of party building work and management and control, to comprehensively enhance the development of the company's ability to provide a strong political guarantee.
Second, the risks that may be faced
In the face of the current pharmaceutical economic growth slowdown, frequent industry policies, safety and environmental protection supervision and other environmental factors, the company's future development may be faced with the following major risks:
1, the risk of industry policy
The development of China's pharmaceutical industry is subject to a greater impact of the policy and regulation, the adjustment of the medical insurance catalog in 2019, pharmaceutical Accounting information quality inspection, pay per case (DRGs) pilot and other industry policies have been introduced one after another, which have a greater impact and influence on drug research and development, production and sales, and in 2020, the country will continue to promote the implementation of regulatory policies, and the concentration of the industry in the future will be significantly increased, and the adjustment of the industry policy will pose a challenge to the development of the business operation.
2, the risk of drug price cuts
In 2019, the pilot program of national centralized drug procurement was further promoted and implemented, and the sales price of generic drugs shrunk significantly. With the deepening of healthcare reform, the implementation of drug price reduction measures and the control of medical costs under the policy direction may lead to a continuous decline in drug prices in the future, which will challenge the profitability of some of the company's products.
3, technology research and development risk
With the national centralized purchasing of drugs to expand the surface, expanding varieties continue to promote, will force pharmaceutical manufacturing enterprises to accelerate the consistency of the evaluation work.
If the consistency evaluation work of pharmaceutical manufacturing enterprises does not meet expectations, the enterprise will lose the opportunity to compete in the market, and the market share is facing the risk of being eroded.
Response: The company will strengthen the scientific research project management, increase the consistency evaluation work support, in the organization guarantee, R & D team support, financial support, external collaboration and other aspects to give tilt support, comprehensively promote the consistency evaluation work.
4, environmental risk
The 19th CPC National Congress will resolutely fight the battle of pollution prevention and control as one of the three major battles to build a moderately prosperous society. The pharmaceutical production process involves a variety of complex chemical reactions, which inevitably produce wastewater, waste gas, solid waste ("three wastes") need to be managed. With the improvement of national and local environmental protection regulation and pollution emission standards, the environmental protection risk caused by the three wastes management has intensified. Enterprises face the risk of changes in environmental policies, increased governance difficulties, and increased expenditure on equipment, process updates and environmental protection costs.
Response: The company takes "environmental protection is the core competitiveness of the enterprise" as the guiding ideology, continues to strengthen the environmental protection laws and regulations and professional knowledge training; continues to enhance the environmental protection policy research and anticipation; continues to increase the environmental protection of the new technology, new equipment investment, improve the effectiveness of environmental protection work and management level, build a strict prevention beforehand, The whole process and multi-level risk prevention system of strict prevention, strict management and strict punishment after the fact, to enhance the risk prevention and control capabilities, and to resolve the risk at the source.
5, quality control risk
The company has a wide range of products, complex production processes, long production process, the production of drugs on the equipment, environment and technology have higher requirements. The newly revised Drug Administration Law was promulgated and implemented on December 1, 2019, heralding the arrival of the "four most stringent" era facing the pharmaceutical industry - the most rigorous standards, the most stringent supervision, the harshest penalties, and the most serious accountability. The company's quality control capability may adversely affect the company's brand image and operations if it fails to adapt to the changes in the scale of continuous growth of operations.
Countermeasures: The company will firmly establish the quality awareness of all staff, pay attention to the training and learning of quality management, and pay constant attention to it; clarify the quality control standards, strengthen the quality tracking and flight checking, continue to carry out technological innovation, process optimization, and continue to carry out special activities for quality improvement, and carry out the production and operation activities in a compliant manner; improve the company's quality control ability from the mechanism, and continue to enhance the ability to deal with emergency quality incidents, and do a good job of product information and information management, as well as the ability to handle emergency situations. The company has been able to improve its quality control ability from the mechanism, continue to improve the quality of emergency response capability, do a good job of product information back to the work, and strengthen the control of product quality.
C. Analysis of core competitiveness during the reporting period
The company is a unified platform for the development of the chemical drug industry under Sinopharm Group, with products focusing on the five major areas of "anti-infective, anti-tumor, cardio-cerebral and cerebrovascular, anesthesia and psychotropic, metabolism and endocrine," and the layout of its products is in the therapeutic areas of China's pharmaceutical market, with the largest scale of use and potential for growth. Our products are located in the therapeutic areas with the largest scale of drug consumption and growth potential in China's pharmaceutical market, and we have formed a whole industry chain covering APIs and intermediates, chemical preparations, biological products, etc., and have certain comprehensive strength and market competitiveness in the market segments of antibiotics, cardiovascular and cerebrovascular, and narcotics and psychotropic drugs. During the reporting period, there was no significant change in the core competitiveness of the company.
1, industrial platform advantage
The company is subordinate to Sinopharm Group, which is the largest centralized pharmaceutical and healthcare industrial platform in China, and is positioned as a chemical platform under Sinopharm Group, with an industrial platform advantage. At present, the company has formed a specialized development pattern with unified strategy, concentrated resources, reasonable configuration, scale effect and synergistic advantages of upstream and downstream industry chain. According to the planning and deployment, the company will continue to deepen the advantages of the chemical and health industry platform through the comprehensive synergy of the industry to achieve leapfrog development.
2, internal synergies
As a chemical drug industry platform of Sinopharm Group, based on five major product areas, the layout of the development platform to build business segments, the full linkage of resources within the segment and coordinated management, to promote the enterprise's internal integration, resource **** enjoyment and balanced development. The R&D line has gradually formed a multi-level R&D system with the parent company as the coordinating center and technology core, realizing the complementary advantages of R&D resources. Purchasing, under the framework of centralized purchasing, the bargaining power of the company is further enhanced, thus reducing the procurement cost; marketing integration, the same therapeutic area of the product can be **** use of marketing resources, the expansion of marketing channels and coverage will be conducive to enhance market share and brand awareness.
3, external synergies
The company actively participated in Sinopharm's "own family" strategic plan, and continued to strengthen cooperation with Sinopharm's internal business giant Sinopharm Holdings. As a participating shareholder of Sinopharm, Sinopharm has the motivation to vigorously promote the company's business development. Meanwhile, the comprehensive promotion of the "two-invoice system" across the country has further consolidated Sinopharm's dominant position as the largest distribution and retailer in China. The company takes this as an opportunity to realize industrial and commercial strategic synergies through continuous deepening of strategic cooperation with distributors including Sinopharm, giving full play to the advantages of external synergies.
4, R & D advantages
The company to "innovation-driven" as the driving force for sustainable development, the establishment of the parent company as the center of the coordination of the multi-level R & D system, the formation of a clear sections, leading the advantages of the professional division of labor, concentration of resources, the combination of production, learning and research of a comprehensive enterprise technology innovation system. During the reporting period, the company obtained 8 newly authorized invention patents; as of the disclosure date of this report, the company has accumulated 8 varieties (10 specifications) of drugs have passed the consistency evaluation, and 1 drug is deemed to have passed the consistency evaluation.
5. Brand Advantage
The company adheres to the implementation of brand strategy, constantly consolidates and promotes brand influence, and establishes a high degree of public recognition. The company owns a number of brands including "Xinran", "Darifen", "Darixin", "Wichita", "Shenjia", "Dalian", "Dalian", "Dalian", "Dalian", "Dalian", "Dalian", "Dalian" and "Dalian", "Shenjia", "Shenluo", "Pu Le Qi", "Pu Hui Ji", "Jinshi graphic trademark", "Lilfan" and a series of well-known brands.
The company's products have also established a certain brand awareness in the international market. Subsidiary Modern Haimen's Zidovudine, Azithromycin, Sinopharm Wichita cephalosporin intermediates series products 7ACA, D-7ACA, 7ACT, penicillin intermediates 6APA, Amoxicillin, and the production site of Tianwei Biological have passed the U.S. FDA certification; Sinopharm Wichita's Clavulanic Acid series products, Amoxicillin, Thiocyanic Acid and other products, as well as Tianwei Biological's Micafernin Sodium passed the European CEP certification; in addition, some of Sinopharm's products have passed the official certification in India and Korea; Tianwei's APIs have passed the official audit certification in Japan; Sinopharm's Zhijun has obtained the EU certification and WHO certification for cephalosporin powder injection and oral preparations.