Zhang Lei's capital magic failed, and the core management of Gaoji Health changed

Image source: Visual China

Blue Whale News, July 25 (Reporter Wang Jianwen) Gaoji Health, invested by Hillhouse Capital, has sudden personnel changes.

Recently, some media reported that it was learned from multiple sources that Gaoji Health had sudden personnel changes, Niu Heyi and Li Bo no longer served as the president and CEO of Gaoji Health, and Gong Jianjun, the former head of Gaoji Health East China, was appointed as the new CEO of Gaoji Health. Previously, Niu Heyi was mainly responsible for the company's offline business, while Li Bo was mainly responsible for online business. With the departure of both of them, this personnel change may reconstruct the business management model of Gaoji Medical.

As a chain pharmacy company invested and established by Hillhouse Capital, Gaoji Health has made large-scale acquisitions with rich capital since its establishment in 2017 and quickly entered the "10,000-store club". However, due to factors such as intensified competition and the expansion of the online O2O model, the chain pharmacy industry has fallen into involution, and the efficiency of single stores has continued to decline. In this context, Gaoji Medical has also changed its previous way of playing, slowing down the pace of store expansion, changing the expansion model, and began to look for new business development directions.

After "holding high and fighting high", he practiced his internal skills

Founded in 2017, Gaoji Health has not been rooted in the industry for a long time compared with traditional chain pharmacy companies such as Laobaimin and Dashenlin.

However, as a company invested and established by Hillhouse Capital, Gaoji Health has "sufficient ammunition". At the 2018 Gaoji Medical (the predecessor of Gaoji Health) Business Partner Strategy Summit, Zhang Lei, founder and CEO of Hillhouse Capital, said, "Hillhouse is firmly optimistic about the pharmaceutical and health industry, and also has sufficient capital to continue to invest in the long term."

According to public information, in more than a year after its establishment, Gaoji Health has invested in nearly 12,000 stores in 21 provinces and cities across the country, becoming one of the first companies in the domestic chain pharmacy industry to cross the "10,000-store threshold". In comparison, as of the end of 2018, the number of stores of Yixintang, the leading domestic chain pharmacy, was 5,738, and the number of stores of Dashenlin was 3,880.

However, unlike the Internet industry, the chain pharmacy industry is highly dependent on human resources, which requires high professional ability of employees, and its operating ability also depends on resources such as suppliers and customers. Just throwing money at it doesn't necessarily lead to building a successful pharmacy chain.

For example, in 2021, Quanyi Health, a chain pharmacy company founded by Cornerstone Capital, also an investment institution, was transferred to KKR. Although Lin Ling, vice chairman of Cornerstone Capital, has said that the sale is more based on the consideration of the fund's investment period. However, there are also views that the choice of cornerstone capital to withdraw is also affected by factors such as the difficulty of pharmacy integration after mergers and acquisitions and the long period of capital withdrawal.

Therefore, as a chain pharmacy company that has grown from zero, Gaoji Health chose to introduce executives from the traditional chain pharmacy industry after a period of rapid expansion to help the company lay a solid foundation.

At the strategic summit in early 2019, Niu Heyi, who was the CEO of Dashenlin, appeared as the chief operating officer of Gaoji Medical and interpreted the construction of the company's integrated operation system. In 2020, Niu Heyi was promoted to president and began to oversee the offline business of Gaoji Health. According to public information, Niu Heyi mainly transforms the company from three starting points: system, supply chain and organizational structure.

In addition, Gaoji Health has also begun to slow down the pace of expansion. In April 2024, Huang Weichuan, senior vice president of the company's digital new retail and innovative payment division, publicly stated that Gaoji Health has more than 15,000 smart pharmacy stores. Compared to 2018, the number of stores has only increased by about 3,000. Among these new stores, the proportion of franchised stores is also expanding.

On the Home of Gaoji Health's official website, the two large posters at the top are related to investment promotion, one shows "smart new pharmacy, more flexible joining", and the other promotes "direct franchise, full operation support." Gaoji Haosheng, a subsidiary of Gaoji Health, announced in 2023 that it only needs a franchise fee of 15,000 yuan, a deposit of 15,000 yuan, and an annual management fee of 7,000 yuan to join Gaoji Haosheng.

The involution of the industry is intensifying, where is the future going?

At the same time that Gaoji Health is "practicing its internal skills", the traditional chain pharmacy leaders have also begun to expand their scale.

By the end of 2022, among the six major listed chain pharmacies, the three pharmacies of Laobaimin, Dashenlin and Yifeng Pharmacy have exceeded the scale of 10,000 stores, and by the end of the first quarter of 2024, the number of pharmacies under Dashenlin has reached 14,915, which is close to 15,000.

From the perspective of the industry as a whole, the number of pharmacy stores continues to grow, but due to the rapid development of online O2O and other factors, the overall offline pharmaceutical retail market has not expanded. According to Zhongkang CMH statistics, from January to May 2024, the domestic pharmacy retail market size will be about 217.8 billion, a year-on-year decrease of 3.7%. In the first quarter of 2024, the number of domestic pharmacies increased by 7.7% year-on-year. Under the combined effect of the two, in the first half of 2024, the average sales of domestic pharmacies fell by 10.6% year-on-year.

As a leader in the industry, listed chain pharmacy companies are also facing problems such as declining single-store revenue. In 2023, the average daily ping efficiency of Yixintang will decrease from 37.37 yuan/square meter in 2022 to 37.09 yuan/square meter, and the average daily ping efficiency of ordinary people will decrease from 61 yuan/square meter to 54 yuan/square meter; The average monthly ping efficiency of Dashenlin decreased from 2460.58 yuan/square meter to 2269.87 yuan/square meter.

As a pharmacy chain with 15,000 stores, Gaoji Health will also be affected by the overall situation of the industry. Therefore, in recent years, the company has continued to develop new business areas in order to find a new growth curve.

In May 2023, Gaoji Health announced a name change, and the company was previously abbreviated as Gaoji Medical. As for the reason for the name change, the company said that "health" is clearly a broader concept than "medical". In the future, the company will optimize the scope of services by broadening the breadth of medical services.

At present, Gaoji Health has invested a lot in "medicine". In recent years, the company has obtained 6 Internet hospital licenses in Tianjin, Chengdu, Hainan and other regions. According to the Blue Whale News reporter's measurement, after opening the "Gaoji Health Pro" applet, you can click on the "Consultation and Prescribing" to enter the Gaoji Internet Hospital applet, which can provide online consultation services for internal medicine, surgery, gynecology, pediatrics, dermatology and other subjects.

In addition, in January 2024, Hillhouse Capital also obtained control of the head doctor MCN Company and merged it into the Gaoji Health System. From the perspective of business model, Zhengdu Health can provide full-link aggregation marketing services to pharmaceutical customers. After its merger into Gaoji Health, it may be able to expand the company's business scope on the B side.

With the appointment of the new CEO Gong Jianjun, Gaoji Health may have more transformation actions in the future. At the 7th anniversary celebration of Gaoji Health in April this year, Gong Jianjun delivered a keynote speech as the general manager of the East China platform. Gong Jianjun said that 2023 is the first year of Gaoji Health's second entrepreneurship, and the East China platform has acquired a number of new project companies from 2023 to the present, laying a solid foundation for Gaoji Health's second entrepreneurship strategic breakthrough. And 2024 will be a crucial year for Gaoji Health's second entrepreneurial strategic breakthrough.

In addition, at the end of 2022, Niu Heyi, president of Gaoji Medical, publicly revealed the company's intention to go public. In 2023, there are also reports that the company will go public in Hong Kong. But to this day, the company has not submitted the form. With the change of helm, it is also worth further attention whether the company will accelerate the progress of listing preparations in the future.