On August 4, Tasly, a leading traditional Chinese medicine company with a market value of nearly 21 billion, announced that it would transfer 33% of its equity to two buyers:
- One is China Resources Sanjiu, which acquired 28% of the shares of Tasly Group and its persons acting in concert for a transaction consideration of 6.212 billion yuan.
- The second place is Guoxin Investment, with 5% of the shares transferred and the transaction consideration of 1.109 billion yuan.
The total value of the two transactions exceeded 7.3 billion yuan. After the completion of this equity change, Tasly Group, the original controlling shareholder of Tasly, will fade out of the stage, and China Resources Sanjiu will become the largest controlling shareholder and hold the largest business discourse.
However, some questions also arise:
First, in the 10th year of the succession of the "second generation of enterprises", Tasly still has stable performance, and there is no shortage of funds, why did the family business suddenly give up control?
Second, from Pien Tze Huang, to Yunnan Baiyao, and then to Yiling, Kangmei, and Tasly, why do state-owned assets have a "soft spot" for traditional Chinese medicine? Will Tasly's past attempts at innovative drugs be "burned" in the future?
01 entered the "system" and cashed out billions of dollars
The Yan Xijun family is the spiritual totem behind Tasly.
In 1989, Yan Xijun, director of the pharmacy department of the hospital, and his wife Wu Yifeng started from scratch and developed compound Danshen dripping pills; In 1994, Compound Danshen Dripping Pill was approved as a national new drug certificate. In the past, they must not have imagined that this drug would be "Changhong" for more than 20 years, and it can still earn billions a year and contribute nearly 4% of its performance.
In August 2002, Tasly was listed on the main board of the Shanghai Stock Exchange, and has been touting its innovative R&D capabilities, ranking in front of the market value array of listed Chinese medicine companies.
Before this acquisition, the actual controller of Tasly was a neat "family". Yan Kaijing, Yan Xijun, Wu Yifeng, and Li Yihui, the four indirectly hold 16.08%, 3.81%, 3.78%, and 1.02% of Tasly's equity through Tasly Industrial Group and other companies, Yan Xijun and Wu Yifeng are husband and wife, Yan Xijun, Wu Yifeng and Yan Kaijing are father and son, mother and son, and Li Yihui is Yan Kaijing's spouse.
Traditionally, family businesses have been known to be robust, and Tasly has not been reported to be financially stressed. Therefore, when Tasly announced on July 31 that its controlling shareholder, Tasly Group, and its concerted actors were planning a share transfer, the market was very surprised. Surprisingly, the market seems to be very optimistic about this transfer of family control. After the news was announced, Tasly's share price rose sharply, closing at 14.08 yuan per share on July 31, an increase of 6.18%, the highest single-day increase since February this year.
Today's changes in the share prices of China Resources Sanjiu and Tasly
Now, Tasly and its concert parties have sold part of their shares to China Resources and Guoxin Investment for a consideration of 6.2 billion yuan and 1.109 billion yuan respectively. Behind the "cash-out" of 7.321 billion yuan is a kind of abandonment of control of the company by the former founders after more than 30 years of entrepreneurship.
In fact, this is not the first time that an A-share veteran pharmaceutical company has "sold out".
In January this year, the pharmaceutical circulation company Neptunus Biotechnology also shouted "rescue" to the direction of state-owned assets because of business problems - the controlling shareholder Neptunus Group plans to transfer its 10% shares of Neptunus Biotechnology to Guangdong Silk Textile Group Co., Ltd., a provincial state-owned enterprise in Guangdong Province, with a total transaction value of about 861 million yuan, and the actual controller is changed to the Guangdong Provincial People's Government.
Could it be that the end of the universe is really within the system? Is the end point of business management to sell yourself?
02
If the transformation of innovative drugs is not smooth, will it be "all in" traditional Chinese medicine?
Judging from the financial data, Tasly's operating conditions have been stable in recent years.
In 2020 and 2021, due to the external environment, Tasly's revenue fell sharply by 28% and 41% respectively, but the net profit attributable to the parent company was not affected, but increased by 12% and 110% respectively. In terms of business volume, in addition to a loss of 264 million yuan in 2022, Tasly has been able to achieve a profit of more than 1 billion yuan since 2013.
Tasly's financial data for the past five years
Just as all athletes want to go to the Olympics to prove themselves, every established pharmaceutical company has a dream of innovative drugs. However, Tasly's transformation road cannot be said to be very smooth, and almost all the pitfalls that cannot be bypassed.
About 10 years ago, Tasly's "founding generation" Yan Xijun retreated to the second line, and Yan Kaijing, the 36-year-old "second generation of enterprises", stepped forward and served as the company's chairman. Under his leadership, Tasly has invested heavily in R&D, and in 2023 alone, R&D expenses will be as high as 917 million yuan, which is "unbeatable" among its peers.
However, in exchange for real money, there is only a long list of pipelines under development. As of the end of 2023, Tasly has a R&D pipeline covering 98 products under development, including 41 Category 1 innovative drugs, 36 in clinical trials, and 26 in phase II and III clinical trials.
In the high-tide breakthrough of innovative drugs, Tasly has planted a lot of heels.
On the one hand, self-developed products have been suspended or terminated one after another because they have misjudged the competitive environment and have always been unable to find the pace of development.
On the other hand, the innovative pharmaceutical companies invested are not competitive enough. Tasly has participated in Series B and Series C financing, and has invested more than RMB 200 million in the research and development of I-Mab's core products. CARsgen, which invested 65 million yuan, received a notice from the FDA at the end of last year to suspend clinical trials for its innovative CAR-T products, and it is far from going overseas......
Several important investment projects did not return on the back, which indirectly led to Tasly's first annual loss in 2022 since its listing 21 years ago, amounting to 264 million yuan.
However, fortunately, Tasly has a good vision of opportunism, and in 2022, it disposed of most of the shares held by I-Mab and CARsgen in a timely manner, and its net profit increased significantly to 1.017 billion yuan in 2023, successfully turning around its losses.
Such thrilling stories abound in the innovative drug industry, but they do not seem to be the choice preference of state-owned assets.
On August 4, in the announcement issued by the two sides, in less than 1,000 words, traditional Chinese medicine was mentioned no less than 10 times, and innovative drugs were obviously not the focus. Will Tasly give up the transformation of innovative drugs and "all in" traditional Chinese medicine in the future? It remains to be seen.
03 "Guozitou" prefers traditional Chinese medicine assets
Under the cold winter, state-owned assets have become one of the few active areas. Especially in the field of medicine, it has been very "ferocious" in recent years.
In 2020, the "Three-Year Action Plan for the Reform of State-owned Enterprises (2020-2022)" was released, proposing to make state-owned capital and state-owned enterprises stronger, better and stronger, and become the "starting gun" for active state-owned assets.
State-owned assets have the preferences and missions of state-owned assets, and there are only a few tracks to focus on, which are nothing more than traditional Chinese medicine, blood products, and circulation plates. The traditional Chinese medicine industry, which shoulders the important task of the development of national medicine, has naturally attracted the most attention.
According to the data of Haitong Securities, the revenue, profit and market value of traditional Chinese medicine state-owned enterprises will account for more than 60% in 2023, and the revenue volume and profitability of traditional Chinese medicine state-owned enterprises will occupy an absolute advantage in the industry.
In the case of China Resources Sanjiu, the acquisition of Tasly is not the only ambition. In January 2023, China Resources Sanjiu spent 2.9 billion yuan to acquire a 28% stake in KPC and officially gained control, and increased the latter's gross profit margin from less than 42% to 44.82% by the end of 2023, and the net profit margin increased from less than 5% to 5.9% in the same period, which did improve certain operational efficiency.
This can be said to be a kind of leakage, and it can also be said to be an "invisible force" for the secondary integration of the industry.
At present, the market value of listed companies in traditional Chinese medicine ranks among the top 10, and as many as 70% of the enterprises have state-owned background. The top six Chinese medicine stocks by market capitalization are all controlled by state-owned assets, including Pien Tze Huang, Yunnan Baiyao, China Resources Sanjiu, Tong Ren Tang, Baiyunshan, and Dong'e Ejiao.
The last historical period has come to an end, and now the A-share medical and health high-quality assets seem to be in the stage of centralized reorganization. In the future, will more state-owned forces enter the market and invest in it?
This change of control of Tasly is neither the beginning nor the end.