JiYao Holding to Acquire PuHua Pharmaceutical to Strengthen Its Position in the Pharmaceutical Industry

Pharmaceutical Network, September 27 – Recently, Ji Yao Holding Group Co., Ltd. released a plan for the acquisition of major assets. The company intends to pay RMB 618 million in cash to acquire a 99.68% stake in Puhua Pharmaceutical. Upon completion of the transaction, the listed company and its subsidiary, Jilin Jinbao Pharmaceutical Co., Ltd., will hold 100% of the shares in Puhua Pharmaceutical.

 

Analysis indicates that through this transaction, Ji Yao Holding Group Co., Ltd. will enhance its competitive advantages in the fields of traditional Chinese medicine preparations and chemical drugs, while expanding its product portfolio into areas such as ophthalmology, thereby further improving the company’s layout in the pharmaceutical industry.

 

 

Morning哨 Research Report points out that since the beginning of this year, mergers and acquisitions in the pharmaceutical industry have shown characteristics such as urgent demand, broad coverage, and huge amounts. In the face of such a fervent M&A boom, the policy-driven forces behind it reveal signals of high national attention.

 

As early as 2017, the General Office of the State Council issued the “Opinions on Further Reforming and ImprovingPharmaceuticalsSeveral Opinions on Policies for Production, Circulation, and Use>, proposing to increasePharmaceuticalsIndustrial Structure Adjustment Efforts to Promote the Elimination of OutdatedEnterpriseExit, focusing on resolving issues such as the large number, small scale, and low level of pharmaceutical manufacturing enterprises; support mergers and reorganizations among pharmaceutical manufacturers; simplify approval procedures for the transfer of product marketing authorizations across regions within corporate groups; cultivate a batch of large enterprise groups with international competitiveness; and increase the concentration of the pharmaceutical industry.

 

An analysis reveals that mergers and acquisitions (M&A) for expansion in the pharmaceutical industry experienced a minor surge in May and June 2018. This period saw numerous consolidations among listed companies, with China Resources Pharmaceutical’s acquisition of Jiangzhong Pharmaceutical in June serving as a typical example of such integration between publicly traded pharmaceutical firms.

 

Against this industry backdrop, Ji Yao Holding Group Co., Ltd. has also been strengthening its pharmaceutical industry chain through mergers and acquisitions; the current acquisition of Puhua Pharmaceutical represents a solid step forward in the company’s industrial layout.

 

According to available information, Ji Yao Holding Group Co., Ltd. is primarily engaged in the research and development, production, and sales of proprietary Chinese medicines, with its product portfolio covering therapeutic areas including the respiratory, digestive, endocrine, and urinary systems, as well as oncology and gynecology.Disease, rheumatic bone diseases, etc. Puhua Pharmaceutical is mainly engaged in the research and development, production, and sales of traditional Chinese medicines and chemical drugs, with its products covering ophthalmology, dermatology, musculoskeletal system, etc.

 

Upon completion of the transaction, Ji Yao Holding Group Co., Ltd. will enhance its competitive advantages in the fields of traditional Chinese medicine (TCM) proprietary medicines and chemical drugs, while expanding its product portfolio into areas such as ophthalmology, thereby further optimizing its business and product mix. Ji Yao Holding stated that the company will fully leverage Puhua Pharmaceutical’s strengths in niche products, continue to increase investment in ophthalmic medications, improve the product quality and brand recognition of the target company, and further strengthen its overall competitiveness.

 

 

Regarding the M&A target, Puhua Pharmaceutical, the capital market’s heightened attention stems largely from its arduous journey of “three IPO attempts over five years.” Some analysts have bluntly stated that this also proves Puhua Pharmaceutical is no ordinary player; were it not for policy-related constraints, the company would likely have been capable of listing independently.

 

Puhua Pharmaceutical’s main products cover ophthalmology, dermatology, the musculoskeletal system, and cardiovascular and cerebrovascular fields. Among these, ophthalmic medications primarily include Compound Bear Bile Eye Drops, Bendazac Lysine Eye Drops, and Myopia Relief Eye Drops; dermatological medications primarily include Paeonol Ointment; musculoskeletal medications primarily include Capsaicin Cream and Compound Chondroitin Sulfate Tablets; and cardiovascular and cerebrovascular medications primarily include Yixintong Dripping Pills.

 

Previously, the controversy over the ineffectiveness of Shapuaisi’s “miracle drug” triggered a series of chain reactions. For manufacturers of bendazac lysine eye drops, this was a case of being inadvertently implicated, with Puhua Pharmaceutical being one of them.

 

Puhua Pharmaceutical, established in November 1997, is primarily engaged in the research and development, production, and sales of traditional Chinese medicine preparations and chemical pharmaceuticals. It is a high-tech enterprise in Jilin Province.GMPCertified Enterprise. After years of dedicated cultivation in the pharmaceutical manufacturing sector, we have established a business structure centered on ophthalmic medications, with coordinated development across dermatological, musculoskeletal, and other therapeutic areas.

 

Puhua Pharmaceutical has established a product portfolio characterized by traditional Chinese medicines (TCM), with a primary focus on ophthalmic and dermatological agents, complemented by products for the musculoskeletal system and other therapeutic areas. Its products feature distinct characteristics, conferring unique competitive advantages in specific therapeutic fields and niche markets. Regarding its product pipeline, the company possesses several high-quality candidates with strong market potential and readiness for industrialization. For instance, Danqiong Dieda Gao, a proprietary TCM formulation indicated for acute and subacute soft tissue injuries, is an exclusive product of the company. Additionally, products such as Mecysteine Hydrochloride Tablets and Shenhuang Ointment demonstrate promising market prospects.

 

Among the company's main products, Compound Bear Bile Eye Drops were listed as a National Protected Traditional Chinese Medicine Product in 2004; Capsaicin Cream was included in the National Reimbursement Drug List; and Paeonol Ointment received the Certificate of Key New Product of the State, issued by the Ministry of Science and Technology of China, in 2007.

 

Upon completion of this transaction, Ji Yao Holding Group Co., Ltd. will obtain a controlling interest in Puhua Pharmaceutical and inject pharmaceutical manufacturing assets, thereby further optimizing the listed company’s industrial layout within the pharmaceutical sector. Given Puhua Pharmaceutical’s strong profitability, the transaction is expected to increase the listed company’s asset scale and profitability to a certain extent, which will help further enhance its sustainable profit-generating capacity.

 

Data shows that Puhua Pharmaceutical recorded a revenue of RMB 208 million and a net profit of RMB 48.9998 million in 2017; in the first half of 2018, its revenue amounted to RMB 107 million, with a net profit of RMB 22.6227 million.

 

Some pharmaceutical industry analysts have pointed out that China’s pharmaceutical sector is still in its early growth stage, with relatively low overall industry concentration. Against this backdrop, policymakers are encouraging measures to boost industry consolidation, and it is believed that mergers and acquisitions within the pharmaceutical industry will become increasingly active, driven by multiple factors.