Panlong Pharmaceutical Lists on SZSE, Highlighting Growth Potential in Rheumatism and Musculoskeletal TCM Market

VCBeat, November 16 – Panlong Pharmaceutical officially listed on the Shenzhen Stock Exchange today, with the stock code 002864. The issue price was RMB 10.03 per share, with a total of 21.67 million new shares issued.

Upon completion of the issuance, the total share capital will be 86.67 million shares, with earnings per share (EPS) of RMB 0.44.

The announcement showed that as of September, Panlong Pharmaceutical's total revenue for the year reached 273 million yuan, a year-on-year increase of 30.36%. The net profit attributable to shareholders of the parent company was 33 million yuan, representing a year-on-year growth of 42.44%.

The announcement projects that operating revenue for 2017 will range from RMB 350 million to RMB 370 million, representing a year-on-year increase of 14.59%–21.14%; net profit is expected to be between RMB 43 million and RMB 47 million, reflecting a year-on-year growth of 8.64%–18.75%.

According to the prospectus for the initial public offering (IPO) released on November 1, the proceeds from this issuance will be allocated to the production line expansion project, R&D center expansion project, marketing network expansion and information system upgrade project, as well as supplementary working capital. The total investment amount is RMB 190 million, with a total of RMB 184 million to be funded by the raised proceeds.

Panlong Pharmaceutical was established on September 22, 1997, and has been primarily engaged in the research and development, production, and sales of proprietary Chinese medicines. The company has formed a product portfolio led by its flagship product, Panlongqi Tablets, focusing mainly on orthopedic and rheumatic conditions, while also covering multiple therapeutic areas including hepatobiliary disorders, cardiovascular and cerebrovascular diseases, gynecological conditions, and anti-tumor treatments.

It is reported that Panlongqi Tablets are the flagship product and exclusively manufactured variety of Panlong Pharmaceutical. Ranked among the top five in market share within the niche segment of proprietary Chinese medicines for rheumatic diseases, the product is also included in Category B of the National Reimbursement Drug List and holds national patent status, demonstrating strong competitiveness.

The production and sales performance of Panlongqi Tablets largely determine the Company’s revenue and profitability.

In 2014, 2015, 2016, and the first six months of 2017, Panlongqi Tablets generated sales revenues of RMB 164.95 million, RMB 154.93 million, RMB 181.38 million, and RMB 105.80 million, respectively, accounting for 83.43%, 83.38%, 83.38%, and 85.31% of the parent company’s operating revenue during the corresponding periods.

Furthermore, Panlong Pharmaceutical possesses two exclusively produced proprietary products, Jinyin Lidan Capsules and Kebireti Tablets, as well as the active pharmaceutical ingredient (API) for Compound Gossypol Acetate Tablets, which is protected by independent intellectual property rights.

In addition to covering multiple therapeutic areas such as musculoskeletal, hepatobiliary, cardiovascular and cerebrovascular, and gynecological disorders, the company collaborates with numerous universities and research institutions on the R&D of new drugs and generic medicines, demonstrating a clear trend toward expansion into broader fields.

Currently, Panlong Pharmaceutical holds production approval numbers for 9 dosage forms and 73 pharmaceutical products, along with 3 health supplement varieties, demonstrating a competitive advantage characterized by the coexistence of proprietary exclusivity and product diversification.

Due to the implementation of the Two-Invoice System, Panlong Pharmaceutical further increased the sales proportion of Panlongqi Tablets. Driven by the combined effect of growth in sales volume and unit selling price, the operating revenue for January–September 2017 is expected to increase year-on-year by 28.83% to 31.21%.

As China’s population ages and public awareness of physical health continues to rise, consumer demand for pharmaceuticals targeting musculoskeletal disorders is expected to gradually increase, thereby driving the growth of the orthopedic disease market.

With the positive development of niche sectors within the proprietary Chinese medicine industry, the market for proprietary Chinese medicines in rheumatology and orthopedics holds substantial growth potential.

Furthermore, based on data analysis provided by Nanfang, among the market shares of various medications across the three major terminal medical institutions in China—public hospitals, retail pharmacies, and public primary healthcare institutions—in 2016, medications for cardiovascular and cerebrovascular diseases accounted for the largest proportion. Medications for the musculoskeletal system ranked among the top in all three types of terminal medical institutions, with their market share ranging from 7% to 14%.

Industrial Securities projects that by 2021, the sales volume of the Chinese proprietary medicine market for musculoskeletal diseases in China may reach RMB 51.095 billion, with the market size for Chinese proprietary medicines targeting rheumatic diseases reaching RMB 16.823 billion, indicating substantial growth potential.