The pharmaceutical industry goes to end of inventory to reduce the profits of raw material drugs slow down the growth of the industry
Fried Garlic Flakes with very crispy taste.the ingredients are 95%garlic and 5%oil,Directly eating as snacks is very delious.
We are professional supplier of Fried Garlic Products in Henan province.which is one of the largest origins of fresh garlic in China.Our mission is try our best to meet the demands of different customers.
Fried Garlic Flakes Fried Garlic Flakes Huaiyang County Wanyuan Garlic Foods Processing Industries Co.,Ltd , https://www.wanyuangarlicfood.com
“The destocking in the pharmaceutical industry basically ended, and the fundamentals were improved in the second half of the year.†The Changjiang Securities Industry Researcher section has recently released a pharmaceutical industry analysis report. According to the value-added indicators of the pharmaceutical industry, the data rebounded significantly in May, indicating that medicine The industry operating rate has rebounded, which also confirms the view that the industry's destocking is basically over.
It is understood that due to multiple factors such as the financial crisis, after the middle period of 2008, the pharmaceutical industry has seen a significant increase in inventory. Starting from the beginning of this year, the destocking of chemical raw materials, chemical agents and biological products industries was most obvious. By May of this year, the process of destocking in the pharmaceutical manufacturing industry had been completed, and companies had entered the inventory-replenishment phase.
The raw material drug will be profitable
According to the report of Shenyin Wanguo, in the first half of the six segments of the pharmaceutical sector, the growth rate of bulk drugs was the lowest, at 8%. Compared with the growth rate of 27% and 21% in the field of traditional Chinese medicine decoction pieces and biological products, the performance of APIs has slowed down the growth rate of the entire pharmaceutical sector. The report analysis pointed out that due to the declining demand, the chemical raw material medicine industry is expected to reach the lowest point of profitability in the third and fourth quarters. Judging from the average level of historical profitability of the industry, the price of vitamin E in key varieties will first rebound.
The reporter found that starting from May of this year, vitamins and other raw materials prices rose sharply, and Xinhecheng plans to discontinue production of vitamin A from late May to late August due to the beginning of the year, and to stop production of vitamin E from late June to mid-August. The equipment entered the maintenance period, so the market price rose sharply due to the new conservative strategy of overcapacity planning.
On July 18, Xinhecheng announced the first semi-annual report on pharmaceutical companies in the two cities. Its semi-annual report said that the company's first-half net profit fell by 53%, becoming the biggest "half-year" drop since its listing in 2004. Operating income of 1.15 billion yuan, a year-on-year decrease of 37.20%; net profit of 351 million yuan, a year-on-year decrease of 53.98%; earnings per share of 1.05 yuan, a year-on-year decrease of 53.13%. It is expected that the net profit attributable to the parent company from January to September will be 40% to 70% lower than the same period in 2008. The company stated that due to the international financial crisis, the market demand for vitamin E and vitamin A, the company's leading product, has fallen, while the market prices and sales of other products such as vitamin H have also declined.
It is reported that, under the influence of the international financial crisis, Europe and the United States have drastically reduced the demand for vitamin products, which led to a drop in prices. The third largest vitamin E manufacturer in the world, Xinhe Cheng’s main vitamin products also decreased in price, and vitamin E decreased. The proportion of operating revenue decreased by 1.6 percentage points year-on-year, gross profit margin decreased by 8.6 percentage points year-on-year, and the proportion of exports dropped by a significant 18.3% to 61.6% year-on-year.
According to the statistics, the price of vitamin E began to fall in the third quarter of 2008, and the volume of exports has decreased significantly since October 2008, while the inventory of dealers and manufacturers has accumulated more. Since the beginning of this year, domestic quotations have fallen and have risen since then, rising rapidly from 110 yuan/kg in May and stabilizing at 180 yuan/kg since July, with a 65% increase.
“Vitamins are a cyclical industry. With the expansion and contraction of production capacity, prices will periodically fall or rise.†Some industry sources have analyzed with reporters that vitamin prices have risen from the second half of 2006 to the first half of 2008. Although there are many reasons, it is still the capacity factor that ultimately affects the price. The entire industry has entered the down cycle due to the deteriorating economic conditions. Major vitamin manufacturers have reduced their production or even stopped maintenance to consume inventory to weather the cold winter of this industry. Among them, the vitamin E manufacturer Zhejiang Pharmaceutical had suspended the production of digested inventory in advance, and Guangji Pharmaceutical had also stopped the production and maintenance of the riboflavin production line to cope with the deterioration of the market environment and saved unnecessary production costs.
At present, the prospect of new and vitamin E is recovering, and the performance in the second half needs further observation. Vitamin A is destocking with dealers and prices are expected to rebound in the future. Therefore, the company's annual performance decline is expected to narrow.
Demand picks up into inventory
From January to May, the growth rate of revenue and profit of the pharmaceutical manufacturing industry continued to decline. Both the gross margin and the period expense ratio of the industry decreased, but the latter declined even more, resulting in a significant rebound in the industry's profitability. Analysts believe that while the industry's demand is picking up, the decline in prices has caused the growth rate of the industry's sales revenue to continue to decline.
According to the data of the SFDA Southern Medicine Economic Research Institute, from January to May, the pharmaceutical industry's sales revenue and profit before tax rose by 18.1% and 17.1% year-on-year respectively, and sales gross profit margin increased by 0.2 percentage points year-on-year. During the period, the expense ratio decreased by 0.67 percentage points year-on-year, and the profit margin remained flat, maintaining 9.6%. Compared with January to February, sales growth and profit growth fell by 0.9 and 2.6 percentage points respectively.
In the sub-industry, the growth rate of sales exceeding the industry average was followed by Chinese Herbal Medicines (up 27.4%), biopharmaceuticals (up 21.5%), chemical agents (up 19.9%) and proprietary Chinese medicines (up 19.4%). Only the sales growth of chemical raw material medicines (up 8.3%) was far below the industry average.
From the point of view of profit growth, the average level above the industry average was Chinese Herbal Medicine Pieces (up 37.6%), Chinese Patent Medicines (up 27.8%), Biopharmaceuticals (up 19.5%), and Chemical Preparations (up 17.94). Only the profit of chemical raw material drugs decreased by 4.1%, which was far below the industry average. From a profit margin point of view, higher than the industry average followed by biopharmaceuticals (12.5%), chemical preparations (10.7%) and proprietary Chinese medicines (10.3%). The profit margins of TCM decoction pieces and proprietary Chinese medicines increased by 1.2 and 0.9 respectively over the same period of last year. Percentage.
Analysing the sub-sectors, it can be seen that the growth rate of sales revenue and profit of the chemical raw material medicine industry bottomed out, inventory growth rate has rebounded significantly, the industry's profitability has rebounded remarkably, and the loss area has rapidly declined. Industry demand has recovered, which is slightly faster than expected. At the same time, chemical preparations and biological products are mostly prescription drugs. Although limited by the “prescription†of medical insurance, the increase in the coverage of primary medical care has kept it stable. The growth rate of sales revenue and profit of the chemical preparations, biological products, and medical device industries rebounded significantly, and the inventory growth rate decreased significantly. The destocking phase was basically completed. In the chemical preparation industry, due to the well-controlled expense ratio, although the gross profit margin has declined, the growth rate of profits has rebounded significantly; the growth rate of profits in the biological products and medical device industries has declined due to the fact that the gross profit margin has fallen more than the cost rate; proprietary Chinese medicines The sales growth rate of the industry continued to decline, the gross profit margin increased month by month, the expense ratio declined, and the profit growth rate of the industry rebounded significantly. Although the growth rate of the sales revenue of the TCM decoction pieces industry declined, it remained at a high level, and the gross profit margin increased month-on-month. The industry production and sales situation is better.
Digestion of excess capacity is more difficult
Sectional Lian believes that the pharmaceutical manufacturing industry has entered the restocking phase and that demand will pick up. The fundamentals will improve in the second half of the year. There are two types of companies whose profit growth rate rebounds first: First, companies such as Hengrui Pharmaceuticals, Huadong Pharmaceutical, and Shuanglu Pharmaceuticals, etc., have the ability to set pricing or launch new products, maintain stable gross profit margins, and have strong sales capabilities. The demand is stable. The products of such enterprises are generally in a rapidly growing field and have strong competitive advantages. The ability of enterprises to launch new products is strong. Second, the companies that have both demand and prices for Zhejiang Pharmaceuticals, Xinhecheng, and Southwest Synthetic Products rebound. In particular, the rebound of vitamin E in bulk APIs is evident.
However, CICC issued a report stating that the generalization of destocking, that is, the process of digesting excess capacity will not end soon. However, the production capacity of most industrial products in China has been expanded several times in recent years, and the capacity under construction in 2007-2008 is still huge and will be gradually released in the future. The seriousness of this overcapacity is from the imbalance of investment and consumption at the macro level. It is evident. In recent years, China’s investment rate (the ratio of capital formation to GDP) has been rising at a high rate of 43%, not only far higher than China’s own average of 38% for many years, but also far higher than the peak level of other countries. In contrast, China's consumption rate has continued to decrease, from the average of 59% in the past years to the current 50%, and even lower than the normal level in other countries (about 70%). Over-investment and under-consumption will make it more prolonged and painful to digest excess production capacity than to narrowly inventory.