Author: Li Chengwan
The three holding subsidiaries of Baiyunshan (600332.SH, 00874.HK), Tianxin Pharmaceutical, Baiyunshan Pharmaceutical General Factory and Jingxiutang Pharmaceutical, were notified by the National Medical Insurance Bureau of falsely increasing the price of raw materials and falsely raising the price of drugs to obtain funds, which caused Public opinion continues to pay attention.
On the morning of August 10, Baiyunshan announced that Guangdong Province had ordered Tianxin Pharmaceutical and other three companies and other related companies to comprehensively rectify their marketing models and stop related illegal operations.
In addition, relevant departments are investigating and punishing those suspected of violating discipline, law and crime.
The first financial reporter's investigation found that the Baiyunshan drug injection cefathiamidine notified by the State Food and Drug Administration had also been involved in bribery cases before.
Under the regulations of the anti-resistance order policy and consistency evaluation, the supervision of antibiotic production and clinical use has become increasingly strict, and Baiyunshan's antibiotic series related drugs have fallen into a situation of declining sales and sluggish performance.
As of the close on August 10, Baiyunshan A shares fell 3.20% to 27.53 yuan, with a total market value of 44.758 billion yuan; Baiyunshan Hong Kong shares fell 4.12% to 19.560 Hong Kong dollars, with a total market value of 31.8 billion Hong Kong dollars.
Past involvement in bribery cases
Before the notification from the National Medical Insurance Bureau, some varieties of the three companies involved in Baiyun Mountain have been withdrawn from the Internet in various provinces. Some varieties of the enterprise will be withdrawn from the Internet, and the prices of some drugs will be adjusted at the same time.
Based on the above-mentioned provinces' withdrawal varieties of the three companies involved, the first financial reporter found that most of these varieties belong to anti-infective drugs, including cefathiamidine for injection reported this time, and cefuroxime sodium for injection, Cefprozil dispersible tablets, etc.
On the China Judgment Documents website, there are many cases of bribery in the medical system of cefathiamidine for injection. Baiyunshan's cefathiamidine for injection was also involved in a bribery case.
A criminal ruling by the Intermediate People's Court of Nanchang City, Jiangxi Province shows that the court found out after hearing that: in early 2013, Cai, a sales manager of a pharmaceutical company, found Tan, who was then director of the Department of Maternity and Neonatology in Jiangxi Province, and hoped that Tan would use it in the neonatology department. The pharmaceutical company gave care to the cefathiamidine for injection drugs represented by the pharmaceutical company, and promised to rebate to Tan according to the standard of 3 yuan per bottle, and Tan agreed.
Later, Cai calculated the rebate based on the monthly prescription volume of cefathiamidine for injection in the neonatology department from January 2013 to December of the following year, and sent the drug rebate to Tan for several times in the form of envelopes in cash, totaling RMB 40,308.
At the beginning of 2015, because Jiangxi Provincial Women's Insurance restricted the use of cefathiamidine, Cai found Tan again, saying that the pharmaceutical company replaced cefathiamidine for injection with amoxicillin sodium and clavulanate potassium for injection, and hoped that Tan would use the drug in the drug. Continue to take care of the use, and promised to rebate to Tan at the standard of 2.5 yuan per stick, and Tan agreed.
From January 2015 to August of the following year (20 months in total), Cai gave Tan a total of RMB 20,000 for drug rebates at the actual fixed rate of RMB 1,000 per month.
The court documents show that the business license of the pharmaceutical company, the "Description on the Distribution of Some Drugs by the Pharmaceutical Company" provided by the Provincial Women's Insurance Pharmacy Department, and the "Use of Pharmaceutical Companies' Drugs by the Neonatology Department of Jiangxi Maternal and Child Health Hospital" provided by the Provincial Women's Insurance Information Department confirmed: The above medicines began to distribute cefathiamidine for injection (0.5g, Baiyunshan Pharmaceutical) to the Provincial Women's Insurance on November 28, 2012. From January 2013 to December 2014, the Provincial Department of Women's Health and Neonatology used a total of 16,795 pieces of the drug ( There are monthly quantity details).
In the end, the defendant, Tan, was convicted of accepting bribes and was sentenced to six months of detention, suspended for one year (the probation period for probation, calculated from the date of the judgment), and a fine of RMB 100,000.
The final judgment dismissed the appeal and upheld the original judgment.
With the deepening of the reform of the medical system, policies aimed at squeezing out the "moisture" in the circulation of medicines have continued to be introduced, and the addition of medicines and the "two-invoice system" have been cancelled. Gold sale.
According to the National Medical Insurance Bureau, after investigation, from 2017 to May 2021, three drug manufacturers including Tianxin Pharmaceutical colluded with more than 50 downstream drug agents in order to avoid the "two-invoice system" policy and supervision. 87 kinds of drugs such as cefathiamidine are cashed out by purchasing raw materials at inflated prices and transferring funds to downstream drug agents. "The amount involved is huge, and some of the funds are used to bribe medical staff or specific related persons to carry out illegal drug promotions. ."
The main method of cashing out is that drug manufacturers and drug agents sign a cooperation agreement to add designated "distributors" in the procurement of APIs, and the "dealers" buy APIs at normal prices, increasing the price several times to ten. It is sold to pharmaceutical manufacturers several times.
In the name of "rising prices of raw materials and high production costs", drug manufacturers have further transmitted the falsely high prices of raw materials to factory and bidding prices.
The “dealers” of APIs are actually controlled by the drug agents, and they cash out the income from the price difference obtained by buying low and selling APIs at a high price, and transfer them to the drug agents for them to implement pharmaceutical commercial bribery.
An insider in the pharmaceutical industry told Yicai.com that the "two-vote system" policy was implemented to purify the circulation link, control the chaos in the field of drug circulation, and crack down on illegal affiliates, commercial bribery, tax evasion and other illegal activities in accordance with the law." Unexpectedly, new forms of corruption are emerging one after another, and the trick of 'there are policies above and countermeasures below' is staged."
On the morning of August 10, Baiyunshan announced that at present, Tianxin Pharmaceutical and other three companies have rectified the prices of the drugs involved nationwide as required, and some products have been stopped from purchasing.
"Guangdong Province ordered Tianxin Pharmaceutical and other three companies and other related companies to comprehensively rectify their marketing models and stop related illegal operations. In addition, the relevant departments are investigating and punishing those suspected of violating discipline, law and crime in accordance with the law." Bai Yunshan said.
Antibiotic drug sales slump
"The illegal sales behavior of the three subsidiaries of Baiyun Mountain this time shows the pressure brought by the company in the antibiotic drug sales sector for a long time." A person in the pharmaceutical industry told Yicai.com.
Under the continuous fermentation of public opinion, on the morning of August 10, Baiyunshan announced to the public that recently, relevant government departments have carried out inflated drug prices and set-up of drugs against three companies, Baiyunshan Pharmaceutical Factory, Tianxin Pharmaceutical and Jingxiutang Pharmaceutical. A special investigation into the withdrawal of funds.
Talking about the impact on the company, Bai Yunshan said that after investigation, in 2021, the total gross profit of the above three companies involved in withdrawing products will be RMB 15 million, and the gross profit of products with reduced prices will be RMB 320 million, accounting for the company's 2021 audited gross profit. The proportion of gross profit is 0.12% and 2.45% respectively; from January to March 2022, the total gross profit of the above three companies involved in the withdrawal of the network products was RMB 12 million, and the total gross profit of the products with reduced price was RMB 102 million, accounting for the company's 2022 January-March gross profit. The proportion of unaudited gross profit in March was 0.25% and 2.13%, respectively.
Judging from the timeline of violations reported by the State Food and Drug Administration, from 2017 to 2021, Baiyunshan’s antibiotic sector revenue declined and faced greater sales pressure.
Baiyunshan said that the company has a complete industrial chain of antibiotics from raw materials to preparations, and chemical products include cefathiamidine, cefixime, cefprozil series, amoxicillin, etc.
Cefathiamidine, cefprozil, and cefixime are the first, second, and third generation cephalosporin antibiotics, which are restricted-use antibiotics. Baiyunshan is the domestic head supplier of cefathiamidine and the domestic sales market of cefprozil. The share ranked high, and cefixime passed the consistency evaluation in 2020.
A reporter from Yicai found that with the iteration of products, the sales of the first-generation cephalosporins in Baiyun Mountain showed a significant decline (anti-resistance order policy, and the National Medical Insurance Catalogue has attached strict conditions for the use of thiamidine), the third generation Cephalosporin antibiotics have an upward trend from 2017 to 2019, but the magnitude is not large. In 2020, due to the impact of the epidemic (reduced hospital visits), the sales volume will decline severely.
Taking cefathiamidine for injection notified by the State Food and Drug Administration as an example, in 2018, 2019 and 2020, the total actual purchase volume of 0.5g/bottle of cefathiamidine for injection by medical institutions was 22.83 million bottles and 2005.94 respectively. 10,000 bottles, 9,739,700 bottles; 1g/bottle of cefathiamidine for injection, the total actual purchase volume of medical institutions was 11,007,300 bottles, 10,506,900 bottles, and 5,492,800 bottles respectively.
As early as 2017, the production volume, sales volume and ending inventory of cefathiamidine for injection in Baiyunshan decreased by 44.71%, 36.31% and 72.59% year-on-year respectively. The impact of restricted medicine policies, such as the requirement for trials and the restriction of infusions in outpatient clinics, has led to a decrease in its production, sales and inventory.
The 2019 annual report shows that the ending inventory of cefathiamidine for injection in Baiyun Mountain has increased significantly year-on-year, mainly because the state continues to strictly restrict the use of antibiotics, and at the same time, due to a new round of adjustments in the National Medical Insurance Catalogue, additional cefathiamidine is added. Due to factors such as stricter conditions of use, sales fell and inventories increased.
Baiyunshan's 2020 annual report stated that the reason for the large year-on-year decrease in the production, sales and ending stocks of cefathiamidine for injection is that the state continues to strictly restrict the use of antibiotics, and the "National Medical Insurance Catalog" still adds cefathiamidine. The stricter conditions of use, coupled with the reduction in the number of hospital patients during the COVID-19 outbreak, have resulted in a reduction in market demand and a drop in sales, while companies are controlling production, resulting in a drop in production and inventory.
In 2020, affected by the epidemic, the revenue and gross profit margin of Baiyunshan's cephalosporin series products both declined.
According to Baiyunshan's 2020 annual report, the company's revenue from cefathiamidine for injection reached 383 million yuan, down 54.49% year-on-year, and its gross profit margin was 2.68%, down 17.68% year-on-year; the revenue of cefprozil series reached 219 million yuan, down 26.25% year-on-year. %, the gross profit margin reached 21.71%, a year-on-year decrease of 8.20%; the revenue of cefixime series reached 925 million yuan, a year-on-year decrease of 23.76%, and the gross profit margin reached 39.34%, a year-on-year decrease of 11.63%.
In 2021, Baiyunshan's revenue of cefathiamidine for injection will reach 214 million yuan, down 44.21% year-on-year, and the gross profit margin will even show -4.45%, down 7.13%.
The overall production and sales volume of the third-generation antibiotic cefixime series increased in balance year-on-year, but according to the relevant regulations on consistency evaluation, the packaging volume per batch of some products of this product was reduced, and the production process and production process supervision were more stringent, plus market raw materials Supply is tight.