Southern Responsibility Investment Action Launched A Shares Pharmaceutical Companies Value Report: 1 Million 260 Thousand Employment, 24 Billion 100 Million Tax Break Differentiation, R & D Enthusiasm Is Different, No Shortage Of Collateral Constraints.

Twenty-first Century researcher Yang Ping, Capital Research Institute

Southern responsibility investment action this year launched the A share pharmaceutical enterprise value report, focusing on the value trend of 314 A share pharmaceutical companies, especially in 2019, showing differences in the field of social responsibility.

Of the 314 enterprises, 18 are new sub shares listed since 2019. With the continuous normalization of IPO, the ranks of listed pharmaceutical and biological companies will continue to expand.

At the closing price of January 10th, the total market capitalization of pharmaceutical and biological listed companies exceeded 4 trillion and 670 billion yuan, accounting for 6.95% of the total market capitalization of the A share market.

In 2019, the plate was commendable, the policy aspect, the acceleration of domestic medical reform policy, the increase in the price of innovative drug insurance negotiations, the normalization of generic drugs collection, and the deepening of the three medical linkage reform, and so on, and so on. On the market side, the biopharmaceutical sector rose 33.44%, outperforming all the A share index by 6.22 percentage points, and outperforming the Shanghai and Shenzhen 300 index by 3.35 percentage points.

How to identify stocks with low risk and high investment value? Multiple factors will affect the differentiation of internal value in the pharmaceutical sector. From the perspective of indicators, the current situation of operation, taxation, R & D investment, governance structure stability and compliance will have a significant impact.

Change of employment tax pattern

The 314 listed pharmaceutical companies are mainly distributed in seven industries, namely, chemical raw materials, chemicals, biological products, medical services, medical devices, medicine, commerce and traditional Chinese medicine. The largest number of manufacturers of chemical agents, a total of 74, followed by Chinese medicine companies and medical device companies, respectively, 67 and 62.

From the implementation of social responsibility, A share listed pharmaceutical companies have greater contributions to local employment and taxation. Wind data show that at present, 314 listed companies in A share have provided more than 1 million 261 thousand and 600 jobs for local companies, with an average of 4005 employees per listed pharmaceutical company.

There are 30 enterprises with more than 10000 employees and 226 employees, accounting for more than 70%, with only 1 employees below 100.

Among them, Shanghai medicine ranked first in the list of pharmaceutical companies with 47 thousand of the staff scale. In 2018, the number of pharmaceutical production and sales personnel in Shanghai reached 14806 and 19810 respectively, and the scale of skilled workers was also far ahead in the same industry, reaching 5290 people.

As the only listed company in the A share market with total assets and revenues over 100 billion, Shanghai medicine ranks first in asset size, employee number or income tax amount.

In the first three quarters of 2019, Shanghai's medical income tax amounted to 960 million yuan, accounting for 0.68% of revenue.

In the first three quarters of 2019, 314 listed pharmaceutical companies contributed 24 billion 74 million yuan to the local government, with an average of 76 million 912 thousand and 700 yuan per listed pharmaceutical company.

The total number of listed pharmaceutical companies with an income tax amounting to over 100 million is 71, with 128 enterprises having more than fifty million tax revenue, and only 8 enterprise income tax is negative.

On the whole, the state-owned enterprises based on Shanghai medicine are at the forefront of promoting social responsibility and promoting tax revenue.

But in recent years, the contribution of private enterprises has become more and more prominent. For example, in 2018, American health provided 39 thousand and 300 jobs, second only to Shanghai medicine. Heng Rui medicine paid 669 million yuan in the first three quarters of 2019, ranking third in Shanghai medicine and Baiyun Mountain.

CISCO and Bi pharmaceutical industries pay less than subsidies.

South China's responsible investment action research shows that the domestic pharmaceutical industry has been gradually dispersed to focus, imitation and innovation, and private enterprises play an increasingly important role by flexible business mode and efficient operation.

In particular, the large scale private leading pharmaceutical enterprises represented by Heng Rui and Yao Ming have the ability to invest more resources and achieve more revenue generation.

The leading private enterprises that bear more social responsibilities have also gained more funds. Innovative medicine leader, Heng Rui medicine and medical enterprise, MINDRAY medical and pharmaceutical industry "Foxconn", Kang Ming Kang, respectively monopolized the top three companies.

As of January 10th, the total market capitalization of the three companies was 384 billion 300 million yuan, 230 billion 800 million yuan and 150 billion 800 million yuan respectively.

The dynamic price earnings ratios of the three parties were 79, 51 and 72 times, respectively. Among them, the income tax amount of the latter two quarters in the first three quarters of 2019 was as high as 543 million yuan and 328 million yuan respectively.

South China's responsible investment action research shows that some enterprises provide hundreds of millions of income tax to local governments every year, while some enterprises rely heavily on government subsidies.

In the first three quarters of 2019, 314 listed pharmaceutical companies received a total of 7 billion 128 million yuan of government subsidies, accounting for 30% of the income tax amount.

Among them, the number of listed pharmaceutical companies with more than 52 of the government subsidy exceeds the income tax payment.

Take Hai CISCO as an example. In the first three quarters of 2019, the total income tax paid by Hai CISCO amounted to 56 million 563 thousand and 200 yuan, but the amount of government subsidy granted by the company was as high as 124 million yuan in the same period, and the difference was nearly seventy million. In 2018, the dual pharmaceutical industry lost 92 million 148 thousand and 100 yuan, and the income tax was -121.60 million yuan. In the same period, the company also received 4 million 925 thousand and 300 yuan from the government subsidy.

Generally speaking, the government subsidy is to help the local industry to support the development of local industries, provide some help to the financial status and cash flow of enterprises, lighten the burden of enterprises and help enterprises develop better. Some new industries that are in line with the national strategic direction will rely heavily on government subsidies to make the enterprises stronger and bigger.

From the perspective of value chain, tax burden and subsidy upside down affect the value echelons of listed companies.

30 billion layout of the three private enterprises in the future more emphasis on R & D

Southern responsible investment action research predicts that with the acceleration of China's medical reform policy and the shift of macroeconomic growth, China's pharmaceutical industry market growth has entered a steady growth stage. Intra industry differentiation will become more and more obvious. Leading enterprises with large R & D investment and perfect layout will be the biggest beneficiaries of market integration.

The R & D intensity of A share listed pharmaceutical companies is higher than that of A shares. 314 listed pharmaceutical companies broke through 1 trillion and 330 billion yuan in the first three quarters of 2019, achieving a net profit of 113 billion 274 million yuan, while the total R & D expenditure amounted to 29 billion 551 million yuan in the same period, accounting for 2.22% of total revenue.

This data is higher than the average R & D input intensity of A shares (excluding finance and two oil) in the first three quarters of 2019.

The largest scale R & D investment is Heng Rui medicine. In the first three quarters of 2019, R & D expenditures totaled 2 billion 899 million yuan, accounting for 17.11% of revenue. In recent years, the intensity of R & D investment has been maintained at more than 10%.

As the largest original pharmaceutical company in China, in recent years, Heng Rui medicine has undertaken 36 special projects of "national major new drug discovery", 23 national key new product projects and dozens of provincial science and technology projects, and applied for 805 invention patents, including 290 international patent applications.

In 2018, 56 innovative medicines were being developed clinically. As of mid 2019, the company's innovative drugs, such as ixeroxib, apatinib, sulphapride, STENTIN, pyritinib and Carolyn Ju monoclonal antibody, have been approved.

In December 27, 2019, the 1 new drugs of Rui medicine, such as ralazolam, were approved for sale and used for sedation in routine gastroscopy. It is expected to get more than 20% of the market share in the general anesthesia market, and the peak sales volume is expected to exceed 2 billion yuan.

The largest intensity of R & D input was the core microbiological product of the original research enterprise listed on the Chuang Chuang board in August 2019. The R & D investment in the first three quarters of 2019 was 39 million 894 thousand and 100 yuan, but the total revenue of the first three quarters of the company was only 129 million yuan, and the intensity of R & D input was as high as 31.02%.

At present, there is only one kind of micro core organisms that are listed on the market. The scale of the business is not large. But there are many research projects in the company, including two countries, 1 types of original new drugs being researched, namely, the western griti sodium, which has completed the phase III clinical trial, and Theo Ronnie, who has carried out several indications phase II clinical trials.

South China's responsible investment action research shows that the enthusiasm of R & D investment of the original research enterprise is much higher than that of other industries. The larger the business scale and the more diversified product line, the more funds the R & D investment is, and the R & D input intensity of the private pharmaceutical companies is higher than that of the state-owned enterprises.

The scale of R & D expenditure is the top three companies with a revenue scale of over 10 billion, and the private listed pharmaceutical companies with a wide line of business lines, besides the hang Rui medicine, the other two listed companies are Fosun medical and MINDRAY medical respectively. The R & D expenditures in the first three quarters of 2019 were 1 billion 290 million yuan and 1 billion 84 million yuan respectively, accounting for more than 10% of the total revenue.

In the ratio of R & D personnel, due to the higher professional threshold of the pharmaceutical industry, the degree of absorption of high-quality talents is also more extensive. The number of R & D personnel in A share listed companies is as high as 119 thousand and 400, which accounts for 9.46% of the total number of employees, far higher than the average level of A shares.

Among them, the scale of R & D personnel is 13 thousand and 900, accounting for 78.62% of the total number of employees.

Southern responsible investment action believes that innovation in biotechnology and healthcare needs huge R & D investment and development cycle is quite long. It usually takes ten years or longer. Only those companies with strong accumulation and strong risk tolerance can develop R & D in large scale, and domestic medical innovation has developed rapidly in the past two years.

Head enterprises have cost advantages in raw materials, production and scale, and resources are further concentrated on these enterprises.

Dozens of enterprises are constrained by governance structure.

The important index to measure the ESG of a listed company also includes whether the corporate governance structure is stable.

With the change of financial policy and the downward trend of macroeconomic growth, the crisis of capital chain of listed companies and major shareholders is frequent, and the pledge rate of major shareholders is often the key factor affecting the stability of listed companies.

The southern responsible investment action research found that compared to environmental protection, construction and other capital intensive industries, the capital chain problem of the pharmaceutical industry is relatively smooth, but the capital chain problem of individual listed companies is still not to be underestimated.

Among them, the pledge rate of major shareholders of 7 listed companies is as high as 100%, and the number of listed companies with a pledge rate of over 70% is 66. However, most of the listed companies with high shareholder pledge rate face different degrees of business difficulties, and even internal control and governance loopholes.

For example, the controlling shareholder and its hostage taking action close to 100% of Yu Heng pharmaceutical industry, due to the outbreak of capital chain crisis and passive reduction of major shareholders, the equity of listed companies is also plunged into equity turmoil.

Since the second half of 2018, the stock of pledged shares has been forced to close about 60000000 shares in the stock market. And the stock held by the 12 courts was frozen by law and waiting for a freeze. The stock waiting for freezing by the Fitch group is 3.65 times the number of shares it holds.

Because the real controller Zhu Jiman, Bai Li Hui and his concerted action were repeatedly passive reduction, the Shenzhen Stock Exchange gave them disciplinary sanction. Not long ago, Yu Heng pharmaceutical company also received the inquiry letter from the Shenzhen stock exchange for selling important "cash cows".

Dozens of listed companies, such as Shanghai's Lloyd's, Jilin Pharmaceutical Holdings, and Han Yu pharmaceutical company, have also experienced business crises or irregularities.

The southern responsibility investment action believes that some major shareholders' capital problems are mainly affected by the big environment. Some enterprises have no problems in their fundamentals. However, the high rate of pledge is really not conducive to the stability of the ownership structure of listed companies, and the behavior of large shareholders often has a great impact on the listed companies.