AOKANG Group Transboundary Vaccine "Harvest" Is Approaching The Core Product Has Been Involved In Bribery Hong Wah Biological IPO Mixed Feelings

The panic caused by the fake life of rabies vaccine is still vivid. It is also the activity of rabies vaccine manufacturer, Chengdu Hong Wah biological products Limited by Share Ltd, IPO.

According to the CSRC announcement, in January 16, 2020, Hong Wah biological (first) will be accepted by the board of audits.

Prospectus shows that Hong Wah bio is a comprehensive research, development and operation of the integration of vaccine production enterprises, and the first domestic production of human diploid cell rabies vaccine vaccine enterprises, the proposed fund-raising $990 million and apply for the gem listing.

In addition to the nature of the vaccine, which is naturally a public concern, Hong Wah's biological concern is Wang Zhentao's status as a real controller. Wang Zhentao is the founder of AOKANG group, a well-known footwear giant in China, and has a A share listed company, AOKANG International (603001.SH).

With the emergence of Hong Wah's bio IPO, the layout of AOKANG's diversified development is also presented. AOKANG group is not only a simple shoe giant in people's impression. It takes leather shoes as its main business, and involves many sectors such as real estate, business development, bio pharmaceutical, financial investment and so on.

Hong Wah's bio impact listing is a microcosm of AOKANG group's biopharmaceutical sector. But AOKANG, which is widely known as a shoe maker, is bound to be questioned by the outside world in the field of cross-border bio pharmaceuticals. With the implied risk of bribery behind it, Hong Wah's biological IPO is doomed to mixed feelings.

Vaccine profitability exceeds shoe industry

Hong Wah biological was founded in 2004, when all shareholders were AOKANG group, Wang Zhentao and Lin Liqin. From the time line, the diversification of AOKANG group began at that time.

Wang Zhentao has no biological or medical background, so in the early stage of Hong Wah's bio technology development, Wang Zhentao "dug" the four core technical backbone of Cai Yong, Zhou Rong, Li Shengyou and Chen Huaigong. Among them, the top three were from the Chengdu Institute of biological products and Chen Huaigong from Lanzhou Biological Products Institute. The main products of the company are freeze-dried Purified Hamster Kidney Cell Rabies Vaccine (human diploid cells) and ACYW135 group meningococcal polysaccharide vaccine.

According to media reports in the early years, AOKANG, a shoemaker, suddenly stepped into the pharmaceutical industry without any connection. The industry did not understand it, and joked that it used the same production line to "make shoes in the daytime and make medicine in the evening". In order to avoid other people's misunderstanding of making drugs and making shoes, AOKANG Group specializes in the name of Hong Wah biological, which is not related to AOKANG's name.

It has to be said that Wang Zhentao was prescient for entering the field of medicine. Although he did not expect the footwear industry to face the current predicament, it was actually looking for a second profit growth point.

After 16 years of development, the scale of Hong Wah's biological revenue has doubled. In 2016 -2018, Hong Wah's biological business income was 92 million 916 thousand and 400 yuan, 262 million yuan and 560 million yuan respectively, the growth rates were 30.74%, 181.90% and 113.59% respectively. The gross profit margin of the vaccine is also very impressive. The Hong Wah biological comprehensive gross profit margin is 90.72%, 89.46% and 94.44% respectively, and the gross profit margin is at a relatively high level. The net profit is 6 million 657 thousand and 900 yuan, 74 million 457 thousand and 900 yuan and 170 million yuan respectively.

"After the outbreak of the longevity biological fake vaccine, the longevity bio delisted and the business license was revoked, and the capacity of the rabies vaccine was insufficient, which made Hong Wah biological similar vaccine companies gain growth opportunities." A private person in the field of medical care in Shanghai pointed out.

Wang Zhentao's vision of taking the lead in the layout of medicine has been confirmed in recent years. Since 2016, Wang Zhentao's leather shoes business has entered a cold winter for Industry reasons. AOKANG International's net profit is decreasing year by year. In 2018, the profits brought by Hong Wah biology exceeded AOKANG's leather shoes business. This year, AOKANG international achieved a revenue of 3 billion 40 million yuan, almost 5 times the scale of Hong Wah's biological revenue, but its net profit to its mother only amounted to 137 million yuan, which was about 33 million yuan less than that of Hong Wah bio.

Last year, Wang Zhentao made an intuitive comparison between the two businesses in an exclusive interview with the media: "the output of a biopharmaceutical employee is equal to the output of 100 employees of a shoemaking enterprise, and the profit rate is much higher than that of the traditional footwear industry."

The development of Hong Wah's biology also attracted investment from well-known venture capital company, Ying Ke capital. At present, Pingtan's shareholding ratio is 27.47%, and that of Tiger Group is 4.91%. Wang Zhentao directly owns 18.37% stake in Hong Wah bio, and indirectly controls 21.44% stake in the company through AOKANG group, accumulatively controlling 39.81% stake in Hong Wah bio.

Bribery risk affects geometry

However, there are corresponding risks behind the rapid growth of performance, for example, the proportion of accounts receivable is increasing year by year. At the end of the reporting period, the net biological accounts receivable of Hong Wah were 70 million 942 thousand and 700 yuan, 105 million yuan and 251 million yuan respectively, accounting for 35.29%, 38.30% and 51.67% of the total assets in the current period respectively.

On the other hand, the product structure of Hong Wah's biology is relatively simple. The company's main business products include lyophilized Purified Hamster Kidney Cell Rabies Vaccine (human diploid cell) and ACYW135 group meningococcal polysaccharide vaccine, which is also the main source of profit for the company. In 2018, the product accounted for 98.53% of the revenue.

Hong Wah biological frankly said that if the company can not successfully develop new products and market expansion situation in the future, it is impossible to successfully develop human diploid cell rabies vaccine and sell on the market less than expected or potential competitors.

At present, only one of Hong Wah's biological products sells rabies vaccine for human diploid cells in the domestic market. However, according to the data released by the State Drug Administration's drug evaluation center, there have been up to 6 clinical trials of rabies vaccine for diploid cells, including Beijing min Hai, Chengdu biological products research institute, Shi Nike, Zhi Fei Long horse, Cheng Da biology and Pu Kang biology.

The first risk that Hong Wah mentioned in the prospectus is competition risk, which means that the freeze-dried Purified Hamster Kidney Cell Rabies Vaccine (human diploid cell) "new drug certificate" has been protected for a period of time. Therefore, if other vaccine companies successfully develop the human diploid cell rabies vaccine and realize the competitive risk caused by the sale on the market.

But beyond those risks, the most controversial issue is a bribery wave involving Hong Wah's biological core products.

The prospectus shows that Hong Wah biological freeze dried Purified Hamster Kidney Cell Rabies Vaccine (human diploid cell) obtained the approval of the drug clinical trial in June 2008, and obtained the new drug certificate and Drug Registration Certificate in April 2012, and the drug was approved just after the bribe of President Hong Wah biological president.

In November 2016, Yin Hongzhang, director of the biologicals Department of the drug registration department of the former State Drug Administration, was sentenced to ten years' imprisonment for accepting bribes. Hong Wah's biological bribery was brought out. The relevant judgments found by the reporters showed that Yin Hongzhang, from 2009 to 2012, took advantage of his duties to accept the invitation of general manager Zhou XA of Chengdu Hong Wah Biological Products Co., Ltd. (predecessor of Hong Wah Biology), providing help to the company in the examination and approval of drug declarations, and receiving 50 thousand yuan of money from unlawful acceptance.

Yin Hongzhang confessed: "in 2008, he met with general manager Zhou XA a of Chengdu Hong Wah Biological Products Co., Ltd. at that time, Zhou said that her company had a freeze-dried Purified Hamster Kidney Cell Rabies Vaccine (diploid) project and hoped that it could take care of it. It indicated that this technology was more advanced and would promote it. When he went to Chengdu in the second half of 2011, he met with her in the hotel lobby, and gave him a bag containing 50 thousand yuan in cash. At the same time, he agreed that he would take care of her company's project. After the approval of its signature, the freeze-dried Purified Hamster Kidney Cell Rabies Vaccine (diploid) has passed the technical review.

Hong Wah, then the general manager of Chengdu Biological Products Co., Ltd., is Zhou Rong. However, Hong Wah did not mention the bribery in the prospectus. In the prospectus, Zhou Rong resigned as Hong Wah's general manager of biology in May 2017. The reason was retirement. Zhou Rong retired as a consultant to Hong Wah biology.

In January 13th, the reporter called the Hong Wah bio secretaries office on the legality of the approved products and whether it would affect IPO and so on, but the telephone failed to connect.