Why Did Li Yunchun Abandon Zerun Like A Chicken Rib When Watson Biological Co., Ltd?

A phone call will detonate the capital circle at the end of last week. Under the reversal of the plot, Watson biological sells its HPV vaccine subsidiary Zerun with difficulty.

"The company may still want to sell, but in order to go public at the beginning, Watson's equity was very dispersed and there was no actual controller. The management thought that the vote could not be passed, so it announced that it would not be sold. Watson chose to sell Zerun at this time. Maybe he is short of money, in order to make a statement. " A researcher in the biomedical industry in South China told the reporter of the 21st century economic report.

The equity structure of Watson bio shows that the large shareholder of Yunnan Industrial Investment Holding Group holds less than 5% of the shares, while Li Yunchun, the chairman of the management, only holds 3.13% of the shares. The dispersed ownership structure also makes investors question whether it is cheap to "sell" their children.

"Two price and nine price, if we want to continue to research and realize industrialization, in view of the domestic and international competition pattern, we have to invest at least 1-1.5 billion to make these two projects go smoothly. In the attitude of being responsible to investors, we took the initiative to make this decision. Look at what we're doing today in three years, and you'll see. " At the weekend, Li Yunchun, chairman of the board of directors of biological investment, responded to this question.

But this statement is still difficult to make up for the anger, confusion and disappointment of the secondary market. On December 7, it closed at 36.53 yuan, and Watson biological was nailed to the limit.

Hillard capital and "tiger system" took over twice

The point of investor's anger is why they often sell their children when their subsidiaries are about to receive blood transfusion.

Prior to this, Watson biological had abandoned its son Jiahe biological. On June 21, 2018, Watson announced that it would transfer its 8.6455% equity of Jiahe biology to conurbay, with a transaction consideration of about 300 million yuan. On June 27, 2018, Watson bio announced once again that it intends to transfer its equity corresponding to the registered capital of Jiahe biological Co., Ltd. (hereinafter referred to as hhct) of about 185 million yuan, and at the same time, HH CT will increase capital by 290 million yuan to Jiahe biological. In addition, hhct will continue to acquire the equity of Jiahe biology held by Huaxing Kangping and Yuxi Runtai. Through a series of equity transactions, hhct has accumulated 50.04% equity of Jiahe biological, becoming a new controlling shareholder. Conway ranked second with 25.34% of the shares, while Watson bio's shares fell to 13.59%, becoming the third largest shareholder.

In the two capital operations of Watson biological against Jiahe biological and Shanghai Zerun, the figures of hillock capital and "tiger system" flashed behind.

HH CT investment mainly comes from the US dollar private equity fund managed by Hillhouse capital. In December 2019, Watson bio announced that Shanghai Zerun will introduce new investors, and the investor intends to increase the capital of Shanghai Zerun in the form of debt to equity swap. After the completion of the transaction, Tianjin hillhingchuying investment partnership (limited partnership) (hereinafter referred to as hillhingchuying) holds 8.4998% equity of Shanghai Zerun. Hillhouse Chuying is one of the investment platforms of Hillhouse capital.

"Tiger system" has also become Watson biological's strategic counterparties.

In the debt to equity swap of Shanghai Zerun in December last year, Hangzhou tiger equity investment partnership (limited partnership) (hereinafter referred to as Hangzhou tiger) obtained 1.1196% equity of Shanghai Zerun; Pingtan Taige Yingke venture capital partnership (limited partnership) (hereinafter referred to as Pingtan tiger) obtained 0.7487% equity of Shanghai Zerun. Hangzhou TEG is a holding subsidiary of tiger pharmaceutical, and Pingtan tiger also has investment in tiger medicine.

In addition, the company, Zibo Yunze and yongxiuguan, which are responsible for the transfer of Shanghai Zerun's equity by Watson biological, also appeared behind the figure of tiger medicine. Xi'an Taiyun Investment Co., Ltd. holds 15.5% equity of Xi'an Taiyun Investment Co., Ltd., of which Xi'an Taiyun Investment Co., Ltd. Hangzhou tiger also holds a 32.06% stake in yongxiuguan.

In April 2015, there was a business cooperation between Watson bio and tiger pharmaceutical, and Watson bio announced to establish a medical and health industry M & A fund with tiger pharmaceutical.

Whether there is interest dispute between Watson's management and the receiver has become the focus of investors' attention. At the Haitong Securities telephone conference, Li Yunchun did not respond positively to the question raised by investors about whether the management of listed companies is related to equity transferees such as Zibo Yunze. He only said that the company would disclose in accordance with laws and regulations.

On the evening of December 6, people close to Watson's management told reporters of 21st century economic news that there was no benefit transfer or cheap sale in this transaction. The transaction itself was beneficial to the long-term development of the subsidiary and Watson, but in the short term, it might affect the secondary market, especially the short-term investors. From the perspective of calming the investor's sentiment, the company will make changes.

In the morning of December 7, Watson bio immediately announced that it would not submit the proposal on signing the equity transfer and capital increase agreement of Shanghai Zerun Biotechnology Co., Ltd. to the sixth extraordinary general meeting of shareholders in 2020 for deliberation. The company will continue to promote the product R & D and industrialization process of Shanghai Zerun as always. On the basis of more extensive recognition, the company will formulate and launch a planning scheme that is in line with the company's strategy and the long-term development of Shanghai Zerun to ensure its sustainable development.

However, Li Yunchun, chairman of Watson biology, also indirectly holds shares in Shanghai Zerun.

In December last year, Watson bio announced that Shanghai Zerun shareholder Suzhou Jinsheng Shuoda Investment Center (limited partnership) (hereinafter referred to as Jinsheng Shuoda) planned to transfer its US $3226154 investment amount (corresponding to 2.6087% equity) held by Shanghai Zerun to Suzhou Jinsheng Shuo Chao Investment Center (limited partnership) (hereinafter referred to as Jinsheng Shuo Chao). In this regard, Watson bio claims that both jinshengshuda and jinshengshuchao are incentive platforms for the core team of Shanghai Zerun, and the transaction helps to continuously promote the implementation of employee motivation of Shanghai Zerun.

After Jin Shengshuo Chao transferred the equity of Shanghai Zerun, its equity structure changed greatly in early January this year. Shanghai Zeji enterprise management center (limited partnership) (hereinafter referred to as Shanghai zecho), Haitong innovation securities investment, Guoyuan innovation investment, Soochow innovation capital and many other institutions have become shareholders of the company. Among them, Shanghai zecho holds 49.71% of shares, becoming the largest shareholder of Jinsheng Shuo super. According to qixinbao data, Li Yunchun holds a 1.27% stake in Shanghai Zeji. At the same time, Shanghai Zeji has been a shareholder of Jinsheng Shuoda since January 19, 2018, with a shareholding ratio of 49.70%. In other words, Li Yunchun indirectly holds the equity of Shanghai Zerun through jinshengshuoda and jinshengshuochao.

7.1 billion "golden eggs"

The focus of selling Zerun quickly focused on whether to sell at a low price.

A primary market investor in Shenzhen told the 21st century economic report that according to the product types currently owned by Watson, the pneumonia 13 price vaccine is still the most attractive and valuable vaccine. On the domestic HPV vaccine track, neither Wantai nor Zerun of Zhifei Watson has the advantage of time window. It may be the second window in the industry with a valuation of 20 billion. However, the hype about this concept in the secondary market is booming, and even some market voices think that with the help of HPV vaccine, Watson's valuation can reach 80 billion yuan.

In the domestic HPV vaccine market, the issuance volume of four price and nine price HPV vaccine of Merck is far ahead in China, accounting for more than 80% of the market in 2019. Wantai bio's bivalent cervical cancer vaccine project was launched in 2003, and was approved by the State Food and Drug Administration on December 30, 2019. It has become the first domestic and the third HPV vaccine manufacturer in the world. On April 21, the first batch of 93643 bivalent cervical cancer vaccines (trade name: Xinkening) of Wantai biological Co., Ltd. obtained the approval certificate of biological products issued by the State Food and drug administration, and was officially put on the market. Based on this, Wantai biological once hit 80 billion yuan.

"Simply benchmarking vantage's 80 billion, it is unreasonable to think that Watson is worth 80 billion with Zerun. What Watson really worth is pneumonia 13 price vaccine, and what supports its 50 billion valuation is this blockbuster product. Since this year, the whole secondary market has been frantically frying the vaccine sector, and the valuation of the whole plate is relatively high." Said the analyst.

Back to the pneumonia 13 valent vaccine, at present, there are two sources of the 13 valent pneumonia conjugate vaccine in China, one is Pfizer, the other is Watson biological. In 2019, Watson's 13 valent pneumonia conjugate vaccine was approved, becoming the first domestic vaccine independently developed in China and the second 13 valent pneumonia conjugate vaccine product in the world. Watson's 13 valent pneumonia conjugate vaccine was officially launched in the first half of this year.

According to the data of Watson in the first three quarters, affected by the epidemic, Watson's operating revenue in the first quarter was only 112 million yuan, with a year-on-year growth of - 36.34%; and its net profit was - 18117700 yuan, with a year-on-year growth of - 146.78%. However, with the 13 price pneumococcal vaccine on the market, Watson's operating revenue in the second quarter reached 461 million yuan, with a net profit of 79.6087 million yuan, realizing the performance recovery.

The full name of 13 valent pneumococcal polysaccharide conjugate vaccine is 13 valent pneumococcal polysaccharide conjugate vaccine. The main vaccination population is infants and children aged from 6 weeks to 5 years (before the birth date of 6 years old) to prevent the invasive diseases caused by 13 serotypes of pneumococci, such as pneumococcal type 1 and type 3.

According to the research report issued by Zhongtai securities on December 10 last year, according to the price calculation of Pfizer 13 price pneumonia vaccine approved for 6-week-old to 15 month old infants, 4-dose routine immunization program (basic immunization for 2, 4 and 6 months, and enhanced immunization for 12-15 months), and 698 yuan / injection, it is estimated that the market space of 13 price pneumonia combined vaccine is expected to reach 7.1 billion yuan at 15% penetration rate.

The new outbreak at the beginning of this year has further improved the awareness of the vaccine and the importance of lung health. As a result, pneumonia related vaccination penetration is expected to increase significantly in the post epidemic era. Watson has become the "gold mine" at present.

Of course, Watson's 13 valent vaccine also has competitors in the domestic market.

Among them, Kangtai Biology (300601. SZ) performed strongly on the track. At the end of this year, kanghaizi company has received a large risk in the process of registration and marketing of Kanghai biological vaccine, but there is still a long way to go before the registration of Kanghai biological vaccine Co., Ltd. at the end of this year. Some people in the industry told the 21st century economic report that according to the speed of the previous approval documents, Kangtai biological may not become a strong competitor of Watson in the next year or so. Watson is still in the leading position of the domestic 13 valent pneumonia conjugate vaccine at this stage.

Huang Zhen, vice chairman of Watson biology, had responded to Kangtai's potential competition when interviewed by the 21st century economic news reporter. He said that there was a large market space for the whole 13 valent pneumonia vaccine. Even if the relevant competitive products were put on the market, it might not be able to alleviate the vaccine shortage in the whole market.