Hai Zheng Pfizer "separation" is imminent

Recently, it has been reported that Haizheng Pfizer, the largest Sino foreign joint venture pharmaceutical company in China, will "split up". Under the pressure of the sharp decline in the performance of Haizheng pharmaceutical since last year, Pfizer is considering divestment.

Since February 18, 2012, Pfizer and Haizheng Pharmaceutical signed a joint venture framework agreement in Los Angeles, California, USA. Haizheng Pfizer, the largest Sino-foreign joint venture pharmaceutical company in China, was established with a total investment of up to 0.295 billion US dollars. Among them, Haizheng Pharmaceuticals holds 61% and Pfizer holds 49%.

In this cooperation, Pfizer is interested in Haizheng's API industry chain and ready-made production capacity, while Haizheng is interested in Pfizer's sales network and brand effect. As a leader in the export of raw materials in China, Haizheng Pharmaceutical hopes that Pfizer's global experience in R & D, production and sales will better realize its internationalization.

At the beginning of its establishment, Haizheng Pfizer did once hand over a good "report card". Revenue reached 4.319 billion billion yuan in 2013, with a 2014 of 4.951 billion yuan, but it suffered Waterloo in 2015, only 2.821 billion, and net profit attributable to the parent company fell by more than 100 per cent. It is also reported that because of the sharp decline in performance last year, Pfizer is considering divestment.

At the beginning of the establishment of Haizheng Pfizer, Pfizer China President Wu Xiaobin seemed to have positioned this "hybrid". He said that "the product lines of the joint venture company and Pfizer's parent company will not overlap and compete in the same industry, mainly aiming at bionic drugs that occupy 70% of the market share in China." But Haizheng Pfizer does not think so. It seems reluctant to use the word "bionic drug" and positions its products as "brand generic drugs".

The cooperation between Haizheng and Pfizer should have been a transformation of Haizheng, but now it seems that it has become a serious challenge related to the rise and fall. In fact, Haizheng Pharmaceuticals, which invested almost all of its future, became a large-scale foundry for Pfizer. In 2015, Haizheng Pfizer accounted for 32.52 of Haizheng Pharmaceutical's main operating income. And this year is an eventful year for Haizheng Pfizer. One is frequent personnel changes. In this year, two CEOs were replaced successively, from Xiao Weihong to Jiang Shidong to Miao Tianxiang. CFO and vice president of sales also changed. Second, in September, the U.S. Food and Drug Administration issued a warning letter on the import of bulk drugs to the Taizhou factory under Haizheng Pharmaceutical. From the date of the warning letter to the period when the rectification was confirmed by FDA, of the 29 bulk drugs currently allowed to enter the U.S. market in Haizheng Pharmaceutical's Taizhou factory, 15 bulk drugs such as acarbose will temporarily not be able to enter the U.S. market. Third, the lack of supply of special star, affecting performance. The fundamental reason is that the sea is only as Pfizer's large foundry.

Haizheng Pharmaceutical, which is deeply involved in rumors of "divorce", once sent a letter of "five questions" to the Shanghai Stock Exchange, pointing directly to the pain: whether Pfizer has the possibility of divestment; Does the supply of "Tezhi Star" affect its performance? Is it normal for the company's senior executives to leave their jobs one after another? The company's interview and why the chairman of the board of directors acted as secretary for a long time? Why did Haizheng Pharmaceutical's profits decline this year?

On the evening of November 18, Haizheng Pharmaceutical said in response to an inquiry letter from the Shanghai Stock Exchange that Pfizer had indeed considered the possibility of divestment from Haizheng Pfizer, but the two sides had not yet formed any specific plan on divestment. "The company will strictly follow the laws and regulations and the relevant provisions of the Shanghai Stock Exchange, pay close attention to the progress of the above matters, and fulfill its information disclosure obligations in a timely manner."

On the 21st, Haizheng Pharmaceutical once again explained the five questions: Pfizer Pharmaceuticals continues to evaluate its investment in Haizheng Pfizer according to the needs of its own development strategy, including the organizational structure and required capabilities of Haizheng Pfizer. It has considered the possibility of maintaining its shares in Haizheng Pfizer, adjusting its shares or withdrawing capital, but so far no decision has been made on any of these options.

At the same time, it is pointed out that once Pfizer decides to withdraw its capital, it will have a significant impact on Pfizer's profits. Based on the sales revenue of Haizheng Pfizer from January to September in 2015 and 2016, the impact revenue in 2015 was 1.765 billion yuan, accounting for 63% of Haizheng Pfizer's main business revenue. From January to September 2016, the impact revenue was 1.553 billion yuan, accounting for 60%.

In addition, Haizheng Pharmaceutical Industry also explained the supply situation of "Tizstar. As one of Haizheng Pfizer's previous major varieties, the company's sales revenue of this variety reached 1.009 billion yuan in 2014 and fell to 0.02 billion yuan after "out of stock" in 2015. However, Haizheng Pharmaceutical said that the shortage of supply was due to the transformation of the production process and quality problems, which had nothing to do with Pfizer's proposed divestment.

Once, foreign pharmaceutical companies in China was called "lying to earn money". Due to policy preference, product advantages, capital promotion and the rapid development of China's overall economy, multinational pharmaceutical giants such as GlaxoSmithKline, Pfizer, Novartis, AstraZeneca, Bayer and Merck all regard China as the world's largest emerging market and have won the growth dividend of the "golden decade.

More than 20 foreign-funded pharmaceutical companies in China have accounted for half of the Chinese pharmaceutical market, and the remaining share has been divided up by more than 6000 local Chinese pharmaceutical companies. However, the maximum retail price of overseas original and innovative drugs in China is 1/3 higher than the international open price.

During the national "two sessions" this year, Li Bin, director of the State Health and Family Planning Commission, said that the price of some expensive imported patented drugs could be reduced by 50% through national negotiations. This is seen as a critical point in the development of foreign pharmaceutical companies in China-they may slide into the "worst era". "The reason for the high price of imported drugs in China is very simple. There is no strong generic drug in China that can compete with imported original drugs. Without competition, there will be no low price." A foreign pharmaceutical company responsible person said.

The lack of ability to develop and produce original research drugs has become a pain in the hearts of domestic pharmaceutical companies.