Health Yuan's integration of Lizhu Group aborted again What will happen to the raw material drug assets?

Integration of Lizhu Group and then abortive health yuan API assets where to go?

By Xiao Meili Guangzhou

Two months ago, hope that through the divestiture of pharmaceutical assets to achieve asset integration of health yuan (600380.SH), in the evening of October 27 announced the termination of the major asset integration plan, the reason is that "the two sides in the transaction price and other matters there is a big difference, it is expected to be difficult to reach agreement in the short term".

This is the second time that health yuan terminated the integration of assets due to payment problems. At the end of September last year, health yuan and li zhu group (000513.SZ) both suspend trading to start the integration of API assets, and ultimately also "due to accounts receivable problem termination".

Health dollar related person in charge of the 21st Century Business Herald reporter said: "Our plan is through the integration of assets, so that the health of the health dollar to health care business is the main, while the Pearl Group is the main pharmaceuticals. However, this is a temporary direction, because the new CEO of health yuan has just taken office soon, our group is also doing adjustments and integration, it is not convenient to disclose more strategic direction."

As to whether it will restart asset consolidation again, the above source said it was not convenient to talk more about it. The Beijing Dingchen pharmaceutical consulting head Shi Lichen believes that the accounts receivable cycle of the API companies is relatively long, and the amount of money involved is often relatively large. Once the backlog is too long, it is difficult to say which company it belongs to after the handover of assets, which may be one of the reasons for restricting the integration of assets between Healthy Metals and Lizhu Group.

According to the health of the previously disclosed "letter of intent to integrate assets", health as the controlling shareholder of lizhu group, will be shenzhen seashore pharmaceutical and xinxiang seashore pharmaceutical and drug production, sales related to all or part of the assets, used to subscribe to the lizhu group of non-public offering of shares. At the same time, Lizhu Group will subscribe for all or part of the equity of Jiaozuo Healthyuan Biological Products Company, a subsidiary of Healthyuan, in cash.

However, the asset integration has been highly controversial as the revenue from pharmaceutical assets accounted for half of Healthwon's total revenue. According to the 2015 semi-annual report released by Health Yuan, net profit of 330 million yuan was realized during the reporting period. Among them, the subsidiary Seaside Pharmaceutical realized net profit of 0.08 billion yuan, up 51.9% year-on-year; Jiaozuo Health Yuan realized net profit of 0.09 billion yuan, up as much as 261.5% year-on-year.

In addition, Seaside Pharmaceuticals is also actively preparing for the U.S. FDA certification. With the steady rebound of the domestic API market, Jiaozuo Health Yuan 7-ACA production and sales compared to the same period have also rebounded.

Shi Lichen told reporters: "Lizhu Group is trying to get rid of the API business, but the health of the yuan does not intend to do APIs. API profits are relatively low, although there is now a rebound, but very unstable, price fluctuations. Now the new environmental protection law has also been introduced, the existing API plant in all aspects need to be rectified, the need to invest in a large cost."

The reporter noted that Lizhu Group had also wanted to realize the separation of API assets through the spin-off and listing. On July 15 this year, Lizhu Group announced that the company's board of directors considered and passed the "motion on the subsidiary Lizhu Group Fuzhou Fuxing Pharmaceutical Company Limited to apply for listing in the national small and medium-sized enterprise stock transfer system. It is understood that Fuxing Pharmaceuticals is a subsidiary of Lizhu Group holding 75% of its main business is the production of fermentation APIs.

However, the implementation of this plan was also forced to terminate. At the end of August, Li Zhu Group announced to stop Fuxing Pharmaceuticals in the national small and medium-sized enterprise stock transfer system proposed listing. The reason was that Li Zhu Group applied to the Stock Exchange for a waiver to comply with the requirements of the Listing Rules, that is, "the parent company shall not make a spin-off listing within three years after the initial listing", but failed to obtain the waiver.

"The deepest reason for the repeated failures of Healthwon to do asset integration is still the relatively decentralized shareholding structure, with no single shareholder in an absolutely dominant position. In this case both health yuan and lizhu group, are more considerate of the interests of the company. Now the two business cross is more serious, the same industry competition is very strong, integration still must be done." Shi Lichen further said.

(Editor: Zhang Weixian)