"Investors Net" Cai Jun

In the face of changes in the market environment, Jointown Pharmaceutical Group, a leading private medical distribution company, has unlocked some new development secrets.

On the evening of August 26th, the company released its 2024 semi-annual report. During the reporting period, it achieved operating revenue of 77.171 billion yuan, net income attributable to shareholders of 1.208 billion yuan, and net income attributable to shareholders excluding non-recurring items of 1.18 billion yuan.

Among them, the company's performance in the second quarter showed a significant improvement compared to the first quarter. The second quarter achieved a net income of 0.67 billion yuan, an increase of 24.6% compared to the previous quarter; the net cash flow from operating activities was 0.453 billion yuan, which has improved compared to the first quarter, and it is expected that the net cash flow from operating activities for the whole year will be a positive number matching the operating performance.

The development of the healthcare industry is actually a marathon, and there may be new environmental changes at every mile. Previously, the company took the lead in implementing digitalization, platformization, and internetization in the industry, and gradually built a scarce "hundred billion level" medical supply chain service platform by implementing a comprehensive service model of "pharmaceutical distribution + logistics distribution + product promotion".

Now, the company is deeply promoting the "three new and two transformation" strategy, consolidating its core competitiveness, firmly adhering to long-term value orientation, honing its inner strength and enhancing resilience, and is confident in achieving its annual business goals.

New product strategy with significant growth

When the market starts to tighten, it is the perfect time for Jointown Pharmaceutical Group to implement its new product strategy.

In recent years, with the continuous deepening of the medical reform policy, CSO (All In Health) has gradually become a hot trend. Zheshang Securities pointed out in a delayed report that the CSO business is undergoing a transformation and upgrade from traditional to specialized and platform-based models, with the domestic market size reaching 139 billion yuan in 2023.

In the digital age, platform enterprises can better integrate resources to complete transformation and upgrade. The company, with CSO as the core, has built a product and promotional marketing system, focusing on product exploration and the introduction of valuable products. Through a sound brand planning and operation system, it empowers core product brands, providing solutions to partners, and ultimately driving profitability.

In the first half of this year, the company's total agency brand promotion business (including pharmaceuticals and medical instruments) achieved sales revenue of 9.862 billion yuan, a year-on-year increase of 14.18%, with a gross profit of 1.191 billion yuan. Behind the significant growth is the company's continuous comprehensive improvement of brand and sales driven by the dual engines of products and channels, continuously boosting the potential energy for the second growth curve.

In this regard, the sales of the total agency brand promotion related to pharmaceuticals reached 5.42 billion yuan, a year-on-year increase of 9.52%. As of the reporting period, the company represents 828 known brand pharmaceuticals, covering Kewi, Beiping, and Kangwang, with stable sales of key product varieties. At the same time, the company actively expands new products, introducing 47 high-quality new product varieties including Mikebao, Pairuisong, Dakeningshuang, Meiduoba, and Weikangling.

The sales of the total agency brand promotion related to medical equipment reached 4.442 billion yuan, a year-on-year increase of 20.45%, with a gross profit of 0.232 billion yuan, a year-on-year increase of 29.41%. As of the reporting period, the company represents a total of 1081 brand manufacturers, covering Johnson & Johnson, Abbott, Fesenius (hemodialysis), RinoVal, Roche, and Maimetong, and has introduced one product line with sales over 100 million and two product lines with sales over 10 million, including Jaco, Dentsply Sirona, and Leica.

As an important component of the new product strategy, the pharmaceutical industry's self-production and OEM business can better reflect Jointown's advantages in variety, brand, channel, and marketing. This business is an important high-profit sector. The company uses big data accumulated by the 'billion-dollar' supply chain service platform to develop related businesses targetedly, and then distributes them to end-users or consumers through a comprehensive sales network.

During the reporting period, the company's pharmaceutical industry's self-production and OEM business achieved sales revenue of 1.438 billion yuan, a year-on-year increase of 21.61%. Among them, in the western medicine industry sector, sales reached 0.282 billion yuan, a year-on-year increase of 50.87%, demonstrating the continuous strategic effects of diversification of products and brands, adding varieties and improving quality. In the traditional Chinese medicine industry sector, the company's subsidiary Jiuxin Chinese Medicine Group achieved sales of self-produced decoction pieces of 1.08 billion yuan, a year-on-year increase of 15.83%.

Deepening internal strength under the 'Three News and Two Enhancements' strategy

Faced with external challenges, the new product strategy is an important part of Jointown Pharmaceutical Group's "Three New and Two High Integration". The company has been polishing for several years and has built long-term core competitiveness in new retail, new medical, digitization, and REITs.

In terms of new retail strategy, the company focuses on "adding ten thousand stores", forming a business matrix including B2C e-commerce, general agent sales, Medicine99 B2B e-commerce platform, retail e-commerce service platform, and integrated logistics Bb/BC warehouse distribution. As of the end of July, the self-operated and franchised drugstores of Good Pharmacist reached 24,387, with a sales of 2.419 billion yuan to franchise stores in the first half of the year, a year-on-year increase of 47.32%. Good Pharmacist's new retail business achieved a sales revenue of 1.456 billion yuan; Jointown's B2C e-commerce general agent total sales business revenue reached 0.496 billion yuan, a year-on-year increase of 11%; Medicine99 B2B e-commerce platform and retail e-commerce service platform business revenue reached 8.784 billion yuan; logistics-related revenue reached 0.471 billion yuan, a year-on-year increase of 16.84%.

In terms of the new medical strategy, the company has opened up the new medical business "New Track", created the "Jiuxin Clinic" brand, and enhanced the control of clinic terminals. It has already developed 412 Jiuxin Clinic member stores, and strives to develop approximately 800 member stores annually.

When it comes to the "Three New" approach, Jointown Pharmaceutical Group's success in tapping into the market trends is due to insights into the market and embracing the trend through systematic capabilities and targeted layouts. Furthermore, the company is also striving to embrace the new flag of "Two High Integration".

During the reporting period, the company set up a "public fund REITs + Pre-REITs" multi-level real estate equity capital operation platform, and plans to carry out preliminary preparations for the first issue in the medicine logistics parks in Shanghai, Hangzhou, Chongqing, and other places. Internally, the company aims to revitalize high-quality pharmaceutical logistics assets, withdraw equity funds, and reduce its asset-liability ratio. Externally, the company is also involved in photovoltaic power generation, contributing to green and low-carbon development.

Many times, companies tend to pursue one-sided expansion during their development. However, given the changes in the external environment, in order to achieve long-term "victory" in a field, it is necessary to dig deeper and build a moat. Since the beginning of this year, Jointown Pharmaceutical has focused on improving the quality of management, actively expanding financing channels, increasing the intensity of talent introduction, and further consolidating its own competitiveness.

During the reporting period, the company's preferred stock issuance application was approved by the China Securities Regulatory Commission, with a total fund raised of 1.79 billion yuan. At the same time, the company successfully issued the first and second ABN totaling 2 billion yuan, with a subscription multiple setting a new high for private Chinese enterprises. The face interest rate also hit a new low for private Chinese enterprises during the same period and category. The first issue of ultra-short-term financing bonds also achieved an innovative breakthrough, with an issue amount of 0.5 billion yuan, and an issuance interest rate of 2.25%, making it the first batch of private enterprise asset-backed debt financing tools issued across the entire market.

In terms of talent introduction, in 2024, Jointown Pharmaceutical implemented a new talent strategy to recruit talents globally. In the first half of this year, the company has recruited 120 high-end professional talents, covering key positions such as CSO, new retail, Medicine99 B2B, digital health, medical instruments, logistics, and information technology, matching the most excellent and suitable professional talents for the enterprise's strategic transformation. (Produced by Sina Finance) ■