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Finance Union Society October 24 news (Reporter Zhang Liangde) The summer temperature in 2024 set a record high in over sixty years. However, in such high-temperature weather, the main single product of Chongqing Taiji Industry - Huoxiang Zhengqi Oral Liquid, saw a significant decline in sales volume in the third quarter, resulting in a over seventy percent year-on-year decline in the company's third-quarter profit.

Taiji Group disclosed its third-quarter performance this afternoon. The company achieved total revenue of 10.434 billion yuan in the first three quarters of this year, a 14.36% year-on-year decrease, with a net income attributable to the parent company of 0.545 billion yuan, a 28.10% year-on-year decrease. In the third quarter, revenue reached 2.617 billion yuan, a 16.44% year-on-year decrease, with a net income attributable to the parent company of 50.4622 million yuan, a 73.82% year-on-year decrease.

According to the company, the main reason for the profit decline is the decrease in sales during the same period. According to Xinhua News Agency, data from the National Climate Center shows that in the summer of 2024, China's climate exhibited significant warm and humid characteristics, with the national average temperature reaching its highest level since 1961. However, in this hottest summer, sales of Taiji Group's largest single product - heat-relief and dampness-expelling Huoxiang Zhengqi Oral Liquid, dropped significantly compared to the same period last year.

According to the company's major business data for the third quarter, the sales amount for pharmaceutical industry business in the first three quarters was 6.188 billion yuan, a 25.24% year-on-year decrease. Among them, the sales revenue for pharmaceutical industry business in the third quarter was 1.109 billion yuan, a 43.99% year-on-year decrease from the same period last year.

The company's seven major industrial categories, only the respiratory system medication revenue remained relatively stable, with only a 1.21% decrease. However, the revenue of the most significant category - digestive and metabolic medication, decreased significantly. The revenue for the first three quarters was 1.769 billion yuan, a 34.28% year-on-year decrease, with sales revenue of only 0.184 billion yuan in the third quarter, a 65.93% year-on-year decrease. The announcement indicated that the decline in this category's sales was mainly due to the decrease in sales of products like Huoxiang Zhengqi Oral Liquid and Tailuo during the reporting period. Even though sales of products such as Sijunzi Compound, Wuling Tablets, and Huoxiang Zhengqi Capsules increased, they did not provide effective performance support given the large base of the primary product Huoxiang Zhengqi Oral Liquid.

In the past two years, the market sales volume of Huoxiang Zhengqi Oral Liquid from Taiji Group has continued to expand. With 626 different production approvals for Huoxiang Zhengqi products on the market, many competitors have increased their investments to compete for product market share.

In May this year, china resources sanjiu medical & pharmaceutical (000999.SZ) released a new product, 999 Huoxiang Zhengqi Oral Liquid in sachets, and henan taloph pharmaceutical stock (600222.SH) promoted the new product Huoxiang Zhengqi Oral Liquid in the southwest region. ysb (09885.HK) also launched its own brand "Happy Pharmacist" Huoxiang Zhengqi Oral Liquid. In addition, tasly pharmaceutical group (600535.SH) is continuously strengthening the marketing activities of its exclusive Huoxiang Zhengqi Pills. Chongqing Taiji Industry is facing challenges to its market position from competitors in this product.

Approval documents for Huoxiang Zhengqi products (Image source: National Medical Products Administration)

In addition to the decline in sales of Chongqing Taiji Huoxiang Zhengqi Oral Liquid, significant decreases were also seen in the revenue of several other product categories. Among them, the revenue from anti-infective drugs decreased by 43.13% compared to the same period last year, revenue from nervous system medications decreased by 19.55% compared to the same period last year, revenue from healthcare products decreased by 20.73% compared to the same period last year, revenue from cardiovascular and cerebrovascular medications decreased by 26.14% compared to the same period last year, and revenue from antitumor and immunomodulatory drugs decreased by 8.06% compared to the same period last year.