According to Caixin News on December 4 (Reporter Zhang Liangde), Henan Lingrui Pharmaceutical (600285.SH), a leading enterprise in traditional Chinese medicine plaster preparations, has begun to expand its business into the chemical innovative drug market by planning to acquire all shares of Silver Valley Pharmaceutical Co., Ltd. (referred to as 'Silver Valley Pharmaceutical') for 0.782 billion yuan.

Henan Lingrui Pharmaceutical announced this evening that the company has signed a 'Letter of Intent for Acquisition' with Silver Valley Holdings Group Co., Ltd. (referred to as 'Silver Valley Group') and shareholder Wang Wenjun, planning to use its own funds to purchase 100% of Silver Valley Pharmaceutical's shares. The company preliminarily assesses the valuation of the target company to not exceed 0.782 billion yuan, and this transaction does not constitute a major asset reorganization.

Through this acquisition, Henan Lingrui Pharmaceutical is stepping out of its traditional advantageous businesses of Chinese patent medicine and plaster preparations to enter the chemical innovative drug market. Regarding this acquisition, Henan Lingrui Pharmaceutical stated that the company actively explores strategic new industries and continuously optimizes its asset structure, and this transaction aligns with the overall strategic planning of the company, benefiting its business expansion.

Established in 2007, Silver Valley Pharmaceutical is an innovative pharmaceutical company focused on the research and development of chemical drugs (including innovative and generic drugs) driven by clinical needs, integrating innovative drug research, raw material synthesis, formulation production, and pharmaceutical sales. It is recognized as a national high-tech enterprise, a gazelle enterprise, a 'specialized, special and new' small and medium-sized enterprise in Beijing, and a major new drug creation project enterprise.

Silver Valley Pharmaceutical's product sales are mainly based on hospital prescription drugs, with the company directly promoting its products to nearly a thousand hospitals through its academic promotion model, and additionally covering thousands of hospitals through an agency promotion model. According to Moshan Pharmaceutical (formerly Yao Rongyun), from 2020 to 2023, the nationwide sales amount of Silver Valley Pharmaceutical in hospitals (all terminals) increased year by year, rising from 0.179 billion yuan in 2020 to 0.412 billion yuan in 2023, with revenue of 0.191 billion yuan in the first half of 2024, a decrease of 13% compared to the same period last year. The company's product sales in retail pharmacies and online pharmacies account for a smaller share, with 2023 retail pharmacy sales of 7.9567 million yuan and online pharmacy sales of 5.8639 million yuan.

Silver Valley Pharmaceutical has its class I new drug, Benzyl Quaternary Ammonium Nasal Spray (trade name: Biliting), which is China's first high-selectivity anticholinergic receptor antagonist, along with the first domestic generic drug, Salmon Calcitonin Injection (trade name: Gutaining), and Salmon Calcitonin Nasal Spray (trade name: Jin'erli); additionally, there is an inhalation solution of Ambroxol Hydrochloride (trade name: Lixichang).

According to Moshan Pharmaceutical (formerly Yao Rongyun), currently, Silver Valley Pharmaceutical's top-selling product is Salmon Calcitonin Nasal Spray, accounting for about 70% of the company's total revenue, with the sales of the other three varieties also exceeding ten million yuan. Among them, the company’s class I new drug Benzyl Quaternary Ammonium Nasal Spray has shown rapid growth since its launch, with Moshan Pharmaceutical national hospital (all terminals) data showing sales of 16.5524 million yuan in 2022 and growing to 46.5346 million yuan in 2023.

The announcement stated that henan lingrui pharmaceutical will pay 10 million yuan to Yingu Group and Wang Wenjun as a sincerity deposit for this trade after the signing of this letter of intent, with all parties aiming to complete the negotiation and signing of formal trade documents before January 15, 2025.

After the completion of this trade, the symbol company will be included in the company's consolidated financial statements, which will help enhance the company's sustainable profitability. However, it should also be noted that henan lingrui pharmaceutical has just announced a stock-based incentive and employee stock ownership plan, and if the merger with Yingu Pharmaceutical goes smoothly, the difficulty of achieving the stock-based incentive unlock targets set by the company may significantly decrease.