On July 12th, Baiyang Pharmaceutical (301015. SZ) officially announced that it has successfully completed the merger and acquisition transaction with Shanghai Baiyang Pharmaceutical Co., Ltd. (hereinafter referred to as "Baiyang Pharmaceutical"), and the business registration and delivery procedures have been successfully completed. Thus, Baiyang Pharmaceutical directly holds 60.199% of Baiyang Pharmaceutical's equity, becoming its controlling shareholder. The financial performance and condition of Baiyang Pharmaceutical will be consolidated into Baiyang Pharmaceutical's financial statements.

Baiyang Pharmaceutical Company Building

According to the announcement, Baiyang Pharmaceutical acquired 60.199% equity of Baiyang Pharmaceutical through cash, with a transaction amount of 880 million yuan. Both Baiyang Pharmaceutical and Baiyang Pharmaceutical are core enterprises under the major shareholder Baiyang Pharmaceutical Group, and have accumulated rich practical experience in the research and development, production, and commercialization of pharmaceutical products. This transaction is not only an important measure for the integration of internal resources within the group, but also a crucial step for Baiyang's transformation and upgrading.

In recent years, Baiyang Pharmaceutical Group has cooperated with research institutions as an "industry investor" to build a platform for the transformation of scientific research achievements, focusing on cultivating source innovation achievements with "first in class" potential and breakthroughs in "bottleneck" technologies. After the transformation and upgrading of Baiyang Pharmaceutical, it will form an ecological synergy with the R&D innovation strategy of its major shareholder Baiyang Pharmaceutical Group.

Baiyang Pharmaceutical is a professional health brand commercialization platform that has long focused on empowering the commercialization of health brands. Not only has it developed multiple well-known products such as imported calcium brand Diqiao, chemical digestive disorder brand Bite, and medical grade whey protein brand Newt Shuma, but it has also formed commercial cooperation with multinational pharmaceutical companies such as AstraZeneca, Astellas, and Jetbelin at different levels. With its strong brand advantage, Baiyang Pharmaceutical has achieved excellent performance, achieving a revenue of 7.564 billion yuan and a net profit attributable to the parent company of 656 million yuan in 2023, a year-on-year increase of 29.55%. In the first quarter of 2024, the company achieved a net profit attributable to the parent company of 166 million yuan, a year-on-year increase of 35.60%.

Baiyang Pharmaceutical, as a pharmaceutical manufacturer focusing on the research, development and production of modernization of traditional Chinese medicine and slow and controlled release preparations, its core product Fuzheng Huayu Tablets (capsules) is a national medical insurance and base drug variety. traditional Chinese patent medicines and simple preparations in the field of liver disease, which has been approved by FDA to complete phase II clinical trials in the United States, occupies a leading position in the field of anti liver fibrosis, with annual sales of nearly 500 million yuan. Driven by the strategy of "double anti" therapy for hepatitis B, the compound growth rate of strengthening the body and removing blood stasis has reached 15% in the past three years. With the continuous improvement of the treatment rate of hepatitis B and the continuous verification and recognition of the effect of "double anti" treatment in clinical practice, the strengthening and removing stasis is expected to usher in a broader market space.

Modern R&D and production base for traditional Chinese medicine

In addition, Baiyang Pharmaceutical's technical strength in the field of sustained-release formulations also has barriers. Its once daily hypoglycemic drug metformin hydrochloride, Nida, is the first approved osmotic pump controlled release form of metformin in China and entered the national medical insurance catalog in 2023. It is currently in the market cultivation stage. Thanks to the market performance of its core products, Baiyang Pharmaceutical's operating revenue in 2022 and 2023 were 635 million yuan and 760 million yuan, respectively, with net profits reaching 109 million yuan and 135 million yuan, respectively.

High end slow-release formulation R&D and manufacturing base

After this acquisition, Baiyang Pharmaceutical will rely on Baiyang Pharmaceutical's professional commercialization capabilities and comprehensive marketing network to further enhance the market share of its core products and maximize the commercial value of its products. At the same time, Baiyang Pharmaceutical has further expanded its pharmaceutical manufacturing market, enhancing the company's overall market competitiveness and sustainable development capabilities, and creating greater value for shareholders.

This milestone merger not only enriches the product structure of Baiyang Pharmaceutical, but also significantly extends its industrial chain layout. Baiyang Pharmaceutical will upgrade from a pharmaceutical commercialization platform to a pharmaceutical industrialization platform that supports source innovation. In the future, as the innovative products incubated by the group gradually transform and land from the research and development stage, the industrial value of Baiyang Pharmaceutical will be reflected, and there will be opportunities to undertake its production, manufacturing, and commercial operation, accelerate the application of medical innovation achievements in clinical practice, and benefit patients.