Review of Huluwa Board Management in 2020.

The business review of Huluwa (605 199) Board of Directors in the first half of 2020 is as follows:

I. Discussion and analysis of operating conditions

In the first half of 2020, the international economic environment is complex, and the supervision of the domestic pharmaceutical industry continues to become stricter, and the competition pattern of the pharmaceutical industry is facing great challenges. Under the leadership of the board of directors, the company continued to focus on technological innovation and strengthening internal management, do a solid job in production, operation and management, steadily promote the development of its main business and improve its management system. In the first half of 2020, the company realized an operating income of 575,553 yuan 159.00 yuan, a decrease of 5.77% compared with the same period of last year; The net profit attributable to the owners of the parent company was 42,565,438+03,468.06 yuan, up 4.60% year-on-year.

During the reporting period, the company focused on the following work:

1, research and development, and intensify product research and development.

2. Strengthen production and quality management, and fully guarantee product quality.

The company adheres to the market demand-oriented, reasonably arranges production plans and organizes production to ensure the timely completion of production tasks; Strengthen the supervision and management of the whole production process to ensure product quality; Strictly implement GMP related requirements and standardize production site management; Strengthen the basic management of safety production and environmental protection, regularly check and calibrate production equipment to ensure the stable, effective and reliable operation of the company's fire protection and environmental protection system; Implement WCM lean production, strengthen the training and assessment of relevant personnel, comprehensively improve the controllability and stability of product production and quality, and ensure the smooth and orderly production operation. The company regularly carries out safety production education activities, organizes safety training, fire emergency drills and other activities to enhance the safety production awareness of all employees and ensure safety production without accidents.

3. In terms of sales, the company continued to strengthen the construction of marketing network system.

Accelerate the improvement of four sales systems: retail chain marketing system, medical terminal marketing system, mainstream commercial distribution system and online e-commerce sales system.

Promote the cooperation between the national top 100 chain stores and regional leading chain stores, accelerate the development of graded hospitals and primary medical institutions, establish a mainstream commercial distribution system, realize the distribution of single pharmacies and clinics, open up online sales channels, and meet the new needs of consumers' purchasing behavior.

Multi-channel, multi-initiative and three-dimensional promotion of enterprise and product brand building: focusing on the project of Huluwa children's category management center in retail stores for sellers; Popularization of online and offline children's respiratory and digestive system professional knowledge for doctors and shop assistants; Facing the public, using the Internet, professional journals and new media to promote the image dissemination of children's professional brands and leading products.

4. Continue to standardize development, implement lean production, realize refined production management, and further improve the management level of enterprises.

Continue to strengthen internal management, improve operation quality and implement lean production; Strictly grasp the management of strategy, assessment, standardization, cost, risk, safety and environmental protection to improve management efficiency. The company has established an internal management system with standardized governance, clear division of labor, unified rights and responsibilities and high efficiency. By improving the management system, strict budget, strengthening accounting and accurate cost control, the company has improved the internal restraint mechanism, reduced the company's operating costs and achieved cost reduction and efficiency improvement; The board of directors, the board of supervisors and senior management of the company are diligent and conscientious, and have expressed professional opinions and opinions on the company's business development, management and major issues, effectively safeguarding the interests of all shareholders, especially minority shareholders.

Second, possible risks

1, raw material price fluctuation risk

There are dozens of Chinese herbal medicines such as honeysuckle, Ophiopogon japonicus and Fritillaria cirrhosa. , mainly Chinese herbal medicines with a large planting area on the market, and the market supply is relatively sufficient. However, most Chinese herbal medicines grow naturally and are collected seasonally, and the distribution of producing areas has obvious regional characteristics. Their yield and quality will be affected by natural climate, soil conditions and processing methods of picking, drying and slicing, and their prices will fluctuate easily. At the same time, the raw materials needed by the company to produce chemicals are affected by market demand, environmental protection and other factors, and the price will fluctuate.

2. Risk of intensified market competition

At present, the company has formed a product system featuring pediatric drug research and development, with Chinese patent medicines and chemical preparations developed simultaneously, covering common diseases such as respiratory system, digestive system and systemic anti-infection. Influenced by factors such as encouraging the development of pharmaceutical industry, especially pediatric drugs, increasing public health investment, aging population, etc., the demand scale of pharmaceutical market in China is constantly expanding, and more enterprises will enter the field of pediatric drugs and other market areas where the company's products are located. The investment and production of enterprises in existing industries in R&D will also increase. The listing of R&D and new drugs may increase product competition, and the company is facing the pressure of intensified industry competition. If the company can't respond to market competition in time and effectively, it will face the risk of slowing growth and declining market share.

3, product bidding risk

According to the relevant provisions such as "Work Standard for Centralized Drug Purchase in Medical Institutions" and "Measures for Supervision and Management of Centralized Drug Purchase", China has now formed a centralized drug purchase model with provinces, autonomous regions and municipalities directly under the Central Government as the unit, with unified organization, platform and supervision. Non-profit medical institutions and state-owned enterprises (including state-owned holding enterprises) organized by the people's governments at or above the county level must participate in centralized procurement. Pharmaceutical manufacturing enterprises participate in centralized drug procurement bidding, and relevant departments will evaluate them according to a number of standards, including bidding price, product quality, qualification of manufacturing enterprises, clinical effect, after-sales service and so on. According to the Notice of the former State Health Planning Commission on Further Strengthening Children's Drug Use in Medical Institutions, all localities can reasonably determine the scope, specific dosage forms and specifications of drugs in their own regions by referring to the selection principles of generic drugs and model drugs issued by industry associations and academic groups entrusted by the former State Health Planning Commission, and directly purchase them online.

Part of the company's drugs need to participate in the centralized procurement bidding or online procurement of drugs in various provinces, autonomous regions and municipalities directly under the Central Government. After winning the bid, they will sign sales contracts with regional distributors or distributors and sell them to medical terminals through regional distributors or distributors. In the future, if the company's products fail to win the bid in centralized procurement bidding or hanging in the network in various regions, or the bid price drops sharply, it may have an adverse impact on the company's future performance.

4. The risk of drug price reduction

The reform of drug price formation mechanism has great influence on drug price. According to the "Notice on Printing and Distributing Opinions on Promoting Drug Price Reform" (904 [20 15]), starting from June 20 15 1 day, except narcotic drugs and psychotropic drugs of the first category, the original government pricing will be cancelled ... 2065438+February 9, 2007, The General Office of the State Council issued "Several Opinions on Further Reforming and Perfecting the Drug Production and Circulation Policy" (Guo Ban Fa [2065 438+07] 13), proposing that public hospitals should be allowed to purchase drugs with quantity and budget in the provincial centralized drug purchasing platform in areas where the medical insurance payment mode reform has been fully implemented or the medical insurance drug payment standard has been formulated, which is the first time in China.

At the end of 20 18, the state launched a pilot procurement with quantity in four municipalities directly under the central government, namely Beijing, Shanghai, Tianjin and Chongqing, and seven key cities, namely Dalian, Xiamen, Xi, Guangzhou, Shenzhen, Chengdu and Shenyang, with the main objectives of reducing the purchase price of drugs, reducing transaction costs and guiding medical institutions to use drugs rationally. Subsequently, the capacity was expanded several times, and the purchase policy with quantity was gradually extended to the whole country, and the drugs included in the scope were further increased. Judging from the results of previous successful bids, the prices of selected drugs have dropped significantly. The policy of purchasing with quantity is a major reform in the field of drug circulation and a weather vane for the reform of China's medical and health system. If the scope of purchasing pilot drugs with quantity is further expanded, due to the purchasing policy with quantity and its price linkage, the prices of some products of the company may be greatly reduced. At the same time, if the company fails to win the bid, it may adversely affect the company's profitability.

5. The risk of further increase in marketing expenses leading to decline in profitability.

With the policy reform of pharmaceutical circulation industry, in order to adapt to the reform direction of "two-vote system" and the needs of the company's refined marketing management, in recent years, the company has adjusted the supporting promotion sales model in time according to the implementation progress of various provinces and cities, and actively promoted the dealer model.

In this mode, the company leads the professional promotion of products and bears the corresponding expenses, which makes the marketing expenses increase year by year during the reporting period.

In the future, with the expansion of the company's business scale and the listing of new products, the company's professional promotion expenses will further increase. If the company's products can't be effectively promoted, or the sales growth scale can't absorb the increase in marketing expenses, it will have a certain adverse impact on the company's profitability and future development.

6, consistency evaluation policy risk

According to the Opinions on Consistency Evaluation of Generic Drugs' Quality and Efficacy issued by the General Office of the State Council in March 2065438+2006 and related regulations, other generic drugs approved for listing before the implementation of the new registration classification of chemicals should, in principle, complete the consistency evaluation of the same varieties of other pharmaceutical manufacturers within 3 years after the first variety has passed the consistency evaluation; If it is not completed within the time limit, it will not be registered again; If there are more than three pharmaceutical manufacturers of the same variety that have passed the consistency evaluation, the varieties that have not passed the consistency evaluation will no longer be selected in the centralized drug procurement. At present, due to the high cost of consistency evaluation and the late introduction of the operating rules for consistency evaluation of injection varieties, the overall progress of industrial enterprises is less than expected. At the same time, because some products belong to "three changes" such as changing specifications, dosage forms and salt bases, it is difficult to determine reference preparations, and some products belong to compound oral solid preparations, which contain a variety of pharmaceutical ingredients, which makes it difficult to evaluate consistency. And the varieties that passed the consistency evaluation are still relatively few.

The company is increasing investment to evaluate the consistency of chemicals that are mainly sold at present and have market potential. However, consistency evaluation will increase the company's operating costs. If the company's main chemicals fail to pass the consistency evaluation, or the passing time is obviously later than that of other enterprises, or the drug consistency evaluation requirements are put forward in the centralized procurement of public hospitals, it will adversely affect the sales of the company's drugs in the centralized procurement of public hospitals or the re-registration of the drug approval number in the future, thus adversely affecting the company's operating performance.

7, COVID-19 epidemic risk.

The COVID-19 epidemic since the beginning of 2020 has had a certain impact on the social and economic operation of China and even the whole world. The company's sales of respiratory drugs account for a relatively high proportion. This time, COVID-19 was mainly transmitted through respiratory tract, accompanied by influenza, which stimulated the market demand of the company's drugs to some extent. Since the outbreak of the epidemic, the state and some local governments have successively issued prevention and control programs for COVID-19, some of which involve companies selling drugs, which has improved the visibility of companies and drugs. At the same time, due to terminal channel sales restrictions, inconvenient promotion, population flow and logistics restrictions, the company's product sales will also be adversely affected. Overall, the epidemic has limited impact on the company's sales in the short term. At present, the company's production bases have all resumed work, and there is a certain safety stock. This epidemic will not have a significant adverse impact on the company's production and operation in the short term.

However, if the epidemic lasts too long, it may cause the supply of raw materials in the upstream to be tight, which will increase the purchase price of the company and have a certain negative impact on the company's future production and operation. At the same time, if the macro-economy is seriously adversely affected by the spread of the epidemic, it may affect the market consumption capacity and the development of the company's marketing activities, thus adversely affecting the company's product sales.

Three. Analysis of core competitiveness during the reporting period

(1) Advantages of product categories and dosage forms

The company is characterized by the development of pediatric drugs mainly based on Chinese patent medicines, and the rapid growth of chemical drugs, with respiratory system drugs, digestive system drugs and systemic anti-infective drugs as the main treatment areas. Up to now, the company has 295 drug approval numbers, among which Ji Hua tablets and Nimesulide sustained-release capsules are exclusive dosage forms, and Xiaoer Feire Kechuan granules (4g per bag), Changyanning capsules (0.3g per capsule) and Changyanning granules (2g per bag) are exclusive specifications.

In the field of pediatric drugs, the company has high-quality oral pediatric drugs such as Xiaoer Feire Kechuan Granule, Changyanning Granule, Cefexoxime Dispersible Tablet, Xiaoer Paracetamol, Xiaoer Zhike Syrup, Xiaoer Qingyan Granule, covering children's respiratory system drugs, digestive system drugs and systemic anti-infection drugs, forming a relatively complete pediatric drug product system. According to the characteristics of drugs and the needs of different age groups, the company has invested in the construction of 16 kinds of pharmaceutical preparation production lines, such as tablets, capsules, granules, soft capsules, dry suspensions, oral liquids, powders, pills, powder injections, freeze-dried powder injections and tinctures. It is a pharmaceutical enterprise with relatively complete dosage forms in China.

The company has more drugs included in the national essential drugs list and the national medical insurance list, as well as a relatively complete product system with rich dosage forms. The company can adjust products and product combinations in real time according to market demand, give full play to the scale advantages of production, sales and brand promotion, and meet the needs of the market and patients to the maximum extent.

(B) product quality advantages

Drug quality is an important cornerstone of the company's operation and the foundation of its long-term development. Since its establishment, the company has taken drug quality as the top priority of enterprise management, established a quality control center to fully control product quality, established and strictly implemented a sound quality management system, and implemented strict inspection procedures from supplier selection, raw material inspection, product production process inspection to finished product inspection and delivery. In addition to organizing production and quality control according to GMP requirements, the company has also established the ICHQ 10 system of FDA of the United States, passed the international ISO900 1 quality management system certification, and established a quality management system and control flow covering multiple departments and the whole product process. Under the condition of standardized production technology, through the mature application of intelligent manufacturing technology system and equipment, digital, information and automatic production can be realized and recorded online.

Chinese patent medicine accounts for a relatively high proportion of the company's products. The main Chinese patent medicine products meet the national drug quality standards, and at the same time, through research and development or secondary development process and quality control, a quality system higher than the national standards has been formed. The company strictly implements the quality standards of drug production, devotes itself to the standardized production of Chinese patent medicines, ensures the standardization and flow of drug production, and realizes the organic unity of drug quality, safety and effectiveness.

(C) product development advantages

Since its establishment, the company has adhered to the goal of modernization of traditional Chinese medicine, and used modern technology, equipment and innovative paths to promote the standardization of the company's core proprietary Chinese medicines. At present, the company's R&D center and Huluwa Technology are respectively responsible for external cooperation R&D and independent R&D, and have established a research and development system with internal R&D strength as the core and a first-class drug research institution in the United Nations. The company encourages and supports the research and development of new drugs and technological innovation, and the proportion of R&D investment increases year by year. The company attaches great importance to the cultivation of talent echelon, and introduces all kinds of talents through cooperation with universities and research institutes to enrich the strength of R&D.

In recent years, while independently researching and developing, the company has established long-term cooperation mechanisms with well-known domestic R&D institutions such as Tianjin Pharmaceutical Research Institute Co., Ltd., Shandong Academy of Pharmaceutical Sciences, Shenyang Pharmaceutical University and Liaoning University of Traditional Chinese Medicine, as well as well as well-known scholars in the fields of pediatrics and Chinese patent medicines, so as to track the cutting-edge research results of the industry in time and develop and commercialize new products. At present, the company has established Hainan Provincial Chinese Medicine Preparation Engineering Technology Research Center and Academician Liu Changxiao's workstation, and obtained the project approval from Hainan Provincial Postdoctoral Research Center, effectively enhancing the company's research and development strength in pediatric drugs and proprietary Chinese medicines.

At present, the company has 73 intellectual property patents. Since 20 10, the company has been continuously recognized as a high-tech enterprise, and has been elected as the vice chairman of the Pediatric Branch of Chinese Medicine Association for two consecutive years. With the continuous innovation of science and technology, the competitiveness of science and technology has been transformed into market competitiveness, which has gradually established the company's leading position in the field of children's respiratory diseases treatment.

(D) Advantages of marketing network

After nearly ten years of development, the company has established a marketing network system covering major provinces and cities in China. At present, according to different market terminals, the company has set up seven divisions, including OTC Division, Xinfeile Division, Medical Institution Division, Channel Control Division, Huluba Division, Special Zone Division and Yizhenyuan Division. At present, the products have covered more than 2,000 sales terminals in cities, towns and rural areas, and more than 3,500 second-class medical institutions. There are more than 9,600 township hospitals and community service centers, more than 200,000 clinics, health centers and service stations, and more than 6,543.8+0.5 million chain pharmacies, forming a complete sales team and service system covering hospitals, primary medical institutions, individual clinics, retail chains and single pharmacies. The company has established long-term cooperation mechanisms with well-known domestic pharmacy chain enterprises such as Sinopharm Holding Pharmacy Co., Ltd., Dashenlin (603233) Pharmaceutical Group Co., Ltd., Yifeng Pharmacy Co., Ltd., Laobaixing Pharmacy Chain Co., Ltd. and Yinxintang (002727) Pharmaceutical Group Co., Ltd., and achieved deep coverage of the national market through well-known chain enterprises.

Based on the grass-roots market, the company vigorously develops the third terminal market. Through cooperation with well-known industry associations such as Pediatric Branch of Chinese Medicine Association and China Medical Education Association, Huluwa Management Business School was established to comprehensively educate and train primary medical staff, company distributors and cooperative retail terminal clerks, improve the safety and standardized drug use level of primary doctors and retail pharmacies, and establish an all-round marketing network covering key municipal hospitals, mainstream OTC retail chains and primary medical institutions. The strong sales network and marketing system ensure that the company responds to the market demand in time and ensures that the company's follow-up products can be put on the market quickly.

(E) Brand advantage

Brand advantage is one of the core competitiveness of the company. While strictly controlling quality, the company puts brand building in equally important work. Starting from 20 15, the company launched the brand strategy, aiming at building the world brand of China ethnic medicine, and taking "healthy China baby" as the corporate mission, striving to build the brand image of China children's health guardian. In terms of brand building, the company adheres to the road of professional promotion, joins hands with domestic mainstream media, and builds three series of brands, namely "Huluwa", "Huluwa Dad" and "Huluwa Mom" through image positioning, which are closely integrated with the company's existing development strategies of pediatrics, adult medicine and gynecology.

After more than ten years of development, the company has a strong comprehensive strength in the field of pediatric pharmacy, and now it has become the vice-president unit of China Chinese Medicine Association, the vice-president unit of China Medical Materials Association, the vice-president unit of Pediatric Branch of Chinese Medicine Association, and the vice-president unit of China Chinese Medicine Association's Child Health Care and Integrated Chinese and Western Medicine Research Committee. In 20 16 and 20 17, the company's Xiaoer Feire Kechuan Granule and Changyanning Capsule were selected into the 28th and 29th "China Medicine-Brand List" sponsored by Southern Institute of Pharmaceutical Economy. According to the statistics of China OTC Association, the company ranked 24th in China OTC brand list in 20 18. 20 17, 20 18 and 20 19 were selected as the representative brands of children's medicines in CCTV- 1 Brand Cultivation of Great Powers for three consecutive years, and their brand awareness and influence were significantly improved.

Through the company's comprehensive control of product quality, the continuous improvement of brand influence and the rapid development of product sales, the "Huluwa" brand has gained high visibility and reputation among the industry and consumers, which is one of the important advantages for the company to participate in industry competition and achieve sustainable development.