Sina Finance and economics news recently, Shuangcheng Pharmaceutical (5.450, 0.14, 2.64%) issued a reply notice to the inquiry letter of the annual report in 2019, replying to the problems such as the company's profit and loss alternation, research and development situation, and the deviation between sales expenses and revenue. As a large-scale polypeptide pharmaceutical enterprise in China, three domestic manufacturers of four listed peptide products are double-digit. Combined with the policy reform of the pharmaceutical industry, the product competition pressure is high.

In order to cope with the continuous loss of the main business, on the one hand, the company has increased the consistency evaluation of existing products and overseas distribution, on the other hand, it has promoted the R & D Progress of key varieties, striving to have the application and approval of heavyweight varieties every year within three or five years.

The main products manufacturers are numerous, the competition is fierce, and the profits and losses have been alternated for many years

The main business of Shuangcheng pharmaceutical is specialized in the production, sales and research and development of chemical synthetic peptide drugs. In 2019, the company realized an operating revenue of 347 million yuan, an increase of 2.79% over the same period last year. Among them, the operating revenue of polypeptide products was 114 million yuan, accounting for 32.84% of the total revenue, while that of other products was 214 million yuan, accounting for 61.73%.

There are nearly 100 local polypeptide enterprises in China, whose products are mainly generic drugs. Shuangcheng pharmaceutical industry is a large-scale professional polypeptide pharmaceutical enterprise. The company has rich experience in the research and development, registration and application, production and marketing of chemical synthetic peptide drugs, and has successfully developed four chemical synthetic peptide drugs in the Chinese market. The number of polypeptide preparations was second only to Hanyu Pharmaceutical (6.470, 0.20, 3.19%), Hainan Zhonghe and shengnuo biological, and ranked fourth with Shuanglu Pharmaceutical (13.400, 0.46, 3.55%) and hausen pharmaceutical.

The company's polypeptide drugs mainly include thymosin for injection ("Jitai"), somatostatin for injection, thymopentin for injection, and bivalirudin for injection. It should be noted that the products of domestic polypeptide preparation enterprises are mostly imitations of foreign polypeptide drugs which have passed the patent protection period or have not applied for patents in China. The competition is concentrated on thymopentin, thymopentin, somatostatin and other large polypeptide varieties. At the same time, the domestic peptide product line and dosage form are relatively single, mainly immune and emergency hemostatic drugs, and common lyophilized powder injection and common lyophilized powder injection are widely used Small volume injection dosage form, the industry competition is fierce.

Among the four polypeptide drugs of the company, 3 domestic manufacturers are double-digit, 55 domestic manufacturers of thymopentin, 19 domestic manufacturers of thymopentin and 19 domestic manufacturers of somatostatin. In addition, the company has 3 domestic manufacturers of bevaludine. Among them, the new market of thymus method is relatively concentrated, and the market share of Shuangcheng pharmaceutical industry is not high. According to the data of meinei.com, in 2018, the new sales volume of thymus method for injection in China's public medical institutions was 2.908 billion yuan, the original research saisheng pharmaceutical industry accounted for 50.58% of the market share, and Dioscorea pharmaceutical accounted for 20.78%.

In recent years, the reform and upgrading of the national pharmaceutical industry, the gradual implementation of various policies, the impact on the industry has gradually expanded. The limitation of medical insurance reimbursement of the company's main products leads to the limitation of the use of many patients and the difficulty of product market expansion. At the same time, seven new companies of the same type have been approved for listing in recent two years, which has intensified the market competition.

The company's products are under pressure at both the sales end and the cost side, resulting in the compression of profit space. On the one hand, the fierce market competition combined with the state's key monitoring of individual large varieties under the policy guidance of medical insurance cost control and fee reduction, the sales of traditional products represented by thymopentin and Thymosin showed a flat or obvious downward trend. On the other hand, with the further standardized development of the pharmaceutical industry and the strengthening of environmental protection laws and regulations, the sales of traditional products have shown a flat or obvious downward trend The price of raw and auxiliary materials purchased by the company has increased to varying degrees, which also leads to the increase of production costs.

Under the condition of continuous growth of the company's operating income, the company has made losses for four consecutive years after deducting non attributable net profit. From 2015 to 2019, the company's net profit deducted from non parent company was -392 million yuan, - 47.0256 million yuan, - 80.7336 million yuan and - 42.9122 million yuan respectively. In response to the inquiry letter, the company said that in the past four years, due to policy reasons, the company's new product launch was slow, and the old product was facing greater competition pressure. In addition, Ningbo Shuangcheng had not yet put into production a large amount of fixed cost amortization, resulting in the company's net profit continued to be negative after deducting non-profit.