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on august 23, lepu medical released its semi-annual report: revenue in the first half of 2024 was 3.38 billion yuan, a year-on-year decrease of 21.3%; net profit was less than 700 million yuan, a year-on-year decrease of 27.5%.

this is far from the company's previous expectations. in april this year, when lepu medical released its 2023 annual report, the company's management made an optimistic forecast for 2024: full-year revenue will reach 8.5 billion yuan to 9 billion yuan, and net profit will reach 2 billion yuan to 2.25 billion yuan.now that half of the time has passed, only one-third of the goal has been achieved.

on august 24, lepu medical held an earnings conference. the company's chairman pu zhongjie apologized to investors twice and explained that emergency products were not considered in the first quarter of this year.the growth rates of revenue from each business segment have recovered, so the full-year performance forecast was relatively optimistic at that time.

lepu explains the reasons for the decline in revenue in the first half of the yearit blamed the sluggish retail channels and made it clear that problems arose in the sales of generic drugs under the "four same policies."

pharmaceutical retail revenue declines

lepu medical's pharmaceutical sector is mainly for cardiovascular disease drugs, including preparations (generic drugs) and apis. in the first half of this year, the company's pharmaceutical sector achieved revenue of 1.13 billion yuan, a year-on-year decrease of nearly 30%. among them, the api segment did not increase or decrease; the operating income of the preparation segment, which accounts for the majority, decreased by 33% year-on-year.

the company believes that the decline in performance is due to the promotion of the "four same policies" for drugs in the second quarter, which hindered the retail delivery of drugs.

lepu medical has two flagship generic drugs: clopidogrel and atorvastatin, one targeting sanofi's "plavix" and the other targeting pfizer's "lipitor", which together accounted for more than 30% of the company's total revenue. after the implementation of national centralized procurement, the two drugs were included in the centralized procurement and became mainstream varieties in china.

the company said that in the five years since the two drugs underwent centralized procurement, the company has been maintaining the stability of its overall business profits by focusing on the out-of-hospital market.but now a new situation has emerged in the pharmacy channel.

lepu's atorvastatin is sold under the trade name of ulipin, which was included in the centralized procurement after a price reduction of more than 90%. according to the company's performance briefing, ulipin is widely used in hospitals and has a relatively low price. however, due to loopholes in the company's channel control, channel diversion occurred."some channel dealers purchase goods from hospital channels and sell them at e-commerce terminals," causing the prices at e-commerce terminals to be lower than the company's e-commerce guidance prices, and drug stores could no longer sell their drugs.

moreover, the "four same policies" implemented in the first half of this yearthe price difference between drugs of different specifications has been eliminated, and it is difficult for pharmaceutical companies to differentiate the prices of products purchased through centralized procurement.the interests of retail pharmacies were affected. coupled with the impact of parallel trading, the originally stable retail channels could no longer withstand it.

the health knowledge bureau found that the phenomenon mentioned by lepu management still exists today: on some food delivery platforms, the price difference of youliping is huge.taking the 20mg/7 specification as an example, the lowest price is 3.6 yuan and the highest bid is over 30 yuan.

some industry insiders have told the health knowledge bureau that for pharmaceutical companies, the price of takeout is already difficult to control. now, not only is this price recognized by the state, but it is also used as the basis for regulating overall drug prices, which has doubled the pressure on many companies.

lepu said: the company is strictly controlling the channels, so that e-commerce channels cannot get drugs from the hospital channels, which will affect the revenue by about 50 million yuan; at the same time, the decline in the prosperity of drug stores requires the digestion of inventory, which will affect the revenue by about 300 million yuan. the company said,now the price of youliping e-commerce has recovered, with an increase of 20%-30%. it is estimated that it will take another quarter to digest the inventory at the retail end.in the future, the pharmaceutical sector may only be able to recover to around 60%-70% of the revenue in the same period.

overall business contraction

compared with pharmaceuticals, lepu medical's main force is still in the medical device sector. in the first half of this year, the overall revenue of this segment also declined, with operating income of 1.75 billion yuan, a year-on-year decrease of 13%.

specifically,the core business of cardiovascular implant intervention performed best, with revenue of 1.15 billion yuan, a year-on-year increase of nearly 17%.among them, the coronary artery intervention business and structural heart disease business increased by 10.2% and 53.6% year-on-year respectively, with a total revenue of approximately 1.1 billion yuan.

in the first half of this year, the company's several innovative products in the field of cardiovascular implantation were approved for marketing, but the performance of these products varied.

a particularly eye-catching development is the biodegradable occluder in the field of structural heart disease.the company disclosed that the pfo interventional closure surgery corresponding to this product is aimed at migraine patients, who have a large population base and a rapid growth in the number of surgeries, exceeding 60,000 cases last year, a year-on-year increase of 50%. the company is also looking for bd partners to promote this product overseas.

another new product, the sonic balloon, was just launched in january this year, but it was slow to enter hospitals and failed to take the lead. currently, the sonic balloon has signed agency contracts with more than 2,000 distributors.because the product price is lower than similar imported products and has a greater competitive advantage, lepu is still very confident in market promotion.

the company's goal for 2025 is: the structural heart disease business can still maintain a high growth on a high base, and the overall revenue of the two segments will achieve an increase of more than 20%.

among lepu's other two businesses, revenue from surgical anesthesia business fell 3.87% year-on-year; in vitro diagnostics fell 57.15% in the first half of this year due to the high base during the epidemic. the company said:"surgery is expected to grow by 10%-15% throughout the year, and it seems achievable at present."

written by li ao

editor: jiang yunjiating

operation｜valley

illustration｜visual china