Under the background of centralized procurement, companies with complete product lines, brand recognition, and excellent services are more competitive. Our company's three major product lines for joints, spine, and sports medicine were all awarded contracts, with competitively advantageous prices, and will continue to increase our market share. At the 2024 interim performance conference held on September 2, the chairman of Chunli Medical (688236.SH), Shi Wenling, said.

However, even though winning the bid has increased market share, the decline in product prices has led to a significant drop in Chunli Medical's performance in the first half of the year.

During the reporting period, Chunli Medical achieved a revenue of 0.38 billion yuan, a year-on-year decrease of 29.70%. The net profit attributable to the parent company and the non-net profit attributable to the parent company were 79.0261 million yuan and 65.915 million yuan, a year-on-year decrease of 37.32% and 40.25%, respectively.

Regarding the main reasons for the decline in revenue and net income, Chunli Medical stated, 'It is due to the impact of the implementation of the national high-value consumables volume-based procurement, which led to a decline in the selling price of related products.' At the earnings conference, a reporter from the Science and Technology Innovation Board Daily further asked Shi Wenling of Chunli Medical what measures the company will take to cope with the impact of centralized procurement in the future, but no response was given.

According to the information, Chunli Medical is mainly engaged in the research, development, production, and sales of implantable orthopedic medical devices, including joint prosthesis products, spinal implant products, sports medicine products, trauma products, and orthopedic surgical instruments.

In recent years, Chunli Medical has been selected for multiple products in different fields as centralized procurement continues its development.

In the field of spinal surgery, Chunli Medical submitted 8 product categories in the centralized procurement of spinal consumables organized by the country in 2023, all of which were successfully bid and are currently being implemented in various provinces. In the field of sports medicine, in November 2023, the centralized procurement of artificial crystal and sports medicine consumables organized by the country was open for bidding in Tianjin, and Chunli Medical's sports medicine products were successfully bid.

In addition, in May of this year, the centralized procurement of artificial joints in the field of joint surgery continued in Tianjin, and Chunli Medical's three product systems for hip joints and the entire knee joint system were successfully bid.

The reporters from "Star Board Daily" found that in the case of poor performance, Chunli Medical also joined the "cost reduction and efficiency enhancement" team. In the first half of the year, Chunli Medical's sales expenses were 0.111 billion yuan, a decrease of 33.20% year-on-year, and research and development expenses were 67.6594 million yuan, a decrease of 9.27% year-on-year. The number of R&D personnel decreased from 462 in the same period last year to 381, a decrease of 17.53%.

In fact, Chunli Medical's overall turnover capability is also declining. As of the end of the first half of 2024, the total book value of Chunli Medical's inventory was 0.52 billion yuan, an increase of 19.77% over the initial balance of 0.434 billion yuan, of which inventory of goods reached 0.187 billion yuan, an increase of 25.26% year-on-year.

Against this background, Chunli Medical announced that except for the supplementary flow project, the scheduled availability of the 4 projects funded by IPO has been delayed.

Among them, the "Comprehensive Construction Project of Orthopedic Implants and Supporting Materials" has been delayed from August 2024 to December 2026, and the "Research and Development Center Construction Project" and "Marketing Network Construction Project" have been delayed from December 2024 to December 2026.

The reason given by Chunli Medical for the delay is, "Due to the uncertainty of macro factors such as politics and economy at home and abroad, and based on the principles of cost control and risk prevention, the company is more cautious in its investment and expenditure in the funded projects." When the reporter from "Star Board Daily" asked about Chunli Medical's current capacity utilization rate, there was no response as well until the end of the earnings conference.