On December 4, the Financial Association reported (by journalist Zhang Liangde) that one of the leading companies in traditional Chinese medicine plaster agents, Henan Lingrui Pharmaceutical (600285.SH), has begun to expand its business into the innovative chemical drug market. The company plans to acquire 100% equity of Yingu Pharmaceutical Co., Ltd. (shortened to 'Yingu Pharmaceutical') for 0.782 billion yuan.

Henan Lingrui Pharmaceutical announced this evening that the company signed a 'Letter of Intent for Acquisition' with Yingu Holding Group Co., Ltd. (shortened to 'Yingu Group') and shareholder Wang Wenjun, planning to use its own funds to purchase 100% equity of Yingu Pharmaceutical. The company preliminarily estimates that the valuation of the target company does not exceed 0.782 billion yuan, and this transaction does not constitute a significant asset reorganization.

This acquisition marks Henan Lingrui Pharmaceutical's exit from its traditional strength in Chinese patent medicine and plaster agents, entering the innovative chemical drug market. Regarding this acquisition, Henan Lingrui Pharmaceutical stated that the company is actively exploring strategic xinxingchanye and continuously optimizing its asset structure. This transaction aligns with the company's overall strategic planning and is beneficial for expanding its business field.

Yingu Pharmaceutical was established in 2007 and is an innovative pharmaceutical company focusing on the research and development of chemical drugs (including innovative and generic drugs) guided by clinical needs. It integrates innovative drug research, raw material synthesis, formulation production, and pharmaceutical sales. It is recognized as a national high-tech enterprise, a gazelle enterprise, a 'specialized, special and new' small and medium enterprise in Peking, and a key national project enterprise for major new drug creation.

Yingu Pharmaceutical's product sales mainly consist of prescription drugs from hospitals. The company's direct academic promotion model covers nearly a thousand hospitals, while its agent-based promotion model covers thousands of hospitals. According to data from Moshen Medicine (formerly Yaorongyun), sales in hospitals nationwide for Yingu Pharmaceutical have increased year by year from 0.179 billion yuan in 2020 to 0.412 billion yuan in 2023, with revenue of 0.191 billion yuan in the first half of 2024, a decline of 13% compared to the same period last year. The company's products have a small sales proportion in retail pharmacies and online pharmacies, with retail pharmacy sales in 2023 amounting to 7.9567 million yuan and online pharmacy sales at 5.8639 million yuan.

Yingu Pharmaceutical has a first-class innovative drug, Benring Quinuclidine Bromide Nasal Spray (brand name: Biliting). This drug is the first high-selective anticholinergic receptor antagonist in China and also has the domestic first generic product, Salmon Calcitonin Injection (brand name: Gutaining), and Salmon Calcitonin Nasal Spray (brand name: Jin'erli); another product is Inhalation Ammonium Bromide Solution (brand name: Lixichang).

Data from Moshen Medicine (formerly Yaorongyun) shows that currently, Yingu Pharmaceutical's top product is Salmon Calcitonin Nasal Spray, which accounts for approximately 70% of the company's total revenue. The sales of the other three varieties also exceed 10 million yuan each. Among them, the sales of the first-class innovative drug Benring Quinuclidine Bromide Nasal Spray are growing rapidly after it was launched, with sales in nationwide hospitals (all terminals) reaching 16.5524 million yuan in 2022 and increasing to 46.5346 million yuan in 2023.

The announcement stated that henan lingrui pharmaceutical will pay 10 million yuan to Yin Gu Group and Wang Wenjun as a sincerity deposit for this transaction after the signing of this letter of intent, with all parties aiming to complete the negotiation and signing of formal transaction documents no later than January 15, 2025.

After the completion of this transaction, the symbol company will be included in the company's consolidated financial statements, which will enhance the company's sustainable profitability. However, it should also be noted that henan lingrui pharmaceutical has just launched a stock-based incentive and employee stock ownership plan, and if the acquisition of Yin Gu pharmaceutical proceeds smoothly, the difficulty of achieving the stock incentive unlocking targets set by the company may be significantly reduced.