Renhe Pharmaceutical’s dual-drive of medicine and health care achieved remarkable results in the second quarter

Renhe Pharmaceutical (000650) released its 2024 semi-annual report on the evening of August 27. During the reporting period, the company achieved operating income of 2.364 billion yuan and net profit attributable to shareholders of listed companies of 337 million yuan. It is particularly noteworthy that from a single quarter perspective, Renhe Pharmaceutical’s net profit after deducting non-recurring items in the second quarter of 2024 was 151 million yuan, achieving double-digit growth both year-on-year and quarter-on-quarter.

According to Renhe Pharmaceutical, the company’s operating income is mainly composed of pharmaceuticals and health products, among which the pharmaceutical business is mainly over-the-counter OTC products, accounting for about 80% of the company’s total pharmaceutical revenue. After years of development, Renhe Pharmaceutical has focused on the development of ophthalmology and respiratory medicine on the basis of consolidating and strengthening gynecology, pediatrics and other businesses, and has formed a series of Shining Ophthalmology brands, Renhe Kelike brand antipyretic and cold series, as well as heat-clearing and detoxifying, cough-relieving and phlegm-reducing, cardiovascular and cerebrovascular, and tonic drugs. Production and sales of many categories and specifications.

Zhangshu City, Jiangxi Province is the location of Renhe Pharmaceuticals and is also a distribution center for traditional Chinese medicinal materials in my country, among which the pharmaceutical industry has a history of more than 1,800 years. In February 2024, the “Yaodu” brand declared by Jiangxi Yaodu Zhangshu Pharmaceutical Co., Ltd., a subsidiary of Renhe Pharmaceuticals, was recognized as the third batch of Chinese time-honored brands by five departments, namely the Ministry of Commerce, the Ministry of Culture and Tourism, the State Administration for Market Regulation, the State Intellectual Property Office, and the State Administration of Cultural Heritage. Renhe Pharmaceuticals said that the “Yaodu” brand officially launched at the first Zhangshu Pharmaceutical Fair in 1958 belongs to Jiangxi Yaodu Zhangshu Pharmaceutical Co., Ltd. The company will inherit, explore and promote the traditional Chinese medicine of the motherland, adhere to the traditional pharmaceutical concept of “Zhangbang”, and focus on the inheritance or original prescription modification products such as Dahuoluo Capsules, Qiangli Loquat Capsules, and Yangxue Danggui Granules. In the first half of 2024, the revenue from Chinese medicine products accounted for about 47% of Renhe Pharmaceuticals’ total drug revenue.

Currently, Renhe Pharmaceuticals’ drug research and development is mainly concentrated on large-variety generic drugs and national classic Chinese medicine prescriptions. As of the beginning of 2024, the company’s Erdongtang is in the CDE review stage, and several varieties have completed material benchmark research and are conducting formulation research. In the first half of 2024, Renhe Pharmaceutical’s net cash flow from operating activities was 361 million yuan, a year-on-year increase of 227.62%. The strong cash flow has also become the source of the company’s continued R&D investment.

With the continued growth of healthy consumer demand, health technology is ushering in a wave of innovation and great development. Based on the original private care, food, and health products, Renhe Pharmaceutical’s big health business segment has begun to layout functional cosmetics, skin care and hair care products, detergents and other daily consumer businesses since 2021. By acquiring 7 companies including Shenzhen Sanpu Natural Cosmetics Co., Ltd., the company’s big health product business has been further improved and enriched. In the first half of 2024, Renhe Pharmaceutical’s big health products achieved operating income of 634 million yuan, accounting for 26.81% of the company’s operating income during the period, a year-on-year increase of 5.33%, and the overall gross profit margin of health-related products has also increased.

The health industry, which is entering a period of rapid growth, is also a general trend to integrate with the Internet. According to Renhe, the company’s health products are mainly sold through offline and online channels, with online sales mainly through Tmall, JD.com, Douyin, Vipshop and other major platforms. At the same time, the company has a large space for channel expansion. With the continuous growth of the number of users, the company will further create development space through private domain operations, channel sinking, channel diversification and other means.