Public-private reform deepens outreach and deepens high-end medical value

The recently released annual report data shows that the medical service industry, with a growth rate of 44%, has become the fastest growing sub-sector in the pharmaceutical industry in 2010. Both Oerlikon Eyecare and Tongze Medical have lived up to the expectations. Last year, operating income increased by 42.61% and 28.19% respectively, and profits increased by 43.73% and 121.81%, respectively.

Some industry analysts pointed out that the good performance of the above two companies is inseparable from their expansion strategies. Their products have gradually moved from the low end to the high end, and the increase in gross profit margin has further enhanced their profitability. This year is the year in which the medical reform in the past three years is a tough year. It is expected that many public hospital reform measures will be introduced one after another. With the help of policies, the medical service industry will usher in yet another wave of mergers and acquisitions.

M&A becomes the focus

At the end of 2010, the "Notice on Further Encouraging and Guiding Social Capital to Organize the Opinions of Medical Institutions" promulgated by the National Development and Reform Commission made the industry rejoice. Afterwards, encouragement clauses encouraging the social capital to run medical services are gradually appearing in local "12th Five-Year Plan" of provinces and cities.

With the help of policies, Aier Eye and General Medical raised the banner of expansion.

The Aier Ophthalmology 2010 annual report shows that last year the company acquired Beijing Yingzhi, Luzhou Guangming, Tianjin McGonagall, Chongqing McGonagall, Shijiazhuang McGonagall, and Nanchong McGonagall 6 eye hospitals. At the same time, the company also acquired Nanchang Air and Jinan Air. The company has established an eye hospital in Kunming, Changchun, Heze, Nanjing, Yueyang, Huaihua and Guiyang, accelerating the layout of the national chain eye hospital.

At the same time, Aier Ophthalmology also purchased Xi'an Ancient City in February this year and officially advanced into the Northwest Eye Market. So far, the company has operated 33 chain hospitals, chain hospitals covering 22 provinces (municipalities), and the national chain network system has taken shape. The China Merchants Securities Research Report pointed out that it is expected that in 2011 the company will complete the construction of secondary hospitals in other provincial capitals and complete the network coverage of tertiary hospitals in Hunan and Hubei.

However, Tongze Medical also established a strategy of group expansion through acquisitions and participation in public hospital reforms. In this regard, Orient Securities research report pointed out that this is in line with the law of the development of the industry. At the end of 2010, Tongce Medical cooperated with state-owned investment companies under the State-owned Assets Supervision and Administration Commission of the Kunming Municipal Government to establish Kunming Tongce Medical Investment Management Co., Ltd., and plans to establish a total of RMB 2 billion in Kunming Tongce Medical Investment Fund to help expand the company. Acquisition of funds to accelerate the acquisition progress. Recently, an agreement was signed with the Kunming Maternal and Child Health Hospital to jointly fund the establishment of “Kunming Maternal and Child Health Hospital Chenggong Hospital Co., Ltd.”, in which the company contributed RMB 300 million to 80% of its equity. In addition, the company also clearly stated in its 2010 annual report that the plan for external expansion in 2011 is that it expects to acquire two to three large-scale medical service companies within one year to develop it into a large hospital equivalent to the Hangzhou Stomatological Hospital of the company. .

Some senior industry analysts pointed out that the value of listed companies in China's medical services has not been fully reflected, and the listed companies are in the early stages of rapid replication, and thus compared to the growth rate, the reproducibility of their models, the ability to control channels, The indicators such as whether the reserves of the early-stage personnel are sufficient are more meaningful.

“This year is the year of three years of medical reform. It is expected that there will be many supporting measures that will be introduced in succession. Listed medical service companies are scarce resources and will inevitably attract investors.” Insiders pointed out that in the process of public hospital reform, Many hospital assets have been underestimated, and listed companies such as Tongce Medical will face more opportunities to acquire public hospital assets at lower prices, and the theme company with medical service investment will usher in major advantages.

High-end thickening profit

This high-speed expansion has brought about a surge in company turnover. The Aier Ophthalmology 2010 annual report shows that last year the company's total operating revenue reached 864 million yuan, an increase of 42.61% year-on-year; total profit reached 178 million yuan, a year-on-year increase of 43.73%. Tongce Medical achieved a revenue of 243 million yuan last year, an increase of 28.19% year-on-year; and a profit attributable to shareholders of listed companies amounted to 49.31 million yuan, an increase of 122% year-on-year.

In-depth analysis of the annual reports of these two listed companies is not difficult to find, its products have gradually moved from low-end to high-end, but also one of the reasons for the growth of the company's performance. Last year, Aier's ophthalmic medical services realized an income of 641 million yuan, an increase of 43.50% year-on-year; the optical microscope service realized an income of 131 million yuan, an increase of 42.77% year-on-year; pharmaceutical sales realized a revenue of 92.654 million yuan, an increase of 236.45%.

Analysts pointed out that in the revenue from the medical services of Aier Eye, the proportion of high-end services such as laser surgery has increased. Last year, the revenue from surgery for myopia laser treatment increased by 42.97%; in addition, the income from high-margin glasses was also high. A substantial increase, which further enhances the profitability of Aier Ophthalmology.

Tongtai Medical also adjusted its business structure and strengthened the promotion of high-cost-added services such as orthodontic teeth and dental implants. Gross profit margin increased by 1.77 percentage points to reach 46.69%. According to the research report of Tianxiang Investment, the high value-added business will become an important driving force for the connotative growth of Tongfang Medical. With the increasing popularity of high value-added services, the company's gross profit margin level is expected to increase further.

The high gross profit of high-end medical makes more and more social capital value this market cake. Last year, Fosun Pharma accelerated its pace of deployment in the medical industry and actively involved in the high-end medical market by participating in a mutually beneficial US-China approach. Following Sinopharm Group and Fosun Pharma, recently China Resources Sanjiu Pharmaceutical Co., Ltd. also announced that it has signed a letter of intent with China Academy of Chinese Medical Sciences, and the two parties will jointly cooperate in the construction of medical institutions.

The above analysts pointed out that under the enthusiasm of the state to encourage social capital to invest in medical institutions, more and more pharmaceutical companies will participate in investing and constructing hospitals, extending the industry chain and seeking maximum profits. With the further relaxation of policies, the attitude of other social capitals entering the medical service sector will also be more positive. The most rewarding high-end medical service market will also face increasingly fierce market competition.

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Asked the specialist hospital to rush around

â–  Trainee reporter Ou Huimin

Through the acquisition of Tongtu Medical Investment Co., Ltd. as the real estate management department, China Resources Sanjiu signed a letter of intent with China Academy of Chinese Medical Sciences to jointly build a medical institution. Recently, the field of medical services can be described as investment activities. Many industry analysts believe that there are currently large investment opportunities in medical services, especially in specialty hospitals, where there will be faster industry growth.

National policy support, high gross profitability, strong reproducibility, and easy expansion have become the main reasons for attracting industry attention to specialty hospitals.

Dilation

Nanjing Securities Researcher Su Jinjiang told the “Medicine Economic News” reporter that, from a whole point of view, the specialty hospitals now belong to the free competition industry, and there is not yet one brand of chain hospitals that can achieve monopoly status. Under this pattern, the development of enterprises mainly depends on the scale, and we must actively seek external expansion.

The model of “central hospital + branch” of leading medical enterprises in oral specialty hospitals is an example. Its Hangzhou Stomatological Hospital took advantage of the brand and resource advantages of the Pinghai Road General Hospital, and successively established the Qingchun Road School District, the Chengxi District, the University Road Clinic, the First Outpatient Department, the Donghemen Clinic, and other branches, occupying Hangzhou. The oral medical service has a market share of about 50%, and its annual operating revenue can maintain an increase of more than 20%. According to the annual report of the General Health Care Report, Hangzhou Stomatological Hospital was still the main source of growth in general medical service profits last year.

Currently, in addition to the Hangzhou Stomatological Hospital, Tongze Medical also owns 8 hospitals including Kunming Stomatological Hospital, Ningbo Stomatological Hospital, Luzhou Stomatological Hospital, Luzhou Stomatological Hospital, Huangshi Modern Oral, Beijing Jingchao Oral, Jiaxing Oral and Ninghai Oral. At the end of last year, Tongce Medical participated in the restructuring process of the Kunming Stomatological Hospital led by the Kunming municipal government and actively subscribed for new shares issued after the restructuring of the Kunming Stomatological Hospital. On November 9, 2010, the Kunming City Government authorized Kunming State-owned assets. The commission's Kunming Medical Investment Co., Ltd. signed the “Kowloon Dental Hospital Restructuring and Capital Increase Agreement” as the investor of Kunming Stomatological Hospital assets.

General Policy Medical is undoubtedly not satisfied with the internal structure of Hangzhou Stomatological Hospital. In order to nurture Hangzhou Stomatological Hospital No. 2 and expand medical services, the goal of mergers and acquisitions and expansion will be explicitly included in the 2011 plan.

Su Jinjiang stated that since the successful acquisition of Kunming Stomatological Hospital, Tongce Medical has explored a model of converting public hospitals into private ones, and it is expected that general medical care will continue to follow the model of “main courtyard + branch” in the future. This model has a strong demonstration effect and exclusivity for the same type of company. Once the general school takes root in a certain area, it will form a strong barrier to entry.

In addition to general medical care, Aier Eye and Ma Yinglong are accelerating the pace of adding specialized hospital chains. As of December 31, 2010, Aier Ophthalmology has operated 31 chain hospitals. The chain hospitals cover 19 provinces (municipalities) across the country, basically forming an increasingly perfect chain network system. In the first quarter of this year, Aier Ophthalmology also acquired a 66.5% stake in Xi'an Ancient City Eye Hospital, and increased the capital to expand Chongqing Mingmu Meg Eye Clinic and completed the construction of the Nanning Aier Eye Hospital project. Ma Yinglong, who has been involved in anorectal medical services since the end of 2008, currently has three anorectal hospitals in Wuhan, Beijing, and Nanjing. The Nanjing Ma Yinglong anorectal hospital is still in preparation for the construction and is expected to open in May this year. Some analysts estimate that this year, Ma Ying-long can open another one to two hospitals.

For almost crazy expansion, a Shanghai pharmaceutical industry analyst told reporters: specialty hospital competition, word of mouth is the key, but also pay attention to the speed of expansion. “Opening a new hospital will basically have no chance of earning money. If you purchase a hospital that is already operating, you will make a little more money, but you need to make some adjustments in management and capital and pay attention to the issue of integration.”

Investment expansion

“The main driving force of specialty hospitals is policy orientation; the driving force for development is population changes, that is, the problem of aging, the quantity and quality of medical services needed; the improvement of living standards will lead to increased health awareness.” Su Jinjiang It is believed that in the long run, the medical service industry is full of opportunities. Because the reform direction of public hospitals is the introduction of private capital, to activate some of the poor performance of public hospitals, convert it into private, or the non-profit into for-profit. As a result, specialist and private hospitals may have good opportunities for development. Specialized subjects such as ophthalmology and dentistry have good prospects.

Major benefits At present, companies on the subject of some medical services have also begun to pursue expansionary development.

At the end of last year, Tongce Medical established the Kunming Tongce Medical Investment Management Co., Ltd. in cooperation with the state-owned investment company under the State-owned Assets Supervision and Administration Commission of Kunming Municipal Government to prepare for the establishment of the Kunming Tongce Medical Investment Fund with a total scale of RMB 2 billion; in April this year, the Medical Care and Kunming Maternal and Child Health Hospital jointly invested in the establishment of Chenggong Hospital, established a first-rate maternity and childcare hospital for Southeast Asia, and differentiated development with public hospitals in infertility and high-end medical care. Recently, Tongce Medical has also acquired through-construction housing investment, using its experience in real estate investment management through long-term accumulation of real estate to manage the company's existing hospital real estate. The establishment of the Real Estate Division will provide solid support for Tongji Medical to build more hospitals and other medical services investments in the future.

Coincidentally, the recent cooperation between China Resources Sanjiu and the Academy of Traditional Chinese Medicine has also earned enough investors' attention. Although China Resources 39 has three or nine brain hospitals and has accumulated certain management experience in the field of medical services, the strength of medical specialists is still weak. The Academy of Traditional Chinese Medicine has a large number of experienced experts and the two sides cooperate to build medical institutions. It can be described as a strong combination of capital, management, and talent. As far as China Resources Sanjiu is concerned, the construction of TCM hospitals can not only share the policy dividends of the state to encourage the construction of TCM hospitals, but also promote the sales of TCM products and expand its influence in the field of TCM. Interviewed analysts pointed out that from the perspective of industry growth rate, the general idea of ​​medical reform is to lower drug prices and increase the prices of medical services. Therefore, the acquisition and establishment of specialty hospitals by pharmaceutical companies may be a good way to hedge drug declines. (Reporter Tang Xueliang)