Feasibility Study on Listing of Pharmaceutical Enterprises Based on Financial Analysis:

Take Company Y as an Example

Yan Ma

Abstract

Health has always been one of peoplersquo;s demands for a high quality of life. For thousands of years, both Chinese and Western medicine have accumulated a lot of medical knowledge and ideas. However, due to the weakness of China in the past century, Chinese medicine has become irrelevant. However, with the outbreak and persistence of COVID-19 and Chinarsquo;s actions in the fight against the epidemic, people have further realized the importance of health, and TCM has again entered peoplersquo;s field of vision. Taking Company Y as an example, this paper analyzes the listing feasibility of Company Y from its macro environment, basic overview, advantages and disadvantages in the industry, financial indicators, enterprise valuation and other aspects. Then, based on the above analysis and combined with the development trend and recent development goals of the enterprise, it concludes that under the current macro and micro environment, Company Y can and should be encouraged to list on the New Third Board, with a stock price of about 7 yuan and a price-earnings ratio of about 25 times.

Keywords

Chinese Medicine Industry, Y Company, Listing Valuation, Financial Analysis

1.Introduction

In recent years, TCM, as a unique resource in China, has played an increasingly important role in Chinarsquo;s economic and social development. In order to meet the peoplersquo;s demand for TCM services and give full play to the unique role of TCM in social development, the State Council issued the Outline of the Strategic Plan for the Development of TCM (2016-2030) in February 2016, which aims to achieve full coverage of TCM services by 2030 and take the TCM industry to a new level. In the same year, to further improve the TCM service system, the Conference adopted the Pharmaceutical Law of the Peoplersquo;s Republic of China, which came into effect on July 1, 2017. A series of policies for traditional Chinese medicine industry to build a good environment for development, to the traditional Chinese medicine industry in our country have created a new space to grow up.

2.Analysis of the Macro Environment

2.1.Political and Legal Environment

With the gradual deepening and improvement of the reform of the national medical system, new medical policies will be gradually implemented to accelerate the standardization and standardization of my countryrsquo;s pharmaceutical industry. The competition in Chinarsquo;s pharmaceutical industry is undergoing new changes, which may affect the production and operation of state-owned enterprises within a certain period of time. The specific policy content is shown in Table 1.

2.2.Economic Environment

The advancement of science and technology continues, and Chinarsquo;s medical expenses are still far lower than those of developed countries. In 2018, my countryrsquo;s traditional Chinese medicine processing and manufacturing industry had an operating income of 239.5 billion yuan and a total profit of 16.5 billion yuan (Data source: Compiled by China Commercial Industry Research Institute). As shown in Figure 1, from 2011 to 2020, Chinarsquo;s medical expenditures have shown a steady upward trend. As one of the three pillar industries of the traditional Chinese medicine industry, the traditional Chinese medicine decoction pieces industry has become the fastest growing sub-industry in the pharmaceutical industry in the past decade.

2.3.Social and Cultural Environment

In recent years, the number of outpatient visits in TCM medical institutions has increased, reaching approximately 1 billion visits by 2017. The cost of medicines for inpatients in integrated Chinese and Western hospitals has also increased year by year, and the number of discharged patients from Chinese-type medical institutions has increased significantly. By making full use of the unique advantages of traditional Chinese medicine, we will continue to promote the traditional Chinese medicine service system to the grassroots level, so that it can play an important role in the treatment of disease, treatment and rehabilitation of major diseases. Our country has further deepened reforms, improved the development of Chinese medicine at the local level, and continued to modernize Chinese medicine. Speeding up the pace of “going out” has created a new form for the revitalization and development of Chinese medicine.

Table 1. Specific policies and content.