Health & Beauty

According to Huacheng Import and Export Data Observation, more than 30 pharmaceutical companies from around the world have announced layoff plans in half a year since September 2021. Two thirds of the layoffs of pharmaceutical enterprises occurred in the last quarter, and 7.6 pharmaceutical enterprises experienced layoffs on average every month. Moreover, the frequency of layoffs is accelerating. Since late March, at least four more pharmaceutical companies have announced layoff plans.

However, according to the annual reports of the financial years that have been opened in succession, the overall growth and profitability of the global pharmaceutical industry, as well as the reserve of new products, are not bad. What are the reasons for layoffs and self-protection in vibrant pharmaceutical enterprises?

Although every pharmaceutical company has its own reasons for layoffs, it cannot be ignored that there have been many "black swan" incidents around the world in the past five years, and there is no sign of stopping. Looking at the changes in the global geopolitical pattern over the past 100 years from the First World War to the present, the risks accumulated in these years have made the industry unable to judge what will happen in the future. Therefore, it is understandable to take precautions and adjust the business layout as soon as possible and even lay off workers. Huacheng Import and Export Data Observation Report.

However, some pharmaceutical enterprises are engaged in reverse operation, instead of "covering their wallets" and "removing their burdens", they are keen on securities investment.

Spin off non-core business

3、 April is the season for Chinese listed companies to issue annual reports. Yunnan Baiyao's 2021 annual report disclosed a loss of 1.929 billion yuan in securities investment, which attracted the attention of the industry. Against the backdrop of uncertain changes in the global geopolitical pattern and the repeated COVID-19, all pharmaceutical enterprises are "covering their wallets" and "unloading their burdens" to protect themselves. This pharmaceutical enterprise's actions and results in the field of securities investment have surprised the industry. Looking at the annual reports of recent years, it was found that since the change of major shareholders in 2018, this pharmaceutical enterprise has invested 7.2 billion yuan in securities, and has gradually increased since then. From 2019 to the first half of 2021, there were 8.821 billion yuan, 11.23 billion yuan and 10.488 billion yuan of trading financial assets respectively.

As a legal person investor in a legal and open capital market, losses and surpluses are the result of investment, which is normal. However, from the perspective of investment opportunities of pharmaceutical enterprises, 2019 to the next two or three years belong to a period of risk uncertainty. Entity enterprises need to be very cautious when investing in the securities market. Even if profits are not losses, they only increase the rate of return of shareholders in this year, but have little effect on the improvement of core capabilities of pharmaceutical enterprises.

At present, most pharmaceutical enterprises are divesting businesses that have little to do with their main businesses, such as health care products, food, etc., and some pharmaceutical enterprises are divesting their pharmaceutical business. Even in the pharmaceutical field, they are further focusing on the core areas, and the advantageous business is divested from the non-advantageous business. The core purpose is to ensure the main business under the condition of limited resources, so as to survive in an extraordinary period, and focus on the subdivided fields to improve the competitive advantage on the basis of survival. From this point of view, the behavior and results of pharmaceutical companies with a loss of nearly 2 billion yuan in stock trading are not very "professional".

George Merck, founder of the global pharmaceutical giant MSD, also said: "We should always remember that drugs are designed to save people, not profits, but profits will follow." Herbert Boyer, founder of Genentech, has always stressed that pharmaceutical companies must have a science-driven culture, be patient-centered and drug-oriented. The reason why these enterprises can break out of the tight encirclement and enter the first echelon in the competitive world pharmaceutical market is directly related to the culture they adhere to, and also related to exploring the development laws suitable for their own industries.

According to the report of Huacheng Import and Export Data Observation, from the perspective of realm, is it beneficial to the healthy development of the enterprise if it conforms to the national laws and regulations and the rules of the enterprise's game? Can we avoid enterprise risks? Can we improve our competitiveness? Needless to say, the leaders of listed companies must ask themselves and answer these questions. As the leader, how to be responsible for the investors and employees?

Protect cash flow to avoid risks

In extraordinary and uncertain times, it is obviously more important for drug companies to avoid risks than to earn more money. If the pharmaceutical enterprises are prepared in the following aspects, it will be of great help to bear and resolve future risks and pass through the uncertain period.

First, avoid risks as much as possible. This mainly refers to avoiding diversification, prudent diversification in the industry and prudent foreign investment. Because it is difficult to predict where and in what areas the future risks will come from, it is likely to fall into the trap with inertia thinking. The experience of enterprises that survived the two world wars, the Great Depression in the 1930s and the global economic crisis in 2008 has proved that it is very important to narrow the front and focus on limited areas in extraordinary times, which can reduce complexity. It is necessary to reduce the risk level.

Second, maintain sufficient cash flow. Sufficient cash flow can enable the company to survive in extremely difficult circumstances. As long as we survive, there will be opportunities after the crisis, and we can seize opportunities.

The third is to reserve, prepare and create opportunities after the crisis. Keep the core business and core backbone as much as possible, leaving the kindling for the future re-emergence. Putting limited resources into scientific and technological research and new drug development in an emergency period will help the competitiveness to a new level when the market recovers. Even if it is very difficult, don't do anything that is detrimental to the brand, quality and customer interests. Huacheng Import and Export Data Observation Report.