Facing changes in the market environment, Jiuzhou Tong, a leading private pharmaceutical distribution company, has unlocked some new development codes.

On the evening of August 26th, the company released its semi-annual report for 2024.

During the reporting period, the company achieved a revenue of 77.171 billion yuan, a net profit attributable to the parent company of 1.208 billion yuan, and a net profit attributable to the parent company after deducting non-recurring gains of 1.18 billion yuan in the first half of the year.

Among them, the company's performance in the second quarter showed a significant increase compared to the first quarter.

The net profit in the second quarter was 670 million yuan, a sequential increase of 24.6%; the net cash flow from operating activities was 453 million yuan, which has improved compared to the first quarter, and it is expected that the net cash flow from operating activities for the whole year will be a positive number that matches the operating performance.

The development of the big health industry is actually a marathon, and there may be new environmental changes every mile.

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Previously, the company took the lead in the industry to implement digital, platform-based, and internet-based transformation and upgrading, and promoted a comprehensive service model of "pharmaceutical distribution + logistics distribution + product promotion", gradually establishing a rare "hundred billion-level" pharmaceutical supply chain service platform in the industry.

Now, the company is deeply promoting the "three new and two transformations" strategy, consolidating core competitiveness, firmly walking the long-term value, honing internal strength to enhance resilience, and is full of confidence in achieving the annual operating goals.

The new product strategy has shown a significant increase in speed.

When the market starts to live a "tight life", it is a good time for Jiuzhou Tong to lay out the new product strategy.

In recent years, with the continuous deepening of medical reform policies, CSO (Full Engine Health) has gradually become a hot spot.

Zheshang Securities pointed out in the delayed report that the CSO business is experiencing a transformation and upgrading from the traditional model to a professional and platform-based model, with a domestic market size of 139 billion yuan in 2023.

In the digital era, platform companies can better gather resources and complete transformation and upgrading.

The company takes CSO as the core, builds a product and promotion marketing system, and focuses on product mining and the introduction of value-added products.

Through a sound brand planning and operation system, it empowers core product brands, providing solutions for partners and ultimately promoting profitability.

In the first half of this year, the company's total brand promotion business (including pharmaceuticals and medical devices) achieved sales revenue of 9.862 billion yuan, a year-on-year increase of 14.18%, and the gross profit was 1.191 billion yuan.

Behind the significant increase in speed is the company's continuous comprehensive improvement of brand and sales driven by both products and channels, continuously adding momentum to the second growth curve.

Among them, the sales of the total brand promotion business related to pharmaceuticals was 5.42 billion yuan, a year-on-year increase of 9.52%.

As of the reporting period, the company's agency well-known brand pharmaceutical specifications reached 828, covering Weiwei, Bei Ping, Kang Wang, etc., with stable sales of key varieties.

At the same time, the company is also actively expanding new products, introducing 47 new high-quality product specifications, including Micabao, Pailisong, Dakning Pill, Meiduo Ba, and Weikang Ling, etc.

The total brand promotion business related to medical devices achieved sales of 4.442 billion yuan, a year-on-year increase of 20.45%, and the gross profit was 232 million yuan, a year-on-year increase of 29.41%.

As of the reporting period, the company's agency brand manufacturers' specifications totaled 1081, covering Johnson & Johnson, Abbott, Fresenius (hemodialysis), Linuo, Roche, and Maimu Tong, etc., and introduced a new product line of more than 100 million yuan, two product lines of more than 10 million yuan, including Jiaqi, Deng Shibai, and Leica, etc.

As another important part of the new product strategy, the pharmaceutical industry's own production and OEM business can better reflect Jiuzhou Tong's advantages in varieties, brands, channels, and marketing.

This business is an important high-gross-profit segment, and the company uses the big data accumulated by the "hundred billion-level" supply chain service platform to develop related businesses in a targeted manner, and then distribute them to the terminal or C-end consumers through a full-channel sales network.

During the reporting period, the company's pharmaceutical industry's own production and OEM business achieved sales revenue of 1.438 billion yuan, a year-on-year increase of 21.61%.

Among them, the Western medicine industry achieved sales of 282 million yuan, a year-on-year increase of 50.87%, building a diversified product and brand ecosystem, and the strategic effect of increasing varieties and improving quality continues to emerge; in the Chinese medicine industry, the company's Jiuxin Chinese Medicine Group achieved self-produced drink sales of 1.08 billion yuan, a year-on-year increase of 15.83%.

Under the "three new and two transformations" strategy, the company has honed its internal strength in the face of external environmental challenges, and the new product strategy is an important part of Jiuzhou Tong's promotion of the "three new and two transformations".

The company has honed for several years and has built long-term core competitiveness in new retail, new medical, digitalization, and real estate securitization (REITs).

In terms of the new retail strategy, the company takes "ten thousand stores to join" as the core, forming a business matrix that includes B2C e-commerce total agency and total sales, Yao Jiu Jiu B2B e-commerce platform, retail e-commerce service platform, logistics Bb/BC warehouse and distribution integration, etc.

As of the end of July, the number of self-operated and franchised pharmacies of Hao Yao Shi reached 24,387, and the sales to franchised stores in the first half of the year reached 2.419 billion yuan, a year-on-year increase of 47.32%, and the new retail business of Hao Yao Shi achieved sales revenue of 1.456 billion yuan; Jiuzhou Tong B2C e-commerce total agency and total sales business revenue scale reached 496 million yuan, a year-on-year increase of 11%; Yao Jiu Jiu B2B e-commerce platform and retail e-commerce service platform business revenue scale reached 8.784 billion yuan; logistics-related revenue scale reached 471 million yuan, a year-on-year increase of 16.84%.

In terms of the new medical strategy, the company has opened up a new medical business "new track", creating the "Jiu Xin Clinic" brand, and improving the control of clinic terminals.

It has now developed 412 member stores of "Jiu Xin Clinic", and strives to develop about 800 member stores in the whole year.

Jiuzhou Tong can achieve results in the "three new", which are all embracing trends after understanding the market with systematic capabilities and targeted layout.

Moreover, the company is also working hard to add the new flag of "two transformations".

During the reporting period, the company built a multi-level real estate equity capital operation platform of "public offering REITs + Pre-REITs", and plans to select the pharmaceutical logistics parks in Shanghai, Hangzhou, Chongqing, and other places to carry out the preparatory work for the first phase of issuance.

In the internal dimension, the company will revitalize high-quality pharmaceutical logistics assets, recapture equity funds, and reduce the asset-liability ratio.

In the external dimension, the company is also laying out photovoltaic power generation, which is also helping green and low-carbon development.

Many times, enterprises are easy to pursue one-sided scale expansion in the development process, but with the change of the external environment, if you want to win in a field for a long time, you need to dig deep moats.

Since this year, Jiuzhou Tong has focused on improving the quality of operation and management, actively expanding financing channels and increasing talent introduction, and further consolidating its own competitiveness.

During the reporting period, the company's preferred stock issuance application was approved by the China Securities Regulatory Commission for registration and approval, and the total amount of funds raised reached 1.79 billion yuan.

At the same time, the company successfully issued the first and second phases of ABN totaling 2 billion yuan, the subscription multiple set a new high in the history of Chinese private enterprises, and the coupon rate set a new low in the same period and the same variety of Chinese private enterprises.

The first phase of the ultra-short-term financing bill also achieved an innovative breakthrough, with an issuance amount of 500 million yuan, an issuance rate of 2.25%, and became the first batch of private enterprise asset-backed debt financing tools issued in the whole market.

In terms of talent introduction, in 2024, Jiuzhou Tong implemented a new talent strategy and recruited talents globally.

In the first half of this year, the company has introduced 120 high-end professional talents, covering key positions such as CSO, new retail, Yao Jiu Jiu B2B, internet medical, medical devices, logistics, and information technology, matching the most outstanding and most suitable professional talents for the company's strategic transformation.