On November 8, China Resources Boya Bio's official website announced that "China Resources Boya Bio and Green Cross (China) meeting and work docking meeting were successfully held". Two days ago (November 6), China Resources Boya Bio completed the acquisition of 100% equity of Green Cross (Hong Kong) and began to include it in the scope of consolidated financial statements. So far, "China Resources" has officially made another move in the blood products sector. In July this year, China Resources Boya Bio agreed to transfer 100% equity of Green Cross (Hong Kong) with its own funds of 1.82 billion yuan, thereby indirectly acquiring the domestic blood products entity Green Cross (China) (for details, please refer to the previous article "Spending 1.82 billion! China Resources Group takes action again").

As the blood products platform of China Resources' big health sector, China Resources Boya Bio's contribution to China Resources Pharmaceutical's performance cannot be underestimated. China Resources Pharmaceuticals stated in its 2022 annual report that its biopharmaceutical business achieved revenue of HK$2.219 billion, a high-speed growth of 405.9% over the same period last year (422.3% in RMB terms), mainly benefiting from its completion of the merger and acquisition of China Resources Boya Bio and Jincheng Haisi Pharmaceutical in the second half of 2021. In the first year of entering the "China Resources System" (2022), China Resources Boya Bio's performance lived up to expectations-revenue of 2.759 billion yuan, a year-on-year increase of 4.08%; net profit attributable to the parent company of 432 million yuan, a year-on-year increase of 25.45%; non-net profit of 392 million yuan, a year-on-year increase of 33.61%.

However, in 2023 and the first three quarters of 2024, China Resources Boya Bio's revenue and net profit both declined-revenue in 2023 was 2.652 billion yuan, a year-on-year decrease of 3.87%; net profit was 237 million yuan, a year-on-year decrease of 45.06%. In the first three quarters of 2024, the revenue was 1.245 billion yuan, a year-on-year decrease of 43.16%; the net profit was 413 million yuan, a year-on-year decrease of 11.07%. China Resources Boya Bio once explained the decline in revenue and net profit in 2023 - on the one hand, it transferred the equity of Fuda Pharmaceutical and Tianan Pharmaceutical, and since then, the two companies are no longer included in the consolidated financial statements; on the other hand, it is the impact of the impairment provision for goodwill and other asset impairment provisions formed by Xinbai Pharmaceutical.

After becoming a listed platform under China Resources Pharmaceutical, Boya Bio has continuously divested its non-blood product business and continued to focus on the development of its main business. China Resources Pharmaceutical is well aware of the market and potential of the blood product sector. It once said to the outside world: "Pay attention to biological products with the same strategic development." According to Minnet data, the sales of blood products in my country's public medical institutions in 2022 will be about 46.4 billion yuan. Compared with the mature markets in Europe and the United States, my country's blood products industry has huge room for growth. According to the statistics of Qianzhan Industry Research Institute, it is expected that by 2027, the market space of China's blood products industry is expected to increase to about 78 billion yuan, and the compound growth rate between 2022 and 2027 will reach 11.6%.

Green Cross (China), which China Resources Boya Bio spent 1.82 billion yuan to indirectly acquire, is one of the few blood products companies in China that has the sales rights of both human factor VIII and recombinant factor VIII. It currently has 6 varieties and 16 specifications of albumin, intravenous immunoglobulin, factor VIII, fibrinogen, β-immunity and immune-breaking. There are 4 plasma stations, and the plasma collection volume in 2023 will be 104 tons, with a compound growth rate of 13% from 2017 to 2023.

Not only that, Green Cross (China) also acts as an agent for the sales of imported albumin, recombinant factor VIII and medical beauty products in China. After the transaction is completed, in addition to wholly-owned holding of a blood product manufacturer, adding a new production license, four plasma collection stations in operation and plasma collection stations in two provinces and regions, China Resources Boya Bio has also opened up a new path for integrating industry resources and expanding new plasma collection stations. Due to its resource attributes, the development of blood products has only two paths: either starting from the inside, strengthening the potential of plasma sources and promoting the endogenous growth of plasma collection stations; or expanding plasma collection stations through mergers and acquisitions or self-construction.

Since May 2001, the state no longer approves new production enterprises and implements total quantity control on production enterprises. At present, there are less than 30 blood product manufacturers operating normally in China, and a few companies have multiple production licenses. The industry barriers are high and the license resources of production enterprises are very scarce. Plasma stations are the source of raw materials for blood product production and are vital to blood product companies. Through mergers and acquisitions, companies can quickly increase the number of plasma collection stations and increase the amount of plasma collection. Moreover, because different companies have different blood product varieties, companies integrate different varieties of resources to enrich product lines, expand their scale, and further improve their market competitiveness.

Because of this, the mergers and acquisitions of companies in the field of blood products are more frequent. From Shaanxi Coal Group's acquisition of Pai Lin Bio, Sinopharm Group's acquisition of Wei Guang Bio to Haier Group's investment in Shanghai RAAS, the industry concentration continues to increase. From the perspective of M&A companies, there is a clear trend of private enterprises becoming state-owned in the field of blood products. Northeast Securities analyzed in a research report that Boya Bio's controlling shareholder changed to China Resources Pharmaceutical, and the state-owned enterprise's acquisition added development potential; Wei Guang Bio's actual controller changed to Sinopharm Group, and the resources of central enterprises enhanced its competitiveness.

At present, among my country's blood product companies, Tiantan Bio and Shanghai RAAS have a large number of plasma stations, and the industry leading effect is already very obvious. In the future, these companies are expected to obtain more plasma station resources.

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