Pharma firm Yunnan Baiyao sees synergy in merger with parent

Listed State-owned pharmaceutical firm Yunnan Baiyao Group Co Ltd said on Thursday that it was making steady progress on its planned merger with parent Yunnan Baiyao Holdings Co Ltd, and said the new combined entity will have greater synergy in its business operations.

"The merger will raise the brand's global competitiveness, upgrade its overall structure and help bring in more funds," said Wang Rong, vice-chairman of Yunnan Baiyao Holdings Co Ltd.

Currently Yunnan Baiyao Group has strengths in product manufacturing, marketing, research and development and human resources, while Yunnan Baiyao Holdings has ample financial resources. An amalgamation of the two firms will help upgrade the overall and financial capabilities, said industry insiders.

"The merger will enable the listed entity to participate more actively in the stock markets, thanks to the infusion of funds from the parent," Wang said.

Yunnan Baiyao is a pharmaceutical brand, which traces its origins to 1902 and is known for herbal medicines that can prevent bleeding and ease pain.

During the first three quarters of this year, Yunnan Baiyao witnessed steady growth in its revenue and net profit. Its revenue for the period rose 9.53 percent year-on-year to 19.72 billion yuan ($2.84 billion), while net profit stood at 2.73 billion yuan, up 4.88 percent year-on-year.

In the third quarter of 2018, the group's revenue rose to 6.75 billion yuan, up 11.62 percent year-on-year. Net profit during the period stood at 1.099 billion yuan, up 5.68 percent year-on-year.

Yunnan Baiyao Holdings Co Ltd, the parent company of Yunnan Baiyao, completed its mixed ownership reform last year and attracted new funding of about 25 billion yuan.

After the revamp the State-owned Assets Supervision and Administration Commission of Yunnan Provincial People's Government and supermarket operator New Huadu Supercenter Co Ltd hold equal stakes of 45 percent each in Yunnan Baiyao Holdings Co. The remaining 10 percent is held by Jiangsu-based Yuwell-Jiangsu Yuyue Medical Equipment and Supply Co Ltd.

According to Wang, Yunnan Baiyao Holdings had year-on-year profit growth of 32.21 percent in 2017 and year-on-year net profit growth of 39.56 percent.