The business club reported on July 25th that Hualan Biotech, which was once famous for its "A stream vaccine", was under the premise of a foregone conclusion that the blood products will be shut down due to the shutdown of the plasma station.

In just 8 days, whether or not to shut down the apheresis plasma station, Hualan Biological issued several contradictory announcements. The content of the announcement has been changing dramatically: shutting down 3 plasma stations—normal blood collection—and 5 plasma stations to collect blood within a set period of time. According to Fan Lan, Hualan Bibi, the five plasma stations accounted for as much as 60% of the company's volume. Investors saw it as a major bearish news. For the first time on the news of the shutdown of the pulp station, Hua Lan Bio, after the resumption of trading, was almost at a low limit, with a drop of 8%.

Executive order sizing station fate ups and downs

This dramatic change began on July 13. Hualan Bio announced that according to the "Guizhou Provincial Blood Collection and Supply Institution Planning" document, the company's Huishui, Luodian, and Pan'an 3 apheresis plasma stations were from 2011. From August 1st, it will stop the pulp production.

As related laws and regulations prohibit companies from purchasing plasma from the outside, the closure of the plasma collection station will directly affect the supply of raw materials for production of Hualan Bio-blood products. According to the announcement, the pulp production volume of the three slurry collection stations in Huishui, Luodian and Pan’an respectively accounted for 39.29% and 36.69% of the total pulp production in 2010 and the first half of 2011.

According to media reports, on the day when the notification was received, Hua Lan biological director secretaries and the above leaders rushed to Beijing to communicate with relevant departments. The same leaders also went to the relevant leaders of Sinopharm Group and Guizhou Yufeng. Subsequently, the Guizhou Provincial Health Department withdrew the relevant notice on the 13th.

On the 14th, the Hualan Biological Bulletin stated that at about 9:00 on July 13th, Hualan Bio received a telephone call from the Guizhou Provincial Department of Health and was told to suspend the execution of the aforementioned documents and requested the company to return the above-mentioned documents to the Health Department. At present, the company's six pulp stations in Guizhou Province are still operating normally.

However, unexpectedly, on July 15, the website of the Guizhou Provincial Department of Health released a second notice to clarify that the province “sets plasma collection stations in only four counties: Kaiyang, Dushan, Puding, and Huangping”. The notice is issued on the 14th.

This means that the 6 plasma apheresis sites of Hualan Bio in Guizhou Dushan, Longli, Changshun, Huishui, Luodian, and Pan’an will only remain in Dushan. After July 18th, Hualan Biological was suspended. On July 20, Hualan Bio announced again that the existing apheresis plasma licenses for five apheresis plasma stations in Huishui, Luodian, Luan, Changshun and Longli are valid until July 31, 2011. Five apheresis plasma stations that have not obtained a renewal apheresis plasma permit will stop the harvest on August 1, 2011 if they have not yet obtained the license.

Fan Zheng said that at present, Hualan Biotech is evaluating the impact of this matter and formulating corresponding countermeasures. Moreover, the company is reporting the situation to the relevant competent authorities and requests to retain the above five apheresis plasma stations.

Ahnbang Consulting Group's pharmaceutical industry researcher Bian Chenguang speculated that the Guizhou Provincial Department of Health revised the document, which may be related to the provincial leaders who believe that Guizhou Province is a major plasma producer and has affected the image of Guizhou Province. Within just a few days, the change of executive orders has made it difficult for companies to make decisions. Making head decisions will have a huge impact on Hualan Biosciences.

Corporate profits or decline by 50%

And this time the "blood source" was cut off has a major impact on the Hualan organism. Fan Yan told reporters that shutting down the above five pulping stations had a very big impact on the company, and the five pulping stations accounted for as much as 60% of the company's volume.

Judging from Hualan Bio's 2010 annual report and 2011 first quarter report, in 2010, Hualan Bionet’s net profit was 818 million yuan, of which the profit of blood products was 523 million yuan, accounting for 63.9% of the total profit. Hualan bio-blood products accounted for the main business income. The proportion reached 59.43%. At the same time, the 2010 influenza A vaccine contributed a profit of 278 million yuan to Hualan Bio, which was 33.9% of the net profit. In the first quarter of this year, the revenue of the A vaccine was only one-tenth of the same period last year.

"If Hualan Bio's new pulping station fails to make up the blood source of the shut down plasma station in time, it will reduce Hualan Bio's profits by half in the short term," said Bian Chenguang.

However, a medical analyst who did not want to be named was optimistic about the performance of Hualan Biotech this year. The above analysts stated that the three quarterly reports of Hualan Biotech should not be affected. According to the relevant laws and regulations, raw material plasma used in the production of blood products enterprises must undergo a quarantine period of not less than 90 days. In Other words, under the normal production process, production pulp from August to October of Hualan Biotech has been put in place, which is not affected by the change of the plasma collection station.

Analysts who watched the music hold the hope that the recovery of pulp production will be based on the Hualan Bio-engineering Chongqing Co., Ltd., a subsidiary of Hualan Bio-Chongqing, and its six newly-built pulp collection stations.

According to the analyst's calculations, Hualan Biologics had about 430 tons of pulp collected last year. Theoretically, the closure of five plasma stations will result in a 60% reduction in the amount of pulp harvested next year, which will be nearly 260 tons. Five of the 6 pulping stations under the Chongqing subsidiary have obtained pulp qualifications and have accumulated about 100 tons of pulp. The annual pulping capacity can reach 400 tons when it matures. This figure is almost the same as the 410 tons harvested by Hualan Bio in 2010 based on a total of 11 logging stations in Guizhou, Guangxi, and Henan. In addition, Hualan Bio has also set up an apheresis plasma station in Fengqiu, Henan, and may continue to build a new plasma station in Henan. This part of the variable may become another gap for Hualan Biotechnology.

“The planning in Guizhou Province has not only affected Hualan Biotech, but also has an impact on the entire industry.” Zhou Rui, an analyst at China Investment, believes that the affected company is not only the Hualan Biological Group, but also a three-level subsidiary of Sinopharm Group. Shanghai Institute of Biological Products, Guizhou Yufeng Biological Products Co., Ltd., and Guangdong Weilun Biological Products Co., Ltd. were also affected.

Although several blood plasma companies in Guizhou Province suffered a major setback in the event of blood sampling, the stock prices of bio-based companies in the capital market were all booming. Both Shanghai Lai Shi and Tiantan Bio were stirred up in the past few days. Lai Shi limit daily limit on July 13th, 18th, Tiantan Biological limit daily on the 18th.

"When Rice first reached the limit, everyone felt that it was just a short-term speculation because the medical sector was oversold in the early stages. I did not expect the second board to open higher again. Only then did I realize that I could do it." Told reporters.