Winning the new financial era

Chapter 465 Pet Medicine
Pet medical care is the second largest market segment in the pet industry, accounting for about 25%, second only to pet food.

The pet hospital is only a sub-industry of the sub-industry of pet medical treatment, and the other two sub-industries are pet medicine and pet vaccine.

Domestic pet hospitals are mainly privately owned, and the service quality and level vary.

According to statistics, there are more than 12000 pet hospitals in China, but non-chain hospitals account for nearly 90% of them.

From the perspective of investment scale, the construction investment scale of domestic pet hospitals is also mainly small and medium-sized. 76.3% of pet hospitals have a construction scale of less than 200 million, of which 100% are less than 43.8 million;

Only 3.2% of pet hospitals have an investment scale of more than [-] million yuan;

Only 500% of the investment scale is between 999 million and 6.69 million.

In other words, "big hospitals" with an investment of more than 500 million yuan account for only 10% of all pet hospitals, which is about 1200, and most of them are chain pet hospitals.

The main competitors of Pater Pet Hospital are these 1200 large pet hospitals.

In fact, it should be about 1100, because Pater Pet Hospital has also opened about 100 pet hospitals in first- and second-tier cities.

The investment standard is very high. First-tier cities and key second-tier cities are all large hospitals with an investment of more than 1000 million;
Weak second-tier cities will invest between 500 million and 1000 million to open smaller hospitals.

There is also a scientific basis for this. Big cities have a large population, more pets, and a developed economy. Pet owners are willing to spend more on their pets.

As for the third- and fourth-tier cities, they are basically the territory of some small hospitals.

Pet Hospital cannot play sinking, because it cannot reflect the scale effect. This is the real economy, and the input and output issues must be considered.

The most important thing is that there are currently several main competitors of Pet Hospital: Ruipeng, Ruipai, and An'an, all three pet hospital chains have opened more than 100 stores to more than 300 stores, and they focus on the first and second lines city ​​open.

The battle was fierce, and Petr Pet Hospital and these opponents often fought close to each other, shop next to each other.

Fortunately, Pate Pet Hospital can get the online traffic of Pate.com, Touronghui, Doushi, and Meituan.

Although the number of hospitals is slightly lower than these three pet chains, the output of a single store is much higher than that of several competitors.

Large veterinary hospitals can afford higher wages and better veterinarians.Once the scale effect is formed, the scattered small pet hospitals in the third- and fourth-tier cities are basically determined by propaganda.

Therefore, the competition for the leading pet hospital in China will still be decided in the first- and second-tier cities.

In addition to finding solutions online, Zhang Yida also started thinking about the upstream and downstream of the industrial chain.

He has a bet with Zhang Sanshi of Gaoling Capital, and the bet is to see who controls more pet industry assets in three years' time, that is, in June 2019.

Whoever has more assets will acquire another one.

At the same time, there is an upper limit of US$10 billion investment, and the competition is to see who has a better layout and management skills in the pet industry.

If Zhang Yida's side is stronger, Gaoling Capital will naturally accept the merger and become a shareholder of Pate Holdings.

After all, Gaoling Capital is in finance. Whether it is financial investment or running it on its own, the ultimate goal is to make money.

Three years later, the two sides merged and avoided a wave battle that would hurt both sides.

It has to be said that Boss Zhang Sanshi is a very smart financier, no matter the outcome of the bet, he will not lose money.

Zhang Yida was different. In his previous life, he ran the pet industry, and his father wanted to make a big splash in this industry. Naturally, the two father and son were not willing to be financial shareholders.

Pate Pet Hospital started a bit slower than its competitors, and is already doing its best to expand. In the past two years, it has only opened a hundred or so pet hospitals.

It's not that the funds are tight, after all, loans can be obtained, but it is limited by the talent pool and industry awareness.

After nearly two years of groping and laying the foundation, Petro Holdings Group has basically figured out the doorways in the industry.

After discussing with his father, Zhang Yida decided to adopt a two-pronged approach, one to increase the speed of hospital expansion, and the other to get involved in the upstream and downstream industrial chains of pet medical care.

Professional pet hospitals carry out pet disease diagnosis and treatment, prevention and treatment, pet health care, pet grooming and other whole industry chain businesses, and bundle the sales of pet food and pet health care products.

Realize the scale effect, and form a unified operation and standardized management mode, and accelerate the promotion of brand effect.

Pet food is produced by Dogford, a 51% subsidiary of Pet Holdings, but Pet Holdings has nothing to say about the two major segments of pet vaccines and pet medicines.

Although Pet Holdings Group and Jingda Pharmaceutical Co., Ltd., a subsidiary of Jingda Medical Group, established a joint venture company, Pet Medicine, to enter the research and development of pet medicines, but they couldn't come up with any successful products for a while.

Domestic pet medicine has no special laws and regulations, and there is a regulatory gap, so the market is very chaotic.

It has become a common practice for domestic veterinary drug companies to imitate the pharmaceutical products of famous foreign animal protection companies, making consumers unable to understand the ingredients, or not labeling the ingredients, and may leave the address, but you can’t find it on the map... There are countless similar examples.

There are also veterinarians who use human medicine as pet medicine. Some human medicine can be used for pets, while others cannot.

If you make a mistake, the dog's life will be lost.There are often disputes between doctors and patients in pet hospitals.

Domestic pet drug companies have always been in this "small, weak, scattered, gray" state, and there are very few companies specializing in the production of pet drugs.

Moreover, the pet medicines produced have strong homogeneity, high degree of mutual imitation, and weak market competitiveness, making it difficult for enterprises to obtain economies of scale.

Without good benefits, it is even more unaffordable to bear the cost and risk of developing innovative drugs.

In addition, there is a lack of professional talents in China, and the research and development capabilities of new pet medicines are obviously insufficient, which hinders the research and development and innovation of pet medicines.

However, as more and more people keep pets in China, the demand for new pet drugs is increasing day by day, and the supply is in short supply, which in turn has further led to a large number of domestic veterinary drug companies imitating foreign pet drugs.

If things go on like this, the production and research and development of domestic pet medicines will enter a vicious circle.

Feeling this, Zhang Qinghua decided to visit a famous foreign animal protection company to learn.

Zoetis, the world's largest pet and livestock drug and vaccination manufacturer under Pfizer, Lilly Animal Health, an animal health brand under Eli Lilly and Company, an animal health brand under Bayer, and other large companies, he Went all over again.

But it is a pity that these companies are very large, and have branches and production factories in China, and they are unwilling to distribute mainstream products to Petro Holdings as an agent.

This is where it gets a little tricky!
Zhang Qinghua had no choice but to change his thinking and turned the agency into an investigation to understand the company's R&D, production, and sales processes.

The people of these companies are still very face-saving, because Pete.com and Pete Pet Hospital are their important sales partners in China.

They took Zhang Qinghua and his party to visit the laboratory and production workshop, and arranged for a special person to be in charge of explanation.

They are not afraid of stealing teachers at all, because they are very confident in technology, including you are not afraid of generic drugs.

After some investigation, Zhang Qinghua learned a lot.

After returning to New York, he began to tell his son about the experience vividly.

"Take Zoetis as an example. In the financial report for the third quarter of 2017, the revenue was US$13.5 billion and the net profit was US$2.98 million.

There are 25 factories and 300 production lines in the world, and the products are exported to more than 100 countries.

There is also a research and development team of thousands of people, all of whom are senior talents.

This company also entered China very early, and set up an office in Beijing in 1995.

Now the Asia-Pacific headquarters is located in Shanghai, there is a research and development center in Beijing, and there are production plants in Kyrgyzstan and Xuzhou..."

Zhang Yida nodded with a smile. He couldn't be more clear about what his father said. After all, he did this in his previous life.

Zoetis is not well-known, but its parent company, Pfizer, is well-known. The production company of Viagra has a history of nearly 170 years.

Pfizer was founded in New York in 1849, when China was still in the Daoguang period...

Therefore, in the field of biopharmaceuticals, Chinese companies still have a long way to go.

Zhang Yida was not at all surprised when his father said that he had not obtained the agency qualification.

How good are foreign devils, the money you can earn by yourself will never be given to you Chinese.

"I heard that Bayer intends to sell the animal health business?"

Zhang Qinghua smiled and said: "Yes, the person in charge of their American branch heard that I have a son worth 700 billion US dollars, so they tried their best to promote their company to me."

Zhang Yida scratched his head, "How much is the offer? Is there $100 billion?"

Zhang Qinghua glanced at his son in surprise, "That's right, how do you know? They asked for 100 billion U.S. dollars."

Zhang Yida replied casually, "I guess."

In fact, it’s no guesswork. In the middle of 19 years in the previous life, Lilly Animal Health acquired Bayer’s animal health department with US$53 billion in cash and US$23 billion in stocks.

Zhang Yida is engaged in this industry, and of course he remembers this largest merger and acquisition transaction in the pet medical market in recent years.

The transaction price is not high. The net profit of Bayer’s animal health business was just over US$4 million that year, and the valuation of 18.8 times the price-earnings ratio is completely reasonable.

At this moment, Zhang Yida was really tempted.

"When I heard the offer, how could I dare to talk about it."

Zhang Qinghua smiled, "What is the valuation of our Pat Holdings Group? Snake swallowing elephants?"

Zhang Yida groaned, the pet market is a sunrise industry, swallowing Bayer's animal protection business, with the help of the sales network of Petnet and Dogford, there is definitely a bright future!

Seeing that his son was silent, Zhang Qinghua asked, "Don't you really want to acquire Bayer's animal health business?"

"I think it can be acquired. In this way, the business sectors of our pet market will be complete. Pet e-commerce, food, hospitals, medicines and other jigsaw puzzles form a pet industry kingdom.

Moreover, the acquisition of Bayer's animal protection business can also expand our business network overseas.

In the future, Petnet and Dogford pet food can both develop overseas! "

Zhang Qinghua has inspected so many pet medicine companies, and he is also very envious of their companies.

Of course it would be great to be able to acquire it and become your own property, but the problem is that you can't afford it?

"You can get 100 billion US dollars? Most of your worth is in the stocks of unlisted companies. Are you going to borrow money?"

Zhang Yida nodded, "We definitely need to use financial leverage, and we don't want so many shares, we just need to be a controlling shareholder, and we can bring in a few partners, so the actual capital contribution is not much."

Zhang Qinghua always felt that it was inappropriate. It is a big step for a company with a valuation of more than one billion dollars to acquire a company with a valuation of tens of billions of dollars.

"Let's wait another two years, until Pet Holdings becomes stronger."

Zhang Qinghua persuaded, "Besides, the pet hospital war in your country has not yet been settled. Isn't this spreading your energy around and giving others a chance to defeat them all?"

Zhang Yida didn't quite agree with his father's point of view, explaining: "There are no opportunities to miss the opportunity, and the chance to be sold by the world's top five animal insurance companies is very rare.

When we win Bayer's animal protection business, the industry chain will be complete.This opportunity should not be missed in any case.

As for those pet hospitals in China, the war will end with a single M&A operation. "

Zhang Qinghua was both helpless and relieved to see his son in high spirits.

Helplessly, he felt that he could not keep up with his son's pace more and more, and the tens of billions of dollars in mergers and acquisitions were so understated in his eyes.

I am gratified that my son's achievements far exceed his own, and his climbing in the business field is close to the top of the world.

Thinking of this, he no longer objected, but repeatedly told him to treat such a high-priced acquisition with caution.

　Thank you, being handsome is a kind of trouble, brother for your reward!
　　
　
(End of this chapter)