Adhere to the road of technological innovation in Shandong drug glass

Established in 1970, Shandong Pharmaceutical Glass Co., Ltd. started from antibiotic glass packaging, adopted low price to seize market share and continuously carried out technological innovation market strategy. The market share of molded antibiotic bottles reached 79%. The company is the largest pharmaceutical glass packaging manufacturer in China.

The pharmaceutical glass packaging industry spans two major industries, glass and pharmaceutical packaging. As pharmaceutical glass packaging continues to develop with high added value, the pharmaceutical glass packaging competition will not only be a competition in the glass industry but will include more and more. The technical characteristics of the drug's compatibility, and the inherent competition elements are moving toward a higher level in the pharmaceutical field. The company took the road of technological innovation and pursued excellence in the production process of medicinal glass. In 2004 and 2005, it adopted the {TodayHot} technological innovation to digest multiple pressures such as the dramatic increase in the cost of raw materials and energy and the delay in the use of butyl rubber stoppers, and maintained a steady increase in profits; 2006 In 2012, the company made great progress in the research and development of pharmaceutical glass packaging and drug compatibility. The butyl rubber plugs began to make significant profits for the first time; and the latest development of neutral boron-silicon-silicon-I glass has become the first in China and the fifth in the world. The pharmaceutical glass packaging company that produces Type I glass has taken the company's business to a new level.

Looking into the future, the company's membrane anti-bottle technology has basically played its potential, and membrane resistant bottles have become a solid foundation for the company's profitability. Relying on the growing maturity of pharmaceutical glass packaging technology and the successful development of Class I glass, the company’s market position has been further improved, and the company has taken the leading position in the domestic market; in the international market companies and multinational giants are gradually approaching: 1 The trend of industrial transfer of multinational packaging giants Increasingly, the company is becoming an OEM manufacturer of multinational packaging companies in China. The successful development of Type 2I glass, the company's glass tube pull tube technology, and Schott's proximity to Germany enabled the company to compete in the international market for glass materials and technology. The company participated in Pfizer's global pharmaceutical glass packaging procurement tender and became a global supplier of multinational pharmaceutical companies. Business. The upgrading of products, keeping up with the international trend of high-quality pharmaceutical glass packaging, the company's business will change from the past to the high quality and high price to win, from the low end to the high end, the profit structure will undergo a qualitative change.

1. Medicinal glass packaging industry {HotTag}

In 2005, the global pharmaceutical packaging scale was US$20 billion, and the average annual growth rate is expected to be 7% in the future. The world’s eight largest pharmaceutical producers, the United States, Japan, Germany, France, China, the United Kingdom, Italy, and Switzerland account for 80 percent of global pharmaceutical packaging consumption. %. Among them, the oral packaging market is the largest, followed by injections.

Pharmaceutical packaging is a very complex area and has a lot to do with the shape of medicines, government regulation, and target markets. In general, OTC, prescription drugs, and gene medicines have different needs for packaging.

Glass packaging is the oldest pharmaceutical packaging. Glass was invented in BC. It was first blown and cut into glass tubes in Syria and Italy. Glass bottles were introduced in 1700 to store wines; glass bottles were used in 1859 to preserve glass bottles. Juice and vegetable juice; 1903 Owens invented the first production of glass bottle automatic production line of uniform specifications, and established OI, the predecessor company of Owens Glass Bottle Company, and began to use glass packaging in large quantities for pharmaceuticals; currently the world’s largest glass packaging manufacturer is the United States. OI, whose glass bottle production line in Colorado, USA, can produce 3 million glass bottles per day, and can produce more than 1 billion glass bottles each year. Today, glass packaging continues to be popular with consumers for its purity, safety, quality, and material stability. At the same time, it is also recommended by the US FDA for the wide use of food and pharmaceutical packaging, and in small-volume injections, freeze-dried powder injections and genetic engineering drugs. The occupies an irreplaceable packaging position.

American Pharmaceutical Glass Packaging

The consumption of pharmaceuticals in the United States accounts for approximately 50% of the world's total. The pharmaceutical packaging scale is approximately US$10 billion. The US has guided the trend of pharmaceutical packaging. Due to its high value-added drugs (mainly based on innovative drugs), pharmaceutical packaging focuses mainly on the safety of packaging: The cGMP management of pharmaceutical production imposes stringent requirements on packaging and gives higher attention to packaging that may cause drug contamination. For example, drugs may react with the packaging to cause side reactions, prevent the packaging of large packages from causing drug contamination, and the pharmaceutical packaging is packaged in small packages. Trends and more.

As the government promotes the rapid development of low-cost generic drugs, prescription drug manufacturers have basically no incentive to change high-cost packaging when the safety of drug packaging is guaranteed. The cost of pharmaceutical packaging has become the most important factor for pharmaceutical companies to choose to package. Traditional glass packaging is still widely used in the prescription drug market; the OTC market is rapidly developing. This market is close to consumers, and innovative, attractive appearance and easy-to-use packaging have become key competitive factors for pharmaceutical companies. A large number of differentiated and convenient packaging products have emerged into the OTC market, and traditional glass packaging is shrinking in the OTC market.

From the perspective of pharmaceutical form packaging trends, the US traditional oral solid drug packaging is that most drugs are packaged in large bottles, and then used by pharmacists in small packages for consumers to use, this traditional packaging and modern drug origin and prevention of counterfeiting Drug management conflicts with others, which promoted the rapid development of aluminum-plastic packaging that was convenient, easy to transport, and accorded with the trend of drug hygiene. Medicinal blister packaging became the most robust branch of oral solid drug packaging, and glass packaging basically exited the oral solid drug market; The shelf life of oral liquids is more susceptible to environmental effects, and drugs and packaging are easier to react. Safe and stable brown glass bottles are still the main choice; injection packaging focuses on traceability, safety, and convenience. Non-PVC co-extruded films are widely used for their safety and transportation convenience. There is no choice of glass material for infusion medicines, small volume injections and freeze-dried powder injections. Safe and convenient glass pre-filled syringes, needleless syringes and injection pens are rapidly developing.

Therefore, even in the United States, which has a very mature glass packaging market, glass will still have a place in the pharmaceutical oral liquid market and small volume injections, freeze-dried powder injections, and genetic engineering drugs markets with its material stability and safety. One billion U.S. dollars, of which the market size of neutral borosilicate type I medical glass molded bottles is as high as 2.9 billion, far exceeding the global market. The major pharmaceutical glass packaging manufacturers in the United States are OI of the United States and Saint Gobain of France.

European medical glass packaging

In Europe, drug packaging tends to be safe, breakable, prevent misuse by children, facilitate use by the elderly, and protect privacy. Drug packaging is taking a high-value route and sales of pharmaceutical packaging materials are expected to grow faster than drug sales in 2007, reaching US$5.1 billion. . Pharmaceutical glass is challenged by plastic packaging. Medicinal glass accounts for approximately 9% of annual sales of pharmaceutical packaging. The development trend of packaging is having a complex impact on medicinal glass, but glass's excellent barrier properties and good appearance make up for easy. Broken defects. In terms of quality, glass is better than plastic, and oral liquids and injections will still be packaged in glass, not only because they are of good quality but because they have no choice in reality. Gene medicine is one of the driving factors for the growth of glass packaging because it must be administered by injection.

Like the United States, Europe is also a very mature market for glass packaging. The European pharmaceutical industry uses 2 billion glass bottles each year, has annual sales of 500 million US dollars, and glass continues to be used in the pharmaceutical oral liquid market and small volume injections for its stable and safe materials. The freeze-dried powder injection market has its advantages. In 2004, OI in the United States entered the European market through the acquisition of European glass packaging company BSNGlasspack and became the largest glass packaging manufacturer in Europe. The other two major glass packaging manufacturers in Europe are France’s Saint Gobain and Germany’s Schott, which are molded separately in injection packaging. Bottles and tubes pull tubes have a competitive advantage in technology.

Chinese medicinal glass packaging

The annual sales volume of pharmaceutical packaging in China is 15 billion yuan, an annual growth rate of 10%. At this stage, the quality of pharmaceutical packaging in China is low, and the pharmaceutical packaging, which accounts for 65% of the total amount of preparations, does not reach the level of the international 1980s, and the international pharmaceutical packaging industry is very Far distance, pharmaceutical packaging is aluminum, plastic, glass coexist. China's aluminum-plastic packaging for pharmaceutical tablets has increased from 10% in 1990 to 40% in 2003. Glass packaging has dropped from 85% in 1990 to 15% in 2003. It has basically withdrawn from the oral solid drug market, just like the European and American markets. In the future, pharmaceutical packaging in China will be oriented to aluminum-plastic packaging for oral solid preparations, glass-based packaging for oral liquids and injections, and the potential for growth in pharmaceutical glass packaging will lie in the market for high-value-added biologic bottles and the replacement of neutral class I pharmaceutical glass III. The industrial transfer of glass-like, international glass packaging giants and domestic enterprises participate in international market competition.

High value-added biopharmaceutical bottle market, neutral type I pharmaceutical glass instead of Class III glass

China's largest medical glass packaging is antibiotic molded bottles, followed by antibiotic control bottles, oral liquid brown bottles, and biologics bottles. There is a big gap between China's medicinal glass materials and international similar products. European and American countries have already developed neutral boron silicon type I medicinal glass, instead of III glass for injection packaging, neutral type I medicinal glass has stable performance. It can effectively protect the chemical properties of drugs, and the broken part of the broken bottle is smooth without fine cracks, and there will be no glass fragments falling into the liquid, which is far better than the Class III glass. Only a few joint ventures and large state-owned enterprises in China use a small amount of Type I pharmaceutical glass. Most companies still use Class III glass for pharmaceutical packaging. Medicinal glass manufacturers can only produce Class III glass, although there are pharmaceutical glass companies. Involved in the research and development of neutral type I medicinal glass, but Shandong Pharmaceutical Glass only two years in September this year, the exclusive development of successful.

In the long run, neutral type I pharmaceutical glass is the trend to replace type III glass, but China's rural medicine consumption level is low, quality and cheap antibiotics will still maintain a stable market capacity, so the type III glass in the future is very long It will be difficult to withdraw from the antibiotic market for a period of time. Class I glass instead of Class III glass will be a long-term process.

International Glass Packaging Giants' Industrial Transfer

Glass is a high-energy-consuming industry. OI, a major global glass packaging manufacturer, and Saint Gobain, a French manufacturer, basically completed the industrial layout in Europe and the United States. The production equipment is optimal and the production process efficiency is the highest. The future cost reduction path can only be transferred to industries in low-cost regions. , And in the transfer of the industry to obtain some of the local market share.

Schott (Germany) is the world's leading glass tube manufacturer. It has the world's best glass tube pull tube technology. China's Class I glass control bottle manufacturers all import pull tubes from Schott and remanufactured into control bottles, so China's Class I Glass bottles are secondary processed products. SCHOTT sales in Asia accounted for 17% of its total sales. In 1966, the company’s first Asian sales representative office operated in Japan. In 1974, it completed the first Asian manufacturing center in Indonesia. Currently, there are two in Beijing and Shanghai in China. The representative office and the manufacturing center were completed in Suzhou in 2002. In the year of 2006, SCHOTT is speeding up its industrial layout in China. It plans to close the Indonesian manufacturing center and import the glass pull tube from the German headquarters to manufacture the control bottle at the Suzhou Manufacturing Center. Special attention is required. However, Schott’s core technology for glass pull tubes is not produced in China. The Suzhou manufacturing center is only a secondary processing function. The glass tubes are produced as controlled bottles and sold to China and other countries, reducing the cost of secondary processing only. . Therefore, in the process of industrial transfer of multinational giants, pharmaceutical glass packaging manufacturers without technical advantages will be squeezed out of the market, and competition in the domestic pharmaceutical glass packaging industry will gradually move toward technological innovation.

In 2006, OI of the United States cooperated with Shandong Pharmaceutical Co., Ltd., the largest pharmaceutical glass packaging manufacturer in China, and had already established orders for brown bottles. In the future, it will further cooperate with Type I medicinal glass bottles; Saint Gobain in France is also in the country. Looking for partners; Europe and the United States, the Middle East and other countries are constantly consolidating brown bottles for oral liquids and immunomodulatory oral formulations. The demand for brown bottles in the international market is increasing rapidly. Needless to say, the trend of industrial transfer of multinational giants is increasingly clear.

Domestic enterprises participate in international market competition

Shandong Pharmaceutical Glass is the fifth company in the world to produce Type I glass. The successful development of Type I glass enables China's pharmaceutical packaging companies to participate in international production competition on glass materials. The pharmaceutical packaging in the European market is taking a high-value route and Class I pharmaceuticals. There is a large gap in the market for new glass packaging products such as molded bottles, controlled bottles, pre-filled syringes and cassette bottles for glass production. Shandong Glass Glass Glass Pipe Pulling Technology is close to Germany's SCHOTT. The company will soon participate in new drugs on the international market. Competition with glass packaging, and may directly become a supplier of downstream pharmaceutical companies.

The Competitive Elements of Medicinal Glass Packaging Enterprises

Pharmaceutical glass spans two major industries, glass and pharmaceutical packaging. It is not the market's imagination that is merely a competition in the glass industry. With the continuous development of pharmaceutical glass packaging, pharmaceutical glass contains more and drug compatibility technologies. Characteristics, internal competition elements also move to higher levels:

Cost and scale: This is the competitive characteristic of glass. Glass is a capital-intensive and labor-intensive high-energy-consuming industry. Good equipment, low raw material and energy costs, and low labor costs are the main competition factors, and companies must obtain The larger market scale effectively reduces costs through scale.

Technological innovation: covering the competitive characteristics of glass and pharmaceutical packaging, lightweight molding bottles, I-type glass production and glass tube pull technology are all technological innovations in the glass industry, the development of new types of medicinal glass packaging, more need to consider the packaging The research and development of the packaging and drug compatibility of enterprises has a higher level of intrinsic technology.

Attachment: The basic concept of medicinal glass packaging and the basic situation of pharmaceutical packaging in China

New medicinal glass packaging:

Type I glass molded bottles: mainly used for packaging plasma, albumin, globulin and other products, specifications in 20ml-100ml.

Type I glass control bottles: mainly used for packaging lyophilized biological agents, powder injections, vaccines, genetic engineering drugs and other products, specifications in 3ml-12ml, mainly 2ml-8ml, large specifications also have 32ml.

Clip-on bottle: foreign countries have partially replaced the injection Ampoule for packaging high-end large-capacity liquid dosage form drugs, domestic mainly for insulin injection packaging.

Pre-filled syringes: mainly used for packaging vaccines, interferon and other biological drugs, is a one-time drug-containing injections.

Brief introduction of two major glass packaging companies in Europe and America: There is no pure medical glass packaging company in the world

US OI: the world's largest glass packaging manufacturer, OI glass packaging involves food, beverages, cosmetics and pharmaceuticals, glass packaging revenue accounted for 89% of its business income, the other 11% is a plastic packaging, 2005 OI sales scale is 7079 Billion U.S. dollars, including glass packaging sales of 630 billion U.S. dollars.

Saint Gobain, France: The Saint Gobain business involves five areas. The packaging revenue only accounts for 11% of the company's business revenue. In 2005, the sales volume was 479.9 billion US dollars, and the glass packaging scale was even smaller. One of the company's five major businesses is Flat glass business.

Chinese medicine packaging has gone through three phases:

In the 50-60s: Brown bottles, straw cartons, and straight neck ampoule were the main packaging, and medicines were bulky and practical.

In the 60-80s, it was greatly influenced by the Cultural Revolution. From the end of the 1960s to the end of the 1970s, there was no registered trademark on pharmaceutical packaging. It was the painful period for pharmaceutical packaging in China and the development of pharmaceutical packaging was completely stagnant.

From the 1980s to the present: In the early 1980s, the registered trademark of drugs was restored, and the pharmaceutical packaging industry began to develop healthily. Composite materials such as aluminum-plastic, paper-plastic, and laser anti-counterfeit packaging materials were gradually popularized.

On April 29, 2004, China promulgated the "Measures for the Administration of Materials and Containers for Pharmaceutical Packaging (Provisional)", which classifies pharmaceutical packaging materials into three categories: I, II, and III:

Category I refers to materials and containers for pharmaceutical packaging that are directly in contact with drugs and used directly;

II refers to direct contact with drugs, but easy to clean, in the actual use of the process, after cleaning and can be disinfected and sterilized drug packaging materials, containers;

Category III refers to materials and containers for pharmaceutical packaging that may directly affect the quality of drugs other than Class I and II.

At present, the main pharmaceutical packaging materials mainly include the following major categories:

Rubber packing material: It mainly appears in the form of stoppers and gaskets for containers, which are divided into natural rubber and butyl rubber. Due to the poor sealability of natural rubber, it is necessary to seal the wax to supplement it, and the chemical properties are unstable. The government has been eliminated from the list. The butyl rubber has excellent sealing performance and replaces the natural rubber plug as an injection package.

Metal packaging materials: aluminum caps, pastes and aerosols used for powder injection packaging, and pharmaceutical aluminum foils for aluminum-plastic blister packaging. Aluminum-plastic composite covers have been accepted by more and more markets due to their easy opening and safe use. The aluminum-aluminum packaging developed in recent years is a new type of packaging material, which has a strong barrier property and can prolong the shelf life of drugs, and is particularly suitable for drugs with poor chemical stability.

Glass packaging material: It is widely used in the fields of injections, powder injections, biological medicines, blood products, lyophilizers, and oral liquids. Glass has good chemical stability, is not affected by the atmosphere, is not decomposed by solid or liquid substances of different chemical compositions, and the chemical properties and radiation resistance properties of the glass can be adjusted by changing the chemical composition of the glass, and the glass is transparent and beautiful. , low price, recyclable, etc., will not cause environmental problems.

Composite packaging materials: mainly including oral solid plastic bottles, liquid plastic bottles, etc., mostly made of high-density polyethylene or polypropylene, polyester materials.

2. China's largest pharmaceutical glass packaging company

Established in 1970, Shandong Pharmaceutical Glass Co., Ltd. started from antibiotic glass packaging, adopted low price to seize market share and continuously carried out technological innovation market strategy. The market share of molded antibiotic bottle reached 79%. It is the largest pharmaceutical glass packaging production enterprise in China.

At present, the company can produce six series of more than 400 kinds of products including molded antibiotic bottles, ampoules, control bottles, infusion bottles, glass tubes, and brown bottles, as well as butyl rubber stoppers, aluminum plastic caps, and plastic bottles, and have been successfully developed. Neutral borosilicate I glass has become the first domestic pharmaceutical glass packaging company capable of producing Class I glass in the world.

The company's total share capital is 222 million yuan, with unlimited sales of 155 million outstanding shares. The controlling shareholder of Wuyuan County Public Assets Management Committee holds 24.84% of the company's shares, unlimited-sale tradable shareholders hold 69.51% of the company's shares, and other limited-sale tradable shareholders hold 5.63% of the company's shares .

The company's main raw material soda ash accounts for about 10% of production costs, and the main energy-consuming coal accounts for about 18% of production costs. In 2004, the price of soda ash increased and the price of coal rose. Production costs rose by more than 30 million, and the government was originally scheduled for 2004. On December 31st, the butyl rubber stopper completely replaced the natural rubber stopper and the antibiotic stopper was delayed until June 30, 2005. The infusion stopper was postponed until December 31, 2005, which greatly affected the effectiveness of the raised funds. Even so, the company Still, through the technological innovation, the costs have risen and the profits have been steadily increasing.

3. Leading by size and cost, membrane resistance bottle is cash flow business

The antibiotic powder injection accounted for the absolute sales volume in the injection market in China. The company cultivated finely in the field of pharmaceutical glass packaging and formed a strong technical advantage. The market share of the membrane-resistant bottle reached 79%, and the production efficiency was higher than 70% of its counterparts. The interest rate is 10 points higher than that of competitors. Relying on technological innovation, the company's market competition strategy is to continuously reduce the price of common specification model anti-bottles, and to introduce high-gross-rate new products to replace old ones and gradually force competitors out of the market. It is expected that urban consumption in the antibiotic market will shrink in China, and rural consumption will increase steadily. The company is the main manufacturer of antibiotic molded bottles. The future size of membrane-resistant bottles is stable. The transfer to the Baotou industry may effectively reduce costs, and membrane resistance bottles become stable cash for the company. Streaming business.

Giants in antibiotic powder industry win customers with size and cost

The penicillin powder industry, which accounts for 70% of the antibiotic powder market share, shows high industrial concentration. 50-60% of production capacity is concentrated in four major manufacturers: Harbin Pharmaceuticals, Shijiazhuang Pharmaceuticals, North China Pharmaceuticals and Lukang Pharmaceuticals, including North China Pharmaceuticals. The annual production of penicillin powder is about 1.2 billion, which is mainly used in the packaging of controlled bottles. The remaining three companies use about 4 billion mold-resistant bottles each year. The company's mold-resistant bottles reach 8.7 billion, and it has the ability to cover downstream customers. We think the scale will become upstream. The bottleneck of competition in the packaging industry.

In recent years, the sales scale of the company’s top five sales customers has been stable at 1.8-1.9 billion yuan. Harbin Pharmaceuticals, Northeast Pharmaceuticals, Stone Drugs, Qilu, Shanghai Pioneer, and Shanghai New Asia, the heavyweight producers of antibiotic powder, are basically the company’s Drug companies are exploring the entry into the molded bottle industry. However, Shandong Pharmaceutical Glass Mould-resistance bottle prices are lower than drug companies entering the Mould-resistance bottle industry. They also make pharmaceutical companies continue to give up sales of more than 500 million yuan. Mold resistant bottle industry.

In addition, because pharmaceutical glass bottles account for a small proportion of drug value (1-10%), the first choice of glass bottles for downstream companies is to consider the stability of the quality of glass bottles in the process of continuous batch filling of large quantities of drugs and their suitability for filling equipment. The company has established a long-term and stable cooperative relationship with nearly 800 customers. The quality of the molded bottles produced has been fully adapted to the requirements of the downstream manufacturers on the mechanical strength and specifications of the bottles, which makes the company's customers have a good Continuity and stability.

Gross profit margin is 10 points higher than that of competitors, and profit is earned by technological superiority

In recent years, the company has continuously invested funds for technological transformation, and has independently developed domestic leading technologies such as lightweight thin-wall mold resistant bottle production technology, high white material mold anti-bottle production technology, servo parallel shear feeding technology, electric servo material feeding technology, and small-mouth pressure blowing technology. , For the transformation of purchased production equipment, not only the product quality has been improved, but also the production efficiency has been greatly improved. The production efficiency of one mold anti-bottle production line has been higher than 70% of the counterparts in 2003 and 2004, which makes the company model resistant to bottle hair. The interest rate is far higher than the average gross margin of the industry by more than ten points (the company's model bottle resistance rate was 41% in 2005, and the average gross margin of the industry was about 30%). The sales price of some products was close to the counterparty cost price, and the company completely relied on technological advantages to win. Take profits.

In 2004, when the cost increased by more than 30 million, the company improved its production efficiency through technological optimization. The company digested the cost of 25 million yuan, and the model-resistant bottle gross margin remained high, reflecting the company’s strong internal management, technical capabilities, and competitiveness.

Adjust product structure and stabilize the leading position in the industry

At present, the company's mold resistance bottle specifications from the 5ml-100ml nearly 300 species, while the peer company can only produce a maximum of 10 specifications. Through the continuous introduction of high-gross new product replacements, lowering the price of competitors' existing model-resistant bottles, cracking down on competitors and gradually forcing competitors out of the market, the company’s market strategy has achieved absolute results, and the industry’s leading position has been steadily consolidated.

In response to the trend of modularization and anti-bottles, the company took advantage of 30 years of accumulated experience in the glass packaging industry to continuously research and develop new-type die-resistant bottles. It is the first lightweight, high-grade, and large-format one in the industry, leading the industry in consumer trends, and Saint Gobain in France fights for Pfizer's high-end customers.

Membrane resistance bottle transfer to Baotou industry will effectively reduce costs and become a cash flow business

As China's unique prescription drug clinical marketing model, urban hospital sales of oral antibiotics swollen, antibiotic powder is mainly on the amount of "virtual praise", sales of water is not great, but with the rational rationality of medication, the future of China's urban hospital antibiotics The consumption of injections has shrunk, and rural areas have become the main force for the increase in the consumption of antibiotics. The company is the main manufacturer of membrane-resistant bottles, and the scale of membrane-resistant bottles is stable in the future.

Membrane resistance bottles are being transferred to the Baotou industry. Due to the availability of local coal and soda ash and tax concessions of 15%, Baotou’s subsidiary Kangyu’s strategic positioning is a company’s Class III glass mold resistant bottle production base. The local coal price is only RMB 200/ton. (Company headquarters 506 yuan / ton), electricity price 0.40 yuan / degree (Corporate headquarters 0.57 yuan / degree), we expect membrane resistance to the entire bottle after the transfer, the long-term gross margin may rise to 45-46%, membrane resistance bottle future contributions to the company The net profit will stabilize at 80 million to 110 million yuan, becoming the company's cash flow business.

4. Take the road of technological innovation, and gradually approach the multinational giants

Before 2003, all technologies of the company centered on the glass industry, and had strong technological advantages in glass packaging. In the pharmaceutical industry, it was only a registered barrier for pharmaceutical packaging controlled by the government. After the intervention in the production of butyl rubber plugs in 2003, the company used pharmaceuticals. Glass packaging began to be fully integrated with drugs. Medicinal glass packaging is not a simple glass bottle, but a medicinal glass that can guarantee the safety of injected drugs. Drug packaging must also be compatible with drugs while packaging drugs. Sex will not react with drugs, causing greater drug safety problems.

Continuous technological innovation in the field of pharmaceutical packaging, product upgrading in 2007

The company's membrane resistant bottles continued to undergo technological transformation and the technical potential was basically brought into play. In 2003, the "bottle + lid" strategy was involved in butyl rubber stoppers. The company's glass packaging began to merge with the pharmaceutical industry. In 2004, the company developed I-type glass for two years. Difficulties, breakthrough in technology in 2006; success in 2007 relying on type I glass, the company will undergo a qualitative leap in pharmaceutical glass packaging, product upgrading, closely follow the trend of international high-quality pharmaceutical glass packaging, the company's business will be from the past Winning to win with high quality and high prices (the same specifications, the price of glass packs of Class I is several times the price of III glass packs), from the low end to the high end, the profit structure will be greatly changed.

The areas where the company may play a technical advantage in the future are:

Relying on the existing film bottle production technology, brown bottles (ie, brown molded bottles) can effectively reduce the weight and grade of grafted molded bottles, providing quality assurance for brown bottles to reach the international market. In the first half of 2006, the brown bottle gross margin was already Up to 44%, 6 percentage points higher than in 2005;

Butyl rubber has free substances, 3-6 months precipitation will affect the effect of drugs, production of butyl rubber stopper has a higher technical threshold, the company specializes in butyl rubber plug and liquid drug formulations compatibility experiments to hire domestic and foreign experts The research has achieved good progress and has become the only packaging enterprise in China that solves the compatibility problems of butyl rubber plugs and liquid drugs, and has made technical preparations for expanding the market share of high-grossing infusions for butyl rubber plugs in 2006 and 2007.

For high-end pharmaceuticals, the company has successfully developed coated rubber stoppers in China and is able to scale production. The cost is much lower than that of the Western-style company's siliconized coating and will be marketed in the future according to market demand;

The successful development of Type I glass has completely rewritten the market characteristics of the company in the past relying on scale and cost competition. In the future, it will shift to high value-added bio-agent pharmaceutical glass packaging and win with quality.

The company is the first pharmaceutical glass packaging company to install automatic inspection packaging machines in China. It is expected that the automatic inspection machine will replace manual inspections in 2007 and take a new step in the inspection technology of pharmaceutical glass packaging.

Entering the international market, it is gradually approaching the multinational giants

Molded bottles are the main packaging of injections, and the company has basically become a packaging supplier for multinational pharmaceutical companies in joint ventures and wholly-owned enterprises in China. With the growing maturity of the company's pharmaceutical glass packaging technology and the successful development of Class I glass, the company's market position has further improved in 2006, entered the international market, and gradually approaching the multinational giants:

The trend of transnational packaging giants is increasingly clear. The company is becoming an OEM manufacturer of multinational packaging companies. In 2006, OI and the company cooperated and had customized a brown bottle. In the future, the company will conduct deeper levels in the category I pharmaceutical glass bottles. Cooperation; Europe and the United States, the Middle East and other countries are continuously compressing the brown bottle packaging of oral liquid and immunomodulating oral preparations. The company will share the rapid increase in demand for brown bottles in the international market in the next few years. The brown bottle will become a new force for export products in 2006 and 2007. .

Formally becoming a global supplier of multinational pharmaceutical companies: The company is the fifth company in the world to produce Type I glass. The successful development of Type I glass enables the company to participate in the international market competition on glass materials, Shandong Medicine Glass Glass Pipe Pulling Technology and Germany. SCHOTT is approaching, the pharmaceutical packaging in the European market is taking a high-value route, and the gap in the new glass packaging market for molded bottles, controlled bottles, pre-filled syringes, cassette bottles, etc. produced by Type I pharmaceutical glass is large, and the company will soon participate in the international market. The market is competitive with new types of pharmaceutical glass packaging, and has participated in global bidding for pharmaceutical glass packaging of Pfizer Pharmaceuticals, and has officially become a global direct supplier of multinational pharmaceutical companies.

5. Earnings forecast

Our profit forecast includes the following assumptions:

The sales revenue of molded bottles remained stable. We assumed that the price of soda ash continues to remain high. We did not consider the increase in gross profit margin of molded bottles brought to Baotou Kangrui;

The export of brown bottles is the driving force for growth. The gross profit rate increased significantly in 2006. In 2007, due to the depreciation of new production lines, the gross profit margin decreased slightly.

The butyl rubber plug antibiotic plug gross margin 15%, infusion plug plugging rate 40%, the company's product structure adjustment, increase the proportion of infusion plugs, the gross margin increased steadily in 2006 and 2007;

In September 2006, Type I glass molded bottles had already started to be sold. We did not assume that income would be generated in 2006. However, in 2007, the company's existing capacity of 60 million Type I glass molded bottles was utilized, and new capacity and new types of bio bottles were available at the end of 2007. The start of production brought a substantial increase in the income of Type I bio-bottles, while the gross profit rate of Type I bio-bottles was as high as 60%;

The company's production capacity is limited, and investment in fixed assets has been continuously implemented in the past two years. The construction of brown bottles and type I bio-bottle production lines has mainly taken place. At the same time, the molding bottle production line has gradually transferred to Baotou Kangrui.

Our profit forecast did not consider the company issuing additional funds, so the financial costs are still high.

Our EPS considers a 45-million-dollar increase in share capital.

In 2006: sales of molded bottles and gross profit margin were stable; sales of butyl rubber stoppers reached 218 million yuan, net profit contributed 20 million yuan (2005 losses); brown bottles achieved sales revenue of 100 million yuan; gross margin improved from 38% in 2005 To 44%, new net profit of 3 million. We expect the company to achieve a net profit of 99 million in 2006, a year-on-year increase of 20% and a diluted EPS of 0.37 yuan.

In 2007, the sale of molded bottles and the gross profit margin were stable. The butyl rubber plug achieved a sales revenue of 290 million yuan, a year-on-year increase of 33%, and a new net profit of 12 million; a brown bottle realized a sales revenue of 130 million, and a new net profit of 13 million; Biopharmaceutical bottles achieved a sales income of 60 million and contributed a net profit of 18 million. We expect the company to achieve a net profit of 142 million in 2007, a year-on-year increase of 43%, and a diluted EPS of 0.53 yuan.

In 2008: sales of molded bottles and stable gross profit margin; butyl rubber plugs achieved sales income of 305 million yuan, a year-on-year increase of 5%, and new net profit of 4 million; brown bottles achieved sales revenue of 169 million, and new net profit of 3 million; Biopharmaceutical bottles achieved a sales income of 138 million and a net profit of 43 million. We expect the company to achieve a net profit of 192 million in 2008, a year-on-year increase of 35% and a diluted EPS of 0.72 yuan.

Medicinal glass packaging is a capital-intensive industry. In June 2002, the company went public and raised 339 million yuan. In 2003, fixed assets increased by 264 million compared with 2002, of which butyl rubber plug project invested 170 million yuan. The pharmaceutical glass bottle project has an investment of 80 million, and the brown bottle, bio bottle, and aluminum-plastic composite cover project have invested 30 million, 31 million, and 27 million respectively. Only the light-weight, thin-walled, high-grade medical glass bottle project has yielded better results. The brown bottle Is gradually yielding benefits, butyl rubber plug will contribute a better return in 2006. It should be said that in the past two years, the company’s raw materials, energy prices, and multiple factors in the national industrial policy have not brought any return to the market. On the other hand, the company’s original molded bottle business has invested more than 20 million in a molded bottle production line. It produces 900 million molded bottles annually, achieves a sales revenue of 36 million, and has a very low input-output ratio of 1:1.5.

The company's Class I glass has been successfully developed. The production line for Class I glass molded bottles requires only 15 million inputs. The annual output is 120 million, and the sales revenue can reach RMB 1-1.2 billion. The input-output ratio is 1:7, which is much higher than Type III glass molded bottle output, with the company's product upgrading, capital return rate will gradually increase, but it may still require a longer process, we hope that investors form a reasonable expectation.

The proportion of product exports gradually increases, and the appreciation of the renminbi is a long-term influence factor.

The proportion of the company’s product exports has gradually increased, and may grow explosively in the next 2-3 years. Although the current export base is low and the export product price is much higher than the domestic sales price, the RMB appreciation will not affect the company's earnings in the short term, but it will come for a long time. It is said that the appreciation of the renminbi is a negative factor.

The international market is changing, companies may find it difficult to grasp

As a company that gradually increases its exports, it has no mature experience in the international market, and the international market is undergoing changes. The company may find it difficult to grasp the opportunities and risks involved.

Multinational giants increase market layout in China and pose significant challenges to the company

The current market for high-end pharmaceutical glass in China is still relatively small. Schott has already set up production bases in China. Saint Gobain also turned its attention to China. On the one hand, it is production transfer. On the other hand, it focuses on the future growth potential of the Chinese market. The future is in medicinal use. In the high-end market for glass packaging, Shandong Pharmaceutical Glass may face competition from multinational giants.

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