The Study On The Impact Of Industrial Chain Extension On The Performance Of Chinese Medicine Manufacturing Enterprises

As a national traditional medicine industry,Chinese medicine industry has developed rapidly over the years with the vigorous support of a series of national industrial policies.But at the same time,there are still some problems in the development of Chinese traditional medicine industry,such as the crisis of Chinese medicinal materials resources,the unsound technology standard system of traditional Chinese medicine and the lack of R & D investment,etc.In recent years,the growth rate of Chinese medicine manufacturing industry has slowed down.Chinese medicine manufacturing enterprises are faced with the frequent fluctuations in the price of Chinese herbal medicines,drug price reduction policies in the medical reform and other issues.The profit margins are constantly being compressed.Many traditional Chinese medicine manufacturers have begun to layout the whole industry chain.However,the essence behind the whole industrial chain model is still the implementation of the industrial chain extension strategy,to expand upstream and downstream in order to achieve integrated operation.The effect of the implementation of the industrial chain extension strategy on the performance of Chinese traditional medicine manufacturing enterprises is worth studying.This paper selects a case study of Kangmei Pharmaceutical Co.,Ltd.,the forerunner of the extension of the industrial chain of the Chinese medicine manufacturing industry.On the basis of the analysis of the extension path of the Kangmei pharmaceutical industry chain,the effect mechanism of Kangmei pharmaceutical industry chain extension strategy on its enterprise performance is discussed.The first is to reduce transaction costs,including distribution costs,contract costs and asset-specific costs,through the internalization of market transactions.The second is to reduce the business risk by guaranteeing the supply of the Chinese medicinal materials and sales of traditional Chinese medicine products.The third is through the control of the upstream and downstream sectors to improve the market monopoly power,so as to obtain monopoly profits.From the perspective of short-term market performance,besides the acquisition of public hospitals involved in medical services,extension activities of Kangmei Pharmaceutical in the upstream and downstream industries are generally favored by investors.From the perspective of financial performance,during the extension of the industrial chain,the profitability,growth capability and value creation ability of Kangmei Pharmaceutical have been improved to a certain extent.However,the extension of the industrial chain also underperformed the operational capacity and caused certain fluctuations in its ability to create cash.The last chapter of this paper makes a conclusion,and then puts forward some suggestions on the implementation of the industrial chain extension strategy for the enterprises of the Chinese medicine manufacturing industry.