Qilian International plans to adjust industrial investment

Rhea-AI Summary

Qilian International (NASDAQ: QLI) has announced plans to adjust its industrial investments in response to declining demand and increasing costs in its oxytetracycline sector. The company will significantly reduce its investment in oxytetracycline and increase its focus on heparin sodium, a biomedical raw material with promising market potential. Additionally, Qilian will expand its licorice product line and invest in financial technology and software development. These strategic shifts aim to optimize resource allocation, boost efficiency, and enhance overall competitiveness and profitability.

Positive

• Significant reduction in oxytetracycline investment to manage rising production and operational costs.
• Increased investment in heparin sodium research, production, and market development, addressing high market demand.
• Expansion into licorice-based products to broaden market share and enhance profitability.
• Investment in financial products and software development to diversify revenue streams and tap into new growth opportunities.

Negative

• Continuous shrinkage in market demand for oxytetracycline products.
• Persistent decline in market prices for oxytetracycline.
• Escalating environmental protection standards increasing production and operational costs.
• Substantial increase in costs leading to impaired profitability in the oxytetracycline industry.

Insights

Financial Analyst

Qilian International's decision to reduce investment in the oxytetracycline sector highlights a strategic shift in their operations. The company identified a persistent decline in both market demand and pricing for oxytetracycline, coupled with increasing production costs due to rising environmental standards. This move aims to cut down on operational costs and mitigate business risks. From a financial perspective, this reallocation of resources is a positive step toward more sustainable profitability. Investors should note that the company’s reorientation might initially come with restructuring costs but is expected to enhance long-term financial health.

Increasing focus on heparin sodium is particularly promising. This sector has a strong market outlook due to its critical role in medical applications. The potential for growth in this segment could provide significant revenue streams, offsetting losses from the declining oxytetracycline market.

Market Research Analyst

Qilian International's diversification strategy into heparin sodium and licorice products aligns well with current market trends. The global demand for heparin sodium, driven by its essential uses in healthcare, suggests a solid growth trajectory. This strategic pivot can potentially open up new revenue channels and diversify risk.

Additionally, the focus on licorice products taps into the increasing demand for natural and herbal health products. This market is growing, backed by consumer preferences for natural remedies and supplements. By investing in licorice-based products, Qilian is positioning itself to cater to these consumer trends, which could lead to enhanced market share and profitability.

However, the announcement on investments in the financial field and software development is less traditional for a pharmaceutical company. While it suggests a move toward diversified revenue streams, the success of this venture will largely depend on the company's ability to manage and grow within these unfamiliar sectors.

Healthcare Industry Expert

Qilian International's increased focus on heparin sodium is a strategic move within the healthcare industry. Heparin sodium is a critical anticoagulant used widely in surgeries and for treating various medical conditions. As the demand for healthcare services continues to rise globally, this area is poised for steady growth. By enhancing their investment in the research and production of heparin sodium, Qilian could establish itself as a key supplier in this high-demand market.

The diversification into licorice products is another interesting development. Licorice has numerous applications in both traditional and modern medicine, including treatments for digestive issues and respiratory conditions. Qilian’s move to expand their range of licorice products could capture a significant market segment seeking natural health solutions.

JIUQUAN, China, May 17, 2024 /PRNewswire/ -- Qilian International Holdings Group Limited (NASDAQ: QLI) ("Qilian" or the "Company"), a pharmaceutical and chemical products manufacturer headquartered in China, today announced: In the past two years, Qilian International Holdings Group Limited has encountered significant challenges stemming from the continuous shrinkage in market demand for its oxytetracycline products, coupled with a persistent decline in market prices and escalating environmental protection standards. These factors have collectively led to a substantial increase in the production and operational costs for Qilian International, consequently impairing the profitability of the oxytetracycline industry. In response to these challenges and in an effort to optimize resource allocation and enhance the company's overall efficiency, Qilian International is planning to reorient its industrial strategy in accordance with the prevailing market conditions and its long-term development objectives.

Firstly, Qilian International will reduce its investment in the oxytetracycline sector. The company plans to substantially decrease its capital allocation to the oxytetracycline industry, aiming to mitigate production and operational costs as well as to manage business risks more effectively.

Secondly, the company intends to bolster its investment in the heparin sodium sector. Recognized for its critical role as a biomedical raw material, heparin sodium offers extensive application prospects and a promising market outlook within the medical field. Qilian International is committed to significantly enhancing its investment in the research and development, production, and market development of heparin sodium. This strategic move is designed to refine the production techniques and expand the scale of heparin sodium production, thereby addressing the escalating market demands.

Thirdly, the company plans to develop a series of licorice products. Qilian International will closely monitor market trends and augment its investment in the research, production, and marketing of licorice-based products, including licorice extract, fluid extract, and compound licorice lozenges. This strategic expansion is intended to broaden the company's market share and enhance profitability.

The fourth is to invest in the financial field (stocks, wealth management, etc.) and software development. With the rapid development of financial technology, the development of financial products and software in the financial field has become a new growth point. The company will actively seize the opportunity to invest appropriately in financial products in the financial field, and gradually increase investment in software development to promote the diversified development of the company.

Adjusting its industrial orientation is a key initiative for the company to proactively adapt to market changes and optimize resource allocation. In the future, through the implementation of the adjustment plan, the company will continue to innovate the business concept, further enhance the overall competitiveness and profitability, promote the sustainable and healthy development of the company, and create greater value for the majority of shareholders and partners.

About Qilian International Holding Group Ltd

Qilian International Holding Group Limited, headquartered in Gansu, is a leading manufacturer of pharmaceutical and chemical products in China. It focuses on the development, manufacture, marketing and sale of licorice products, oxytetracycline products, traditional Chinese medicine derivatives product, heparin product, sausage casings, and fertilizers. The Company's products are sold in more than 20 provinces in China. For more information, visit the Company's website at https://www.qilianholdings.com 

Safe Harbor Statement

Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, are: the ability to manage growth; ability to identify and integrate other future acquisitions; ability to obtain additional financing in the future to fund capital expenditures; fluctuations in general economic and business conditions; costs or other factors adversely affecting our profitability; litigation involving patents, intellectual property, and other matters; potential changes in the legislative and regulatory environment; a pandemic or epidemic. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in the Company's filings with the Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Such information speaks only as of the date of this release.

For more information, please visit our website.

Media contact:
JIANG YUBIN
595090812@qq.com 
xinchen@qiliancorp.com 

View original content:https://www.prnewswire.com/news-releases/qilian-international-plans-to-adjust-industrial-investment-302148962.html

SOURCE Qilian International Holding Group Limited

FAQ

Why is Qilian International reducing its investment in oxytetracycline?

Qilian International is reducing its investment in oxytetracycline due to declining market demand, persistent price drops, and rising production and operational costs.

What new sectors is Qilian International investing in?

Qilian International is investing in heparin sodium, licorice-based products, financial products, and software development.

How will the investment in heparin sodium benefit Qilian International?

The investment in heparin sodium aims to enhance production techniques, expand production scale, and meet growing market demand, thereby improving profitability.

What are the expected outcomes of Qilian International's new industrial strategy?

The new strategy aims to optimize resource allocation, boost efficiency, enhance competitiveness, and improve profitability.

What are the main challenges faced by Qilian International?

Qilian International faces challenges such as declining demand for oxytetracycline, falling market prices, and increased production and operational costs due to stricter environmental standards.