Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
LANSEN PHARMA
HKEx Stock Code : 00503 
 
Corporate Profile
The principal activities are manufacturing and trading of pharmaceutical products. The principal activities of the Group are carried out in the People's Republic of China (the ¡§PRC¡¨).

Business Review - For the year ended December 31, 2012

New opportunities under changing pharmaceutical policies

2012 was deemed to be a year of pharmaceutical policy change. The various national and local policies being launched would bring profound impact on the current and future development of the pharmaceutical industry.

The National Development and Reform Commission adjusted the price of pharmaceuticals again in 2012. After substantial adjustments on the prices of gastrointestinal drugs in March, it released notices regarding adjustments on the prices of respiratory antipyretic and analgesic medicines and specialty drugs at the end of the year. Lansen's core products, Pafulin and MMF, were not on the list. On the other hand, the price of Tuoshu (Leflunomide tablets) has dropped. However, it is anticipated that this new price will have little impact on Lansen in 2013 in terms of its sales across China.

The Group will conform with State policies and regulations on a timely basis within the context of price reduction on pharmaceuticals across PRC. The Group will also seize opportunities arising from changing pharmaceutical policies, optimize the organisational structure, actively strengthen its marketing strategies and strive to enhance its market penetration in order to maintain its leading position in rheumatology.

Steady growth of core products and a record high in the sales growth of MMF

Lansen's core products are rheumatic specialty prescription western pharmaceuticals ¡V Pafulin (Total Glucosides of White Peony capsules), Tuoshu (Leflunomide tablets) and MMF (Mycophenolate Mofetil). All three products are disease modifying drugs for autoimmune rheumatic diseases and had been included in the Medical Insurance Catalogue. Amid changing pharmaceutical policies in 2012, Lansen insisted on professional and academic marketing strategies and to cooperate with rheumatology associations to implement ¡§Zhang Naizheng Foundation¡¨ and ¡§CSTAR Project¡¨. Lansen also cooperated with hospitals to implement the ¡§Cornerstone Scheme¡¨, with doctors in organising seminars and with patients through the ¡§Lansen Care Club¡¨. Driven by Lansen's strong and powerful overall marketing strategy, all core products recorded satisfactory sales, of which, the sales of MMF (our new product) made a record high in product growth, reaching a fast growth of 147.6%.

During the year, the sales of modern Chinese herbal extracts reached a record high of US$23.3 million, representing an increase of 26.6% over last year. Sales of generic drugs and other pharmaceuticals grew rapidly with a revenue of US$10.4 million, representing an increase of 50.2% over last year.

Stable development of Starry through careful planning

During the year, Starry achieved steady development with sound planning and has completed the expansion of its iohexol production facilities, doubling the annual production capacity. Starry now has the capability to implement large-scale production. It is expected that the future sales of Starry will increase steadily.

During the year, Lansen increased the shareholding in Starry from 20.0% to 21.5%. Subsequent to the completion of the acquisition in November 2012, Starry is still being treated as an associate of the Company. Its results has been accounted for by using the equity accounting method. One of the business strategies of the Company is to explore business opportunities through business alliances or acquisitions so as to enlarge its range of rheumatic specialty pharmaceuticals, including the production of upstream bulk pharmaceuticals of rheumatic specialty pharmaceuticals. The investment in Starry has significant strategic implication. It provides opportunities for the Company to take part in the upstream supply business in the pharmaceutical industry. The Board is of the view that this acquisition enables the Company to further participate in the business of Starry in order to accumulate experience in the production, management and control of bulk pharmaceuticals.

Loxoprofen Sodium tablets, a new product that enables Lansen to enter the market of non-steroidal anti-inflammatory drugs

Loxoprofen Sodium tablets, a non-steroidal anti-inflammatory drug, was approved by the State Food and Drug Administration during the year. It has been launched into the market in the second half of the reporting period. The product is a supplement to the market of non-steroidal anti-inflammatory drugs for Lansen. The launch of Loxoprofen Sodium tablets provides more treatment options for doctors and patients and at the same time it also acts as a driving force to expand the room for growth of the Group. As the launch time is still short, the product is currently in the preliminary stage of promotion. It is expected that there will be room for growth for this product driven by the marketing of Lansen's product portfolio.

The completion and opening of a new quality control and research and development centre

During the reporting period, the newly completed quality control and research and development centre of the Group has been put into service. The opening of this new centre will continue to upgrade the research and development capability of the Company and enhance the quality control standard of its products. It will lead the Group to be in line with international standards in terms of the overall structure such as the scale, production quality and management level. Meanwhile, it ensures that the Group will be more competitive in the increasingly competitive environment.

Business Outlook - For the year ended December 31, 2012

¡EIn 2013, Lansen will continue to optimise its well-proven marketing model for specialty prescription western pharmaceuticals and implement effective marketing strategies based on the special characteristics of its regional markets. The Group will make use of the local academic promotional opportunities to enhance market awareness of its products. For the teambuilding of its sales team, the Group will reinforce professional marketing training to increase the marketing knowledge and professional competence of the sales staff. In order to meet different market and hospital demands, the Group will implement flexible marketing strategies and accelerate the sales growth in its existing markets and the second- and third-tier cities.

¡EFor its core market, the Group will continue to develop other disease modifying drugs and drugs for autoimmune-related diseases through acquisitions, agency arrangement and research and development (¡§R&D¡¨). Meanwhile, the Group will consider introducing biologics through cooperation with domestic and foreign pharmaceutical enterprises to establish a comprehensive product portfolio for the Company. For its existing products, the Group will actively develop their application on other autoimmune diseases to extend their product life cycles.

¡ELansen will strengthen the product development capability of its R&D team and speed up research progress by increasing its investment in product development. Additional efforts will be put into the development of new drugs to enrich the product portfolio and reinforce the Company's market position.

With the implementation of the New GMP standards, we plan to carry out a large-scale upgrade of our production systems. This is a top priority for Lansen in 2013. Thus management has set up a task force comprising key staff from production, quality control, engineering and administrative departments to facilitate effective decision making for this project. External professionals will be invited to join the team when necessary.

As announced on 6 March 2013, Lansen's Chief Executive Officer (¡§CEO¡¨) and Executive Director, Mr. Xu Jun, informed us that he will leave the Company at the conclusion of his contract on 8 April 2013. On behalf of the Board, I would like to thank Mr. Xu for his significant contribution to the growth and development of Lansen and wish him and his family well.

The Board is also pleased to welcome and congratulate Mr. Liu Bang Min on his new appointment as CEO and Executive Director to succeed Mr. Xu Jun. As the Company grows and matures in the very challenging Chinese market, there will be an increased requirement for professional and systematic management. The Board believes that Mr. Liu and his team are well positioned to provide this leadership. We are optimistic about Lansen's future.

Looking forward, the Group will seize opportunities arising from the national medical reform in an active manner and endeavor to become an even more exceptional listed company with long-term competitiveness and a standardized marketing approach. With an informed vision looking to the future, the Group will strive to create better results in 2013 with the dedicated efforts of its workforce.

Source: Lansen Pharma (00503) Annual Results Announcement
Chairman Stephen Burnau HUNT Issued Capital (shares) 415M
Par Value USD 0.01 Market Capitalisation (HKD) 1,013M
 
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