Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
SINO BIOPHARM
HKEx Stock Code : 01177 
 
Corporate Profile
Principally engaged in the research and development, production and sale of a series of modernised Chinese medicines and chemical medicines.

Business Review - For the year ended December 31, 2012

During the year under review, the Group faced the external and internal operating environment change brought by the Government's macro-economic adjustment, launch of a series of healthcare reform, and rising inflation and production cost pressures. Nevertheless, all enterprises under the Group managed to meet its yearly business target through implementing a wide range of measures to actively tackle the various unfavorable factors. Examples of these measures include strengthening the Group's quality control system, promoting technological and managerial innovations, and imposing stringent management on all production processes, so as to increase output and yield, boost labor productivity, assure product quality and enhance the Group's corporate image. The enterprises under the Group have continued development of strategies in order to strengthen their expertise and competence within their specific market segments and establish a more leading position through utilising the strength of the professional sales team for exploring new markets and increasing market share. The Group has also continued to promote its products' professional academic achievements, as well as increase the investment and integration of marketing activities in order to consolidate and enlarge market share and sales coverage of all of its products. Furthermore, the Group's efforts in exploring new sales channels have borne fruit with substantial year-on-year growth in turnover and profit, allowing the Group to sustain rapid yet steady development. Over the past few years, the Group has strived to focus on brand innovation and bolster the competitiveness of its core business while continuing to increase its investment in research and development (ˇ§R&Dˇ¨) in order to create products which integrate innovation and replicated elements. This direction has upgraded its corporate brand image within the industry. More specifically, during the year under review, a new oncology medicine ˇ§subutinib maleateˇ¨ developed by JCTT has successfully received clinical approval from the State Food and Drug Administration. Clinical research has commenced on this medicine.

The Group recorded turnover of approximately HK$8,326.66 million during the year under review, an increase of approximately 44% against the same period last year. Before and after accounted for unrealized fair value (gains)/losses of equity investments at fair value through profit or loss and related deferred tax, profit attributable to the Group was approximately HK$858.26 million and approximately HK$890.76 million, respectively, approximately 36.4% and approximately 92.5% higher than in the same period last year, respectively. Based on the profit attributable to the Group before and after accounted for unrealized fair value (gains)/losses of equity investments at fair value through profit or loss and related deferred tax, the basic earnings per share were approximately HK17.37 cents and approximately HK18.03 cents, respectively, approximately 36.7% and approximately 92.8% higher than in the same period last year, respectively. Cash and bank balances totaled approximately HK$2,880.19 million.

The Group continued to focus on developing specialized medicines where its strengths lie so as to build up its brand as a specialty medicine enterprise. Leveraging on its existing medicine series for treating cardio-cerebral diseases and hepatitis, the Group also actively developed oncology medicines, analgesic medicines, diabetic medicines, respiratory system medicines, parenteral nutritious medicines, anorectal medicines and anti-infectious medicines, etc.

The Group's principal profit contributors are JCTT, Beijing Tide, NJCTT and Chia Tai Qingchunbao Pharmaceutical Co., Ltd..

Cardio-cerebral medicines

Cardio-cerebral medicines are manufactured mainly by Beijing Tide and NJCTT and accounted for approximately 16.5% of the Group's turnover. The category's major product Kaishi injections produced by Beijing Tide works on the Drug Delivery System (DDS) theory to improve cardio-cerebral microcirculation blockage. It is the first micro-sphere target sustained release medicine in the PRC. The proprietary pharmaceutical technology used by the Group enhances the product to have more apparent effect than similar products in the market, which allows it to enjoy majority market share. Beijing Tide was awarded GMP medicine certification by the Public Welfare and Health Ministry of Japan in February 2008. For the year ended 31 December, 2012, sales of Kaishi injections amounted to approximately HK$1,692.51 million, an increase of approximately 25% as compared with the same period last year.

NJCTT's Tianqingning injections, which was launched in 2006, is a plasma-volume expander for patients with blood volume deficiencies. As this product can be used as plasma for all blood types, it has huge market potential. For the year ended 31 December, 2012, the product recorded sales of approximately HK$220.95 million, an increase of approximately 24% when compared with the same period last year. Sales of another pharmaceutical product, Yilunping tablets, amounted to approximately HK$285.08 million for the year ended 31 December, 2012, a remarkable increase of approximately 48.6% when compared with the same period last year.

Hepatitis medicines

Hepatitis medicines is one of JCTT's main product series which recorded sales of approximately HK$3,827.35 million for the year ended 31 December, 2012 and accounted for approximately 46% of the Group's turnover.

JCTT mainly produces two categories of hepatitis medicines that can protect the liver while lowering enzyme levels and combating hepatitis virus. Ganlixin injections and capsules made with ingredients extracted from Licorice are the number 1 hepatitis medicine brand in the PRC. For the year ended 31 December, 2012, its sales amounted to approximately HK$171.87 million, a decrease of approximately 9.1% when compared with the same period last year. After the protection period of the product expired, many replicas have emerged into the market, resulting in intensified competition. The Group thus developed Tianqingganping enteric capsules with better therapeutic effect than Ganlixin capsules and its intellectual property right being protected. Sales of the medicine continued to increase to approximately HK$314.01 million in the year, representing a growth of approximately 24.4% when compared with the same period last year. In 2005, JCTT launched the patented medicine Tianqingganmei injections, which was made with Isoglycyrrhizinate separated from Licorice. During the year under review, the product has bright prospects and recorded the sales of approximately HK$1,366.94 million, a large increase of approximately 60.7% against the same period last year. The Group believes that medicine series made with ingredients extracted from Licorice will help to maintain JCTT's leadership in the market for medicines protecting the liver and lowering enzyme levels.

The Group launched a patented hepatitis medicine called Mingzheng capsules in 2006. As a firsttier synthetic drug for combating hepatitis virus in the international market, the product has been well received by the market since launched with sales increasing rapidly. Mingzheng capsules have become another blockbuster product for combating hepatitis virus. For the year ended 31 December, 2012, its sales amounted to approximately HK$781.25 million, an increase of approximately 10% when compared with the same period last year.

JCTT's self-developed new medicine for hepatitis B, Runzhong (Entecavir) dispersible tablet, has obtained the new product approval certificate and production approval in February 2010, making JCTT the first pharmaceutical manufacturer to gain the approval for this product in the PRC. The product was launched to the market since March 2010. For the year ended 31 December, 2012, the sales amounted to approximately HK$1,069.27 million, a large increase of approximately 115.3% against the same period last year. Runzhong dispersible tablet is the latest generation of guanine nucleoside analogue oral medicine used mainly for the treatment of hepatitis B. It inhibits viral replication and has lower risk of triggering the emergence of medicine-resistant virus. After Entecavir was launched in 2005, the medicine recorded strong sales growth around the world as one of the most efficacious hepatitis B medicines.

Oncology medicines

Tianqingyitai injections, Tianqingrian injections, Zhiruo injections and Renyi injections are mainly developed and manufactured by JCTT and NJCTT. For the year ended 31 December, 2012, sales of oncology medicines amounted to approximately HK$613.12 million, a remarkable increase of approximately 41.9% as compared with the same period last year.

Analgesic medicines

Launched in 2005, the analgesic medicine Kaifen injections is developed and manufactured by Beijing Tide. It is a Flurbiprofen Axetil microsphere target sustained release analgesic injection produced based on the DDS theory and enabled by advanced target technology. The product is famous for strong pain relieving effect with minimal side effects and has been well received by medical practitioners and patients since launched. Sales of the product for the year ended 31 December, 2012 amounted to approximately HK$634.21 million, approximately 52.2% significantly higher than that as compared with the same period last year.

Diabetic medicines

The main diabetic medicine of the Group, Taibai sustained release tablets, which is used for lowering blood sugar level, was developed and manufactured by JCTT. There are more than 30 million diabetics in the PRC and the Metformin Hydrochloride has been identified as a first-tier medicine for lowering blood sugar level. As Taibai sustained release tablets has sustained release capability, it can stabilize a patient's blood sugar level. For the year ended 31 December, 2012, the sales of the product have amounted to approximately HK$41.06 million, a decrease by approximately 13.3% as compared with the same period last year.

Respiratory system medicines

The main product of respiratory system medicines is Tianqingsule (Tiotropium Bromide) inhalation powder. For the year ended 31 December, 2012, the sales was amounted to approximately HK$75.76 million, a sharp increase by approximately 112.8% as compared with the same period last year.

Parenteral nutritious medicines

The main product of parenteral nutritious medicines is Xinhaineng (Carbohydrate and Electrolyte) injections. For the year ended 31 December, 2012, the sales was amounted to approximately HK$252.33 million, a significant increase by approximately 278.3% as compared with the same period last year.

Anorectal medicines

The main product of anorectal medicines is Getai (Diosmin) tablets. For the year ended 31 December, 2012, the sales was amounted to approximately HK$145.30 million, an increase by approximately 32.1% as compared with the same period last year.

Anti-infectious medicines

The main product of anti-infectious medicines is Tiance (Biapenem) injections. For the year ended 31 December, 2012, the sales was amounted to approximately HK$365.91 million, approximately 65.7% significantly higher than that as compared with the same period last year.

Business Outlook - For the year ended December 31, 2012

Over the past ten years, the pharmaceutical industry in the PRC has experienced rapid growth. The improving economic standard of living in the PRC and the ongoing optimisation of the country's healthcare and medical insurance system would spur a new round of rapid growth in the pharmaceutical industry. In early 2013, the Ministry of Health announced that it would increase the amount of medical fund for this year's new rural cooperation project to RMB270 billion. A total of 20 illnesses including lung cancer and stomach cancer are all covered in this medical insurance scheme for people living in rural areas. This scheme and other similar initiatives are increasing the demand for pharmaceutical products and expanding the scope for further development of the industry. The pharmaceutical products included in the ˇ§National Basic Medicines Indexˇ¨ newly announced by the Ministry of Health have increased by 60%, it has announced for the first time the proportion of generic medicine utilisation permitted for medical organisations at Grade 2 or above at the beginning of the year. These policies also have the potential to spur explosive growth in the generic medicine market segment.

In view of the improving economic standard of living and healthcare standard in the PRC, the focus of the country's medical and healthcare industry is shifting from treatment to prevention, and, more narrowly, from the prevention of infectious disease to the prevention of chronic disease. Large-scale healthcare industries will quickly become the highlights of the PRC pharmaceutical industry. This will inevitably present challenges to the industry, but it will also generate new development opportunities for high-quality pharmaceutical enterprises which can swiftly adjust their business strategies in response to the shifting development trend in the industry. Anticipating and preparing for opportunities on top of the challenges ahead, the Group is optimistic about the prospects for long-term growth of the pharmaceutical industry.

Source: Sino Biopharm (01177) Annual Results Announcement
Chairman Tse Ping Issued Capital (shares) 4,941M
Par Value HKD 0.025 Market Capitalisation (HKD) 25,794M
 
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