| By Cindy Wu, Asia Manufacturing Pharma |
| Wednesday, 06 May 2009 |
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Hubei Guangji Pharmaceutical, China’s largest riboflavin APIs manufacturer, is expected to post a net profit of RMB5 million (approx. US$733,500) for the first quarter of 2009, a year-on-year decline of 91.3 percent. The manufacturer attributed the expected poor performance to declining prices of riboflavin and lower sales volume.
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Price for riboflavin had declined to RMB117 (approx. US$17.2) per kilogram on April 15 this year from the historical peak of RMB660 (approx. US$96.8) per kilogram in November 2007. Production cost of riboflavin saw a further increase, due to unfavorable factors including increased costs of raw materials, the appreciation of the yuan and increases in loan interest rates.
In addition, the manufacturer temporarily stopped production during the 2009 Spring Festival to |
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address the global financial crisis, which also dragged down its Q1 performance. Since 2007, several new domestic producers such as Shangdong NB Group have emerged in the riboflavin sector, bringing about new competition, in addition to DSM and BASF.
In 2008, Hubei Guangji Pharmaceutical posted revenues of RMB43.1 million (approx. US$6.3 million) in infusion products, up 6 percent year-on-year, while gross profit margin declined five percentage points.
As glass infusion bottles are gradually falling into disuse in the infusion sector, Hubei Guangji Pharmaceutical’s glass infusion bottle business is dragging down its financial performance. The manufacturer may spin off this division in the future.
Hubei Guangji Pharmaceutical is undertaking various measures to ensure a steady performance. |
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The manufacturer will speed up the construction of a riboflavin expansion project, which has a designed annual production capacity of 2,500 tons, and identify new growth points by commercially launching β-carotene products as early as possible.
Hubei Guangji Pharmaceutical posted revenues of RMB572 million (approx. US$83.9 million) in 2008, down 28.1 percent year-on-year. Profits for the period were RMB117 million (approx. US$17.2 million), a decline of 58.6 percent year-on-year. The manufacturer’s performance was continuously dragged down by declining prices of riboflavin.
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