| By Liu Yuanyuan, Asia Manufacturing Pharma |
| Wednesday, 05 August 2009 |
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Shandong Xinhua Pharmaceutical, a leader in development and manufacturing of chemical synthetic APIs and preparations in China, reported revenues of RMB 1.2 billion (approx. US$175.7 million) for the six months ended June 30, 2009, an increase of 4.9 percent from the same period of 2008. Net profits attributable to shareholders were RMB 39.9 million (approx. US$5.8 million), up 95.0 percent year on year. Furthermore, the company is anticipating a 100-150 percent increase in its net profits for the first three quarters of the year, to RMB 51.1-63.9 million (approx. US$7.5-9.3 million), with those for the third
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quarter up 100-370 percent to RMB 10.2-23.96 million (approx. US$1.5-3.5 million). µ
The strong growth was mainly driven by significant decreases in the company’s procurement costs and increases in sales of its flagship products. As oil prices dropped in early 2009, prices for many pharmaceutical materials declined, which led to a 0.95 percent decrease |
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in Shandong Xinhua Pharmaceutical’s operating costs during the first half of the year, and pushed its overall gross margin up 4.9 percent. Revenues generated from chemical APIs totaled RMB 614 million (approx. US$89.9 million), a decrease of 9.4 percent year on year.
However, the gross margin for the APIs business rose 11 percent, benefiting from a series of measures taken by management to strengthen some strategic cooperative efforts as well as the 20.9 percent decrease in production costs for APIs.
Sales of preparations grew 20.1 percent during the period, boosted by enhanced promotions and adjustments to the company’s product mix. The adjustments have resulted in the proportion of sales of preparations in the company’s total rising to 29.9 percent from 24.9 percent in the same period of last year.
However, the recent run-up in oil prices is expected to negatively impact Shandong Xinhua Pharmaceutical’s future growth by
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increasing material costs. During the first half of 2009, Shandong Xinhua Pharmaceutical’s nine API products and three solid preparation production lines received the GMP certificate from or passed the certificate review of the State Food and Drug Administration (SFDA).
Shandong Xinhua Pharmaceutical, as a leading manufacturer of antipyretics and analgesics, has a market share of 67 percent and 23 percent for its flagship Pipemidic Acid Tablets and Nimodipine Tablets, respectively, in China. In addition, the country’s medical reform is expected to further expand the company’s preparation business. Prices for antipyretic and analgesic APIs are expected to rise this year, which, in turn, will positively affect the company’s bottom line.
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