| By Cindy Wu, Asia Manufacturing Pharma |
| Monday, 12 October 2009 |
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Joincare Pharmaceutical Group, a major Chinese producer of prescription drugs, OTC medicines and health products, saw little profit in enzymatic process 7-ACA (7-Amino cephalosporanic acid) products for the first half of 2009 due to suppressed downstream demand. Compared with the conventional chemical decomposition process, the enzyme catalysis-based 7-ACA has lower costs and is more environmentally friendly. Environmental protection measures associated with the
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production of enzymatic process 7-ACA accounts for approx.
17% of the total operating costs, while the total cost of production for the item accounts for 40% of all associated costs. Due to strict environment policies, many 7-ACA manufacturers have to limit or
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reduce production.
During the first half, Jiaozuo Joincare Biotechnological, a subsidiary of Joincare Pharmaceutical Group, ceased production for one to two months in a move to reduce inventories.
For the first half, the company sold a combined 254 tons of 7-ACA, with 180 of the tons sold in the second quarter. Forty percent of the 7-ACA sales went to Livzon Pharmaceutical Group, the companu’s largest buyer of the item.
Jiaozuo Joincare Biotechnological began to show a profit in the second quarter resulting in a profit of RMB2.02 million (approx. US$296,000) for the first half.
For the second half of 2009, the price for 7-ACA is expected to increase due to improved demand. This has led to, Essence Securities, a
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Chinese securities research company, raising its forecast price for the company’s share within 12 months to RMB11.6 (approx. US$1.7).
The company is forecasting that 7-ACA will drive Joincare Pharmaceutical’s earning per share up to RMB0.34 (approx. US$0.05) in the second half of this year. Joincare’s earning per share is forecast to reach RMB0.45 (approx. US$0.07) in 2010.
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