Sino Biopharmaceutical 2010 profit up 42.8% to HK$567mn

The company acquires manufacturer of dermatology and hormonal pharmaceutical products to bring new revenue contributions to the Group.

Leading modernized Chinese medicine producer, Sino Biopharmaceutical Limited (“Sino Biopharmaceutical”) on Monday announced its annual results for the year ended 31 December 2010, according to a Sino Biopharmaceutical report.

Results
For the reporting year, the Group registered turnover of HK$4,086,144,000, a year-on-year increase of 26.3%. Profit attributable to the Group rose by 42.8% to approximately HK$566,897,000. Basic earnings per share increased by 33.2% to 11.68 HK cents. The Group maintained a strong financial position with cash and bank balances reaching approximately HK$2,338,495,000 (2009: approximately HK$1,827,313,000).

The Board of Directors proposed a final dividend of 2 HK cents per share. Together with a dividend of 6 HK cents per share already paid in the first three quarters, total dividend for the year will amount to 8 HK cents per share. (2009: 6.5 HK cents).

Mr. Tse Ping, Chairman of Sino Biopharmaceutical, said, “In the face of pressure arising from various measures taken by the PRC government, including the mandated adjustment in the price of pharmaceutical products and the implementation of centralised bidding and procurement of pharmaceutical products at the provincial level, as well as a persistently high CPI indices, we launched a series of counter measures during the year. We also continued to focus on new product development while strengthening quality control in order to enhance brand competitiveness. In addition, the Group increased its equity interests in Jiangsu Chia Tai Fenghai Medicines Co. Ltd. and Yancheng Suhai Pharmaceutical Co. Ltd., which are principally engaged in the production and sale of raw materials and pharmaceutical products for the treatment of bacterial, inflammatory and cardio-cerebral diseases. As well, we acquired the equity interests in Shanghai TongYong Pharmaceutical Co. Ltd., which is primarily engaged in the manufacturing and sales of dermatology and hormonal pharmaceutical products during the year. These acquisitions will bring the Group into a new business segment, which in turn will generate new sources of income. We have thus achieved our objective of continuing to realize revenue and profit growth during the past year.”

BUSINESS PERFORMANCE
While leveraging its existing series of medicines for treating cardio-cerebral diseases and hepatitis, the Group has also actively developed other medicines, including but not limited to oncology medicines, analgesic medicines, diabetic medicines, respiratory system medicines and digestive system medicines. Sales of the Group’s major medicine types for the year ended 31 December 2010 are outlined below:

Cardio-cerebral medicines
Cardio-cerebral medicines accounted for approximately 20.6% of the Group’s revenue during the review year. Performance of this segment’s major products was as follows:

• Sales of Kaishi injections increased by about 44.4% to approximately HK$1,094,460,000;
• Sales of Tianqingganan injections grew by about 3.4% to approximately HK$51,210,000 when compared with last year;
• Tianqingning injections reported sales of approximately HK$155,010,000, an increase of about 50.2%; and
• Yilunping tablets recorded sales of approximately HK$146,920,000, an increase of about 55.5% when compared with last year.

Hepatitis medicines
Sales of hepatitis medicines amounted to approximately HK$1,805,760,000 during the review period, representing about 44.2% of the Group’s revenue. Performance of the segment’s major products was as follows:

• Tianqingganping enteric capsules recorded sales of approximately HK$202,640,000, representing a growth of about 10.3% against last year;
• Tianqingganmei injections reported sales of approximately HK$454,340,000, a year-onyear increase of about 36.1%;
• Sales of Mingzheng capsules grew by about 2.2% to approximately HK$647,910,000; and
• The new medicine, Runzhong (Entecavir) dispersible tablets recorded sales of approximately HK$144,800,000 since its launch in March 2010.

Oncology medicines
Sales of Oncology medicines, including Tianqingyitai injections, Tianqingrian injections, Zhiruo injections and Renyi injections, amounted to approximately HK$283,190,000, representing a year-on-year growth of approximately 48.5%.

Analgesic medicines
The sales of Kaifen injections, a principal product, increased by 50.7% to approximately HK$288,160,000 during the review year.

Diabetic medicines
Taibai sustained release tablets, the main product in this category, recorded sales of approximately HK$36,800,000 for the year ended 31 December 2010, representing growth of about 11.7% against last year.

RESEARCH & DEVELOPMENT (“R&D”)
The Group continued to focus on the R&D of new products. During the period under review, the Group received 15 new product and production approvals. A total of 48 cases had undergone and completed clinical research, or were in clinical trial or in the process of applying for production approval. Out of these 48 cases, there were 10 hepatitis medicines, 9 oncology medicines, 10 cardio-cerebral medicines, 4 respiratory system medicines, 1 diabetic medicine and 14 other medicines. In addition, the Group filed applications for 42 invention patents and 1 apparel design patent. It also obtained 18 invention patent rights, 4 apparel design patents and 3 transfer invention patents. Altogether, the Group has 224 invention patent rights, 24 apparel design patent rights and 3 utility model patent rights.

PROSPECTS
Mr. Tse concluded, “Looking forward, we believe that the PRC government will undertake efforts to enlarge coverage of the social welfare system and improve living standards as a means of addressing an aging population and growing demand for chronic disease medicines. Moreover, macroeconomic growth has continued steadily, which will facilitate further development of the pharmaceutical industry in the PRC. With the beginning of Twelfth-Five Year Plan, government’s price adjustment on pharmaceutical products and ‘New GMP’ to be implemented in March, the earnings of pharmaceutical product manufacturers are likely to be reduced further, resulting in accelerated consolidation of the industry. We will continue to strengthen product quality management and implement cost control measures that result in greater efficiency. We will also maintain our vigilance, seeking merge and acquisition and restructuring opportunities that drive our business growth and deliver optimal returns to our shareholders.”