Sino Biopharmaceutical Announces 2020 First Quarterly Results
Results Highlights
- At the beginning of the COVID-19 pandemic, owing to its strong sense of social responsibility and in line with its mission, the Group took the initiative to donate RMB10 million to the Chinese Academy of Medical Sciences on 26 January to support research on COVID-19. At the same time, the Group has promptly set up an anti-pandemic supplies procurement team to purchase supplies, such as face masks, protective gloves, protective clothing, negative pressure isolation ambulances and diagnosis and treatment related products, from different countries for donating to anti-pandemic frontline medical workers. Up to the end of the period, Sino Biopharm and its subsidiaries donated cash and supplies on 18 different occasions with a total value of nearly RMB22 million to anti-pandemic efforts.
- "The Establishment and Application of Key Technology Systems on Emulsification in New Pharmaceutical Preparation," a research project reported by Beijing Tide, in cooperation with Peking University, has been honoured with "The 2019 National Science and Technology Progress Award - Second Prize". The Group is one of the few pharmaceutical enterprises to be feted in this way. The accolade is prestigious national recognition of Beijing Tide's research and development platform of emulsification for high-end preparations.
- Construction of "The Purun Bio-Medical's R&D and Production Project" of Jiangsu Purun Bio-Medical Co., Ltd., a wholly-owned subsidiary of NJCTT located at Nanjing Jiangbei New Materials High-Tech Park, has officially commenced after the groundbreaking ceremony. Occupying an area of about 300 mu, NJCTT's product R&D and production capabilities would be substantially strengthened after the project is completed.
- The Group has obtained approval from the United States Food and Drug Administration ("FDA") for its application filed for "Fulvestrant Injection". This is another advance for the Group to sell its products in the international markets after Tenofovir Disoproxil Fumarate tablets obtained marketing authorization in the European Union.
- During the pandemic, the intravenous therapy of Magnesium Isoglycyrrhizinate injection (brand name: Tianqingganmei) was included as a supportive treatment for patients with mild and common symptoms (without severe underlying illnesses) in the "Treatment Practices for the Mild and Common Cases of Novel Coronavirus Pneumonia (Second Edition)" jointly published by the offices of the National Health Commission and National Administration of Traditional Chinese Medicine.
- Five products including "Budesonide Suspension for Inhalation" (brand name: Tianqingsuchang), "Sitagliptin Phosphate Tablet" and "Dabigatran Etexilate Capsules" (two specifications) obtained approval for drug registration. Three of these products are the first generic drug of their kind in China and have potential to become blockbuster products.
Results
For the three months ended 31 March 2020, the Group recorded revenue of approximately RMB6.22 billion, representing an increase of approximately 0.2% over the same period last year. During the period, profit attributable to the owners of the parent was approximately RMB862 million, approximately 0.6% higher than that of the same period last year. Earnings per share were approximately RMB6.85 cents, 0.7% higher than that of the same period last year. The Group has maintained a strong financial position with cash and bank balances reaching approximately RMB16.12 billion at the period end (as at 31 December 2019: approximately RMB11.91 billion).
The Board of Directors declared a quarterly dividend of HK2 cents per share (2019 first quarter: HK2 cents).
Business Highlights
During the period under review, most outpatient and inpatient visits at hospitals dropped dramatically due to the pandemic. On-site academic activities and face-to-face exchanges with professional doctors were also adversely affected. The Group quickly reacted and fully utilized third-party online academic exchange platforms to maintain communication with general medical practitioners and patients, thereby strengthening its support to online academic activities. Particularly in the areas of respiratory, infection and oncology that have been less affected by the pandemic, intensive online academic exchanges and promotion activities have been launched. The Group has also supported volunteer medical consultations taking place through online hospital networks. The chronic disease management platform of the Group for respiratory, oncology, analgesic, and kidney illnesses that has been actively operating was also used to enhance the service and professional assistance provided to doctors and patients.
For the production, in response to the government's strategies, the Group has resumed its production and operations at the early stage with strict precautions for isolation and social distancing, with the first priority to ensure the supply of much-needed anti-infection and respiratory drugs for the therapy of those patients infected with COVID-19, as well as the oncology drugs with pressing demand. The respiratory medicine Tianqingsule (Tiotropium Bromide powder for inhalation); anti-infectious medicines Tianjie (Tigecycline for Injection), Fengruineng (Moxifloxacin Hydrochloride and Sodium Chloride Injection), Tianli (Linezolid and Glucose Injections), and Tianming (Caspofungin Acetate for Injection); analgesics Flurbiprofen cataplasm and Parecoxib Sodium for Injection; and orthopedic medicine Gaisanchun (Calcitriol) capsules also recorded strong growth.
The sales from oncology drugs recorded the highest growth among all. In addition to the rapid growth of Anlotinib Hydrochloride capsules, sales of two products: Qingkeshu (Abiraterone Acetate Tablets), and Jizhi (Gefitinib Tablets) rapidly expanded after they secured the bid for the extended centralized drug procurements by the government. Other oncology products Yinishu (Dasatinib) tablets, Qianping (Bortezomib for Injection) and Shoufu (Capecitabine) tablets also recorded strong growth, which further enlarged the sales contribution of the oncology drug lines to the Group.
The newly launched products also significantly boosted the sales growth. In addition to Qingkeshu, and Jizhi mentioned above, products that have been approved for launch also recorded satisfactory results, including cardiovascular medicine Anbeining (Apixaban Tablets), contrast agent Qingliming (Iodixanol Injection), the first generic oncology drug Leweixin (Bendamustine Hydrochloride for Injection), Weishou (Azacitidine for Injection, the first generic drug) and the first generic anti-rheumatic drug Taiyan (Tofacitinib Citrate Tablets).
For R&D, several strategic products with strong potential have secured production approvals during the period, and 4 of them have been designated as meeting the Consistency Evaluation requirements at the same time.
During the review period, the sales performance of the Group's major medicine types are outlined below:
Hepatitis medicines
- The sales of hepatitis medicines amounted to approximately RMB1,329.61 million, representing approximately 21.4% of the Group's revenue.
Oncology medicines
- The sales of oncology medicines amounted to approximately RMB1,984.40 million, representing approximately 31.9% of the Group's revenue.
Orthopedic medicines
- The sales of orthopedic medicines amounted to approximately RMB467.75 million, representing approximately 7.5% of the Group's revenue.
Anti-infectious medicines
- The sales of anti-infectious medicines amounted to approximately RMB416.01 million, representing approximately 6.7% of the Group's revenue.
Respiratory system medicines
- The sales of respiratory medicines amounted to approximately RMB334.41 million, representing approximately 5.4% of the Group's revenue.
Others
- Sales of other medicines amounted to approximately RMB1,689.69 million, representing approximately 27.1% of the Group's revenue.
R&D
The Group has continued to focus its R&D efforts on new hepatitis, oncology and respiratory system and cardio-cerebral medicines. During the first quarter, the Group was granted 14 clinical trial approvals, 6 production approvals, and 6 approvals for Consistency Evaluation, and made 9 clinical trial applications, 3 applications for Consistency Evaluation and 2 production applications. Cumulatively, a total of 437 pharmaceutical products had obtained clinical trial approval, or were under clinical trial or applying for production approval. Out of these, 30 were for hepatitis medicines, 189 for oncology medicines, 24 for respiratory system medicines, 24 for endocrine, 40 for cardio-cerebral medicines and 130 for other medicines.
Over the years, the Group has been placing high importance on R&D and innovation, as well as through collaboration and imitation, to raise both R&D standards and efficiency. Regarding R&D as the lifeblood of the Group's development, the Group continues to devote into more resources. For the three months ended 31 March 2020, the total R&D expenditure of approximately RMB994 million, which accounted for approximately 16.0% of the Group's revenue, was charged to the statement of profit or loss and capitalized in the statement of financial position respectively.
The Group also emphasizes on the protection of intellectual property rights. It encourages its enterprises to apply for patent applications as a means to enhance the Group's core competitiveness. During the first quarter, the Group has received 25 authorized patent notices (21 invention patents, 2 utility model patents and 2 apparel design patents) and filed 123 new patent applications (120 invention patents and 3 apparel design patents). Cumulatively, the Group has obtained 787 invention patent approvals, 25 utility model patents and 92 apparel design patents.
Prospects
The COVID-19 pandemic remains serious in regions outside China, which will continue to affect the economy. Through implementing effective prevention and control measures, the pandemic in China has essentially come under control and enterprises around the country have gradually resumed work and operation. The decline in economic indicators has also narrowed. Hence, China is expected to be among the first countries to leave the worst impact of the pandemic behind and return to normal production, everyday life and routine medical procedures. Pent-up demand for medical diagnosis and treatment limited by isolation during the pandemic period will gradually be unleashed, which might lead to the rapid growth for the pharmaceutical industry in the immediate future.
The nationwide implementation and extension of the centralized drug procurement programme in "4+7" cities has substantially squeezed the profit of selected drugs as well as many competitive generic drugs. The COVID-19 pandemic has weighed further on the operations of small- and medium-pharmaceutical companies with limited R&D capabilities and only a few new products. Some of them are even encountering difficulties in maintaining the viability of their business. As a result, the consolidation and elimination of the weaker players in the market will accelerate and developing and launching innovative and popular products have become the primary capabilities required by pharmaceutical enterprises if they wish to win amidst the fiercer market competition.
The Group's strong investment in R&D over the years has borne fruit, as evidenced by the maturing innovative platforms and optimization of creative talent structure for both small molecule and macro-molecule drugs. The continuous huge investment in R&D has also ensured that it can engage in the launch of new products every year, which has become and will continue to be the key growth driver for the Group's results.
Introduction of Newly Approved Products:
Tianqingsuchang (Budesonide Suspension for Inhalation): A glucocorticoid inhalant with strong anti-inflammatory properties used for first-line treatment of asthma. There are approximately 235 million asthma patients globally, and the number in China exceeds 45 million. The efficacy of nebulized inhalation suspension is more trusted by doctors and patients when compared to other dosage forms but needs to be administered under the supervision of medical professionals in hospitals.
Sitagliptin Phosphate Tablet: An effective and highly selective dipeptidyl peptidase-4 (DPP-4) inhibitor used for improving glycemic control in patients with type 2 diabetes mellitus. Clinical trials show its efficacy in lowering blood sugar, and it can be used alone with high safety and fair tolerance, without increasing the risk of hypoglycemia and causing gastrointestinal reactions. More importantly, it offers long-term protection of beta-cells in the pancreas, which can slow the progress of diabetes.
Dabigatran Etexilate Capsules: A new generation non-Vitamin K oral anticoagulant used for the prevention of stroke and systemic embolism in patients with non-valvular atrial fibrillation. It is the first new oral anticoagulant launched since Warfarin in 50 years, and is the first oral anticoagulant approved for long term indications, signifying a milestone in the global anticoagulant drug sector.
About Sino Biopharmaceutical Limited (HKEX:1177)
Sino Biopharmaceutical Limited is a leading, innovative R&D driven pharmaceutical conglomerate in the PRC. Its business encompasses a fully-integrated chain which covers an array of R&D platforms, a line-up of intelligent production and a strong sales system. The Group's products have gained a competitive foothold in various therapeutic categories with promising potentials, comprising a variety of biopharmaceutical and chemical medicines for treating tumors, liver diseases, respiratory system diseases, anti-infectious diseases and orthopedic diseases.
Sino Biopharm is a constituent stock of the following indices: MSCI Global Standard Indices - MSCI China Index, Hang Seng Index, Hang Seng Index - Commerce & Industry, Hang Seng Composite Index, Hang Seng Composite Industry Index - Consumer Goods, Hang Seng Composite LargeCap Index, Hang Seng Composite LargeCap & MidCap Index, Hang Seng China (Hong Kong-listed) 100 Index and Hang Seng Stock Connect Hong Kong Index. Sino Biopharm was ranked as one of "Asia's Fab 50 Companies" by Forbes Asia for three consecutive years in 2016, 2017 and 2018.
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