On 1 March 2016, Hubei Guangji Pharmaceutical Co., Ltd. (Guangji
Pharmaceutical) (stock code: 000952) released its 2015 financial report, which
showed that the company had turned losses into gains. This was mainly attributed
to rises in the price of its main products, which greatly pushed up net profit.
Revenue:
USD85.70 million (RMB560,355,472), up by 15.33% YoY
Net
profit: USD3.20 million (RMB20,921,469), up by 109.41% YoY
2015 saw no great change for the main businesses of Guangji Pharmaceutical. The
company's main products are raw materials, including riboflavin sodium
phosphate and riboflavin (pharmaceutical grade, food grade, 98% feed grade, and
80% feed grade) and formulations, including tablets and liquid.
Guangji Pharmaceutical's revenue and net profit, 2010-2015, USD
Source: Hubei Guangji Pharmaceutical Co., Ltd.
In 2015, Guangji Pharmaceutical profited the most from H2, in particular in Q4,
when quarterly net profit reached USD6.20 million (RMB40,545,945.80),
overturning previous losses from Q1-2.
According to Guangji Pharmaceutical's board of directors, reasons for the
turnover are as follows:
Rise
in market prices of vitamin B2 (riboflavin) and vitamin B6 (VB6), driving up
the profitability of products
Sharp
reduction in distribution expenses and administrative expenses, thanks to the
enhancement of internal management
Production
cost decline by 12.1% YoY, because of technological improvements
Guangji Pharmaceutical's revenue and net profit in Q1-Q4, 2015
|
Quarter
|
Revenue,
USD
|
Net
profit, USD
|
|
Q1
|
15,340,035
|
-1,008,873
|
|
Q2
|
12,954,533
|
-2,369,048
|
|
Q3
|
29,176,443
|
376,548
|
|
Q4
|
28,229,910
|
6,201,108
|
Source: Hubei Guangji Pharmaceutical Co., Ltd.
In 2015, the market price of vitamin B2 (VB2) was higher than in 2014, and
since Q4 of 2015, prices have started to rise, according to CCM's price
monitoring.
At the end of June, Guangji Pharmaceutical suspended the production of VB2 in
two factories. Following this, Shanghai Hegno Pharmaceutical Development Co.,
Ltd. (Hegno) and Shandong NB Group Co., Ltd. (Shandong NB) also suspended the
production of VB2 and raised price quotations.
This helped eased oversupply and
paved the way for the price to rebound. Guangji Pharmaceutical is the
largest producer of VB2 in China, accounting for more than 60% of the domestic
VB2 market share. Their VB2 business accounts for more than 70% of the
company's annual revenue.
Guangji Pharmaceutical's subsidiary, Guangji Pharmaceutical (Mengzhou) Co.,
Ltd. is also engaged in the production of VB2. Their total capacity of VB2 is
about 4,500 t/a. Guangji Pharmaceutical's subsidiary, Hubei Guangji
Pharmaceutical Jikang Co., Ltd., is engaged in the production and sale of
medicine formulations. Last year, the rise in the price of VB2 tablets meant a
corresponding rise in the company's net profit.
Another main product of Guangji Pharmaceutical is VB6, whose market price also
rose last year. Guangji Pharmaceutical is a major supplier of VB6 in China, but
the VB6 is actually produced by its subsidiary, Hubei Huisheng Pharmaceutical
Co., Ltd. (Huisheng Pharmaceutical), who have a capacity of 1,000 t/a, and
produce mainly feed grade products.
Currently, Huisheng Pharmaceutical is
applying for GMP (Good Manufacturing Practice) certification, and has finished
the construction of an API production line (Active Pharmaceutical Ingredients),
although the line is not yet up and running. The company's sales volume, sales
prices, net profit, revenue, and profit also increased in 2015.
Market price of 80% feed grade Vitamin B2 in China, Jan., 2014-Feb., 2016
Source: CCM
Market price of 98% feed grade Vitamin B6 in China, Oct., 2014-Dec., 2015
Source: CCM
Guangji Pharmaceutical's prodution lines that need GMP certification, as of
Feb., 2016
|
No.
|
Production
line
|
GMP
certification
|
|
1
|
Large-volume
injections
|
Passed
|
|
2
|
Riboflavin
sodium phosphate API
|
Passed
|
|
3
|
Formulations
(tablets, granules,gels, cream)
|
Passed
|
|
4
|
Vitamin
B2 API
|
Application
processing
|
|
5
|
Vitamin
B6 API
|
Application
preparation
|
Source: Hubei Guangji Pharmaceutical Co., Ltd.
In 2016, the prices of several vitamin varieties have been rising significantly
and the downstream farming industry is rebounding. Because of this, it is
expected that Guangji Pharmaceutical's business performance will improve this
year. However, the company also faces some huge challenges from stricter
environmental protection policies and from its own simplistic product
structure.
In 2015, in order to improve the company's public image and increase profits,
Guangji Pharmaceutical recycled wastewater through fermentation and treated factory smell comprehensively.
On the way to Guangji Pharmaceutical becoming a leading enterprise in the Chinese
biological fermentation field, the core problem it faces is the high cost of
environmental protection.
"It is critical for our company to reduce the cost of environmental protection,
and optimize the efficiency of environmental treatment, if we want to
strengthen our biological fermentation business," said Chen Feibao,
general manager of Guangji Pharmaceutical.
This article comes from Corn Products China News 1603, CCM
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Tag: pharmaceutical vitamin