CCM: Guangji Pharmaceutical turns losses into gains in 2015

Publish time: 29th June, 2016      Source: CCM
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    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

  CCM vitamin news China_Guangji Pharmaceutical's revenue and net profit

  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




          Revenue, USD         


          Net profit, USD         


























  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




          Production line         


          GMP certification         




          Large-volume injections         






          Riboflavin sodium phosphate API         






          Formulations (tablets, granules,gels, cream)         






          Vitamin B2 API         


          Application processing         




          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