TAIPEI: ScinoPharm Taiwan Ltd, which makes active pharmaceutical ingredients (API), yesterday said that net income last quarter declined 32 percent year-on-year to NT$132 million (US$4.15 million), or NT$0.19 per share, due to steep drops in shipments of generic weight-loss and antidepressant drugs.
Reduced sales led to diminished capacity utilization, which further eroded earnings, ScinoPharm said.
“Unlike last year, shipments of weight-loss and antidepressant drugs were virtually halted during the first half, but we expect shipment growth to resume in the second half,” ScinoPharm chief financial officer Patricia Chou told an investors’ conference.
Despite the profit decline, gross margin last quarter improved to 38 percent from 35 percent in the January-to-March period, which Chou said was an indication that the company’s earnings have begun stabilizing.
“The company is seeking other API clients to replace reduced orders for branded drugs,” she said, adding that there is a lot of room for improvement before ScinoPharm regains the 40 percent gross margin it enjoyed before last year.
Operating expenses last quarter dropped 17 percent, due to reductions in payroll and bonuses and other cost-control measures, Chou said.
However, the company did not reduce research and development expenses in the quarter, she added.
Net income in the first half fell 32 percent year-on-year to NT$245 million, or NT$0.35 per share, as sales slid 13 percent to NT$1.94 billion and gross margin fell to 37 percent from 42 percent.
ScinoPharm’s core competence lies in its oncology drugs because of the high entry barrier in the market. Overall sales by products showed that oncology drugs accounted for 79 percent of overall sales in the first half, compared with 65 percent last year.
By business, generics manufacturing contributed about 89 percent to overall sales in the first six months, compared with 77 percent last year, the company said.
For the second half, the company said it would begin to focus on China and Japan, which offer faster growth opportunities, compared with slowing growth in the US and Europe, where opportunities are further constrained by large-scale mergers and acquisitions in the pharmaceuticals sector.
ScinoPharm also reported an important milestone in its drive to expand into the lower segments of the pharmaceutical supply chain.
The company said that it recently submitted an abbreviated new drug application (ANDA) to the US Food and Drug Administration for fondaparinux, which is an anti-thrombotic agent used to prevent the occurrence of blood clots after surgery.
The ANDA phase might take two to three months to complete, ScinoPharm said.
