Sihuan Pharmaceutical Announces 2012 Annual Results

HONG KONG, March 25, 2013 /PRNewswire/ -- Sihuan Pharmaceutical Holdings Group Ltd. (HKEx: 0460) ("Sihuan Pharmaceutical" or the "Company"), a leading pharmaceutical company with the largest cardio-cerebral vascular ("CCV") drug franchise in China's prescription drug market, today announced its annual results for the year ended 31 December 2012.

In 2012, leveraging its leading position in the CCV prescription drug market, Sihuan Pharmaceutical achieved satisfactory results amidst regulatory pressure affecting the pharmaceutical industry. Revenue surged by 35.7% to RMB3,042.5 million, while gross profit rose 33.5% to RMB2,289.4 million. Profit attributable to owners of the Company grew by 9.8% to RMB904.4 million. The Board of Directors recommended a final dividend of RMB5.8 cents per share (2011: RMB2.5 cents) for the year ended 31 December 2012. Together with interim dividend of RMB3.1 cents per share, total dividend for the year ended 31 December 2012 will be RMB8.9 cents per share. The dividend ratio will be approximately 50.9%.

Dr. Che Fengsheng, Chairman and CEO of the Company, said, "The year 2012 was a challenging year for the Company, yet it was also a turning point in our business development. We have completed integration of our distribution network that significantly enhanced our operational efficiency. We have completely ended its reliance on individual products and built a more balanced revenue stream, as the sales contribution from its 9 major products now exceeds half of its total sales revenue. In addition, we have accomplished an important milestone forging a collaborations with international players. Our continuous R&D efforts have started to bear fruit as several projects achieved breakthroughs during the year. We have has further strengthened our leading position in the CCV prescription drug market and become the eighth largest pharmaceutical company in the Chinese prescription drug market in 2012." 

Sustained Growth Momentum via Diversified Product Portfolio

CCV Products

In 2012, the CCV business remained the Company's largest revenue contributor. Driven by a broadened revenue base, sales of CCV products soared 38.8% to RMB2,803.9 million, accounting for 92.2% of the Company's total revenue. 

Sihuan Pharmaceutical's continuous efforts in product diversification were evident in the impressive growth in sales of its promising products. The Company has strengthened its academic promotion and grew sales of Danshen Chuanxiongqin injection, Yuanzhijiu, Yimaining and Yeduojia, Guhong injection significantly by 776.6%, 334.0%, 101.7%, 188.4%, 118.9% to RMB 73.1 million, RMB 361.2 million, RMB 125.9 million, RMB 73.5 million, and RMB 205.5 million, respectively. Building on stronger operational efficiency after integration of its distribution network, sales of Oudimei improved in the second half of 2012 and increased 6.3% to RMB696.1 million for the year.

The Company's established products also maintained steady growth with a deepened market penetration, especially into low-end markets. Sales of Kelinao, GM1, Qu'Ao, Qingtong and Chuanqing for the year grew by 22.7%, 51.2%, 35.6%, 46.6% and 12.5% to RMB649.6 million, RMB217.1 million, RMB 92.5 million, RMB67.0 million and RMB93.0 million, respectively.

Non-CCV Products

In view of building a further diversified product portfolio, the Company stepped up its efforts in promoting key non-CCV products during the year under review. Thanks to the Company's effective sales and marketing strategy, sales of Ren'Ao, Zhuo'Ao, Bi'Ao and Luoanming rose 67.8%, 58.4%, 28.8% and 64.6% to RMB13.7 million, RMB14.4 million, RMB52.8 million and RMB58.2 million, respectively.

Enhanced Sales and Marketing Efforts

To achieve a more balanced and diversified product portfolio, the Company rode on the expansion in medical insurance coverage to step up its marketing efforts for both its promising products and established products. During the year, the Company focused in strengthening the academic promotion for its promising products, boosting recognition of its key products through clinical trials, expanding the coverage of its established products in low-end market, as well as expanding its sales and marketing team. The Company also completed the integration of the sales team and distribution network of companies acquired after its listing into that of the Company.

Breakthroughs in Research and Development Projects ("R&D")

With its unremitting efforts in R&D over the years, the achieved significant breakthroughs in a number of major projects during the year. For its generic drugs, Roxatidine Acetate Hydrochloride for Injection, an exclusive first-to-market generic drug, and Nalmefene Hydrochloride Injection, a Category 3.1 generic drug, obtained approval for production; for its innovative drugs, Benapenem and Imigliptin Dihydrochloride, Category 1.1 innovative drugs, received Approval for Clinical Studies in January and February 2013 respectively.

In a bid to enhance its R&D efficiency, the Company completed the restructuring of its innovative drug R&D team Xuanzhu Pharma Co., Ltd ("Xuanzhu Pharma", or known as KBP BioSciences Co., Ltd.) which made it a wholly-owned subsidiary of the Company. Under the Company's overall development strategy, Xuanzhu Pharma will focus its resources on developing innovative drugs in major therapeutic areas such as CCV, metabolism and oncology.

Forged Collaboration with International Player

In 2012, the Company entered into a collaborative agreement with NeuroVive Pharmaceutical AB, a leading international mitochondrial pharmaceutical development company based and listed in Sweden. The collaborative agreement focused on the development of two innovative products, CicloMulsion® and NeuroSTAT®, which are used for the treatment of heart reperfusion injuries and traumatic brain injuries, respectively. This collaborative agreement marked an important milestone in the Company's overseas business development and enriched its product pipeline.   

Outlook for 2013

Looking ahead, the Company will continue to adapt to the evolving operating environment by strengthening its capabilities in sales and marketing while ramping up investment in R&D to build a further diversified product portfolio.

By adhering to its two-pronged strategy of promoting its established and promising products, Sihuan Pharmaceutical will endeavour to tap the rising demand brought by wider medical insurance coverage. To this end, the Company will boost its marketing efforts by enhancing academic promotion for its fast growing products and extending market coverage for its established products into third- and fourth-tier cities. The Company will also strive to secure tenders for the development of new markets for newly launched products.

To strengthen its overall R&D capabilities, the Company will optimize return on its investment through higher incentives and improvements in project management to shorten the time-to-market cycle. Furthermore, Sihuan Pharmaceutical will continue to identify opportunities for collaboration and M&A, and will exercise flexibility in collaboration, especially with international pharmaceutical companies.

Dr. Che concluded, "Amid the challenges ahead arising from the anticipated market and policy changes, various favourable factors such as wider medical insurance coverage across the country, the rise in per capita funding standards for medical insurance, the acceleration in urbanization and the ageing of China's population are expected to spark a rise in the demand for pharmaceutical products. Leveraging its outstanding sales and marketing capabilities, optimized and high quality product mix, strong R&D capabilities, Sihuan Pharmaceutical is confident in its future development and is poised to seize the opportunities up ahead. " 

About Sihuan Pharmaceutical Holdings Group Ltd.

Founded in 2001, Sihuan Pharmaceutical Holdings Group Ltd. is a leading pharmaceutical company and the largest cardio-cerebral vascular drug franchise in China's prescription drug market by market share. The Company also became the eighth largest pharmaceutical company in terms of hospital purchase in the Chinese prescription drug market in 2012. The success of the Group can be attributed to its differentiated and proven sales and marketing model, diversified portfolio of market leading drugs, extensive nationwide distribution network, and strong research and development capabilities. The company's current products encompass the top five medical therapeutic areas in China: cardio cerebral vascular system, central nervous system, metabolism, oncology and anti-infectives. Their major products such as Kelinao, Anjieli, Chuanqing, Qu'Ao, GM1 and Oudimei are widely used in the treatment of various cardio-cerebral vascular diseases.

SOURCE Sihuan Pharmaceutical Holdings Group Ltd.

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