The Straits Times / The Business Times News on AsiaPharm

AsiaPharm sees double-digit growth for next 2 years

ASIAPHARM Group expects to continue enjoying strong double-digit growth in profits and sales for the next two years, riding on the demand for drugs from China's huge ageing population.

In an interview with Reuters on Wednesday, executive chairman Liu Dianbo said AsiaPharm, the biggest pharmaceutical company listed in Singapore, is looking at markets beyond China.

It hopes to sell its drugs in Asian countries such as Indonesia, the Philippines and Malaysia by the end of this year. 'Eventually, we hope to expand into Australia by 2007 and move into the European and US markets,' Mr Liu said. Currently, Vietnam is AsiaPharm's only foreign market.

In a statement yesterday, AsiaPharm, which makes anti-inflammatory drugs, said the pharmaceutical industry in China is forecast to grow about 15 per cent in 2006.

This compares to the growth of AsiaPharm's pharmaceutical sales of 58.3 per cent and 36.4 per cent in FY2004 and FY2005 respectively.

AsiaPharm said since its initial public offering in 2004, the group has further improved its efficiency and technological competencies. These have included more research and development, and an increased distribution network.

AsiaPharm - whose core product Elcatonin is used to treat osteoporosis or brittle bones in the elderly - is focused on making new drugs annually. It also has a strategy of selling its own drugs rather than distributing for third parties.

'In view of the above strategies and our track record of pharmaceutical sales outpacing this growth rate, the group is hopeful that its sales (and hence, net profit) over the next two years will continue to exceed that of the national pharmaceutical industry growth rate by about 10 percentage points,' it said.

In China, about 100 million people - or nearly 10 per cent of the total population - are aged 65 years or above, a consequence of longer life expectancy and the government's one-child policy.

'About 50 per cent of our drugs are targeted at the ageing population,' Mr Liu told Reuters.

This month, the company started selling Ximing ting, a new pill used to treat menopausal ailments such as hot flushes and mood swings.

'The market for this drug is very big. We hope to have at least a 20 per cent market share in this drug market in three to five years' time,' he said, adding that the potential market size for the drug in China is about 60 million people.

Within China, the company sells its drugs to about 2,000 hospitals in key cities such as Beijing and Shanghai. But Mr Liu said that there is still room to grow at home.

'There are about 6,000 hospitals we can sell to, but we tend to target the mid to bigger-sized hospitals. We'll penetrate more hospitals in due course,' he said.

Last year, AsiaPharm saw new profit rise 25 per cent to 89.62 million yuan (S$18 million). Net profit margin also improved to 26 per cent from 22.8 per cent.

Profits this year are expected to rise about 31 per cent, according to the average of five analysts polled by Reuters Estimates.

AsiaPharm's chief financial officer Chong Chin Fan said the company enjoys better margins by selling its own products. 'We will be happy to maintain margins at that (2005) level,' Mr Chong said.

AsiaPharm closed yesterday down two cents to 79.5 cents.