Profits attributable to shareholders increased significantly by 110.2% to RMB 634.5 million; Sales of core drugs continued to record strong growth
Strategic investment by leading international investment firm Blackstone to support the company’s future growth
HONG KONG, Aug. 24, 2018 /PRNewswire/ — YiChang HEC ChangJiang Pharmaceutical Co., Ltd. ("HEC Pharm" or the "Group", SEHK stock code:01558) is pleased to announce its interim results for the six months ended 30 June 2018. During the period under review, the Group’s revenue grew 123.8% year-on-year to RMB 1,482.4 million, profits attributable to shareholders surged by 110.2% to RMB 634.5 million, delivering a strong financial performance underpinned by solid business momentum.
Strong revenue momentum driven by core drug Kewei unlocking market opportunity
In the first half of 2018, the Group’s core drug Kewei helped drive overall business growth by delivering significant revenue growth of 143.1% to RMB 1,353.5 million, representing 91.3% of the total revenue. Oseltamivir has steadily replaced obsolete and less effective anti-influenza treatments, becoming the recommended drug for treating influenza due to its effectiveness and safety. In the "Chinese Guidelines for Diagnosis and Treatment of Influenza (2018 Edition)" published by the National Health Commission of the People’s Republic of China (NHC) in January this year, the first update since 2011, Oseltamivir was the recommended anti-viral drug for treating influenza. Moreover, the guidelines specifically recommended Oseltamivir granule form for children, who find capsules difficult to swallow. The Group’s patent-protected Kewei granule form has uniquely positioned the Group to address the influenza treatment market opportunity. The national influenza surveillance results indicated that there had been higher influenza rates in the first half of this year which had stimulated an accelerated sales growth of Kewei, the core product of the Group. Such sales growth, together with the Group’s continued academic promotion activities, has helped boost Kewei’s brand recognition and product reputation.
Based on the current product portfolio of launched drugs and pipeline products and taking into account the diagnosis and treatment records of different clinical departments of hospitals, the Group has established professional teams to conduct differentiated marketing and management for its product lines. As at 30 June 2018, the Group has a total of 1,480 sales personnel. Currently, the Group’s sales team has been divided into the following: 1) core drug academic promotion sales team (Kewei & Ertongshu) covering Class III and II hospitals (1,107 personnel); 2) general medicine sales team covering Class I hospitals and clinics (185 personnel); 3) distributor recruitment and management team covering 3rd party distributor partners selling into Class III & II hospitals (52 personnel); 4) OTC channel sales team covering sales of all drugs in OTC pharmacies (136 personnel).
Strong progress on pipeline drug R&D, with multiple products attaining successful results at different stages
For insulin, the Group is developing three types of active pharmaceutical ingredients and various types of corresponding insulin formulations, with the products targeting to launch between early 2019 and 2021. As for research and development standards and clinical development strategies of insulin, the Group follows the latest technical guidelines on biosimilar drugs adopted in Europe and the United States, striving to provide high-quality biosimilar drugs comparable to the original innovator drugs.
For Hepatitis C, the Group is focused on developing two therapeutic solutions. One of the solutions is a combination therapy of Yimitasvir Phosphate and Sofosbuvir, for which the Phase III clinical trials were conducted in the first quarter of 2018 and are currently underway. The solution is scheduled to be submitted to the State Food and Drug Administration ("CFDA") for approval by the end of 2018 and it is expected to be approved for launch after 2019. The other solution is a therapy involving Yimitasvir Phosphate and Furaprevir, jointly developed by the Group and one if its partners, TaiGen Biopharmaceuticals Co. (Beijing), Ltd., for which the Phase II clinical trials commenced in the first quarter of 2018 and the data from these clinical trials showing effective and favorable results. This treatment is expected to be approved for launch after 2020.
USD 400 million strategic investment by Blackstone to help support future business growth
In August this year, the Group entered into a subscription agreement with Blackstone, one of the world’s leading international investment firms, and plans to issue convertible bonds in an aggregate principal amount of USD 400 million. Blackstone is one of the world’s largest investors with extensive resources and experience in the healthcare sector. As a long-term strategic investor, Blackstone will closely collaborate with the Group to tap market opportunities, strengthen its market share in the pharmaceutical sector, as well as support its sustained and rapid growth.
The Group intends to use the net proceeds to acquire pharmaceutical products, increase production capacity, and expand its sales and distribution network, which will support the expansion of its product offerings and market share, helping to meet demand from rapid sales expansion in the future. At the same time, the Group plans to leverage this opportunity to introduce Blackstone as a long-term strategic investor that can support the Company pursue attractive drug acquisitions, advance its development strategy, operation and management, strengthen international cooperation, and improve corporate governance and investor relations.
Tang Xinfa, Chairman of HEC Pharm said, "Looking forward, the Group will continue to enhance its innovation and R&D capabilities to meet ever-changing market demand, diversify the Group’s drug portfolio, and optimize our competitiveness. Meanwhile, the Group will maintain the growth momentum of our core drugs and increase their market share by further expanding sales and distribution channels to community hospitals and primary hospitals. For future new products, the Group will continue to strengthen and build-out its professional sales teams, leveraging academic promotion activities to build a solid foundation for sales of future new products. In the future, the Group will adhere to its development strategy in a disciplined and prudent manner. By enriching and diversifying the drug portfolio, maintaining strong competitiveness of core drugs and leveraging our strengths in academic promotion capabilities, we will strive to achieve stable development in the long term and create maximum value for all shareholders and investors."
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About YiChang HEC ChangJiang Pharmaceutical Co., Ltd
YiChang HEC ChangJiang Pharmaceutical Co., Ltd. ("HEC Pharm" or the "Group") is a pharmaceutical manufacturing company that focuses on the R&D, manufacturing and sale of pharmaceutical products in the therapeutic areas of anti-virus, endocrine diseases, cardiovascular and antineoplastic diseases. With 17 years of history, HEC Pharm has become a leading pharmaceutical company in China with a nationwide distribution network. Since its establishment, the Group has adhered to the pharmaceutical philosophy of "Serving Chinese with Higher Standard" and formed strong competitive edges in pharmaceutical manufacturing and marketing. As at 30 June 2018, HEC Pharm manufactures, markets and distributes 33 pharmaceutical products in China, with Kewei as its core product. It is the only manufacturer of Oseltamivir Phosphate granules in China. The Group successfully listed on the Main Board of Hong Kong Stock Exchange on 29 December 2015 with the stock code 1558.