Wed, Nov 13, 2013 - Page 13 News List

ScinoPharm posts profit decline on low margin

BUMP IN THE ROAD:The firm attributed last quarter’s lower margin to product mix from client orders, but said that would improve as it readies a new factory

By Camaron Kao  /  Staff reporter

ScinoPharm Taiwan (台灣神隆), which supplies active pharmaceutical ingredients, reported a profit decline of 37.82 percent last quarter from a quarter ago because of lower gross margin from its product mix.

The company posted a profit of NT$252.5 million (US$8.56 million), down from NT$406.08 million in the second quarter, according to the company’s filing to the Taiwan Stock Exchange.

That figure was 22.43 percent lower than NT$325.5 million the previous year, the filing said.

“Because we deliver our products on a made-to-order basis, the products we sell within a period are determined by the orders of our clients, and the product-mix we had last quarter happened to generate a lower profit margin,” ScinoPharm chief financial officer Patricia Chou (周珮芬) said at an investors’ conference yesterday.

Last quarter, gross margin declined to 42.75 percent from 54.11 percent the previous quarter and 49.86 percent a year ago, the filing said.

Chou said that the company’s products this quarter will have higher gross margin than those in the last quarter, and in the long term the company is likely to keep its gross margin between 45 percent and 50 percent.

From January through September, the company registered a profit of NT$1 billion, or NT$1.49 per share, up 35 percent from NT$748 million a year ago.

During the nine-month period, gross margin was 51 percent, up from 50 percent the previous year, the filing said.

The firm’s factory in Changshu, China, which can produce 250 cubic meters of active pharmaceutical ingredients a year, is expected to be operational by the middle of next year if the Chinese government completes the validation process within three to six months, ScinoPharm president and chief executive Jo Shen (馬海怡) said, adding that the new factory can help the firm increase sales in China.

Eyeing the rising competition of active pharmaceutical ingredients from companies in India and China, ScinoPharm is also building a factory to make formulation in Greater Tainan, Shen said, adding that the factory’s first production line is to start operating next year.

“We will strive to post higher growth than that of the global active pharmaceutical ingredient sector,” she said.

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