ScinoPharm becomes biotech star

BRIGHT FUTURE::With an almost 76 percent return on investment since its IPO and an over 15 percent increase in stock this year alone, Scinopharm’s prospects are good

By Kevin Chen  /  Staff reporter

Mon, Jul 29, 2013 - Page 13

ScinoPharm Taiwan Ltd (台灣神隆), which supplies active pharmaceutical ingredients (API) on a made-to-order basis, has become the nation’s biggest biotechnology company on the main board by market capitalization.

Shares in ScinoPharm rose 1.76 percent to NT$80.9 in Taipei trading on Friday, the highest closing price since the company’s debut on the Taiwan Stock Exchange on Sept. 29, 2011, which pushed its market value to NT$52.58 billion (US$1.76 billion), Taiwan Stock Exchange data showed.

The stock has risen 15.9 percent so far this year and represented a return of nearly 76 percent for its investors compared with its initial public offering price of NT$46 a share. Analysts said the stock could climb even higher this year.

In his latest report on the company released last week, Jih Sun Securities Investment Consulting Co (日盛投顧) analyst Chang Li-chun (張立群) set a new target price on ScinoPharm’s shares at NT$94, up from a previous NT$82.

During the second half of the year, more cooperation between Taiwanese and Japanese pharmaceutical firms, and positive clinical results of several new drugs will help boost the shares of companies such as ScinoPharm, Chang said.

In addition, ScinoPharm is deepening ties with international partners and stepping up expansion in Japan and China to beef up global market shares, a move that Chang said will lend extra momentum to its operations beyond this year.

Citigroup Global Markets also raised its target share price on the stock to NT$84 from NT$82, citing ScinoPharm’s strong performance in the second quarter and major product launches in the pipeline in the second half of the year.

“The bright spot in the second half of 2013 comes from new product launches that demonstrate ScinoPharm’s research and development capabilities and whose contributions will carry over to 2014,” Citigroup Taiwan research head Peter Kurz said on Monday last week.

The company’s shares have also been buoyed by a welcome improvement in its gross margin amid a better product mix, a more efficient production process and larger economies of scale, which hit a record level of 55 percent in the first quarter.

Citigroup forecast the company’s gross margin would reach 52.3 percent this year and 51.5 percent next year, up from NT$50.6 last year.

Earlier this month, ScinoPharm posted an increase of 33.97 percent in consolidated revenue to NT$2.52 billion in two quarters from NT$1.88 billion in the same period last year.

In the April-to-June quarter, revenue increased 46.6 percent year-on-year and 12.9 percent quarter-on-quarter to NT$1.34 billion, which Kurz attributed mainly to higher shipments of topiramate, the API for anti-obesity drug Qsymia, and those of anti-cancer ingredient Docetaxel.

With ScinoPharm planning seven new products this year, with five in the US and two in Japan, Kurz said new products would help drive the company’s sales to NT$3 billion during the July-to-December period.

Citigroup estimates the company’s full-year revenue will rise 18.82 percent to NT$5.43 billion this year and increase by another 9 percent to NT$5.92 billion next year. It forecast net profit for this year to reach NT$1.51 billion, or NT$2.32 per share, and hit NT$1.58 billion, or NT$2.43 a share, next year, compared with last year’s NT$1.17 billion, or NT$1.8 a share.