Arich Enterprise Co Ltd (久裕), which sells medical products to local hospitals and provides logistics services for the products, will move to the GRETAI Securities Market on Oct. 31 from the Emerging Stock Market, at NT$50 per share.
The company expects the GRETAI debut to increase its publicity and financial transparency, while the move is expected to raise NT$575 million (US$19.61 million) through the issue of 11.5 million new shares, Arich said.
Taiwan’s medical logistics and storage services market has a market value of NT$81.6 billion a year. Arich chairman Eric Chang (張俊仁) said the market is growing and could reach NT$122.4 billion in the next few years, as local drug makers and distributors try to save costs by consigning medical logistics and storage services to companies like Arich.
At present, 60 percent of medical logistics and storage services are consigned to medical logistic service companies, but the figure could grow to 90 percent, a level seen in advanced countries, in the near future, Chang said on Tuesday.
“Companies like Arich have reached the economies of scale for such business, making it cheaper for drug companies to subcontract their logistics and storage services to us,” he said.
Switzerland-based Zuellig secures 52.1 percent market share in Taiwan, followed by Arich, with 26.9 percent share, and Switzerland-based Diethelm Keller Siber Hegner (DKSH) Holding Ltd’s Taiwan division, with a 21 percent share, he said.
While the logistics and storage services only accounted for 18 percent of Arich’s revenue of NT$1.52 billion last year, its high entry barrier allows the company to enjoy a high gross margin of 39 percent, Chang said.
That is because companies have to meet the Current Good Manufacture Practice standard in Taiwan and the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme standard of the EU to guarantee the quality of drugs being transported and stored, he said.
The remaining 82 percent of sales were generated from the distribution of medical products for Pfizer Inc, Johnson & Johnson and Shionogi & Co Ltd, with lower gross margin of 14 percent, Arich said.
Starting this year, the company also distributes certain medication used in hormone therapy for Bayer AG in Taiwan, the company said.
Arich has a paid-in capital of NT$330 million and is 49.5 percent owned by Excelsior Healthcare Group (佳醫集團).
From January through last month, Arich posted revenue of NT$1.07 billion, down 7.73 percent from NT$1.16 billion the previous year because of low sales of new hair growth products, the company said.
During the first half of this year, Arich reported profit of NT$25.93 million, up 14.1 percent from NT$22.73 million a year ago, the company said.