CSPC Pharmaceutical gains 38.9% profit

The company’s 2020 performance beats market expectations, the OCBC said.

The CSPC Pharmaceutical Group posted a 38.9% YOY increase in profit to $6.16m (CNY5.16m) in 2020, above market expectation, the OCBC Investment Research reported.

The pharmaceutical company’s earnings were attributed to improved finished drugs and antibiotics margin as well as expense control and one-off income from its subsidiary.

Total revenues rose 12.8% to $29.7 (CNY24.9b). Some 26$ of the revenues were generated through the NBP sales, which grew 17%YOY. Oncology sales grew 29% in 2020, compared to 2019.

The company’s expenses in research and development rose to $3.46b (CNY 2.9b), representing a 45$ YOY increase as it plans to grow the house team to 1,000 clinical headcount.

It declared a final dividend of HKD9 cents per share, in addition to the interim dividend of 6 cents.

Moreover, the signing of two licensing deals in the first quarter of 2020 and four more deals in the pipeline have been received positively by the market.

CSPC Pharmaceutical has signed deals for asthma and non-small cell lung cancer treatment. The four other deals, which are in advanced stages of negotiations, are expected to build the company’s innovative pipeline.

Moreover, CSPC Pharmaceutical's business development size is seen to expand to 30 staff in three years from 15 presently.

The OCBC Investment Research expects this strategic focus in growing CSPC Pharmaceutical's pipeline of innovative drugs will add to its longer term growth prospect.

The report, however, noted a potential investment risk such as the faster catch-up by research and development capabilities of its peers, larger price cuts from China healthcare sector reforms, and rising competition amongst others.