Sinopharm sees first-half profit jump 27pc on government incentives

PUBLISHED : Monday, 25 August, 2014, 10:58am
UPDATED : Monday, 25 August, 2014, 10:58am

Sinopharm, the mainland’s largest pharmaceutical company, jumped to 17-month high in Hong Kong trading after it reported a 27 per cent increase in net profit for the first half of this year.

Shares of Sinopharm jumped as much as 6.4 per cent to trade at HK$27.4 at 9.30am in Hong Kong, the highest since March 11 last year. It fell back to trade at HK$26.50 at 10.37am, still up 2.7 per cent.

Its first-half net profit was 1.47 billion yuan (HK$1.85 billion), compared with 1.15 billion yuan in the same period last year, thanks to a basket of government incentives to promote reform of the mainland’s healthcare system, the company said in an exchange filing on Monday. It did not declare any dividend payout for the period.

[The] pharmaceutical distribution industry sustained a steady, although slower growth pace

The NDRC approved an increase in the retail price ceiling for 530 types of drugs in May. In addition, the State Council increased medical insurance subsidy standards for rural cooperatives and urban residents to 320 yuan per person from 40 yuan per person in May.

Sinopharm said those policies had “significant impacts on market recalibration and institutional optimisation”.

“During the first half of 2014, [the] pharmaceutical distribution industry sustained a steady, although slower growth pace in sales and profit levels,” it said. “Both industry concentration ratio and distribution efficiency improved as a result of industry structure adjustment.

 “However, the whole industry is still facing different pressures in terms of longer receivable turnover days, increasing capital requirements and thinning profit margins.”

At the end of June, the group’s distribution network covered 31 provinces, municipalities and autonomous regions, it said.