Gross margins at Guangzhou Pharmaceutical's trading business are expected to be stable in the second half despite continuing reform of the medical sector.
Company secretary He Shuhua said the reform had dealt a blow to its medicine-trading business, which generated a lower gross margin of 12.06 per cent in the first half, against 14.46 per cent in the first six months of last year.
He said the reform had discouraged customers from buying expensive and high-margin medicines, meaning the company had started selling lower-margin products to protect its market share.
'The margin began to stabilise in May and June and we do not expect it to fall further in the second half,' Mr He said.
Guangzhou Pharmaceutical, listed during the market crash in October last year, is the mainland's largest manufacturer and trader of Chinese patent medicines.
In the first half, gross margins at the company's manufacturing division rose to 45 per cent from 42 per cent due to lower production costs.
