Management Q&A
Dated 27 August 2004
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Dear Investors,
Thank you very much for the questions and the opportunities to clarify them. We hope you have a better understanding of our business through this online exchange. Your questions will be reposted in black followed by our replies in blue italics. Rgds, The Management Team AsiaPharm Group Ltd |
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Versa, you wrote:
Thanks to the management initiative for this Q&A & the sterling set of latest results. Applaud the management continuous dialogue with shareholders. Thank you. It is part of our responsibility as a Public Listed Company The stock has been one of the best performing IPO stocks in the SGX, what are the reasons behind this? The main reasons are our strong financial performance, the uniqueness of being the only Singapore-Listed Pharmaceutical Group, as well as our strength in taping the specialty pharmaceutical industry in the growing PRC pharmaceutical market. We believe our growth strategies have attracted the interest and confidence from the investors. We will continue to grow in the following ways:
Will there be increasing R&D expenses? Our R&D division is a profit centre and our revenue from sales of R&D results/ patents have increased 247.5% to RMB 13.9 million from RMB 4.0 million in 1H2004. We are confident that our R&D centre will continue to be a profit centre. The main revenue of the group is coming from within the PRC, what plans are the management for expanding the overseas market? It is the intention of the Group to expand into overseas market such as Singapore, Asean and Asia-Pacific region. It can be in form of collaboration with MNCs, research institutes or bringing in our range of products to the region. What percentage of revenue will come from the new product range? It is too early to determine the contribution of new products to our revenue, as we launch 1 to 2 products every year. Normally, it will take one to three years for the new products to show significant contributions. Rgds, The Management Team AsiaPharm Group Ltd |
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Foo Men Joo, you wrote:
Question : 1, With many new regulations introduce by the ministry of health of the PRC govt. of types of drug need doctor prescription that only possible of customer allow to buy the drug from the OTC counters, Base on local news program of the regulation, The sales of this types of drug sales had reduce by a lot. With this is there affecting the sales and numbers of channel to obtain the drug ? Our Group will not be affected as almost all our drugs are prescription drugs used in hospital for critical illnesses, which cannot be purchased without prescription. Currently, we have only 2 products that are available on OTC. 2, With the PRC govt. wanted to reduce the health cost for it people. The hospital required to have tender system and after winning the tender, it will buy the drug that require and it will affected the selling price to the hospital. It that will affecting the profits as the selling will be lower? The tender system is already in place before our IPO and as such we do not foresee any impact on our future earnings. 3, With the WTO agreements to reduce imported duties that allow more international drug company imported the better drug into PRC market and set up the manufacturing in coming year to get market shares from the local with their financial and R & D ? It is possible that we may face some competition from the MNCs with better drugs. However, even with the lower import duties, the price of the drugs will still be too high for the market to significantly impact us. Moreover, the higher priced, imported drugs may lose out under the current tender system, especially if the drugs are new and not been proven. 3, Any plan to tide up with oversea drug company in next 6 to 1 year ? Thank you, Foo Men Joo We are constantly looking out for opportunities to work with foreign partners. Rgds, The Management Team AsiaPharm Group Ltd |
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Heng Chew Hock, you wrote:
What kind of impact/role (if any) does Traditional Chinese Medicine play in your area of business? Asiapharm manufactures and produces specialty pharmaceutical drugs from natural ingredients as well as new formulations for chemical drugs. As such, Traditional Chinese Medicine or TCM does not play a part in our business except for certain R&D research into the medical properties of natural ingredients that may be happen to be used in TCM. Rgds, The Management Team AsiaPharm Group Ltd |
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Xavier, you wrote:
Pls shed some light on the average number of days in the R&D development of a new drug. ie from research to mass production? The whole R&D process from commencement to mass production will usually take 3-5 years. The products produced are mainly extracted from the natural environment, how is this different from synthetic drugs. We use advance technology to extract the effective ingredients from natural ingredients (i.e. fruits, herbs etc) whereas synthetic drugs are just chemical compounds being mixed together. With almost RMB$147m in cash, would the management be looking at giving back the cash as dividends or to use for acquisitions & expansion? Indeed, these are the possible options that the management might consider. Rgds, The Management Team AsiaPharm Group Ltd |
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Acemundo, you wrote:
Can you explain the long term loans and why it is not paid off even with cash at hand? The reason why long term loans are not fully repaid is due to the fact that some of the loans have fixed repayment dates which are not due yet. What are the management's future plans for expansion and distribution? Domestically, the Group intends to expand our sales networks by increasing the number of sales offices and sales staff, as well as increase the usage of our drugs across other areas of medical specialisation. We have also increased our client base from 1300 hospitals to 1500 hospitals since IPO. Also, new products will be launched annually to expand our range of products. Internationally, the Group intends to expand to Singapore, Asean and Asia-Pacific region by bringing our products or through collaboration with MNCs and research institutes. Is there a cause for concern on the rising distribution & operating cost? No. Distribution and operating costs increased mainly in line with higher revenue from pharmaceutical drug sales. Rgds, The Management Team AsiaPharm Group Ltd |
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Yong, you wrote:
Will the rising oil prices affect the cost of production? The effect of rising oil prices will be minimal as it only constitutes a small portion of our operating costs. Is the high profit margin sustainable? There is no reason to suggest otherwise. Rgds, The Management Team AsiaPharm Group Ltd |
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Marc, you wrote:
Will high oil prices increase the production cost dramatically? The effect of rising oil prices will be minimal as it only constitutes a small portion of our operating costs. Any plans to collabrate with other drugs manufacturers to expand the distribution & sales base? Domestically, the Group intends to expand our sales networks by increasing the number of sales offices and sales staff, as well as increase the usage of our drugs across other areas of medical specialisation. We have also increased our client base from 1300 hospitals to 1500 hospitals since IPO. Also, new products will be launched annually to expand our range of products. Internationally, the Group intends to expand to Singapore, Asean and Asia-Pacific region by bringing our products or through collaboration with MNCs and research institutes. Rgds, The Management Team AsiaPharm Group Ltd |
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Dear Investors,
Thank you for all your questions and the interest in AsiaPharm Group Limited. We have come to the end of this Q&A session. We have enjoyed and learnt much from your questions and we hope that you have a better insight of our Company and know more about our operations. Rgds, The Management Team AsiaPharm Group Limited |