Decline in the export prices of APIs

Yesterday (April 28th), Huahai Pharmaceuticals, which was transitioning from raw material medicines to preparations, released its financial report for the first quarter of this year. In the first quarter of 2014, the company achieved operating income of 522 million yuan, a year-on-year decrease of 12.20%; and a net profit of 52.456 million yuan, a sharp drop of 48% year-on-year.

In response, Huahai Pharmaceuticals stated that the decline in net profit was mainly due to the impact of the sales of APIs, and related sales expenses and R&D expenses increased.

On the other hand, the park where the company is located has increased environmental protection verification, which has affected the normal sales of main raw material medicines.

From the company's specific business perspective, during the reporting period, there was a trend of differentiation between APIs and pharmaceutical preparations. In the first quarter of the year, the formulation business realized revenue of RMB 180 million, and the income of APIs declined.

“Last year, the prices of bulk medicines were very volatile, the basic prices were depressed, and exports fell, and customers in Europe and America still had phenomena such as pressing goods.” An analyst in the pharmaceutical industry told the “Daily Economic News” reporter.

On the other hand, the company's preparation of drugs is still in transition and has not yet been effectively played. The reporter was informed that at present, the company has a number of preparation products approved by the FDA (United States Food and Drug Administration), some of which are being declared by CDE (National Food and Drug Administration Drug Administration), and the general manager of the company is Chen Baohua. There have been many public calls for CDE to open up green channels for reviewing products that have been listed abroad.

“The problem now is that raw material medicines are not going well, affecting income, and the products that look promising have not yet played a big role,” said the analyst.

In addition, the company's financial report shows that during the reporting period, Huahai Pharmaceutical had a sales expense of 45,296,000 yuan, a year-on-year increase of 96.72%. The high sales cost also greatly reduced the company's profits.