Imexpharm Corporation, a leading player in Vietnam’s pharmaceutical sector, has released its interim results for the six months ending June 30, 2024. The company demonstrated solid performance amid fluctuating market conditions, with a 10% increase in net revenue compared to the previous year.

Financial highlights

For the first half of 2024, Imexpharm achieved net revenue of VND 1,008 billion (US$42 million), reflecting a 10% year-on-year growth. The company’s strong performance in the ETC (ethical, trade, and company) market, with a 33% revenue increase, significantly contributed to this growth. The ETC market in Vietnam expanded by 15% in Q1, indicating that Imexpharm’s growth outpaced the market.

Despite a 4% decline in OTC (over-the-counter) revenue, the company made notable strides by partnering with pharmacy chains, which resulted in a 141% increase in revenue from this segment.

Profit Before Tax (PBT) and EBITDA were VND 161 billion and VND 215 billion, down 19% and 7% year-on-year respectively, due to a 27% rise in the cost of goods sold (COGS). However, both metrics showed improvement in the second quarter, with PBT and EBITDA increasing by 7% and 6% quarter-on-quarter, respectively. The EBITDA margin remained stable at 21%.

The rise in COGS was attributed to the adjustment of inventory levels and the ongoing depreciation of the IMP4 facility, compounded by rising prices of Active Pharmaceutical Ingredients. Nonetheless, effective cost control in SG&A (Selling, General, and Administrative Expenses), which decreased by 6% to VND 213 billion, partially offset these impacts.

Looking ahead, Imexpharm is optimistic about achieving its 2024 targets, bolstered by significant investments in marketing and planned expansions.

Business highlights

During the Reporting Period, Imexpharm made significant strides in positioning itself for future domestic and international growth by advancing its R&D program and enhancing operational processes.

In the first half of the year, the Company launched 10 new SKUs and maintained 93 ongoing R&D projects in its innovation pipeline. Additionally, it formed a strategic partnership with Genuone Sciences Inc. to facilitate the transfer of advanced drug manufacturing technology from Korea. This partnership aims to broaden the Company’s R&D capabilities to include complex medications beyond antibiotics, such as treatments for diabetes and cardiovascular conditions.

To meet the growing demand for its high-value products, Imexpharm increased production volumes at its IMP2, IMP3, and IMP4 factories, while prudently adjusting production at IMP1 to align with conditions in the OTC market. Furthermore, the Company developed plans to address the strong market demand for its high-quality injectables by expanding IMP4, part of its broader factory development program. This expansion is expected to significantly boost IMP4’s production capacity within the next 2-3 years.

In June, demonstrating its commitment to transparency and thorough information dissemination, Imexpharm hosted shareholders, investment funds, and securities company representatives at its IMP2 high-tech antibiotic factory. Company representatives provided a comprehensive overview of Imexpharm’s EU-GMP capabilities, organizational structure, manufacturing processes, and operational strategy.

Soon after the Reporting Period concluded, Imexpharm initiated a project to upgrade and overhaul its operational systems by adopting the latest SAP S/4HANA enterprise resource planning software. This move positions the company as the first in Vietnam's pharmaceutical industry to implement such advanced technology, paving the way for new standards in operational efficiency and enhancing service to both customers and partners.

Bonus share issuance

On July 5, Imexpharm’s Board of Directors issued a resolution seeking shareholders’ opinion on the issuance of bonus shares. This proposed issuance is a strategic move designed to support the Company’s expansion plans over the next three to five years. It is intended to both strengthen the Company’s equity base and enhance its market liquidity.

Following the issuance, Imexpharm would become the largest listed pharmaceutical company in terms of charter capital, reinforcing its market leadership and competitive position. The increased number of shares in circulation is also expected to stimulate more active trading of Imexpharm's stock. Consequently, the bonus share issuance has the potential to improve market perception of Imexpharm and enhance shareholder value.

The bonus share issuance, which would be made on a 1:1 ratio, is expected to be fully implemented in the fourth quarter of 2024, pending approval from the General Meeting of Shareholders and the State Securities Commission.

Market outlook

The opportunity for Vietnamese pharmaceutical companies continues to grow, driven by recent government measures favoring local players. In particular, the government published an Action Plan in February designed to implement Vietnam’s National Strategy for the Pharmaceutical Industry. The Action Plan aims for the country’s local production capacity to meet 80 percent of domestic pharmaceutical demand and 70 percent of the total market value by 2030.

Additionally, the government issued four important Circulars (No. 03, 04, 05, 07) in the first half of the year to address various challenges in the procurement and bidding process for medicines and medical supplies. Imexpharm expects these measures to create favorable conditions and increase opportunities in the Vietnamese pharmaceutical market over the long term.

Chaerhan Chun, Non-Executive Chairman of Imexpharm’s Board of Directors, commented: “Imexpharm’s success will continue to be built on increasingly sophisticated production, operational, and financial foundations. I am confident in the company’s ability to leverage its many strategic advantages to drive profitability and shareholder value in the full year and beyond. The bonus share issuance, if approved, will further underpin Imexpharm’s status as a market leader and strengthen its growth potential.”

Imexpharm is a market leader in manufacturing and distributing high-quality antibiotics in Vietnam. Over its close to fifty-year history, the company has been a pioneer in Vietnam’s rapidly evolving pharmaceutical industry, focusing on international partnerships and operating at the highest safety and quality standards. Looking to the future, it is strategically and financially poised for growth both domestically and globally. The company has been expanding and will continue to expand its portfolio into new treatment areas and wellness.

At the close of the Reporting Period, Imexpharm's share price had increased by 33% since the start of the year, compared to a 10% increase in the VN-Index of companies listed on the Ho Chi Minh City Stock Exchange.

Imexpharm, in line with standard industry practice, records its sales from individual channels as gross revenue.

PV