Pharma seller focused on three core areas

money-glitz | Winnie Lee 10 May 2021

Edding Group, an integrated pharmaceutical company in China, is seeking a listing on the main board to raise US$300 million (HK$2.34 billion).

Founded in 2001, the Shanghai-based company has obtained exclusive rights from foreign companies to sell drugs in mainland China, South Korea, Japan, Malaysia, Singapore, Vietnam, Indonesia and Thailand.

The group focuses on three core therapeutic areas, namely anti-infectives, cardiovascular disease, and respiratory systems.

In 2019, anti-infectives was the second-largest therapeutic area in China with market size of 225.5 billion yuan (HK$266 million), accounting for 13.8 percent of the entire Chinese pharmaceutical market. The cardiovascular disease area had a market size of 212 billion yuan in 2019. The respiratory system area with a market size of 90.8 billion yuan in 2019, grew at a compound annual growth rate of 10.3 percent from 2015.

Edding has a product portfolio comprising six core products, including three commercialized originator-branded products and three pipeline products.

Two brands Vancocin and Ceclor, which have sold in China since January 2017, are two anti-infectives brands with sustainable revenue contribution.

Vancocin is the only first-line drug among major therapies for the treatment of MRSA infections, food poisoning, in China's National Reimbursement Drug List, according to a commissioned Frost & Sullivan Report. It accounted for 57.6 percent of sales in 2020.

Ceclor, which accounted for 27 percent of sales, is a leading antibacterial brand for children in mainland China.

Vascepa, the core late-stage pipeline product, is a therapy for cardiovascular risk reduction. The drug has been approved for marketing in the US, Canada, Lebanon and the United Arab Emirates. The firm carried out phase III clinical trials in mainland China and plans to launch the drug in 2022.

The sales and marketing network of about 850 sales representatives cover more than 22,000 hospitals across 31 provinces in China, as of end-December last year.

Total revenue increased by 26.8 percent year-on-year to 1.87 billion yuan in 2019 as the sale of some respiratory and anti-infective products grew.

The turnover then fell 5.7 percent to 1.77 billion yuan last year mainly due to a temporary decrease in medical treatments and limited hospital services in the mainland China during the coronavirus disease pandemic.

A net profit of 151.44 million yuan was recorded in 2019, compared with a net loss of 126.28 million yuan in 2018 as the firm was optimizing the product portfolio and cost structure and developing a comprehensive platform. The net gain then fell by about 38 percent to 93.99 million yuan.

The gross profit margin improved from 36.4 percent in 2018 to 60.1 percent in 2020, by reducing the cost of sales through integrating upstream manufacturing and supply chain management.

The company will use the net proceeds to fund research and development of pipeline products. A portion will be used for further improving the product portfolio, expansion and upgrade of manufacturing, and research and development facilities.

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