FAST NEWS: Investment Loss Undermines Simcere Pharma’s Profit

The latest: Simcere Pharmaceutical Group Ltd. (2096.HK) on Wednesday reported its revenue grew 27.3% to 2.7 billion yuan ($389 million) in the first half of the year, while its net profit plunged 88.8% to 61.9 million yuan.

Looking up: The company’s revenue from innovative pharmaceuticals grew 44.8% year-on-year to 1.77 billion yuan, accounting for 65.4% of its total. Its core product Sanbexin, a self-developed innovative drug to treat ischemic stroke, accounted for 1.04 billion of that revenue alone.

Take Note: The company’s investment portfolio recorded a loss of approximately 331 million yuan in fair value. The company also recorded a one-time pre-tax gain of nearly 400 million yuan from the sale of its stake in Simgene Group Ltd. last year, compared to no similar gain in the same period of this year. Those two factors were the main drivers of its big profit decline.

Digging Deeper: Founded in 1995, Simcere Pharmaceutical is a drug company that develops, makes and sells oncology and cardiovascular drugs. The company was listed in the U.S. in 2007, but delisted in 2013, before re-listing in Hong Kong in 2020. Its innovative drug revenue jumped 53.8% to 3.12 billion yuan last year, benefiting from Sanbexin’s rapid growth. The company maintains a positive revenue outlook as the drug is performing well this year. Additionally, its other innovative oncology drug, Cosela, received conditional approval for launch in China in July.

Market Reaction: Simcere Pharma’s shares rose on Thursday morning, closing up 3.6% at HK$8.14 at the midday break. But the stock still trades at the lower end of its 52-week price range.

Translation by Jony Ho

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