Mekophar records first loss as major pharma firms post Q2 profits

Ho Chi Minh City-based Mekophar posted its first loss in the second quarter, while most other pharma industry majors in Vietnam reported significant profit growth.

Mekophar (MKP) reported a loss of VND104.5 billion ($4.4 million) in Q2, the first loss in its history. It earned net revenues of VND207 billion ($8.7 million), up 10% year-on-year, according to its financial statement.

The company attributed the loss to a decrease in market demand, impacts of competition from other businesses, and problems with registration numbers.

In the first six months of 2023, Mekophar posted net revenues and after-tax profits of VND443 billion ($18.7 million) and VND4.3 billion ($181,600), down 28% and 81%, respectively.

As of June 30, Mekophar's total assets were valued at VND1.54 trillion ($65.2 million), down 5% compared to the beginning of the year, with cash and cash equivalents at VND36.7 billion ($1.55 million), down 40%.

For 2023, the firm has targeted revenues and pre-tax profits of VND1.1 trillion ($46.5 million) and VND50 billion ($2.11 million), respectively.

On the Unlisted Public Company Market (UpCOM), MKP shares closed Tuesday’s session at VND26,600 ($1.12).

The firm attributed the loss to low demand and stiff competition, among other problems.

In stark contrast, Hau Giang Pharmaceutical JSC (DHG Pharma) reported an after-tax profit of VND263 billion ($11.1 million) in Q2, up 12% year-on-year.

The company, listed on the Ho Chi Minh Stock Exchange (HoSE) as DHG, posted a net revenue of nearly VND1.15 trillion ($48.7 million), up 3%, according to its financial statement.

Hau Giang Pharmaceutical said continued focus on trading strategic and key products, better organization of its distribution system as well as its connection with customers have helped its positive performance.

In the first six months of this year, DHG posted net revenues of VND2.38 trillion ($100.57 million) and after-tax profits of over VND624 billion ($26.4 million), up 9% and 27% year-on-year, respectively.

As of June 30, 2023, DHG's total assets value increased by 10.8% compared to the beginning of the year to VND5.73 trillion ($241.8 million). Of this, cash deposits of VND2.32 trillion ($98 million) and inventories worth VND1.49 trillion ($62.9 million) were down 1.5% and 19.1%, respectively.

For 2023, DHG Pharma has set revenue and pre-tax profit targets of VND5 trillion ($212.8 million) and VND1.13 trillion ($48.1 million), up 7% and 3% respectively.

At the close of Wednesday’s session, DHG was trading at VND124,400 ($5.25) per share.

Meanwhile, Imexpharm Corporation (IMP) posted net revenues and after-tax profits of nearly VND440 billion ($18.5 million) and VND79.7 billion ($3.4 million) in Q2, up 24% and 71% year-on-year, respectively.

Imexpharm recorded H1 net revenue and after-tax profits of VND919 billion ($38.8 million) and VND157.5 billion ($6.6 million), up 37% and 58%, respectively.

At the end of June, IMP's total assets stood at nearly VND2.52 trillion ($106.6 million), up 11% compared to the beginning of the year, with cash and cash equivalents at VND66.8 billion ($2.8 million), down 62%.

For 2023, IMP has set net revenue and pre-tax profit targets of VND1.62 trillion ($68.4 million) and VND305 billion ($12.88 million), respectively.

On the Ho Chi Minh Stock Exchange (HoSE), the IMP share price traded for VND72,500 ($3.06) at Wednesday's closing session.

Top broker SSI Securities said that while the post-pandemic situation will remain stable in most aspects, an economic downturn could stall spending on healthcare.

The first half of 2024 will be an unpredictable time for the supply of active pharmaceutical ingredients (API) and excipients. About 65% of API used in the production of drugs in Vietnam is imported from China, which has reopened, but SSI Securities predicted that shortages could still occur.

In addition, the Russia-Ukraine conflict continued and there was a risk of shortage of API and drugs imported from Europe. Companies that can use domestic raw materials will gain a better position, the broker said.

SSI expects pharma industry revenue to reach VND169 trillion ($7.2 billion) in 2023, up 8% year-on-year.

Meanwhile, Agribank Securities (Agriseco) assessed pharmaceutical industry profits would remain stable in 2023. The pharmaceutical industry is known to be a defensive one in the context of the economy facing many difficulties. Besides, Vietnam’s pharmaceutical industry still has a lot of potential for development in the medium and long term as the country’s population size is large and aging at a rapid rate. The increase in per capita income also helps people to spend more on medical and healthcare products, Agriseco noted.