During the reporting period, Imexpharm capitalised on its leadership position in the manufacture and distribution of high-quality antibiotics and in the critically important ethical drugs channel (ETC) market. At the same time, it continued to successfully align itself for growth against a backdrop of varying market conditions.

Financial highlights

Net revenue for the six months ended 30 June 2024 was VND1.01 trillion ($39.87 million), up 10 per cent on-year. Imexpharm’s ability to capitalise on its leadership of the rapidly expanding ETC market helped drive this growth, with the company seeing a 33 per cent increase in first-half ETC revenue.

In the first quarter, the overall ETC market in Vietnam is reported to have grown by 15 per cent. Based on this comparison, the company expects its first-half performance to be well above market.

Although revenue derived from the over-the-counter (OTC) channel declined four per cent overall, the company made significant progress in its strategy to partner with pharmacy chains, an increasingly important OTC sales route. Revenue derived from this source grew 141 per cent in the half year.

The high-tech antibiotic plant IMP4 meets EU-GMP standards of Imexpharm

Before-tax profit and earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the reporting period were $6.36 million and $8.48 million, down 19 per cent and 7 per cent respectively on-year as a result of a 27 per cent rise in the cost of goods sold (COGS).

Both measures improved through the second quarter as Imexpharm steadily increased production volume of its higher-value, EU-standard products, demonstrating its ability to flex production to match changing market demand for individual products. The ongoing, positive momentum from this action led to second-quarter before-tax profit and EBITDA growth of 7 per cent and 6 per cent respectively on-quarter, and EBITDA margin stabilising at 21 per cent.

The rise in COGS was driven in part by the company’s proactive balancing of inventory levels to match conditions in the less sophisticated OTC market. It was also impacted by the ongoing, planned depreciation of the IMP4 factory and an increase in the price of Active Pharmaceutical Ingredients. These factors were partially offset by effective cost control in Selling General and Administrative Expenses (SG&A), which reduced by 6 per cent on-year to VND213 billion ($8.41 million).

Looking ahead to the second half of the year, the company anticipates additional enhancements in EBITDA and is confident it will achieve its overall targets for 2024. Imexpharm made a significant investment in marketing campaigns during the first half of 2024 which is expected to translate into strong revenue growth in the second half.

Business highlights

During the reporting period, Imexpharm continued to position itself for future domestic and overseas growth by making solid progress in its R&D programme and strengthening processes within its operations.

Product research and development at Imexpharm's EU-GMP quality drug factory

In the first half of the year, the company launched 10 new SKUs with 93 ongoing R&D projects in its innovation pipeline. It also signed a strategic partnership with Genuone Sciences Inc. to facilitate the transfer of advanced drug manufacturing technology from Korea. This partnership will further expand the company’s R&D capabilities to complex medications outside antibiotics, including treatments for diabetes and cardiovascular conditions.

To meet demand, particularly for its higher-value products, Imexpharm increased production volume at its IMP2, IMP3 and IMP4 factories, while prudently adjusting production at the IMP1 factory to balance with the conditions experienced in the OTC market.

In addition, the company developed plans to meet the strong market demand for its difficult-to-produce, high-quality injectables by expanding IMP4 as part of its overall factory development programme. This will allow the company to significantly boost IMP4 production capability within a timeframe targeted for the next two to three years.

In June, as part of its commitment to providing timely, transparent and thorough information on its business and operations, Imexpharm hosted shareholders, investment funds and securities company representatives at its IMP2 high-tech antibiotic factory. Company representatives gave a comprehensive overview of Imexpharm’s EU-GMP capabilities, organisational structure, manufacturing processes and operational strategy.

The high-tech antibiotic plant IMP2 meets EU-GMP standards of Imexpharm

Shortly after the end of the reporting period, Imexpharm launched a project to upgrade and overhaul its operational systems by implementing the latest SAP S/4HANA enterprise resource planning software. The company believes it is the first pharmaceutical company in Vietnam to use this advanced technology, which will allow it to pioneer new standards in operational efficiency and customer/partner service.

Plan to issue bonus shares to investors

On 5 July, 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.

Post-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. As a result, 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, after receiving 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 favouring 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 expects the country’s local production capacity to meet 80 per cent of domestic pharmaceutical demand and 70 per cent of total market value by 2030.

In addition, the government issued four important Circulars 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 will create better conditions and increase opportunities in the Vietnamese pharmaceutical market over the long term.

Chaerhan Chun, non-executive chairman of Imexpharm’s Board of Directors said, “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.”