Standard Chem & Pharm Group's clinic and hospital market remains stable and is expanding overseas, especially in Japan where a shortage of generic drugs has created midterm opportunities for Contract Manufacturing Organizations (CMOs). It's been revealed that many Japanese pharmaceutical companies have inquired, challenging the company to achieve double-digit growth in revenue this year. Syn-Tech Chem. & Pharm., still awaiting inspections by the Ministry of Health and Welfare for two remaining factories after reconstruction following disasters, is expected to start contributing this quarter. Its growth momentum is anticipated to be the strongest in the group. Additionally, Syngen Biotech's new capsule plant is expected to commence production in the third quarter. Overall, there is a chance for the group's revenue to challenge high single-digit growth this year.
In 2023, Standard Chem & Pharm's consolidated revenue was NT$6.24 billion, with a year-on-year growth of 6.64%. After-tax net profit increased by 2.39%, with earnings per share (EPS) reaching NT$4.67, both setting new records. Cash dividends of NT$2.7 per share were also the highest in history.
Chairman Fan Zi-ting stated in a briefing yesterday that two items in the Japanese market continue to be shipped, with one new CDMO collaboration signed. Negotiations are underway for the gout new drug and nasal spray generic drug agency registrations. Japan is the market with the clearest growth trend in the future. PMDA is undergoing institutional reforms to address two major issues: "drug shortage" and "unstable supply." This has led to generic drug manufacturers gradually reducing the introduction of new products to ensure stable supply. The longstanding collaborative production model is being broken. In 2023, there were only 176 generic drug applications for drug pricing, accounting for 18% of the 2020 total, reaching a historic low. This creates CMO opportunities for Taiwanese factories, with many Japanese pharmaceutical companies inquiring. The company will consider factors such as price and technological improvement when accepting orders, with fermentation expected over the next 1 to 2 years.
The United States is also experiencing an increasingly severe trend of drug shortages, with about 132 types of small molecule drugs in serious shortage. This will also bring potential CMO opportunities for Taiwanese factories. However, the U.S. market is fiercely competitive, and Standard Chem & Pharm will monitor the competition closely, preferring not to enter overly competitive markets. Three products have been shipped, including diabetes, amyotrophic lateral sclerosis, and lipid-lowering drugs. As for China, the market is recovering, with the company adopting both its own brand and technology transfer. Antibiotic injections are still being shipped, with two technical transfer approvals and three consistency evaluation reviews in progress.
Within the group, Syn-Tech Chem. & Pharm. and Standard Chem & Pharm themselves are expected to achieve double-digit percentage growth. Both domestic and international sales for Standard Chem & Pharm are on the rise. Of the four factories affected by Syn-Tech Chem. & Pharm.'s fire, the last two have been completed and are awaiting reports from the Ministry of Health and Welfare. Once the modifications are approved, production is expected to resume in the first half of this year. The total production capacity will be higher than before, serving as an important driver of revenue growth.
The inspection for the new Syngen Biotech capsule plant is also scheduled for May or June, with production expected to commence in the third quarter upon approval. With Syngen Biotech's high base period last year, recent health supplement market sentiment has been somewhat affected by the recall of Kobayashi Red Yeast Rice raw materials, so operational stability is sought after this year. Overall, Standard Chem & Pharm Group's revenue is expected to steadily rise this year, challenging high single-digit percentage growth.
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