Active pharmaceutical ingredient (API) manufacturer SCI Pharmtech reported a 25.42% year-on-year increase in revenue for the second quarter. However, its gross profit margin dropped by nearly one percentage point to 27.49%. The company's core business profits grew by 50%, but net profit after tax decreased by 68.83% due to a high comparison base from insurance compensation in the same period last year. Earnings per share (EPS) for the quarter were NT$0.52, with a cumulative EPS of NT$0.89 for the first half of the year. Looking ahead, the company expects new production capacity to continue contributing, with epilepsy drugs projected to scale up production next year. A batch of Alzheimer's medication is scheduled for shipment in the fourth quarter, and orders for anti-opioid addiction and pain relief drugs are expected to be fulfilled next year, signaling an improving operational outlook.
Following the Lunar New Year, SCI Pharmtech gradually resumed full production capacity, reaching NT$392 million in revenue for the second quarter, a 25.42% year-on-year increase. Monthly depreciation expenses increased by NT$10 million, and costs for electricity, personnel, and insurance also rose, leading to a gross profit margin of 27.49%, down nearly one percentage point from 28.44% in the same period last year. This decline was primarily due to increased depreciation costs from new plant operations. Operating income reached NT$55.07 million, marking a 51.51% year-on-year growth, while net profit after tax was NT$62.19 million, a 68.83% decrease year-on-year, largely due to the previous year's high base from insurance compensation. The EPS for the first half of the year was NT$0.89, lower than the same period last year.
SCI Pharmtech stated that current production capacity is approximately 90% of previous levels (with one production line not rebuilt), and utilization rates are around 70% to 80%. Some products have resumed production, but are awaiting client audits. The primary goal for this year is to restore orders from previous customers, with orders gradually returning. Regarding gross profit margins, the company anticipates new product revenue expansion to drive margins upward, though they are expected to remain below 30% this year.
The company has successfully reclaimed orders for its largest former customer, who orders depression medications. However, the price of raw materials has decreased, leading to a reduction in contract manufacturing prices. Quinine, which saw a surge in demand during the pandemic, is facing intense competition as production resumes in India, posing challenges for generic drug customers.
For glaucoma drug BZA, the main customers are based in Switzerland and Japan, with consistent orders continuing. Despite the fire, shipments were unaffected, and sales to the original manufacturer began this year, with shipment volumes expected to increase, making the second half of the year stronger than the first. SCI Pharmtech's epilepsy drug, which used to contribute NT$200 to NT$300 million annually at its peak, has recently undergone customer audits but is still in the process of certification, with potential for scaled-up production next year. Additionally, the company's pet heart disease medication began shipping last year.
Looking ahead, SCI Pharmtech is optimistic about its new Alzheimer's drug, for which the client in the UK has already applied for regulatory approval. A batch is expected to be shipped in the fourth quarter, with the client having already paid a NT$30 million deposit. The company is also working on Buprenorphine, a drug for anti-opioid addiction and pain relief, with the API approval application submitted in Taiwan. The goal is to secure the Drug Master File (DMF) by the third quarter, with order fulfillment anticipated to begin next year.
As for fire insurance compensation, the company has not yet completed the purchase of some equipment, so the final insurance claim has not been filed. It is expected that this will be resolved in the fourth quarter.
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