Orient Europharma's dual strategies have proven effective, with the company returning to profitability for two consecutive quarters this year. General Manager Calvin Tsai highlighted that the company’s medical division continues to expand its product line. Notably, the generic drug Ezetimibe was launched in the U.S. this year, and several other products are slated for release in the second half. The company now holds distribution rights for seven rare disease treatments, which will be marketed by a dedicated team. Meanwhile, the company is accelerating its efforts to obtain approvals and expand its global footprint. As for the 4,800 shares of Caliway Biopharmaceuticals that have drawn public interest, Tsai mentioned that the timing of their sale will be based on market conditions. Currently, Orient Europharma's Caliway holdings are valued at NT$2.8 billion, with a potential profit exceeding NT$2.7 billion, translating to over NT$30 per share in potential earnings.
During an online investor conference on the 28th, Tsai noted that since 2021, revenue had significantly declined due to the company's performance in China. However, ongoing adjustments to the company’s strategy in China and the continued expansion of its pharmaceutical division have led to two consecutive quarters of core business profitability. Although post-tax net profit remains negative, with a loss of NT$1.85 per share, this is largely due to unrealized foreign exchange losses. These losses stem from the valuation of foreign currency positions in the company's British Virgin Islands (BVI) subsidiary, which uses the U.S. dollar as its functional currency. As the U.S. dollar appreciated, the value of non-dollar assets declined, resulting in significant unrealized losses. However, these losses are not realized, and shareholders should not be concerned.
Since 2020, Orient Europharma has been undergoing a restructuring process, resulting in a reduction of its health division's revenue from NT$3.4 billion to NT$800 million, lowering its revenue contribution to 37%. The company’s presence in China has also shrunk, with its revenue share now at 26%. Meanwhile, a New Zealand partner is adjusting product formulations to expedite approval processes. Outside of China, the company's footprint continues to grow, with steady revenue growth in Taiwan, the U.S., and Southeast Asia.
In terms of medical business development, Tsai stated that the company is actively expanding its product line with a focus on overseas markets. Currently, Orient Europharma operates two U.S. FDA-approved pharmaceutical manufacturing facilities and hopes to expand its partnerships with innovative drug companies, exploring various collaboration models in manufacturing, licensing, and more. In the U.S., two generic drugs already hold the top market share, and Ezetimibe was launched this year. In Taiwan, the company has obtained approval for two 505(b)(2) new drugs, one antibody-drug conjugate (ADC), and two injectable products, which are intended for treating blood cancer, benign prostatic hyperplasia, diabetic macular edema, schizophrenia, transdermal hair growth, and severe acne. These products are expected to be launched between the second half of this year and the first half of next year, potentially boosting revenue. The 505(b)(2) drugs will also be introduced to overseas markets after their launch in Taiwan.
Additionally, the company expanded its orphan drug agency business last year through a partnership with an Italian firm. This year, Orient Europharma secured distribution rights for four more rare disease drugs in Taiwan, Hong Kong, and Southeast Asia. These products will be promoted by a dedicated department. In its contract manufacturing operations (CMO), the company is collaborating with new drug companies. Currently, it has partnerships for oral products with companies such as Handa and a UK-based firm, and five injectable products are under development.
Regarding the timing of selling its shares in Caliway Biopharmaceuticals, Tsai explained that each investment has its strategy, and the company will make decisions based on a comprehensive assessment of market conditions, without a precise timeline. According to Orient Europharma’s financial report, the company currently holds 4,800 shares of Caliway, valued at NT$2.885 billion, representing a 3.44% stake. Based on the initial purchase cost, the potential profit exceeds NT$2.7 billion, with an estimated contribution of over NT$30 per share in potential earnings.
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