“Volatile” Asian markets drive Aceto’s Q4 growth

By Gareth Macdonald

- Last updated on GMT

Related tags: Pharmacology

US fine and industrial chemicals specialist Aceto says that its expansion on the global stage, particularly in Europe and Asia, is starting to pay financial dividends.

For the quarter ended June 30, the New York-headquartered firm’s operating income was $11.8m (€8.2m), more than double that recorded in the comparable three months of fiscal '07. In addition for the period, total revenues were $104.7m, up 20 per cent on those it saw a year ago, while profits increased around 47 per cent to $24.2m.

Speaking at Aceto’s Q4 press call, CEO Leonard Schwartz said that the firm has set up a new pan-European sales organization, completed the integration of its Singaporean operations into its wider supply chain and was continuing to develop its presence in Japan.

On the latter development in particular Schwartz was upbeat. He commented that while: “Japan is a difficult market to enter for all kinds of reasons…particularly…the very conservative pharmaceutical industry​,” Aceto has received its second order for drug intermediates from a local manufacturer. It completed its first delivery earlier this year.

Aceto’s expansion in Asia has also allowed it to achieve significant cost advantages. Schwartz explained that in China for example, “if there’s a product that’s growing rapidly, all of a sudden you have 10 people build factories [to produce it],”​ causing the price to drop considerably.

He added that, because Aceto buys $110m worth of chemicals from more than 500 manufacturers in the country each year, it has the flexibility to “capitalize on the volatility of these marketplaces​.”

Vietnamese opportunities

Schwartz also said that Aceto would continue to look for expansion opportunities and added that it has been considering expansion of its activity in the Vietnamese market for some time. The firm is already licensed to sell medicines, medical devices and active pharmaceutical (APIs) in Vietnam, generating turnover of $8m from its operations in 2008.

Schwartz went on to say that he is due to meet with representatives from Vietnam’s Pharmaceutical Companies Association, which represents the country’s 90 or so drugmakers, to discuss what types of APIs and drug intermediates the local industry needs.

He also said that: “It is our understanding in Vietnam that wholly foreign-owned entities can establish companies there starting January 1, 2009 very, very similar to China,”​ adding that Aceto’s knowledge of the Chinese market will prove invaluable in the further development of its Vietnamese operations.

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