ScinoPharm: profits fall on higher costs, an idle plant and lower Qsymia sales

By Gareth Macdonald

- Last updated on GMT

Idle Changshu plant hurt ScinoPharm in 2014; plans to up CMO activites at the site
Idle Changshu plant hurt ScinoPharm in 2014; plans to up CMO activites at the site

Related tags Pharmaceutical drug

ScinoPharm was hurt by weak US demand for the weight loss pill Qsymia, higher raw material prices and costs associated with its still unapproved plant in China in 2014.

The Taiwan-based active pharmaceutical ingredient (API) supplier reported full year revenue of NT$4.1bn ($135m), down from NT$5bn in 2013. Operating profit was NT$484m, down from NT$1.2bn.

ScinoPharm said revenue from generic APIs and custom manufacturing failed to meet its expectations, citing price erosion and supplier issues. The firm also said US demand for Vivus’ weight loss drug Qsymia, for which it supplies the API topiramate​, was also down.

Cancer drug APIs

Raw materials costs for ScinoPharm’s cancer APIs – specifically docetaxel and paclitaxel –  increased significantly in 2014 and negatively affected revenue and profits.

Both APIs are made from 10-deacyl baccatin (10-DAB), which is a compound found in yew tree bark. ScinoPharm holds a US patent for a novel synthesis method​ that uses 10-DAB extracted from yew tree needles rather than bark.

A Scinopharm spokesman told us "10-DAB, the starting material for our two major products docetaxel and paclitaxel, was in short supply for the past two years because of severe winters and flooding in Europe, especially Poland where the material came from." 

He added that: "The soaring cost reduced our earnings of 2014. However, we have found a solution by adding multiple sources of yew tree needles, which will help to improve our gross margin gradually​."

China facility

ScinoPharm also said: “The recently completed large Changshu plant in China, scheduled for a US FDA inspection late this year or early next year, is currently not yet approved for commercial production, resulting in idle capacity and addition to amortization and depreciation expenses​.”

The Changshu facility, which was completed in 2013​, is intended to supply both China and international markets. ScinoPharm claims it has already been licensed to produce nine drug substances by Chinese regulators with another 10 being assessed.

Drug pipeline

ScinoPharm also set out its plan for 2015 explaining that, because the competitive challenges facing its API business are likely to continue, it plans to accelerate development of its own range of finished drug products​.

CEO Yung-Fa Chen said: “ScinoPharm plans to accelerate the process of new product development and expand its product pipeline, expediting its corporate transformation by creating new products with its own research and development capabilities.

The firm also plans to try and address low capacity utilization by expanding its contract research and manufacturing (CRAM) services business and seeking new business for the   sterile injectables facility that is building.  

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