Set revenue target of 2,630 billion VND, consider investing in new factory

Imexpharm Shareholders' Meeting: Set revenue target of 2,630 billion VND, consider investing in new factories

Imexpharm plans to grow double-digit on a high base in 2023. The company is considering investment opportunities in new factories, in addition to the four current factory clusters, to increase production capacity.

At the General Meeting of Shareholders of Imexpharm Pharmaceutical Joint Stock Company (IMP) held on April 26, Ms. Tran Thi Dao, IMP's CEO said that decades of investment in technology have helped the Company own the largest number of EU-GMP-certified production lines in Vietnam, contributing to Imexpharm's record growth in 2023.

Currently, IMP has 4 factory clusters, operating a total of 7 factories and workshops. In 20223, IMP2 and IMP3 factories were certified with EU-GMP for the 2nd and 3rd consecutive times, respectively. IMP1 factory cluster contributed the largest revenue of 50%, IMP3 factory cluster contributed 32%.

IMP4 factory meets EU-GMP standards and recorded sales of 80 billion VND after 5 months of operation in 2023.

In 2023, IMP's total revenue reached VND 2,113 billion, up 26% compared to the overall market growth rate of 8%. Net revenue reached VND 1,994 billion, up 21%, pre-tax profit reached VND 377 billion, up 30%. Over the past 5 years, the compound annual growth rate of EBITDA reached an impressive 17.5%.

In the revenue structure, the OTC channel accounts for 51%, while the ETC channel leads in sales, 1.8 times higher than the second-ranking domestic pharmaceutical company. This comes from the competitive advantage of having the largest EU-GMP-standard production capacity in Vietnam.

Ms. Dao said that the company has always maintained its leading position in the market as a manufacturer and distributor of high-quality antibiotics in Vietnam compared to domestic and foreign companies. The company's product diversification initiatives have helped bring in strong revenue from new product lines, especially cough medicine, fever reducer, and digestive aid.

IMP's domestic market share in antibiotic production and distribution is nearly 9%.

As a pioneer in investing in factories meeting GMP-ASEAN standards, and owning the most factories meeting EU-GMP standards in Vietnam (with 11 production lines meeting EU-GMP standards), IMP is quite favorable in expanding its export market from 2023. IMP's products have met international SHE (Safety, Health, Environment) and MRO (Maintenance, Repair, Operation) criteria, in addition to owning 27 Product Circulation Authorizations (MAs) in Europe.

IMP has applied for 11 additional registrations for 6 products in Europe, including complex products such as Ampicillin/Sulbactam, bringing the total number of European Marketing Authorizations to 27 for 11 product types.

In 2024, the target is to have gross revenue of VND 2,630 billion, an increase of 24%, of which the OTC channel contributes VND 1,214 billion (an increase of 12%) and the ETC channel contributes VND 1,216 billion (an increase of 49%). Net revenue of VND 2,365 billion, an increase of 19%, EBITDA of VND 550 billion, an increase of 18%.

According to Ms. Dao, the company continues to maximize the number of registrations in the European chain, expanding the ETC customer file from 600 to 1,000 customers in the next 5 years. At the same time, expanding the list of raw material suppliers and developing competitive pricing strategies to increase ETC market share.

The company will continue to expand its specialty drug groups, diversifying its product portfolio including the production and distribution of drugs for the treatment of cardiovascular, diabetes, respiratory, neurological and eye diseases, vitamins, minerals and health protection foods. In particular, the vitamin and functional food segment is in line with the strong growing demand of the health care product market. Accordingly, the company has also invested in a specialized factory to produce these products.

“We are also looking at investment opportunities in new factories, in addition to the four current factory clusters, to enhance our capacity to meet the future needs of domestic and foreign customers,” said Ms. Dao.

In addition, the Company will expand cooperation with Genuone, SK Plasma and many other international companies in the near future to acquire advanced manufacturing technology, as well as to transform IMP to a new level of quality.

The General Meeting of Shareholders also approved a 2023-2024 dividend of 20% (instead of 15%), of which 10% is in cash and 10% is in shares.

Discussion at the Congress

The representative of the largest shareholder SK Group is currently the Chairman of the Board of Directors. What outstanding changes can shareholders expect this year ?

Ms. Chaerhan Chun, Chairman of IMP Board of Directors: The company has many plans ahead and is discussing with senior management personnel to implement them, in order to seize opportunities as well as promote the company's competitive position. Our biggest goal is to increase corporate value, ensure openness and transparency with stakeholders, thereby expecting the market value to be reflected more closely to the real value of the company.

The company will also step up communications and outreach to analysts and investors, with the hope that stakeholders can access complete and timely information.

What is the reason for the strong growth of ETC channel revenue in 2023?

Ms. Tran Thi Dao:

As I presented above, in 2023 many industries faced difficulties, but the pharmaceutical industry alone recorded positive growth with a growth rate of 8%, mainly growth in the ETC channel (hospital channel) and the OTC channel only grew by 1%.

The growth in the ETC channel is due to 3 factors:

(1) In the first half of 2022, after the end of the Covid epidemic, hospitals will resume normal medical examination and treatment activities. Therefore, the demand for drugs in the hospital channel is very high.

(2) The proportion of people buying insurance is nearly 90% to 93%, at the same time there are many policies and regulations in the direction of creating all conditions to have medicine to serve the people, in which especially when entering the hospital, there must be no shortage of medicine. For example, Resolution 80 on drug extension, forcing a second settlement for tens of thousands of drug products from 2023 to 2024; the law on medical examination and treatment, the law on bidding, especially the Ministry of Health issued Circular 06 and Circular 03 to create favorable conditions for investors as well as businesses, to have conditions to have enough medicine supply.

(3) The rate of antibiotic use in the hospital system, according to IPBA, is very high. Regarding Imexpharm, almost all EU-GMP factory chains for Cephalosporin and Penicillin groups, injectables and oral drugs, Imexpharm accounts for 70% of antibiotics.

The company also maximized the capacity of the EU-GMP factory, so the ETC channel grew by 56%. This is also the foundation for growth in 2024 and in the plans for the coming years.

The Board of Directors increased the 2023-2024 dividend to 20%, so what is the dividend rate policy for the following years?

Chairman Chaerhan Chun: Dividends will be based on business results. The Board of Directors and the Management Board will focus on strengthening the fundamentals and ensuring growth. We believe that this is the core factor to attract investors. Investors are always interested in the growth potential of the business, thereby valuing the stock. We also expect investors to be more interested in the potential value of IMP shares.

Currently, the company regularly receives questions related to the liquidity of IMP shares and internally the company is also discussing solutions to improve stock liquidity.

Accordingly, we believe that with the company's dividend policy and growth potential, IMP shares will be more attractive in the eyes of the investing public.

Good growth in ETC channel, does the company plan to prioritize this channel over OTC channel in 2024 ?

Ms. Tran Thi Dao: We have to focus on both channels with a determined spirit. Especially the ETC channel, a traditional channel that has been exploited for more than 20 years. 2022-2023 is the year that Imexpharm will bear fruit for EU-GMP factories, this is the premise for 2024 and the vision for the coming years.

Regarding the policy mechanism, in Circular 03 recently issued by the Ministry of Health, priority is given to 3 manufacturers of 3 registration numbers that meet all conditions such as price, quality and supply conditions, then no import bidding is required. That is a golden opportunity for businesses to participate in the supply mechanism for hospitals.

The OTC channel is 100% exploited at 2 IMP 1 factories in Dong Thap; but has not yet covered and expanded in the Northern region. Therefore, in 2024, IMP will increase expansion in the Northern region to contribute to the 12% growth as planned.

Chairman of the Board Chaerhan Chun:

The ETC channel is very important to us. Obviously, the current hospitals are about 95% public hospitals and Vietnam still depends on public hospitals. Imexpharm has quality products to supply to the hospital channel.

What is the expected gross profit margin in 2024?

Mr. Nguyen An Duy, Deputy General Director in charge of finance: About 40-41% (about 40.6% in 2023). IMP has been implementing many cost optimization programs in the short and long term.

In addition, IMP has also switched to purchasing raw materials and many items in the company in a centralized model to enjoy good prices, according to the international standards that Imexpharm has just applied.

Chairman Chaerhan Chun: I think the profit margin will not be limited, it can be equal to or higher than 2023. Depreciation of machinery at factories in the coming years will also help save costs.

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