FAST NEWS: Simcere’s profit plunges on investment losses

The Latest: Simcere Pharmaceutical Group Ltd. (2096.HK) on Tuesday forecast its net profit for the first half of this year will be between 427 million yuan ($48.9 million) and 487 million yuan, down 78.6% to 81.2% from the same period last year.

Looking Up: Excluding changes in the fair value of its shares in 3D Medicines (1244.HK) and a one-off gain from the disposal of a subsidiary in the year-ago period, the company’s net profit would have recorded relatively solid year-on-year growth.

Take Note: Simcere’s first-half revenue is expected to range from 3.08 billion yuan to 3.14 billion yuan, down 7% to 8.8% year-on-year, mainly due to declining revenue from promotional services and declining sales of its Xiannuoxin Covid drug with the end of the pandemic.

Digging Deeper: Founded in 1995, Simcere develops, makes and sells oncology and cardiovascular drugs. The company was listed in the U.S. in 2007, but delisted in 2013, before re-listing in Hong Kong in 2020. It had six drugs on the market at the end of last year and about 60 others in its pipeline. The company has sought to transform from a developer of existing drugs into a maker of self-developed products. It has sold assets twice in recent years for substantial capital gains, but its investment income has also been affected by losses on some of its drug industry holdings.

Market Reaction: Simcere’s shares rose on Wednesday, closing up 1.9% at HK$5.29 by the midday break. The stock now trades near the lower end of its 52-week range.

Translation by A. Au

To subscribe to Bamboo Works weekly free newsletter, click here