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Wednesday, 23 March 2016, 17:39 HKT/SGT
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Lee's Pharm Announces 2015 Annual Results
Profit Attributable to the Owners of the Company Surged 18.8% and Recorded an Improved Net Profit Margin of 24.8%

HONG KONG, Mar 23, 2016 - (ACN Newswire) - Lee's Pharmaceutical Holdings Limited ("Lee's Pharm" or the "Group", Stock Code: 950), an integrated research-driven and market-oriented pharmaceutical group in China, today announced its annual results for the year ended 31 December 2015 (the "year under review").

The Group recorded sales revenue of HK$922,150,000, representing a slight decrease of 3.5% compared to last year. Sales of licensed-in products accounted for 54.6% (2014: 59.6%) of the Group's revenue while sales of proprietary products contributed 45.4% (2014: 40.4%) of the Group's revenue.

Overall gross margin was quite stable in the year under review and reached 70.3% in 2015 (2014: 70.2%). The Group has made significant improvements on the sales and marketing efficiency during the year and selling expenses to revenue ratio has substantially lowered to 27.8% (2014: 32.4%). In addition, the Group has invested profoundly in R&D during the year under review and has made noteworthy progress in various pipeline products especially in cardiovascular and oncology disease areas.

The savings on sales and marketing expenses contributed to maintain a moderate profit growth for the Group during the year. In addition, a one-time net positive impact of approximately HK$13,033,000 was recorded during the year which comprised the gain on deemed disposal of interest in Powder Pharmaceuticals Incorporated, an associated company of the Group, of HK$31,825,000 and the written off of certain intangible assets of HK$18,792,000 therein, net profit attributable to the owners of the Company was HK$229,052,000, representing an increase of 18.8% over last year, and recorded an improved net profit margin of 24.8% (2014: 20.2%). The Board of Directors recommended the payment of final dividend of HK$0.074 (2014: HK$0.066) per ordinary share.

Dr. Benjamin Li, Executive Director and Chief Executive Officer of the Group, said, "Year 2015 was proved to be tough and challenging for the Group. The more price-sensitive environment and arduous conditions in tender process for pharmaceuticals created strong headwinds for revenue growth. However, the Group has taken this opportunity to streamline its cost structure and expenses related to selling, marketing and promotion that had resulted in achieving a healthy profit growth for 2015. In addition, efforts were made during the year under review for expansion in manufacturing capability, investment in product development and partnership, strengthening in regulatory ability and improvement in balance sheet."

On the manufacturing front, the Group has invested approximately HK$80 million for the solid dose production facility in its manufacturing site in Nansha District, Guangzhou, and has reached its final stage of construction and equipment installation. The capacity of this facility is estimated at up to 1 billion tablet/ capsule units per year and is expected to be fully operational in the second quarter of 2016. It is targeted that the first registration batches, along with preparatory work for obtaining Good Manufacturing Practice ("GMP") certification, will be ready by the end of 2016. The commercial production will commence in 2017. The design work of the second production facility in Nansha manufacturing site for the manufacturing of ophthalmic drugs is expected to commence the construction in June 2016.

In the Hefei site, a prefilled syringe line is under design and the upgrade of the small volume injection line is on the way. What's more, a new quality control laboratory has just been come into operation in the Hefei site, which is fitted with state-of-the-art equipment that provide more guarantee for product quality. Taking Nansha site together, they reinforce the Group's commitment to product quality and safety.

The year 2015 was another monumental year for the Group's drug development. With three new clinical trial certificates obtained during the year under review, the Group has more than 13 clinical studies in either operational or preparatory stage. It further demonstrates the Group's investment and commitment in new drug development as the engine for sustainable growth. Recently, Anfibatide has just reached a significant milestone in its other indication of Thrombotic Thrombocytopenic Purpura (TTP) and obtained orphan drug designation from the US FDA.

In addition, the Group has made great strike in partnership during the year and up-to-date, The Group has concluded six licensing agreements with United States, European, Chinese and Japanese companies to license or acquire assets that represent near or medium term opportunity.

In August, the Company has committed to invest up to US$8.5 million (approximately HK$66.3 million) into an investment fund, namely, Lee's Healthcare Industry Fund L.P. (the "Fund"). Also in August, the Company has completed the investment of HK$10 million for 33% equity interest in a private company in Hong Kong which intends to establish and operate a project for the building up and operating a central pharmacy for compounding radio-pharmaceuticals for domestic supply. In September, the Group won the bid for the land use right in respect of the land parcel at RMB11.1 million (approximately HK$13.6 million). The land parcel is specifically for medical and sanitary use and is located at Nansha District, Guangzhou with a total planned gross floor area of approximately 65,981 square meter. The Group planned to build and operate a new private hospital in the land parcel which will consist of specialty centers such as rehab center through partnership with experience operators.

During the year under review, the Group continued its effort in knowledge-based promotion and leverage on new media to support physician education and to disseminate scientific information for its products. The Group's fully sponsored China-Europe Echocardiography CME Project comprised of fifty online echocardiography lessons and is highly acclaimed in the cardiologist community in China. In addition, the WeChat marketing platform of the Group greatly enhancing the Group's knowledge-based marketing strategy and promotion coverage of its products in a cost effective way.

In the corporate development front, the Group had reached an important milestone. In April, the Company entered into a placing agreement with Morgan Stanley & Co. International plc and the placing of 30 million new shares of the Company pursuant to the placing agreement was completed on 22 April 2015. Net proceeds of approximately HK$384 million were planned to be used for manufacturing facilities expansion, R&D and general working capital of the Group to improve the existing business of the Group and future investment purposes of the Group and was fully utilised as intended as at end of the year under review.

In June 2015, Powder Pharmaceuticals Incorporated ("PPI"), an associated company of the Group, had successfully attracted strong interest from certain investors and had successfully raised additional funding of approximately US$12 million (approximately HK$93 million) in aggregate by mean of the issuance of new shares of PPI to support its development of Zingo and continuous blood glucose monitoring system.

Commenting on the Group's future growth, Dr. Li said, "The implementation of a slew of new regulations that favour innovation and ingenuity has ushered China's pharmaceutical industry into a new era in which the Group can accelerate its growth. Plus in February 2016, CFDA announced that it would speed up approvals of new drugs, and it would prioritise the approval of drugs with clear clinical value, which will result in significantly enhanced pipeline of the Group. With expansion in manufacturing capability, investment in product development and
partnership, enhancement in sales and marketing efficiency, strengthening in regulatory ability and improvement in balanced sheet, the Group is well positioned to face the coming challenging year. The sales of six major products will be benefited from the transformation of its sales organisation and strategy. Remodulin, oral Carnitine and Gaslon N are expected to commence contribution to the revenue growth. Last, but not least, two new products are expected to be launched in 2016."

Topic: Press release summary Sectors: Daily Finance, Daily News, BioTech
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