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Profits of pharmaceutical companies seeing sharp increase

Profits of pharmaceutical companies seeing sharp increase

Thursday 28, 04 2022
The growth of the pharmaceutical industry has been foreseen. The fear of the epidemic causing the increasing demand for medicines and health care products has boosted profits of companies in the industry.

Profits in 1Q2022

DHG Pharmaceutical Joint-Stock Company has just reported its profit after tax for the first quarter of 2021 which reached VND 255 billion, an increase of 25% compared to the same period in 2021 and also the highest quarterly profit since 2005.

DHG Pharmaceutical Joint-Stock Company

Similarly, Imexpharm Corporation and Domesco Medical Import-Export Joint Stock Corporation also experienced double-digit profit growth, reaching nearly 26% and more than 32% respectively compared to the first quarter of 2021.

Pharmaceutical companies inlcuding Traphaco or Vidipha Central Pharmaceutical JSC recorded a more dramatic increase in profit after tax, reaching over 50% over the same period. Some small-scale pharmaceutical companies such as SPM Company even witnessed a sudden increase in profits of nearly 135% compared to the same period last year.

The growth of the pharmaceutical industry has been foreseen. The fear of the epidemic causing the increasing demand for medicines and health care products has boosted profits of companies in the industry.

DHG Pharma said that demands for nutritional products and products related to the treatment of Covid-19 such as Klamentin, Medlon, and Bocalex are really huge. Representative of Traphaco shared at the recent annual meeting that cough medicine or mouthwash have been sold well over the past time. As for Domesco, the company launched new products to support the treatment and prevention of Covid-19 and post-Covid-19 symptoms, which greatly contributed to increasing revenue and profit.

DHG Pharma

Industry outlook

SSI Research's analysis report expects healthcare demand to recover and grow by 13% year-on-year.

SSI Research estimates that profits of healthcare companies will increase 15% year-on-year, thanks to the 12% growth in revenue and 4-6% increase in prices of medical examination and treatment services and medicines.

The increase in price is explained as inevitable because pharmaceutical companies have had to deal with high prices of raw materials (APIs) and hospitals have faced many expensive operating costs in the past two years.

pharmaceutical companies

For the group of pharmaceutical companies, the analysis report suggests that business results may be positive in the first half of 2022 when people stockpile drugs for the new Omicron variant, while the hospital group has to wait for the recovery until the second half of the year.

However, profit margins of pharmaceutical companies may be affected and drug prices may increase slightly in the near future. This is considered inevitable because pharmaceutical companies have had to deal with high raw material prices (APIs).

SSI Research highlights the possibility that China will tighten policies in API production with the aim of protecting the environment. This can lead to higher raw material prices and require businesses to diversify their sources of supply to address the above risk.

Source: SSI Research

Compiled by VietnamCredit

 

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