Pharma importer to raise up to HK$240m in IPO

Kingworld Medicines Group Limited, a mainland-based importer of pharmaceutical and healthcare products, said Thursday that it will expand its sales network from its current 1,500 to 3,000 retail outlets in the coming years.

The company plans to set up booths at around 3,000 retail outlets including pharmaceuticals, supermarkets, clinics and chain stores. It aims to buy a couple of distribution businesses in China's eastern and southern provinces to further beef up its distribution network.

The company also announced Thursday details of its Hong Kong initial public offering in a press conference. It plans to offer 150 million shares at a price of HK$1.33 - HK$1.60 per share, raising up to HK$240 million. The share offering will begin today and close on November 17, while trading is expected to commence on November 25.

Founded in 1996, Kingworld Medicines is best known for its cough and phlegm relieving product Nin Jiom Pei Pa Koa, which accounts on average for more than 60 percent of the company's total sales.

Of the 49 products the company distributes currently, most are secured from outside the mainland including Japan, Canada, Hong Kong, Taiwan and Thailand - and from 13 different suppliers. Currently, the company supplies its products to 190 distributors, which in turn supply more than 17,000 retail outlets on the mainland.

"China is one of the largest pharmaceutical markets in the world. The growing domestic demand for pharmaceutical and healthcare products has given and will continue to give a strong push to our business," Chairman Zhao Lisheng said.

The company posted revenue of 556 million yuan for the year ended December 2009, up from 527 million yuan in 2007 and 536 million yuan in 2008. Net profit, meanwhile, rose to 37 million yuan from 29 million yuan in 2007 and 34 million yuan in 2008, representing a compound annual growth rate (CAGR) of 13 percent for the three-year period. For the first half of this year, the company registered revenue of 313 million yuan and a net profit of 10 million yuan.

Sales of pharmaceutical products on the mainland grew at a CAGR of approximately 16.72 percent during the years between 2000 and 2009. According to an estimate by Southern Medicine Economic Institute under the State Food and Drug Administration, growth will likely be able to sustain itself at more than 16 percent in the next three to five years.

China Daily

(HK Edition 11/12/2010 page3)