Chinese drugmaker Tianyin Pharmaceutical says it is on schedule to relocate two plants into a new manufacturing facility in Qionglai city after the local government established an area where its wants to group pharmaceutical manufacturing.
The drugmaker is making the $25 million investment in a newer, larger capacity plant, even in the face of a miserable earnings picture. The update on the new plant was part of the company's year-end financial report in which it said revenue was off significantly amid competition from generic drugs. Tianyin makes modernized traditional Chinese medicine (mTCM), branded generics and active pharmaceutical ingredients (APIs).
The company says a formulation plant in the Longquan district, east of Chengdu, is being relocated to Qionglai, along with a pre-extraction plant that currently is in the center of Chengdu, in "a rapidly expanding residential area." The two operations will be combined into one plant, in which the company is investing $25 million. It said the modern plant will allow it to meet new GMP requirements and also will expand the company's capacity. The new facility is slated to go online early next year. The company said in a release that if demand calls for more product, it may invest another $10 million in the facility in a second phase.
In reporting its year-end financials, Tianyin indicated that it faces the same kinds of pricing pressures that have hit Western drugmakers. Its sales for its fiscal year that ended June 30 were $69.6 million, down nearly 27% from $95.2 million in fiscal 2011. The Chinese company pegged the hit to "generic pricing pressure under the ongoing healthcare reform." It said net income was $6.4 million, down from $15.7 million.
The Chinese government has instituted "healthcare reform" as it works to provide more treatments to its rapidly expanding population while trying not to break its budget. In August, it increased the number of drugs on its price-controlled "essential drugs" list to about 700, from 307. That was about 100 drugs less than originally planned but the move is expected to put further pressure on its domestic industry.
- here's the press release