China drugmaker hopes to raise $38m from IPO

SIHUAN Pharmaceutical Holdings, one of China's leading companies in cardiocerebral vascular (CV) drugs, announced its initial public offer (IPO) yesterday.

The Hainan-based company aims to raise $38 million by offering 120 million shares at 43 cents apiece. Of this, five million shares will be available for public subscription.

Sihuan's primary focus is on the research and development, production and sale of CV drugs, which treat diseases affecting the heart, brain and the body's blood vessels.

Headquartered in Haikou city, Sihuan has a research and manufacturing facility in Beijing and distributes its products to 2,800 hospitals in China. It aims to increase distribution to around 6,000 hospitals in the next three years.

In a media conference, executive chairman and chief executive officer Che Fengsheng said that the company sees growth opportunities, due to CV problems becoming increasingly common among the Chinese population.

'China is experiencing an increasing rate of CV disease due to an ageing population, change in dietary habits, a quicker pace of life and greater work pressure.

'All these factors lead to hypertension, high cholesterol, heart valve disease, stroke and complications arising from diabetes.'

Looking ahead, Dr Che added that the funds raised from the IPO will be channelled towards four main areas - research into new products, increasing distributorship and marketing, raising production capabilities and for working capital.

Sihuan currently has more than 50 products under development and is looking to launch at least five new pharmaceutical products each year for the next three years.

The company said that its revenues for the year ended Dec 31 were estimated at 168.2 million yuan. Revenues have been growing at a compounded annual rate of 48 per cent since 2003.

Profits grew at a compounded annual rate of 71.6 per cent since 2003 to reach an estimated 89.9 million yuan for last year.

The IPO price of 43 cents a share represents an estimated price-earnings ratio of nine times.

The company promises a dividend policy of not less than 30 per cent of net profit for this year and next year.