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Chairman's Statement

 

 


On behalf of the Board (“Board”) of Directors (“Directors”) of Essex Bio-Technology Limited (“Company”, together with its subsidiaries, “Group”), I am pleased to announce that the Group has achieved encouraging developments in the financial year ended 31 December 2016.

 


THE ENRICHMENT PROGRAMME

In 2015, the Group initiated and implemented an enrichment programme (“Enrichment Programme ”) for enhancing its research and development pipeline and expanding its products portfolio, with an objective of enabling the Group to scale further heights over the next 10 years.
 

Under the Enrichment Programme, in 2016, the Group has successfully invested in several companies and secured the exclusive distribution right of an ophthalmic medical device.
 

Summary of details of the Group’s investments made and/or the distribution right obtained during 2016 are outlined as follows:



 

OBTAINED A CONVERTIBLE LOAN OF HK$150 MILLION FROM INTERNATIONAL FINANCE CORPORATION (“IFC”)

On 6 July 2016, the Group obtained a convertible loan of HK$150.0 million (“Convertible Loan”)  from IFC, a member of the World Bank Group. The proceeds of the Convertible Loan are for the Company’s strategic investment in and development of the Group’s biopharmaceutical business and general working capital requirements. The Directors are of the view that the entering into of the agreement for the convertible loan would allow the Company to raise additional funds for the Group’s business. Furthermore, it is contemplated that the capital base of the Company would be enlarged and strengthened upon conversion of the Convertible Loan.
 

SALES AND DISTRIBUTION NETWORK

As at 31 December 2016, the Group has 39 Regional Sales Offices  (“RSOs”) and a total number of about 1,280 sales and marketing representatives, out of which approximately 730 people were full-­time staff and approximately 550 people were hiring on contract basis and engaging from appointed agents.

 

The RSOs and sales and marketing representatives are deployed across major cities and provinces in the PRC, which are tasked with the function of promoting the Group’s products to pharmaceutical companies and hospitals, and providing training on clinical applications of the Group’s products to medical practitioners. In addition, these RSOs serve another vital role to the Group in gathering market intelligence and feedback for the Group’s research and development planning and clinical studies.

 

RESEARCH ANDDEVELOPMENTPLATFORMS

The Group’s key research and development platforms comprise: Growth Factor, Nano-­antibody and Blow­-Fill-­Seal (“BFS”). Growth Factor platform and Nano­antibody platform are technology platforms, whereas BFS platform is the manufacturing platform. The establishment of the BFS platform, the state­-of-­the­-art technology of manufacturing plant and equipment, has strengthened the Group’s core competency and enabled the Group to develop and produce a series of preservative-­free single dose drugs.

 

To strengthen the research and development capabilities, the Group has entered into the following agreements:

 

1.      Cooperation agreement with Tasly Pharmaceutical Group Co., Ltd in 2015 and for the
         development of, in particular, a therapeutic product using Platelet-­Derived Growth Factor (PDGF)
         for the treatment and healing of diabetic ulcers. The project is being planned for Phase III clinical
         trials in the PRC.

2.      Collaboration and license agreement with Abpro, which offers the Group the opportunity to
         develop
a new range of therapeutic products, using certain antibody candidates of Abpro, for the
         Group’s ophthalmology and surgical businesses, as well as new drugs for the Group’s oncology
         business.


FINANCIAL PERFORMANCE

Amid Yuan depreciation and operating under the new tendering system of drug pricing reform in 2016, the Group was able to overcome the adversities and delivered yet another year of good performances.

For the year ended 31 December 2016, the Group achieved a consolidated turnover of approximately HK$775.7 million, representing an increase of 18.6% over previous year. Correspondingly, the Group’s consolidated profits for the year rose to approximately HK$136.3 million for the year ended 31 December 2016 from approximately HK$104.9 million in the previous year, representing an increase of 29.9%. Such increase is mainly attributed to the increase in turnover,different product mix and better costs management.

The Group’s revenue is mainly derived from the biopharmaceutical ophthalmic drug, the Beifushu series, which accounted for approximately 35.1% of the Group’s total revenue, whereas, the Beifuji series, biopharmaceutical products for surface wounds healing and treatment, contributed to approximately 42.7% of the Group’s total revenue. Revenue from selling and distribution of third party products and provision of marketing services to third party contributed approximately 22.2% to the Group’s total revenue for the year ended 31 December 2016.


OUTLOOK AND PROSPECTS

Barring unforeseen circumstances, the Group is optimistic of the continued growth in 2017 from its flagship biopharmaceutical products, the Beifushu and Beifuji series, as well as from its third party products under the distribution agreements.

The Group will continue to execute its Enrichment Programme to seek further investment opportunities in the PRC and overseas, while fostering closer development and business relationship with existing investees.

As disclosed in the announcement of the Company dated 8 March 2017, the Company is exploring the possibility for a Korean Depository Receipt Programme on the Korea Exchange, which if materalised, is expected to enable the Company to provide further liquidity for its shares, increase public awareness of it, promote its corporate image and broaden its shareholder base.
 

DIVIDEND

To reward our shareholders for their years of valuable support, the Board is proposing a final dividend of HK$0.032 per ordinary share to be approved at the upcoming annual general meeting of the Company.

 

APPRECIATION

I would like to take this opportunity to express my sincere gratitude to all stakeholders, business associates, valued customers and each and every member of the Group for the trust, support and cooperation accorded to us in developing the Company as a leading pharmaceutical company.

 

 

Ngiam Mia Je Patrick

Chairman

Hong Kong
21 March 2017