2009 Outlook for Medical Companies    

Beijing Double-Crane Pharmaceutical Co., Ltd. (Double Crane, SH: 600062)

Double Crane focuses on the pharmaceutical sector, has completed a nationwide distribution for the business of intravenous solutions (IV solutions) of 100 milliliters or above, via acquiring Guangzhou Shenzhou Pharmaceutical Co., Ltd. and building an IV solutions manufacturing base in Xinmin, Liaoning province. It is expected that the company's market share for IV solutions would rise to around 20% in 2009 from 12% in 2008. Meanwhile, as the firm has largely hiked the production of plastics bottles/bags with relatively higher profit margins. The gross margin for its IV solutions business would rise to around 40% in 2009 from the current 38.75%.
   Double-Crane expects to sell 800 million pieces of hypotensor 0# drugs in 2008, up 13% year-on-year. As the company has been building medical treatment network in rural areas and urban housing communities for two years, sales could rise 15% or more for 2009.
   And its new product, the injection of ginkgo whose sales stood at RMB120 million in the first three quarters of 2008, may see a year-on-year growth of 50% for the whole 2008.
   In the segment of oral hypoglycemic drugs, Double-Crane has also established a product family offering high-, mid- and low-end products. Driven by the large increase in diabetes, the company's sales of oral hypoglycemic drugs could rise 10%, 20% and 30% in 2008, 2009 and 2010 respectively.

Jiangsu Hengrui Medicine Co., Ltd.(Hengrui, SH: 600276)

Hengrui, with 70% of its preparation sales revenue from antineoplastic drugs, has set a diversified development strategy of focusing on antineoplastic drugs. The company expects sales growth in the next 3 years to keep at ranging 20% to 30%. See page 24 this issue.

Shanghai Kehua Bio-engineering Co., Ltd. (Kehua, SZ: 002022)

With the frequency of doctor-seeing and hospitalization rising rapidly in China, the use of diagnostic reagent is set to get a boost as biochemistry technology-based method is the key way to diagnose an illness. As a leading company in the diagnostic reagent sector in China, Kehua will undoubtedly be a major beneficiary in this regard.
   The company reported an operating income of RMB354 million in the first three quarters of 2008, up 22.57% in annualized terms. Net profit attributable to the shareholders rose 50.96% to RMB137 million, or RMB0.433 per share.
   Kehua's self-produced medical apparatus and instruments will become an extra earnings driver. In the first nine months of 2008, the company's reported sales of around RMB28 million from the medical apparatus and instruments business. The company is expected to sell 130 sets of automatic biochemical analyzers in 2008, pocketing sales of RMB38 million, or 70% up on yearly basis. In 2009, the company could further boost sales in the medical apparatus and instrument sector by 50%, driven by the ongoing medical reform.
   Kehua's earnings would be further improved with its fast growing export business. The company in 2005 signed a long-term contract with Clinton AIDS Relief Fund to supply HIV/AIDS testing reagent (colloidal gold method) for five years. The company expects to increase overseas sales in 2009, on top of an estimated export revenue of US$5 million in 2008.

Tasly Group Co., Ltd.(Tasly, SH: 600535)

Tasly, China's leading cardio-cerebral-vascular Chinese drug maker, is counting on rural market for growth. In 2008, the company's cardiotonic pill business is expected to rise 15% to RMB1.2 billion. In 2009, the new medical system would further boost the product's sales in rural areas and in housing communities, leading to the same growth rate in 2008.
   Silibinin capsules, its newly-developed botanical drug for hepatitis treatment, could realize sales of RMB70 million in 2008 and over RMB100 million in 2009. Tasly is headquartered in Tianjin and operates manufacturing sites in Tianjin, Shanghai, Shaanxi and Jiangsu provinces. In addition to the domestic market, the company exports drugs to markets in Asia, Europe, Africa and America.