PharmaZen profit up 40%; growth strategy outlined

Peter McIntyre
Peter McIntyre
Dunedin-founded biotech company PharmaZen has reported increased profit before tax of almost 40% and outlined an ''aggressive'' strategy for development and growth.

For the year ended December, now Christchurch-based PharmaZen reported turnover of $6.99 million, compared with $6.68 million the year before, while before-tax profit was up 38%, from $537,108 the previous year to $739,114.

As with previous years, the strength of the New Zealand dollar continued to plague PharmaZen, as it did for all manufacturers and exporters in the country. PharmaZen chief executive Craig McIntosh said the before-tax profit was a ''significant achievement'', given what had been another challenging year for exporters.

PharmaZen makes nutritional health supplements, about 10% for domestic markets and 90% for export. Up to 23 staff manufacture up to 900 tonnes of raw products annually, into a wide variety of supplements for human and animal health.

''PharmaZen had set very aggressive timetables for product and capability development as it looked for additional growth areas,'' Mr McIntosh said.

Craigs Investment Partners broker Peter McIntyre said PharmaZen's result was ''encouraging'', and key for investors was the company having a plan for expansion under way.

''They appear set to gear up and increase production, which will benefit both the top and bottom lines, after some difficult years in the past,'' Mr McIntyre said.

Trading on the Unlisted platform, PharmaZen has a market capitalisation of $9.6 million and 160 million shares on issue. During the past year, share trading volumes have been low, with a share high of 7c and low of 5c. The stock was trading at 6c yesterday.

Mr McIntosh said that during 2013 PharmaZen had the commercial launch of StimuCalä, a clinically proven calcium supplement.

''This is the first time the PharmaZen has had branded material in retail markets and it is our first product with patent protection,'' Mr McIntosh said.

In an interview with the ODT, Mr McIntosh acknowledged the problems caused by the high New Zealand dollar, estimating PharmaZen's profit, could more than double if the exchange rate were around US75c, rather than the present $US85c.

This year, PharmaZen commissioned a state-of-the-art fluidised powder blender, enabling highly accurate blending of batches up to 1500kg, Mr McIntosh said.

The unit provided PharmaZen with a ''significant point of difference'' over competitors which had smaller, less accurate ''homogenisers'', and it had already helped secure additional contract business, he said.

''Frustrations that were outside our control with delays to the extraction project have prompted us to switch to a more self-sufficient model.

''We have invested heavily in putting together a pilot plant that will be on a par with the best available in New Zealand.''

PharmaZen's freeze-drying and vacuum-drying technologies would be complemented this year by a new spray dryer, which opened up significant new product opportunities.

''There is no doubt that exchange rates and margins will again prove challenging for 2014.

''However, through diversification of product range and increased capabilities, PharmaZen is well positioned,'' he said.

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