Drugs distributor and pharmacy services firm Sigma Pharmaceuticals is one Australian company that should be poised to build on an already robust export performance into China following that country’s dramatic change of heart on e-commerce rules a week ago.
The change of heart saw what was going to be a significant toughening of the rules on imports of products such as vitamins, some pharmaceuticals, cosmetics and food products like dairy relaxed by classifying them as personal, meaning a significant amount of cumbersome red tape will be avoided.
That’s why shares in companies such Blackmore’s Bellamy’s and a2 milk all rose solidly on news of the change of heart.
The company revealed plans to expand its Chinese online business to Hong Kong and is considering further growth elsewhere in Asia.
Sales through the Chinese Amcal pharmacy website have been “many millions of dollars” above expectations, chief executive Mark Hooper said yesterday during a briefing on the group’s latest annual results.
"While that’s been mainly focused on mainland China, we will push that into Hong Kong," he said.
"We are starting to think about whether this might be a model we can roll out elsewhere."
Sigma launched the website in mid-2016, partnering with Chinese marketing and e-commerce company Azoya to aggregate orders and deliver its products.
Sigma yesterday reported a 5% rise net profit of $53.2 million in the year to January 31.
Revenue jumped 26% to $4.4 billion, partly due to sales of hepatitis C drugs after they were listed on the Pharmaceutical Benefits Scheme (PBS) in March 2016.
The Hepatitis C drug sales accounted for about 15% of Sigma’s total sales, and Mr Hooper said the revenue rush is likely to ease over the next 12 months.
"The overseas experience with Hep C drugs is that it peaks about 12 to 18 months in, and then it tails off," he said.
Sigma said its supply of pharmaceuticals to hospitals continues to build, with a 20 per cent market share in Victoria, more than 30 hospitals now trading with Sigma in NSW, and the company set to push into Western Australia.
Sigma confirmed that it expects at least five per cent growth in underlying earnings in 2017-18, after achieving 12% growth in 2015/16.
The company will also extend a share buyback scheme to include a further 10 per cent of shares on issue.
Sigma shares were up 2.5% at $1.23, still well under the 52 week high of $1.51 last October when the China story was in full swing.
Final dividend was steady at 3 cents a share, taking the full year payout to 5.5 cents a share, up from 5 cents in 2015-16.
The company will also extend a share buyback scheme for a further 10% of shares on issue.
The company also said it plans to change name to Sigma Healthcare to pending share holder approval, as well as its ASX ticker to SIG on May 4.
