CCM: Yifan Xinfu to raise funds for pharmaceutical business expansion 07-15-2016

On 2 June, Yifan Xinfu Pharmaceutical Co., Ltd. (Yifan Xinfu), a global leading vitamin B5 (VB5, = calcium pantothenate) producer, announced its plan to make a private placement of ≤ USD286.85 million (RMB1.89 billion, issue expenses included). After the issue expenses are deducted, the rest of this sum will be invested into:

                                                                       Source: Baidu

  • Hefei Yifan Biopharmaceutical Co., Ltd. (Hefei Yifan, wholly-owned subsidiary of Yifan Xinfu)'s high-end pharmaceutical preparation project (USD91.06 million – RMB600 million)
  • Acquisition of 53.80% shares in DHY&Co., Ltd. (DHY) (USD106.34 million – RMB700.68 million)
  • Replenishment of liquid capital (USD83.47 million – RMB550 million)

Yifan Xinfu's private placement plan (for A shares) has been passed by the board of directors and is waiting for the approval from the China Securities Regulatory Commission. Specifically,

  • First offering date: the date to set pricing benchmark
  • Offering price: ≥90% of the average stock price in 20 business days before benchmark setting date and finally determined by the board of directors and sponsor institutions (main underwriters) in line with purchase prices offered by the investors and the principle of price priority
  • Number of shares to be issued: calculated on the closing price on 31 May, 2016 (USD2.51/share – RMB16.55/share) and maximum fund to be raised (USD286.85 million – RMB1.89 billion), given the undetermined offering date

This private placement is expected to increase Yifan Xinfu's total equity and net assets. However, given the fact that the high-end pharmaceutical preparation project and DHY's projects are still on the stage of R&D, it may take long to generate profits. Thus, the company's financial figures, like return on net assets and earnings per share, are likely to go down in the short period.


According to Yifan Xinfu's private placement plan, altogether USD108.21 million (RMB713 million) will be invested into Hefei Yifan's high-end pharmaceutical preparation project which will focus on the R&D and production of pharmaceuticals treating hematologic tumors and other related diseases.

This will further extend the company's supply chain of active pharmaceutical ingredients (APIs) and pharmaceutical preparations. When the clinical trials finish and the production is approved, Yifan Xinfu will further complete its product structure, especially on hematologic tumor pharmaceuticals.

Early on 7 April, 2016, Yifan Xinfu announced its acquisition of 53.80% shares in DHY for USD151.77million (RMB1.00 billion). Notably, DHY's wholly-owned subsidiary, Generon (Shanghai) Co., Ltd. (Generon) aims at global market and devotes to developing biopharmaceuticals.

It is the first Chinese bio-macromolecule medicine producer whose products enter phase I and phase II clinical trials in the US. It has also successfully developed a series of clinical and pre-clinical innovative bio-macromolecule medicines. These products has applied for registration in mature markets, like the US and European, after international standard R&D and clinical trials, and have the potential to be marketed around the globe.

"This investment will further improve our company's R&D capability and help us usher in bio-macromolecule medicine business, the most promising field in the pharmaceutical market so far," disclosed Yifan Xinfu, "Also, combined with our rich experience in overseas marketing, it will be benefit to carry forward our international development strategies."

Since 2014, Yifan Xinfu has acquired a number of pharmaceutical enterprises and undertaken reorganization, so as to transform from a traditional API producer into an enterprise devoted to producing differentiated pharmaceutical preparations. So far, this transformation has turned out to be effective: in 2015, the company's business structure changed:

- Pharmaceuticals

  • Revenue: 68% of the total
  • Gross profit margin: 43%

- APIs and intermediates

  • Revenue: 23% of the total
  • Gross profit margin: 38%

Notably, in Q1 2016, the company experienced a YoY rise of 38.50% in revenue and 62.25% in net profit, mainly thanks to increasing sales of pharmaceuticals from companies acquired last year and the rising market price of VB5.


Yinfan Xinfu's financial performance, 2012-Q1 2016

Source: Yifan Xinfu Phamaceutical Co., Ltd.


Monthly market price of 98% feed grade vitamin B5, Jan. 2014-May 2016

Source: CCM

This article comes from Vitamin China E-News 1606, CCM


About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.


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Tag: vitamin  pharmaceutical

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