Trial results boost buoyant PharmaZen

Media Release

April 27, 2012

Trial results boost buoyant PharmaZen

Eager anticipation surrounding trial results for its bone health product range has biotechnology company PharmaZen confidently looking forward to the next 12 months on the back of another year of profit and turnover growth.

Despite the twin hurdles of a gravity-defying dollar and on-going earthquakes, for the 12 months ending December 31, 2011, PharmaZen reported a surplus before tax of $485,958 on turnover of $6,602,187. This compares with a before tax surplus of $482,338 on turnover of $6,277,516 for the previous 12 months.

PharmaZen chief executive, Craig McIntosh, said that despite these challenges it was pleasing to report that the company has been able to maintain sales and profitability levels.

“It is interesting to note that in the 2010 Annual Report we bemoaned the rise in the New Zealand dollar against the US dollar from 64 cents to 72 cents. In 2011, the New Zealand dollar averaged 79 cents. In terms of New Zealand dollar revenue, the impact of this 10% appreciation against the Euro and USD is around $500k in top line sales, when compared with the 2010 result.

“There is not doubt that with our current mix of products, the strength of the New Zealand dollar will continue to be a significant impediment to growth in profitability. We need to diversify our range, hence our focus on accelerating our investment in research and development.”

Recent trials look very positive for the company.

“Clinical trials, which commenced in 2011 and which are set to be completed in the second half of 2012, are showing encouraging interim results and we are confident that this significant body of work will be of great value to the company’s future growth.”

McIntosh said that currency aside, the Christchurch earthquake was clearly a significant event for the area and while the company came away comparatively unscathed, it was not without its challenges.

“The plant was without power for four days and without water for more than four weeks and it took some significant ingenuity by staff to have the business fully operational within seven days.

“The main challenge, lack of mains water, was worked around by the use of flat deck trucks converted into make shift water tankers ferrying 75,000 litres of water in per day from Kaiapoi.

“This not only allowed the business to operate, but with the installation of domestic washing machines, we were able to provide staff with extended amenities as many of them remained without power/water/sewerage for considerable time.

“The Board is immensely appreciative of the efforts of staff during this period. The fact no customers had their supply interrupted is testament to the commitment and skill of the team at Waitaki Biosciences,” he said.

The company was able to complete the installation of the new onsite freezer which now enables it to store the majority of raw material requirements, allowing greater flexibility in manufacturing and achieving significant savings over traditional third storage. Work was delayed on the dry side expansion

“Carbon emissions are becoming an increasingly important issue, with the potential to develop into a non tariff barrier to entry in some markets. It is pleasing to note that PharmaZen is now CEMARS (Certified emissions measurement and reduction scheme) accredited.

“While we gained great credibility in our ability to maintain supply throughout the challenges of 2011, we are not resting on our laurels. This year sees the installation of a standby co-generation capacity, which will enable the plant to run without grid supply. The unit is being designed and built to run off biodiesel that we will produce onsite from waste fat. It will operate during control period demands where penal rates of up to $187/kWh apply.

“The investment is significant at $250k installed and while the primary purpose was risk mitigation, the project has been engineered in such a manner as to achieve a pay back in less than three years,” he said.

McIntosh, while confident of the year ahead, is concerned that the post-quake issues are going to be greater than the event itself with insurance, building consents and financing all posing new and additional challenges.

The AGM will be held at the clubhouse, Otago Golf Club, 24 Balmacewen Road, Dunedin, on May 31st at 12.30

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