PharmaZen forecasts 44% jump in 2018 sales as new plant allows toll processing
By Jonathan Underhill
May 16 (BusinessDesk) - PharmaZen, a Christchurch-based manufacturer of plant and animal-based health supplements, is forecasting a 44 percent increase in sales this year and a jump in earnings as the company brings a new plant online.
Turnover at its Waitaki Biosciences operating division is forecast to rise to $10.5 million this year from $7.3 million in 2017, according to a presentation to shareholders at their annual meeting this month. Earnings before interest, tax, depreciation and amortisation is seen rising to $2.5 million from $443,000 while pre-tax profit is $1.5 million from a $352,000 loss in 2017 when major delays installing a new freeze drier disrupted production.
A five-year, $12.5 million capital investment will result in PharmaZen having the largest solvent extraction plant in New Zealand and the biggest freeze drier plant in Australasia with the capacity to dry 3,000 metric tonnes of frozen product a year, it says.
According to the AGM presentation, the company is in the final stages of gaining a licence from Medsafe to produce MCHCal and StimuCal - products aimed at promoting bone health. Its other products include ActiPhen, a freeze-dried kiwifruit powder for digestive health, CassiPure, a blackcurrant extract and PernaTec oil and powder extracted from greenshell mussels.
"What we're experiencing now, in some cases, is quite unprecedented demand," said Steve Caultron, general manager at Waitaki. "We've got some fairly significant opportunities ahead of us in completely new markets where their volume expectations take us to a new level."
In PharmaZen's 2017 annual report, posted on the Unlisted Securities Exchange (USX) where its shares trade, the company said it is "now moving into its next phase including the development of new products. We anticipate an acceleration in investment in intellectual property with significant clinical trial work already scheduled for 2018 and 2019."
The company was likely to review its capitalisation policy "in order that the balance sheet better reflects the significant value in intellectual property that PharmaZen now possesses." It raised $2.4 million in equity capital in the final quarter of 2017 and said it was in talks with strategic partners for additional placements. Total borrowings stood at $8.1 million at year-end, up from $5.5 million a year earlier.
The company now had "an exceptional opportunity" to "increase its presence in the global nutraceutical market," it said in its annual report, which was released on March 26.
PharmaZen shares last traded on Unlisted at 7 cents, giving the company a market value of $13.7 million.