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PharmaZen posts record 1H profit

PharmaZen, a manufacturer of plant and animal-based health supplements, turned to a record first-half profit as it reaped the benefit of earlier investments.

Earnings before interest, tax and depreciation jumped by more than $1 million to $785,000 in the six months to June 30, compared with a loss of $170,000 in the year-earlier period, the company said in a statement. Turnover increased 48 percent to $5.56 million.

PharmaZen, founded in 2001 by the late Dunedin entrepreneur Howard Paterson, posted an annual loss in 2017 in what it described as a "challenging year". It was hurt by major delays installing a new 2,000 kg dryer which disrupted its production, reduced its capacity for making higher value products and raised its manufacturing costs.

The Christchurch-based company has invested more than $12 million in new plant and equipment during the past five years. That has shifted its facility from a small freeze-drying factory to a world-class operation with the largest solvent extraction plant in New Zealand and the biggest freeze drying plant in Australasia, the company said.

Chief executive Craig McIntosh said the latest result is "extremely pleasing" and provides a glimpse of the future growth potential for the business.

"Last year (2017) was an exceptionally disruptive year with the culmination of multiple projects putting pressure on infrastructure," he said. "The bulk of these projects have now been completed and we are starting to reap the benefits. Both the new multipurpose extraction facility and the expanded freeze-drying facilities are now fully commissioned, operational and generating profit."

McIntosh said the company is continuing to invest in research and development projects and has just been awarded a US patent for one of its bone health products marketed under the StimuCal and MCH-Cal trademarks. While already sold globally as a supplement to optimise bone mineral density, the additional certification is likely to further extend the product's reach, he said.

“We expect to continue to see growth in this area but it’s pleasing to note that demand is up across all ranges," he said. "We are particularly pleased with our CollaMex collagen, a product used for joint health and skin care supplements, which has already surpassed 2017 full year sales,”

He also noted growth in the company's botanical products, with first-half sales of its kiwifruit extract ActiPhen increasing 250 percent increase over the same period in 2017. ActiPhen has high levels of the enzyme actinidin and is used as a digestive health supplement.

McIntosh expects growth to continue to accelerate with the company running a major clinical trial involving 100 participants for a second generation product it will launch later in 2018.

With the major expansion in place and the company experiencing substantial growth, PharmaZen has strengthened its management team. Ben Alberts, previously chief executive of Globepak, South Africa’s largest sports nutrition manufacturer, has been appointed chief operating officer. Gary Monk, formerly general manager of Gelita New Zealand, has been named chief technical officer.

PharmaZen shares last traded at 7.1 cents on the USX exchange, valuing the company at $15.6 million.


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