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Hyphens Pharma’s high returns to shareholders fuelled by a post-pandemic boom, accretive acquisition

Douglas Toh
Douglas Toh • 7 min read
Hyphens Pharma’s high returns to shareholders fuelled by a post-pandemic boom, accretive acquisition
Zhang: Southeast Asia is the market in which we see a lot of potential in the long run. Photo: Albert Chua/ The Edge Singapore
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Having weathered the challenges of the pandemic, Hyphens Pharma remains dedicated to expanding its business through organic growth and acquisitions. The company is also forming partnerships and strategic ventures to facilitate expansion.

Founded in 1998 and publicly listed on the Singapore Exchange S68 -

(SGX) in 2018, the group has earned a reputable position in the pharmaceutical industry. While maintaining a robust presence in the Republic, it is steadily expanding its footprint throughout Southeast Asia, across various business segments.

The first, the specialty pharma segment, focuses on commercialising and promoting pharmaceutical products across various specialties like dermatology, radiology and allergy. These products are distributed in selected Southeast Asian countries through exclusive distributorship, licensing and supply agreements with reputable American or European brands.

Hyphens Pharma’s second segment, proprietary brands, concentrates on developing, marketing, and selling its dermatology and health supplement products, branded as Ceradan and Ocean Health.

Their third segment, medical hypermarket and digital, is engaged in wholesale pharmaceuticals and medical supply in Singapore, serving healthcare professionals, institutions, and pharmacies.

With its comprehensive portfolio, Hyphens Pharma effectively meets the diverse demands of various Southeast Asian markets. “Southeast Asia is a very fragmented market, we engage local teams who understand the local market well. When we work with pharma principals from Europe and the US, we leverage on our strong abilities in local regulatory affairs, sales and marketing, and become their expert in local distribution,” says the company’s chief financial officer, Flora Zhang, in an interview with The Edge Singapore.

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Segment expansion

Hyphens Pharma’s capability to navigate regulatory and licensing challenges has facilitated the expansion of its various segments and the nurturing of its proprietary brands in regions where it operates. Concurrently, the company is actively seeking international partnerships to broaden its global reach.

Apart from its strong licensing capabilities, Zhang highlights Hyphens Pharma’s competitive advantage from its reputable brands and extensive network. “We have been around for a long time, for over 20 years in some countries, and we have a very strong network and collaboration with the local distributors and hospitals. We are an established partner in Southeast Asia, and our ability to obtain approval on new drug registrations has been proven with a great track record,” adds Zhang.

See also: Celebrating the top listed companies in Singapore

To sustain this growth in the industry, she highlights that the company is committed to continual advancement. “When we look at the three main business units, we see substantial progress. Since 2018, we have been widening our product portfolio,” adds Zhang.

In the first quarter of FY2023, which ended on March 31, the revenue from Hyphens Pharma’s specialty pharma principals segment decreased by 12.9% y-o-y.

This decline was mainly attributed to the conclusion of its distributorship agreement for Biosensor products.

Responding swiftly, the group sought a new distribution opportunity with French paediatric pharmaceutical company Laboratoires Gilbert S.A.S. in 1HFY2023. The group is also aggressively acquiring new licensing opportunities for drugs such as Winlevi, Byfavo and Nabota in various countries.

“If we look at the first quarter of this year, there’s a drop in revenue because of the loss of Biosensor, whose distribution agreement ended (with us) last year. Following the loss of Biosensor sales in 1QFY2023, we quickly identified alternative products and recovered sales in the following quarter,” says Zhang.

During the pandemic, she characterised the company’s profit growth in FY2020 as being “slower” due to global disruptions. Despite the challenging times, Hyphens Pharma reported earnings of $11.4 million for FY2022, up 66.7% y-o-y, supported by record revenue of $162.3 million, demonstrating substantial 28.9% y-o-y growth.

‘Accumulated demand’

Shareholders were paid a dividend of 1.1 cents for FY2022, up from just 0.67 cents in the previous year. Zhang attributes the better showing to “accumulated demand” as the group’s markets recovered from the pandemic and the acquisition of Novem Group at the end of 2021.

In FY2022, the group’s pharma segment revenue rose 45.8% to $95.7 million, led by strong sales in Singapore, Vietnam, and Malaysia. The proprietary brands segment also saw a 22.9% revenue increase to $23.4 million, attributed to the growing demand for products like Ceradan and Ocean Health supplements.

With robust performance in FY2022 and the two preceding years, Hyphens Pharma was recognised at this year’s Centurion Awards as the company that delivered the highest returns to its shareholders, among its peers in the healthcare services and pharmaceuticals sector.

Despite the positive results, Hyphens Pharma remains vigilant and proactive.

“Post-Covid-19, the environment has changed. We see disruptions, especially in supply chains, and the economic landscape remains unpredictable. We are navigating through this by expanding our product range, diversifying our portfolio and constantly seeking new products to tackle and diversify risk,” she adds.

Growth trajectory

As part of its ongoing growth strategy, Hyphens Pharma has embarked on mergers and acquisitions (M&A) to enhance its performance and growth trajectory.

Aside from the record revenue numbers, which Zhang attributes to demand built over time, she points to the incremental revenue of $15.7 million from Novem, a consumer healthcare and pharmaceutical company acquired by Hyphens Pharma at the end of 2021, as a contributing factor.

“That was an exemplary example of the M&A strategy we were pursuing, a strategic, local player complementing Hyphens’ existing business. Novem leans towards the public sector as they supply to hospitals, which complements Hyphens’ distribution network, which caters more to the private sector,” says Zhang.

She adds that in Southeast Asia, inorganic growth is vital for Hyphens Pharma to expand into existing and new markets for accelerated growth.

“We look for M&A targets with products that complement our current range or new market presence that we are interested in. They typically have an established network and existing pharma products in the commercialisation stage.”

Hyphens Pharma has formed partnerships to boost its growth. Last May, Metro Holdings M01 -

invested $6 million in Hyphens Pharma’s subsidiary, DocMed Technology, a digital health platform. Metro Holdings, also listed on SGX, operates in various markets, including property and retail.

Digital platforms

DocMed also aims to create digital platforms to improve the healthcare supply chain. This digital ecosystem includes WellAway, an e-prescription platform enabling online prescriptions and direct drug orders for patients. It is the city-state’s first and only Health Sciences Authority (HSA)-registered E-Pharmacy. Another platform is POM, a B2B (business-to-business) marketplace providing drug and medical supplies to medical professionals.

“DocMed aims to provide a B2B digital pharmacy solutions platform to connect healthcare stakeholders, including healthcare practitioners such as doctors and pharmacists, and healthcare institutions such as clinics and hospitals, with industry stakeholders such as pharmaceutical companies and medical consumables manufacturers, to empower them to meet patients’ needs more efficiently,” says Zhang.

Hyphens Pharma’s efforts to streamline the medical hypermarket and digital segment appear poised for growth in the long run, as revenue from the segment grew to $43.2 million in FY2022 from $41.2 million the year before, a stable but moderate rise of 4.9%.

The group will further develop its proprietary segments to secure a larger portion of the regional market, capitalising on the increasing income levels that drive greater demand for healthcare and increased consumer spending.

Other positive trends, like more comprehensive insurance coverage, will further reinforce these efforts.

She adds: “In the near term, we still see market uncertainties relating to supply chain disruptions and the macro-economic environment. Consequently, our focus remains on maintaining the same level of performance as the previous year, which was a record year. In the long run, Southeast Asia is the market in which we see a lot of potential.”

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