E Is China Biologic Products Poised To Tumble?

China Biologic (CBPO), a specialty biopharmaceutical company immersed in the plasma industry, continues to experience impressive growth on many fronts (see initial article here). At the same time, however, the company faces intense competition in the plasma space, which is home to Baxter (BAX) and Novo Nordisk (NVO), which market ADVATE and NovoSeven, NovoEight and NovoThirteen, respectively. China Biologic previously struggled with a Q1 decline in albumin import volume, which has directly impacted product pricing. As a Chinese company operating in China, it is also at the mercy of an unpredictable and omnipotent regulatory regime. In 2H 2014, for example, the company’s overall performance was curtailed largely due to the production suspension of the Guizhou facility. Despite these odds, China Biologic has continued its impressive course to new highs, and is only expected to exceed Q4 2014 growth estimates on March 4th.

Here is a recap of important developments that took place over the last several months:

  • China Biologic announced it received GMP certification for a new production facility. The facility will significantly expand China Biologic’s production capacity as overall demand increases for its plasma-based products. Management has stated that the addition production capacity should improve the company’s financials this year. It also signifies that the company is making significant efforts to capture a larger market share. This follows the company’s strategic decision to increase its minority stake in the Guizhou facility to a majority position late last year. This strongly suggests that the company is expecting increasing demand in China for its plasma-based products. Thus, I can only perceive this positively.
  • China Biologic recently reinstated a poison pill to deter a hostile takeover attempt. Since hostile takeovers can be detrimental to shareholders, this is certainly positive. Indeed, this also indicates that management is highly aware of the likelihood of a hostile takeover attempt, given its increasing market share.
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    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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