“Wealth” Products Hurt Globally Acquisitive Pharmaron Beijing’s 1st Half Profit

Globally acquisitive Pharmaron Beijing, a China-based pharmaceutical research services company led by billionaire Lou Boliang, expects profit to grow by a single digit at best due to declines in the value of wealth-product investments.

Pharmaron expects revenue to have grown by 39% to 42% over 2021 to as much as 4.56 billion yuan, the company said in a Hong Kong Stock Exchange filing on Friday after the close of trade. Net profit, however, is estimated to range from as low as 564 million yuan – the same as the first six months of 2021 – to a high of 610 million yuan, which would be an 8% gain. (See link here).

“In the first half of 2022, as a result of the international macro environment changes, the returns of some of our principal protected/variable return’s low and medium-risk bank wealth management products dropped sharply, which had certain adverse impact on the company’s net profit attributable to owners of the parent,” it said.

Pharmaron has been expanding through the acquisition of a global network. The Beijing-headquartered company bought contract researcher Absorption Systems of Pennsylvania for $137.5 million in 2020, and paid $120 million for a research center owned by AbbVie Inc. in Liverpool in 2021. Earlier this month, it announced the purchase Aesica Pharmaceuticals, a supplier of active pharmaceutical ingredients located in Newcastle, from the UK’s Recipharm group. It didn’t say how much it paid for Aesica. Pharmaron employs 12,000 people globally; 80% of its business is denominated in U.S. dollars.

Pharmaron’s Hong Kong-traded shares have lost nearly 36% in the past year; they lost 5.5% on Friday to close at HK$74.80.

The company is chaired by Lou, an American citizen with an estimated fortune worth $1.4 billion on the Forbes Real-Time Billionaires List today.

Lou received his M.S. degree in 1986 and Ph.D. in organic chemistry in 1989 at the Shanghai Institute of Organic Chemistry. Lou did post-doctoral research at the University of Montreal in 1990-1994. Lou worked at life sciences and biotech companies including Cytel and Ontogen before co-founding Pharmaron in 2004.

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