Lotus Pharmaceuticals (1795:TT), a multinational pharmaceutical company, today reported full year 2022 audited financial results.
Full year 2022 financial highlights:
- Lotus achieved its most successful financial year on record, marked by high double-digit revenue growth for the third year in a row. The company more than doubled its year over year (YoY) net profit from NT$1,403 million in 2021 to NT$3,021 million in 2022.
- Consolidated full year net sales were NT$14,633 million, growing approximately 16% year-on-year (YoY).
◆ Export revenues outside of Asia grew 28% YoY, mainly fueled by the global launch of Lenalidomide, the launch of Enzalutamide in Latin America, and growth in export revenues from existing products such as Vinorelbine, offset by lower revenue from buprenorphine / naloxone sales in the U.S.
◆ Asian Business demonstrated topline growth of 5.6%; excluding foreign exchange impact of the South Korean Won (KRW) vs. NTD, topline growth was approximately 10%.
◆ Revenues from Asia and exports were evenly balanced, with Asia accounting for approximately 51% of total revenues and exports representing approximately 49%.
- Full year gross margin increased to 53%, driven by a higher contribution from more profitable exports of oncology products, as well as the hybrid brand and generic portfolio in Asia.
- Operating profits surged 79% YoY to NT$4,111 million, resulting in a 28% operating margin for the year, an increase of 10 percentage points versus the prior year.
- Full year EPS was NT$11.59, more than twice the EPS of NT$5.50 in 2021.
- The Board of Lotus proposed paying a cash dividend of NT$3.46 per share, representing an approximately 30% payout ratio.
Robert Wessman, Chairman of Lotus said: “Lotus reached major commercial milestones in 2022. The continuing successful commercialization of products globally will provide resources that can fuel our next phase of transformation. Lotus’ exemplary track record over the last 5-6 years has given both our shareholders and employees confidence in our ability to achieve ambitious goals. We started out in 2015, facing skepticism and with limited resources. Now the business is ready for take-off. I am excited to see what Lotus can achieve in the next 5 years.”
Petar Vazharov, Chief Executive Officer of Lotus, continued: “I am excited to share our achievements in 2022.Lotus has achieved high double-digit growth for three consecutive years. This is not out of luck, but the result of a concerted team effort and I want to thank the entire Lotus team for making 2022 such a remarkable year. I am particularly proud of the fact that Lotus was named one of the Best Companies to Work for in Asia in 2022 by HR Asia. When we develop proactive teams and talents, based on a high-performance culture, we can work together as one and make things happen. We will continue to focus on innovation and operational efficiency while exploring new growth opportunities. I look forward to another successful year ahead.”
Operational results for the Year ending on December 31, 2022
Total consolidated net sales were NT$14,633 million for the year, compared to NT$12,649 million in 2021, representing an increase of approximately 16%.
- Lotus realized its biggest global product launch with Lenalidomide in 2022, which was introduced in 14 European markets in the first quarter of 2022 and later in the U.S. and Brazil in the third quarter. Along with Lenalidomide, the company also launched Enzalutamide in Latin America and Vinorelbine in Mexico through a United Nations tender in Q4. These launches contributed to a 28% YoY increase in global export revenues.
- In Asia, 2022 saw the acceleration of Lotus’ transformation from a pure-play generic pharmaceutical company to a "hybrid branded and generic" player. The company established focused therapeutic areas such as Osteoporosis in Taiwan, Korea, and Thailand, Lung Cancer in Taiwan, Drugstores in Taiwan, Weight Management in Korea, Parkinson in Taiwan and Korea, Nephrology in Korea, Anti-Addiction in Taiwan, and more. To accelerate Lotus’ transformation, the company acquired a number of brands, such as Cialis® and Alimta®. Lotus’ Asian markets grew 5.6% YoY; when excluding negative foreign exchange impact of the KRW versus NTD, growth was 10% YoY.
Gross margin was 53% for the year and improved from 45% in 2021. The higher gross margin was mainly due to a revenue mix featuring more profitable export oncology products, as well as the branded portfolio in Asia.
R&D expenses were NT$520 million in 2022, 13% lower than the year before. Lower R&D expenses were mainly due to lower impairment expenses.
SG&A expenses saw an increase of 15% compared to the prior year, mostly because of higher amortization related to the newly acquired brand assets, such as Cialis® and Evista®, higher payroll and benefit costs related to business expansion and inflation and growing promotional activity after the end of the COVID pandemic. The higher SG&A expenses also included an irregular impairment charge of a brand asset in Korea, in the amount of NT$34 million.
The Company delivered an operating margin of 28% this year, versus 18% last year, representing a 10 percentage-point increase.
During 2022, the Company generated steady cash inflows from operations with a net inflow of NT$4,452 million from operations, before tax and interest. Net gearing decreased due to increased profitability. The Company’s net debt to LTM EBITDA ratio landed at 1.28x as of the fourth quarter 2022, compared to 1.49x as of the same period last year.
The Company reported NT$11.59 EPS for the full year 2022, which is 111% above the NT$5.50 EPS for 2021. The Board of Directors of Lotus proposed a cash distribution of approximately 30% of 2022 net earnings or NT$3.46 per share to the shareholders of Lotus.
2022 Business Update
In 2022, Lotus continued maturing into a highly capable end-to-end global pharmaceutical player. As of December 2022, Lotus had 1,174 employees from 18 different countries. During the year, Lotus’ R&D teams completed 6 dossiers for filing. Lotus delivered the first ever New Chemical Entity Exclusivity (NCE-1) / potential First to File (FTF) filing and achieved tentative Abbreviated New Drug Application (ANDA) approval in the U.S. for Midostaurin (generic of Rydapt®) The Company also obtained first cycle tentative approval of Nintedanib (generic of Ofev®) in the U.S. Currently, Lotus R&D has the total of 37 INNs in its pipeline at various stages. In addition, during the year, Lotus’ in-licensing team supplemented the Company’s portfolio with 19 generics and three 505b(2) products licensed from partners around the world.In 2022, Lotus’ global regulatory teams made 75 filings around the world and received 72 market authorization approvals globally. Lotus’ CRO team in India completed 33 bio-analytical studies and 22 clinical studies. Lotus signed 20 additional out-licensing agreements during the year. Currently, the Company’s licensing agreements cover more than 160 markets globally.