China Biologic Products, Inc. (NASDAQ:CBPO) Q4 2018 Earnings Conference Call - Final Transcript

Mar 07, 2019 • 07:30 am ET

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China Biologic Products, Inc. (NASDAQ:CBPO) Q4 2018 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank You. We will now begin the question-and-answer session. (Operator Instructions)

And our first question comes from Yolanda Hu of Morgan Stanley. Please go ahead.

Thanks for taking my questions. My first one is on the plasma business. Since the sales guidance was not provided this time, can you walk us through the key assumptions of the plasma business such as sales volume growth and ASP erosion for albumins and IVIG? Also if possible, tell us, the new Chief Business Officer, which areas will he be focusing on going forward? Any details of the transformation of sales efforts, as stated in the press release?

Second question, by the end of 2018, there are close to $90 million (ph) of cash and time deposit. Do you have any plans on how to leverage it to increase ROE? Thank you.

Executive
Ming Yin

Yes, Yolanda, this is Ming. I'm trying to provide some -- our assumption for the plasma business for the 2019. In 2019, we expect the core plasma business to generate a healthy revenue growth around 10% to 15% than 2017 -- 2018, factoring the impact from the two-invoice policy on certain products. The substantial improvement compared to 2018, as we benefit from the expanded capacity at our new Shandong facility.

And I think for the overall albumin and IG, our assumption is, we expect the albumin and IG to -- from volume perspective, to grow around mid-teens compared to 2018 because we have different channels for the albumin and IG, so the 10% to 15% of growth on volume is combined the direct channel and also our distributor channel, and -- because, as you might aware, in 2018, our direct sales channel for both albumin and IG has a very weak performance. And 2019, we expect the overall -- the growth may generate from the distribution channel. So in other words, the albumin and IG growth in the direct channel may be flat from volume perspective, but most of the growth was coming from the distribution channel.

And as you've already seen from our press release we issued yesterday, we had a very healthy growth from distribution channel for both albumin and IG in the fourth quarter 2018. So we expect, in 2019, we will continue to deliver the higher growth from distribution channel and -- but the high growth from distribution channel will pretty much add expense of more -- the competition in terms of a price erosion. So that's why the -- our assumption for both albumin and IG, the average price for 2019 could be down another 3% to 5%, which reflected pretty much flat direct channel price and a high-single digit price erosion in the distribution channel. So hopefully, that answered your first question.

Operator
Operator

Thank you.

Executive
Ming Yin

And for the CBO, the role I think -- as our CEO just mentioned, Dr. He is a very experienced industry veteran. So he will be leading the commercial organization, in charge of sales, marketing and also medical marketing. So basically, I think