AFT Pharmaceuticals, the Auckland-based manufacturer renowned for its Maxigesic pain relief medication, has achieved unprecedented sales figures in the first half of the year, primarily driven by robust growth in the Australasian region.
Photo: 123RF
Despite this impressive sales performance, the pharmaceutical company reported a net loss of $2.5 million for the first half of the year due to significant sales disruptions affecting major Asian markets.
Key financial metrics for the six months ending September, in comparison to the previous year, are as follows:
- Net loss after tax $2.45m vs $1.8m net profit
- Revenue $86.7m vs $83.6m
- Operating loss $1.8m vs $3.2m profit
- FY 25 forecast operating profit $15m to $20m
The company recorded operating revenue of $86.7 million, representing a 4 percent increase compared to the same period last year, solidifying its position in the pain relief market.
However, sales in key Asian markets plummeted by 18 percent, largely due to several major clients reducing their orders, compounded by a strike by healthcare professionals in South Korea that severely impacted the sales of core product lines.
The company has strategically increased its investment in research and development, raising expenditures to $8.9 million from the previous $7 million, illustrating a commitment to innovation and product advancement.
Managing director Dr. Hartley Atkinson emphasized the importance of heightened R&D spending for a dynamic pharmaceutical enterprise. He stated, “We’ve got what we think is a really good pipeline of eight key products targeting multibillion-dollar markets. So, we are doing a little bit more R&D (research and development), nothing crazy, but we’re gradually increasing our R&D spend…”
Dr. Atkinson highlighted the company’s commitment to developing solutions for patients lacking adequate treatment options, which he believes will afford AFT a significant competitive edge in the long run.
Encouragingly, he noted that sales trends in Asian markets are showing signs of recovery, leading to a more optimistic outlook for the remainder of the fiscal year.
Although the company has prudently adjusted its guidance to a projected operating profit of $15 to $20 million, Dr. Atkinson is optimistic about sales rebounding. He remarked, “We’ve got lots of forward orders for our international business; Asia’s trading well, so it’s very much back on track.”
He further noted that AFT has a historical trend of stronger sales performance in the second half of the fiscal year, buoyed by increased sales of allergy medications during peak seasons.
“We’re very strong in the New Zealand market in allergy. We’re number one in the allergy market, and we do also find our analgesic products do sell a lot more around Christmas time,” he remarked.
Additionally, AFT holds a leading position in the eye care sector, being the top seller of lubricating eye drops in Australia, particularly during summer months when dry eye issues become prevalent.
AFT’s board of directors remains confident in the company’s overall financial health and expects to declare a dividend at the end of the fiscal year.
What measures is AFT Pharmaceuticals implementing to address the challenges faced in Asian markets following their reported sales decline?
**Interview with Dr. Hartley Atkinson, Managing Director of AFT Pharmaceuticals**
**Interviewer:** Thank you for joining us today, Dr. Atkinson. AFT Pharmaceuticals has reported significant sales growth in the first half of the year, particularly in the Australasian market. Can you elaborate on what factors contributed to this success?
**Dr. Atkinson:** Thank you for having me. Our growth in the Australasian region is primarily due to increasing demand for our Maxigesic pain relief medication. We’ve seen strong support from both healthcare professionals and consumers who value the dual-action relief Maxigesic provides. Our marketing efforts and strategic partnerships in the region have also played a crucial role in reaching new customers.
**Interviewer:** That’s great to hear. Despite the increased revenue, AFT reported a net loss of $2.5 million. What were the main challenges that led to this financial outcome?
**Dr. Atkinson:** Yes, while our operating revenue rose to $86.7 million, there’s no denying that we’re facing significant challenges in key Asian markets. We experienced an 18 percent decline in sales there, primarily due to some major clients reducing their orders and the recent strike by healthcare professionals in South Korea, which disrupted our operations. These factors have heavily impacted our overall profitability.
**Interviewer:** It sounds like a tough situation. What steps is AFT taking to counter these challenges?
**Dr. Atkinson:** We’re taking a multi-faceted approach. First, we’re focusing on rebuilding relationships with our clients in Asia and exploring new partnerships to stabilize that side of our business. Additionally, we’ve increased our investment in research and development, raising our spending from $7 million to $8.9 million. This reflects our commitment to innovation and developing new products that can enhance our market position and mitigate risk going forward.
**Interviewer:** Looking ahead, what are your forecasts for the future, particularly in light of the challenges you’ve mentioned?
**Dr. Atkinson:** We’re cautiously optimistic. For fiscal year 2025, we anticipate an operating profit between $15 million and $20 million. We believe that our focus on R&D and our strong presence in the Australasian market will help us achieve this goal, especially as we work to resolve the issues in Asia.
**Interviewer:** Thank you, Dr. Atkinson, for your insights. It’s clear that while there are challenges ahead, AFT Pharmaceuticals remains committed to innovation and growth.
**Dr. Atkinson:** Thank you for the opportunity to share our story. We’re excited about the future and are dedicated to providing relief for patients worldwide.
