OPC Shareholders Meeting: Increase Profits by 20%, Establish ETC as Primary Distribution Channel

In 2023, OPC determined that the economic development was slow. The essential medicines (cardiovascular, oncology, antibiotics) of the Enterprise still had revenue growth, but on the contrary, those medicines for supportive treatment and nutritional supplements were heavily affected, especially the revenue of the herbal products was strongly influenced.

Thus, OPC ended 2023 with revenue of more than 1 trillion VND, 15% lower than the same period, only reaching 78% of the plan; net profit was 122 billion VND, 14% lower than the same period, and achieved 83% of the pre-tax profit plan. However, the profit margin on revenue has increased.

Sharing more about the story in 2023, General Director Pham Thi Xuan Huong said that in the early stage of the year, fluctuations in the global economy and geopolitics have had a great impact on the global supply chain. In this context, the Government stepped in to support, helping people get access to medicines. At the same time, some new laws and decrees were issued to support the pharmaceutical sector.

“The revenue of the pharmaceutical industry increased by 8.6%, which is a good figure in the context of economic difficulties. But in fact, the Government’s support is only for specialty medicines. In essence, only foreign enterprises took advantage of this opportunity, while domestic enterprises were less so. OPC is a herbal medicine enterprise, it is also very difficult to take advantage of it”– cited Ms. Huong.

2024 OPC Shareholder Meeting. Photo: Chau An

Another challenge is the emergence of large pharmacy chains. “Pharmacies have recently faced difficulties because of the emergence of large pharmacy chains that have captured market share. When traditional pharmacy chains are in trouble, they are the main customers of OTC”.

Ms. Huong confided that in the next 5-10 years, OPC will have to think a lot. “In the face of such a difficult year, OPC must restructure. OPC used to have product lines that were an advantage for over 40 years, as ordered by the state, which is traditional medicine. But up to now, not only OPC can do it. Plus competitors, this is very difficult.”

However, Ms. Huong assessed that even though revenue decreased last year, profit did not decrease much. In addition, she emphasized that the restructuring of operations, operations, business… has helped the profit margin on revenue increase compared to the previous year, reaching more than 15%.

“In 2023, the first few quarters were difficult, the workers were unemployed. Therefore, OPC tried to join hands, at the end of the year, gave 1.5 months’ salary, and this amount was included in the cost. So, the profit margin should have reached 19%” – she shared.

Profit increased by 20%, ETC is the main channel

In 2024, OPC set the goal of returning to growth. At the congress, the Enterprise submitted a consolidated revenue plan of nearly 1.3 trillion VND, an increase of 27% compared to the previous year; pre-tax profit of 186 billion VND, an increase of 20%.

Source: OPC

Regarding the implementation plan, OPC said that this year it will restructure its products, focusing on groups with good revenue and profit. Notably, it is the completion and expansion of the OTC channel, finding new distribution partners, but at the same time strongly promoting the development of the ETC channel to become the main distribution channel.

One of the notable plans of OPC is to survey and continue to develop herbal medicine areas. OPC assesses that raw materials are the decisive factor in product quality, so it has invested in planting many herbal medicine areas according to the GACP – WHO standards in order to proactively supply, stabilize product quality, besides protecting germplasm, creating employment for farmers, contributing to the development of local economy and aiming to export medicinal herbs. In 2023, OPC was one of the units licensed by the Department of Traditional Medicine Management – Ministry of Health with the largest number of medicinal herbs meeting GACP standards.

In addition, General Director Xuan Huong said that marketing will also be one of the goals to focus on this year.

“The sales channel, for years, has still been sold the same way, still sold at points of sale, wholesale, which is only suitable for the trend of 10 years ago. Many people ask: why not marketing? In fact, marketing without knowing where to sell is a big risk. We have not mastered the market, have not mastered the point of sale” – cited by Ms. Huong.

“Does herbal medicine still have potential? Ten years ago, the story of drug registration was very easy, because before Circular 22, everything was very easy. Now that we have integrated into the world, clinical trials are required for registration, and now there are no guidelines for clinical trials. That means this is a difficult story, so the Board of Directors will allocate resources to provide guidance, on a strong foundation of OPC to redevelop. For many years, OPC has sold points and wholesaled, so now it doesn’t know who its customers are..

This activity has led to more than 180 registered products, with only 2-3 products generating revenue. That means the production costs are very high, but the efficiency is not high” – Ms. Huong added.

However, Ms. Huong still believes that herbal medicine is a story that still has potential. Medicinal herbs have the potential to develop very good new products. “A medicinal herb has many uses. So scientists from the old formula that discover the new will create new drugs. Overall, the future of OPC has a very bright path. Pharmaceutical companies may be strong at this time, but the world has left far behind.”.

But currently, OPC does not intend to invest in opening its own chain of pharmacies.

Ms. Pham Thi Xuan Huong, General Director of OPC. Photo: Chau An

“The ultimate goal is to capture the market. When production has a distribution chain, it is ideal. OPC has thought about this. Can a chain be built? But when balancing the goals, if we currently make a retail chain, it means that we have to invest for a long time. Long Chau started a long time ago and they lost a lot, so did An Khang”.

“For OPC pharmaceuticals, we have too many goals because we also have to produce. We also have to R&D, and production technology, that is the core of OPC. If we invest in the chain at this time, it is really dangerous. We can come up with a strategy to invest in the chain, but such an investment will also deviate from the core strategy.” 

Regarding the profit distribution plan, the General Meeting of Shareholders approved the option to pay a cash dividend of 15% for 2023 – at the same rate as in 2023