China Biologic: Plasma and Profits

10/22/2015 9:00 am EST

Focus: STOCKS

James Oberweis

President, Oberweis Asset Management, Inc.

Our latest featured recommendation is a biopharmaceutical company principally engaged in the research and development of human plasma-based products in China, explains Jim Oberweis, Jr., small-cap money manager and editor of The Oberweis Report.

China Biologic Products (CBPO) is the largest non-state-owned producer of plasma products and the second largest producer in China in terms of 2014 sales.

China Biologic has a product portfolio with over 20 different dosage forms of plasma products. Its principal products are human albumin and immunoglobulin for intravenous injection (or IVIG).

Albumin has been used for almost 50 years to treat critically ill patients by assisting the maintenance of adequate blood volume and pressure.

IVIG is used for certain disease prevention and treatment by enhancing specific immunity. These products use human plasma as their principal raw material.

All of its products are prescription medicines administered in the form of
injections. The company’s sales model focuses on direct sales to hospitals and inoculation centers and is complemented by distributor sales.

China is the second largest plasma products market in the world, after the US. Compared to more developed countries, however, China has a lower per capita usage level of plasma products, primarily attributable to a lack of awareness of the benefits of IVIG therapy.

In the company’s latest reported second quarter, sales increased approximately 32% to $79.1 million from $60.1 million in the second quarter of last year.

China Biologic reported earnings per share of $0.99 in the latest reported second quarter versus $0.82 in the same quarter of last year.

Clients of Oberweis Asset Management own approximately 63,000 shares. These shares may be appropriate for risk-oriented investors.

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