Hovid on road to recovery

PETALING JAYA: HOVID Bhd is on the recovery path after taking steps to sort out Carotech Bhd's debts and is looking to expand the pharmaceutical business next year, said managing director David Ho.

Last week, in its filing to the stock exchange, Hovid's third quarter net profit ended March 2013 rose 33 per cent to RM5.13 million from RM3.85 million posted a year ago. 

Excluding the non-recurring item, Hovid’s year-to-date pre-tax profit RM18.41 million works out to be 51 per cent higher than the previous year’s RM12.19 million.

In its notes to investors, Hovid said Carotech was an associate company up to December 22 2011. It has now become a simple investment to Hovid. 

In the last three years, Carotech faced difficulty as there was no working capital. One way for Hovid to raise funds is to embark on a rights issue of new warrants.

Hovid is set to raise RM7.62 million. These 5-year warrants will replace the original warrants that had expired. The listing of the new rights warrants will be carried on June 10. Apart from working capital. Hovid will also use a portion of the RM7.62 million to defray expenses incurred in the right issue of warrants.

In an interview with Business Times here, Ho assured investors that Hovid is on the recovery path. It has been 17 months since Hovid was lifted from PN17 status on January 16 2012. 

"When Hovid slipped into PN17 status, it was like we were in intensive care. Now that we've been lifted from that status, you can say Hovid is well on the recovery path in the normal hospital ward," he said. 

"In Hovid's books, Carotech is written off to RM1. The plant in Lumut is still running with just a skeletal workforce. We are still resolving Carotech's debts with the banks. Hopefully, we can resolve this by the end of this year and get discharged from the hospital, so to speak," Ho added.

Hovid's laboratories in Perak produce antibiotics, antidiabetics, antihypertensives, antimalarial and anti-inflammatory analgesics, ranging from skin care and hair care products to health beverages. Its products are GMP-compliant and exported to more than 40 countries. 

In the consumer market, Hovid is known for its popular Tocovid SupraBio health supplement and Ho Yan Hor Herbal Tea.

The Tocovid SupraBio health supplement is currently the consumer market leader for palm oil phytonutrient extract. Among the active ingredients in the extract are tocotrienols, little known but the better half of the vitamin E family.

Tocotrienols, which are most abundantly found in palm oil, are showing promise in clinical trials that they are capable of reducing risk of degerative diseases such as stroke, heart attack and cancer.

Asked on the prospects of Hovid's pharmaceutical business, Ho said the requirement for product registration has become lengthier with increasing stringent rules in the development of generic drugs. This, he said, has slowed pharmaceutical launches.

Nevertheless, Hovid has at least 10 to 15 products being developed in the pipeline each year. "We hope that our margin will improve slightly in the second half of this year. We are tweaking our product mix to drive sales of higher margin products. 

"We have been working hard submitting dossiers to gain market approvals. We do expect some new dossiers to come in some time towards the end of the year," he said.

"This year, if we can maintain our performance, that will be quite good. Hopefully, by next year, we will be back on our feet and focusing on growing the pharmaceutical business," Ho added.