Lotus achieves another record high EPS for FY2021

FY2021 financial highlights:

• Lotus continued to deliver double digit growth in top-line revenue and bottom-line profitability in 2021. The company also reported a new record basic EPS of NT$5.50, representing 30% increase compared to the previous year.
• Total net sales were NT$12,649 million, representing a 18% growth versus the prior year and hitting the high end of the expectation.
  Asian Business segment increased by 6.4% to NT$7,050 million, or up 8.3% excluding the unfavorable currency impact of KRW/NTD.
  Export Business segment reported sales of NT$5,495 million, representing a 38.6% growth driven by strong performance of gSuboxoneas well as the increasing supply revenues from Export Oncology products.
• Average Gross margin improved to 44.6%, vs 42.8% in the previous year, driven by COGS management as well as product mix.
• Operating profits were up 42.3% to NT$2,295 million contributed by better margin profile and operating leverage.
• Basic EPS reached NT$5.50 representing a 30.3% increase compared to the previous year. If using the same capital share as last year, the basic EPS would be NT$5.77, representing over 36% year-over-year growth.
• The Board of Directors today approved cash dividends of NT$1.93 per share, the highest dollar amount ever paid in the Company’s history.

Robert Wessman, Chairman of Lotus, said: “I am very proud of all the achievements Lotus team has delivered throughout the year leading to another record annual earnings at a year-over-year growth over 30%, especially during the difficult COVID situation with lock-downs in the region. We would also like to share the great results with all the shareholders and thus the Board has approved cash dividends of the highest dollar amount that Lotus has ever paid. I am confident the team will continue to deliver more remarkable achievements to lead the Company to another record year in 2022 and the next success.”

Petar Vazharov, Chief Executive Officer of Lotus, continued to indicate: “This is an exciting day for Lotus, as we share our strong 2021 financial results. Lotus continues to be the largest pharma company in Taiwan by revenue and is also the only pharma company in Taiwan with annual sales over NT$10 billion and consistently delivering double-digit growth for the last 3 years.

Such great results are thanks to Lotus team efforts in executing company’s two-pronged strategy. In 2021, we have seen more diversified contribution from individual business units as the business lines continued to grow. In Asia, both Korea and Taiwan, our original stronghold in North Asia, have grown steadily. SEA markets, including Thailand, Vietnam, Singapore, and other distribution markets, stood out as the main growth driver of the year and increased by 32% compared to 2020. Export Business also performed well and grew almost 40%. Even Though we saw some challenges with our gSuboxone in the US in the middle of the year, we managed to achieve over 30% increase in revenue. The RoW export revenue grew significantly due to healthy demand our products around the world.

We have been also making a significant progress in expanding our product portfolio by internal R&D as well as business development to ensure sustainable growth going forward. Lotus R&D team has delivered, for the first time in Lotus history, a major first to file filling in US. Business Development team executed more than 25 In-licensing deals, including Evista brand acquisition for Taiwan market and the in-licensing of NCE in Oncology field.

Based on the strong foundation build over the last 6 years and outstanding results achieved in 2021, we have entered in 2022 with very strong confidence that it will be a remarkable year for Lotus!”

Operational results for FY2021

Total net sales were NT$12,649 million, compared to NT$10,729 million for the prior year, representing an increase of 17.9% supported by consistent growth from both Asian Business and Export Business.

• Net sales from Asian Business increased by 6.4%, or 8.3% excluding foreign exchange impact, over last year despite the COVID restrictions in the region. All the key markets grew steadily across the region – Taiwan increased by 13% year-over-year on the back of Stalevo/Comtan and the launch of newly-acquired Evista. SEA also showed a 32% yearly growth. Qsymia maintained strong growth in the anti-obesity market in Korea during the year, and the oncology portfolio in Korea also grew over 10% year-over-year, which is expected to be further boosted by the recently-approved biosimilar Bevacizumab.
• Revenues of Export Business showed strong performance. The Company’s gSuboxone maintained the market share of 34% as of the year end and delivered another 39% growth in sales versus the previous year despite the pricing challenge around mid-year. Export Oncology also increased by almost 39% over the prior year with increasing supply revenues and launch of new product, Enzalutamide, in November to boost the future momentum.

Gross margin was 44.6% for the year of 2021, 1.8 percentage points better than 2020, mainly driven by better product mix with more contribution from high margin Export Oncology and COGS management.

R&D expenses was NT$596 million in 2021, a 17.9% increase compared to a year before as a result of the impairment of discontinued R&D projects due to the market dynamics.

SG&A expenses saw a moderate increase of 10.9% over FY2020 driven by higher amortization from licensed-in products as per commercial launches and expenses related to plant optimization programs in Korea.

With steadily growing top-line and well-managed spending throughout 2021, Lotus delivered operating margin above 18.1% for the full year, significantly improved from 15.0% in 2020.

The Company’s leverage, supported by solid growth and enhanced profitability, has reduced significantly with effectively lowering its net debt to LTM EBITDA ratio from 1.93x as of FY2020 to 1.49x as of FY2021. Its finance costs were also further reduced by 11.1% to NT$297 million during 2021, compared to NT$334 million in 2020.

With all the major deliverables achieved on track, the Company set another milestone to deliver double-digit growth on top of its over NT$1 billion sales in 2020 and made another record since its inception with EPS of NT$5.50 for FY2021. Its Board of Directors also approved cash dividends of NT$1.93 per share, which is the highest cash dividends paid by the Company.

Pipeline and business development update

During 2021, Lotus has been aggressively expanding the addressable markets with more diversified portfolio, especially oncology products, both in Asian countries and for global markets. 121 submissions were made around the world either by its own regulatory team or through its strategic partners, including 2 biosimilar products to enhance the overall portfolio. In addition, the Company received 100 approvals from its Asian footprints as well as additional 42 countries outside Asia by working with its global partners to boost the worldwide potentials for its leading portfolio.

• As of the end of 2021, the Company has 94 countries covered in the world, which includes the single largest market in the US and several major European countries, for its Lenalidomide – 56 counties approved with 1 more tentative approval, 28 countries under registration, and 9 submissions under preparation. Moreover, the Company has launched its Lenalidomide in 39 countries, including first-to-market launch in 14 EU countries in February 2022, by partnering with local commercial leaders in each region.
• There are 54 countries covered for Lotus’ Gefitinib – 35 approved, 10 under registration, and 9 submissions under preparation.
• 50 countries are covered for Lotus’ Vinorelbine – 37 approved including full strengths approvals in Taiwan and Vietnam the first 2 largest markets in oral form, 7 under registration, and 6 more under preparation.
• The Company also has 38 countries covered for Enzalutamide, 49 countries for Sunitinib, 31 countries for Pazopanib, as of the year end. Moreover, in addition to the 3 leading products under roll-out over 90 countries, the Company has also launched its Enzalutamide in 2 markets since November 2021, which boosts the second wave for its global pipeline expansion.

In addition to its internal R&D projects continuously building up, the Company has signed 28 business development deals to bring in additional drivers to accelerate the substantial growth for both top line and bottom line. Among these 28 deals, the Company acquired Evista® (Raloxifene) in Taiwan and successfully re-launched the product within 2 months from the contract execution and got its first NCE cancer drug, Zepzelca® (lurbinectedin), licensed-in from the originator for the territory of Taiwan aiming to further penetrate the lung cancer market along with its existing portfolio. The Company also got another 2 505(b) 2 products, 20 generic deals, and 4 OTC products through the business development deals to complete the overall portfolio for long term competitiveness.