CSL flags $370m FY20 hit on China changes

CSL shares have dipped after the biotech giant flagged a $370 million sales hit in the next financial year as it transitions to its own model for blood plasma sales in China.

The ASX-listed healthcare firm – which had already outlined plans to transition to its own Good Supply Practice License – on Friday announced a “one-off” hit of between $340 million and $370 million when the change is made in FY20.

CSL, currently the biggest supplier of albumin in China, said the licence change was an “investment in the future” that would let it own and sell products in the domestic Chinese market instead of relying on third parties for distribution.

CSL’s ASX-listed shares dropped as much as 4.2 per cent to $210.25 following the announcement, and were worth $212.96 at 1040 AEST, still down 3.0 per cent.

Annual sales of albumin in China were worth $500 million to CSL in FY18 and the company said they are expected to return to a more normalised level in FY21, following completion of the transition.

The company said profit effect is expected to remain in line with historical CSL Behring margins.

Albumin is a protein that makes up a large portion of blood plasma.

CSL currently distributes it via a third party with sales recorded when the product leaves CSL’s manufacturing facilities in the USA and Europe.

After transitioning to its own licence, CSL said product sales will be recorded at a later point in the cycle but will not have any impact on the availability of albumin to patients.

CSL shares have gained 85 per cent in value since January 2017.

The company lifted first-half profit 6.8 per cent to $US1.16 billion in February, helped by increased sales of its antibody replacement drugs in the US and its flu vaccines worldwide.

Last month, it appointed Paul McKenzie as chief operating officer to lead the new global end-to-end supply chain organisation.


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