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Hyphens Pharma revs up digital push amid Covid-19

It is using technology to stay in touch with medical professionals and connect with consumers; it is even exploring telemedicine.

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The longer-term strategic intent is to develop the proprietary brands segment further, says Lim See Wah, Hyphens' founder, chairman, and chief executive.

HAVING transformed its traditional wholesale business into an online medical hypermart two decades ago, Hyphens Pharma International is now reaping the benefits of its digital strategy. The company, which sells pharmaceuticals and other consumer healthcare products, is now exploring how digital technology can aid other segments of its business too.

Lim See Wah, the company's founder, chairman, and chief executive, says Hyphens is using technology to stay in touch with medical professionals and connect with consumers. It is even exploring opportunities in telemedicine.

The Covid-19 pandemic has made for a challenging operating environment, leading to a rise in supply lead time and freight costs. Nevertheless, Hyphens has been able to keep operating as its operations are classified as essential services.

In fact, strong demand for its products gave the company a boost in the first quarter ended March 31. Its net profit increased 48.6 per cent to S$2.12 million, on the back of a 16.4 per cent rise in revenue to S$31.4 million.

Its wholesale business, which the company refers to as "medical hypermart and digital", is the oldest of its three business segments. But at 36 per cent of the quarter's revenue, it is not the largest. That would be specialty pharmaceutical principals, at 49 per cent of revenue. Hyphens has distributorship and licensing agreements with brand principals that allow it to sell specialty products to medical practitioners in Asean.

The third segment is proprietary brands, which contributed 15 per cent of revenue in 1Q. The latter involves the development, contract manufacturing, and sale of Hyphens' own products. The company has two skin health brands, Ceradan and TDF, and a supplement brand called Ocean Health.

The longer-term strategic intent is to develop the proprietary brands segment further, said Mr Lim. Hyphens aims to be Asean's leading pharmaceuticals and consumer healthcare group - and, in the long run, "Asia's number one skin health company".

Improving online presence

Hyphens' main digital foray has been its B2B portal of over 4,000 items, which are delivered to more than 3,000 customers including private clinics, pharmacies, polyclinics, and nursing homes. Online since "the days of dial-up", the portal continues to be revamped as technology advances. Said Mr Lim: "I think there are a lot of possibilities to see how we can enhance it to support our clinicians in their practice."

Hyphens has also gone online in the B2C realm, with its proprietary brands now on e-commerce platforms such as Shopee, Lazada, Qoo10, and RedMart. Here, too, Hyphens is looking at how to better connect with and educate consumers. "People are not just buying a product, people are buying a solution," said Mr Lim - and solutions have an "information component".

And, with restrictions on physical meetings during the Covid-19 outbreak, Hyphens has continued to engage its medical professional customers via video conferencing.

"In the past, you rely quite heavily on medical representatives going to talk to the doctors," said Mr Lim. With face-to-face meetings unlikely in the short term, Hyphens must go digital to continue delivering info to doctors.

As for how the company - as a supplier of products - could get involved in telemedicine, Mr Lim said he is looking at various possibilities and that plans are fluid. But he added: "I don't think we envisage going in doing the telemedicine platform ourselves."

In the last five years, Hyphens has reported a compounded annual growth rate of 11.1 per cent for its revenue and 6.3 per cent for its profit after tax.

Its plans for further growth include geographical expansion. Singapore currently accounts for just over half of its revenue, Vietnam 32 per cent and Malaysia 7 per cent. Hyphens is also present in the Philippines and Indonesia, and has a marketing and distribution network in six other markets.

In Asean, Hyphens handles specialty pharma and its own brands; outside Asean, it partners local distributors to take its own brands across Asia, the Middle East and Africa.

The company is also growing its product catalogue. For instance, the firm is preparing to launch a Ceradan-branded hand lotion sanitiser that kills germs while protecting skin from alcohol's drying effect.

And last year, it signed a five-year memorandum with the Agency for Science, Technology and Research (A*Star) to collaborate on developing skin health products with a focus on commercialisation.

Having previously worked with A*Star on specific projects, Hyphens wanted a wider-ranging MOU to allow further collaboration, said Mr Lim.

"We have market know-how - we identify the problem, what is the job to be done - but we need our (own proprietary) product, so I think partnering with A*Star is ideal for us to leverage their deep technical expertise to come up with solutions that are market-appropriate," said Mr Lim.

With net cash of S$27.1 million as at March 31 and net operating cash inflow of S$2 million in the first quarter, Hyphens is also ready to seize acquisition opportunities that could aid the company's expansion goals, he added.

Following Hyphens' Q1 results, RHB Securities has maintained its "buy" rating on the stock with a target price of S$0.27. Sales of Hyphens' Ocean Health supplements rose as consumers sought to improve their immunity, RHB said. So did sales in the medical hypermart and digital segment, with higher online order volumes and demand for personal protective equipment.

"While we see resilience in its business, we believe that the group will experience some impact in 2Q20 due to the government-mandated 'circuit breaker', and remain cautious on how the Covid-19 situation will pan out," RHB added.

It nevertheless sees Hyphens' higher revenue as "sustainable, as digitalisation will be an important part of the healthcare industry going forward".

Mr Lim, too, is proud of Hyphens' early decision to go online. He said: "In view of the current situation, digitalisation is definitely going to be a key tool. And we did not just start with Covid."

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