PharmaZen plans for expansion

Biotechnology company PharmaZen will push ahead with manufacturing site expansion plans after an encouraging half-year result.

In the six months to June 30, the company recorded a net profit of $275,000, up from $216,000 in the 2011 half year.

Turnover was $3.47 million compared with $3.705 million in the prior corresponding period.

PharmaZen chief executive Craig McIntosh said the result was pleasing given the difficult trading conditions with the global economy, challenging exchange rates and significant increases to insurance and energy costs.

"To be able to post a 25 per cent increase in profit given the current trading conditions, is a very good result for us," McIntosh said.

"The increase has come from improved margins, with the slightly lower turnover reflecting the fact we have been able to drop some of the commodity lines as demand for our proprietary products continues to strengthen.".

The company has a pragmatic view in terms of the future, holding no expectation for any significant improvement in the global economy or respite from the New Zealand dollar.

"We have been successful in getting the business to the point where it is profitable, and continues to improve its profitability, in spite of the economic environment. We have the base in place now where we can push ahead with the site expansion and accelerate our research and development programmes."

McIntosh said a consent application had been lodged with Christchurch City Council and work is expected to commence on stage one of the Christchurch developments at Port Hills Rd next month.

"Stage one will see us invest around $1.5million in site development and new building to address current bottlenecks. More importantly, it is preparing the infrastructure in such a way as to accommodate further incremental expansion at an accelerated rate," he said.

PharmaZen's trading division, Waitaki Biosciences, manufactures a collection of powder products extracted from animal and marine sources. The range includes green-lipped mussel, shark cartilage, natural calcium and Chondroitin Sulphate.

The products are used by other companies as a base for health products, mainly in the areas of bone health, joint health, immune and digestive support as well as hair care and cosmetic applications.

Pharmazen shares, which trade on the Unlisted platform, last changed hands at 4.5 cents.