Active pharmaceutical ingredient (API) manufacturer YUNG ZIP CHEMICAL reported lower revenue and gross margin in the first half of the year, resulting in a net loss of NT$0.19 per share. CEO Yu-Ju Li attributed the decline to early stockpiling of APIs by new drug clients in Phase 3 clinical trials and inventory adjustments by certain customers. He expects some orders to be replenished in the second half, offering a potential revenue rebound. Regarding tariff impacts, Li noted that U.S. tariff policies have not only made American buyers more cautious, but have also prompted some Chinese suppliers to seek other markets, increasing short-term competitive pressure globally.
At an online investor conference on the 16th, Li outlined the company’s R&D strategy, which focuses on “economical processes and sustainability.” YUNG ZIP CHEMICAL continues to enhance production efficiency, strengthen self-sufficiency in intermediates to mitigate supply risks from China and India, and implement low-carbon green processes in line with ESG principles, balancing cost and compliance. Product selection prioritizes high-value drugs while avoiding large-volume, highly competitive markets. The company leverages multi-generation product portfolios and existing GMP certifications to enhance client trust and adoption efficiency.
Consolidated revenue in H1 was NT$256 million, down 21% from the same period last year. The decline was mainly due to early stockpiling of APIs for Phase 3 clinical trials by long-term new drug clients, along with customer inventory adjustments, slightly reducing first-half orders. However, some delayed orders are expected to be fulfilled in the second half, potentially boosting overall performance.
Gross margin fell from 35% last year to 23%, primarily due to a lower proportion of high-margin new drug shipments, compounded by foreign exchange losses. This resulted in an operating loss and a net loss after tax of NT$8.14 million, or NT$0.19 per share.
Li emphasized that the recent U.S. tariff changes not only affected the Americas supply chain but also indirectly influenced global market dynamics. With tariff policies still uncertain in scope and direction, clients are ordering more cautiously, reducing both timing and volume. The U.S.-China trade conflict has further prompted some Chinese suppliers, unable to sell in China, to redirect shipments to other regions, intensifying price and order competition. The company has closely communicated these impacts with clients, though some figures remain under negotiation. Overall, U.S. market fluctuations are spilling over to other markets, raising short-term competitive pressure.
In the first half, YUNG ZIP CHEMICAL’s sales in the Americas declined around 7%, mainly due to cautious purchasing following the April U.S. tariff policy changes. The company maintains regular communication with major U.S. clients, ensuring mutual understanding of market conditions, and reports that business relationships remain stable without significant operational impact.
By product category, excipients saw a slight 5% decline due to short-term shipment adjustments. Analgesics declined more significantly, as clients had stocked up last year, temporarily reducing purchasing demand, though procurement is expected to resume in 2025, boosting sales. Contract manufacturing and specialty chemical businesses fell around 5%, also affected by clients’ clinical stage progress, but discussions on overseas collaborations are underway, with potential for deeper cooperation. Additionally, the company is negotiating other partnership agreements, some already in contract stage.
Antimicrobial products performed strongly, with year-on-year growth of approximately 29%, driven by demand in Northeast Asia. Local clients are actively expanding overseas markets, increasing end-product purchases. This region is expected to sustain growth over the next two to three years, providing an important driver for the company’s sales.
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