JT1 8.2016This article by Jennifer Tan (left, Director, Research & Products,  Equities & Fixed Income, at the Singapore Exchange) was first published in SGX's kopi-C: the Company brew series. The article is republished with permission.

Healthcare veteran Lim See Wah's rejection from medical school more than three decades ago turned out to be a significant pivot in his entrepreneurial journey. 

Why the focus on dermatology?

Lim See Wah HyphensPharma

Atopic dermatitis and eczema is a multi-billion-dollar market, and set to triple in size over the next decade. With rapid urbanisation in the region, allergic responses will continue and increase in frequency."

-- Lim See Wah (photo),
CEO, Hyphens Pharma.

Settling instead for a place in the Department of Pharmacy at the National University of Singapore's Faculty of Science, Lim discovered a passion for pharmaceuticals in the ensuing years.

"I grew up wanting to be a doctor. But pharmacy turned out to be an exciting and inspiring discipline," he recalled.

"I realised that without drugs, medicine would not be what it is today. The advancement in pharmaceuticals is a true companion to the advancement of healthcare," he noted.

"For example, for a successful surgery, you need both skilled surgeons and drugs - without the anaesthetic, you can't carry out the procedure."


After graduating with a Bachelor of Science in Pharmacy with Honours, the aspiring drug innovator began his career as a regional product manager in French-owned pharmaceuticals firm Hyphens Pharma in Singapore.

"What struck me was that Asia has an enormous and unrealised demand for healthcare services. Everywhere I travelled - Vietnam, Cambodia, Indonesia, the Philippines - these markets had huge populations, but quality medical care was either inaccessible, unavailable, or clearly lagging," Lim said.

"The second issue was that Asia was not the origin of innovation in healthcare - the region was a receiving point, with most of the products coming from other parts of the world."

Lim was gripped by this paradox: While the region has a burgeoning population and multi-year growth prospects in patient demand, there is little or no representation in terms of innovation for healthcare products.

"It got me thinking seriously about how to plug the gap," he added.

The opportunity to realise his vision emerged in 1998 when he invested in a home-grown, family-owned business - Pan-Malayan Pharmaceuticals - and became its Managing Director.

"At the time, Pan-Malayan was a traditional, wholesale business focused purely on the local market. It was an interesting platform that had the potential to be transformed into a healthcare business serving the needs of ASEAN."

Transformation Journey

Stock price 

21 c

52-week range

16-24 c

Market cap

S$63 m

PE (ttm)

12.5

Dividend yield 

2.6%

Return on equity

18.7%

Shares outstanding

300 m

Source: Bloomberg, SGX

In 2001, Lim began negotiations with former employer Hyphens Pharma, which was keen to exit its Singapore operations, and successfully acquired the company a year later.

"This acquisition opened up a whole new world of possibilities - I was able to build on what Hyphens Pharma already had, and add building blocks by venturing beyond Singapore into the region," he said.

"This was what I had been waiting for - the chance to fly the flag for Asia in the pharmaceutical industry."

And so began Hyphens Pharma's metamorphosis over the next few years, with Lim kick-starting operations in Malaysia, Indonesia and the Philippines.

"We were steadfast in seeking market opportunities, and these opportunities were easy to spot - improving economic growth rates, increasing consumption power, and higher demand for better quality healthcare in the region," he noted.

The company positioned itself to deliver on that demand by building strong regulatory capabilities as well as relevant market channels. It also chalked up more than 300 product registrations, ranging from medical devices to food supplements and pharmaceuticals.

In 2011, the company rolled out its first proprietary dermatological brand, Ceradan.

"By then, the business had changed significantly - we had put in place a pan-ASEAN network, with access to a sizeable market and a strong portfolio of products," Lim said.

"With the launch of our first in-house brand Ceradan, the growth trajectory of the company also shifted - we moved from selling third-party products to creating our own intellectual property," he added.

"That's how we came into our own." 

Even after that, Lim did not sit still. Five years later, apart from acquiring home-grown health and nutritional supplements company Ocean Health, Hyphens Pharma also inked an agreement with Singapore's Agency for Science, Technology and Research (A*STAR) to become strategic dialogue partners in the field of dermatology. 

Since then, both parties have conducted various research and development (R&D) work, including product formulation, technology transfer and licensing, stability studies, as well as in vitro and in vivo studies in the field of skin health. The focus on R&D for dermatologicals and cosmeceuticals that target eczema, acne, and pigmentation disorders continues.

In 2017, Hyphen Pharma filed a patent in the UK for its next-generation Ceradan range of products - Ceradan Advanced - for the management of atopic dermatitis.

Expanding Footprint

With the launch of our first in-house brand Ceradan, the growth trajectory of the company also shifted - we moved from selling third-party products to creating our own intellectual property. That's how we came into our own.”

-- Lim See Wah,
CEO, Hyphens Pharma.

The following year, in May 2018, Hyphens Pharma listed on the Catalist board of Singapore Exchange. 

The Group now has three main business segments: Specialty Pharma Principals, Proprietary Brands and Medical Hypermart & Digital. The first division sells a range of specialty pharmaceutical products in a number of ASEAN countries through exclusive distributorship or licensing and supply agreements with brand principals, mostly from the US and Europe.

The second focuses on development and sale of its own proprietary range of dermatological products under the Ceradan and TDF brands, and health supplement products under the Ocean Health brand. 

Finally, the Group is also the wholesaler of pharmaceuticals and medical supplies to healthcare professionals, healthcare institutions and retail pharmacies via its business-to-business online platform. This virtual hypermart - the city-state's first - boasts more than 3,000 customers and 4,000 inventory items.

Looking ahead, Hyphens Pharma aims to deepen its footprint in ASEAN, and has begun building an international presence by appointing distributors for proprietary brands in the Middle East and South Asia.

The Group plans to roll out more products this year, including those with patented or patent pending technologies, to further strengthen its dermatology business. It will also enhance its product offerings through licensing and research collaborations, and boost its digital health platform by partnering third-parties with relevant know-how. 

"While we've built up a good presence today, we're constantly on the lookout for M&A opportunities, as well as strategic alliances and joint ventures that will add synergies to our existing business," Lim said.

"In the area of product acquisitions, we'll zero in on dermo-cosmetic and health supplement products, which may include novel products in late stages of development, or a finished product already available in the market. We also want to enhance our capabilities, which could include the acquisition of customers in a market or therapeutic field that we're not presently in."

Why the focus on dermatology? "Atopic dermatitis and eczema is a multi-billion-dollar market, and set to triple in size over the next decade," he pointed out. "With rapid urbanisation in the region, allergic responses will continue and increase in frequency."

According to a 2017 report by Future Market Insights, the size of the global atopic dermatitis market is forecast to quadruple to US$24 billion in 2027 from US$5.8 billion in 2016, while that in ASEAN is projected to triple over the same period.

And so far, prospects in the region appear solid - ASEAN's population of more than 640 million represents the third-most populous region in the world, after South Asia and East Asia. The 10-member regional bloc is also the world's sixth-largest economy, with gross domestic product of nearly US$3 trillion. It is widely anticipated to become the fourth-largest economy by 2030, after the US, China and the EU.

According to a 2018 White Paper by Solidance, total healthcare spending for six major ASEAN economies - Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand - is seen rising to US$740 billion in 2025, from US$420 billion in 2017.

The Cutting-Edge

Despite the bright outlook, challenges abound. This is why building scale is a priority - to help the Group combat rising cost pressures and increasing operational complexities, so it can remain relevant in the market, Lim said. 

Partnering clinical research agencies like A*STAR and institutions of higher learning is also critical in mitigating the risks and costs of the Group's R&D efforts. "The cost of regulatory compliance - in terms of increased stringency in controls - keeps going up," he added.

Competitive pressures are also on the rise. "ASEAN as a growth market can be a double-edged sword, since it's always attracting new players into the industry."

That's why Hyphens Pharma is obsessed with innovation. "This is one thing that propels us up the value chain and differentiates us from competitors. Our listing on SGX also helps us in this regard - we stand out because very few of our peers are publicly listed."

As a result, the 52-year-old is always focused on planning, strategising and execution - activities which sometimes keep him up till the wee hours.

"It's not just worry, but also excitement, that keeps me awake at night," Lim admitted with a grin.

"We've got a really cool platform, and our business is at a crossroads - this is a thrilling stage in our journey," he said. "There's just so much potential in Asia, and the time is now - this is the story of the millennium. The question is how do we manage overall risk and yet be able to capture the opportunities out there."

Another key driving force for the father of two boys, aged 15 and 19, and a girl, 21, is improving the quality of life for patients. "I am first and foremost, a pharmacist," he said. 

"What inspires me is helping patients - alleviating their suffering, as well as providing them with the tools to live long and healthy lives." 

Outlook

    • Hyphens Pharma remains focused on further cementing its leadership position in Singapore and deepening its presence in ASEAN. With its established footprint, the Group expects its business momentum to continue.  
    • Following the launches of new dermatological products in 2018, more launches are planned this year, including products with patented or patent pending technologies, and thus the skin health business is anticipated to grow.  
    • The Group will continue to enhance its product offerings through licensing and research collaborations, and plans to strengthen its manpower capital to support its expansion plans towards establishing an international footprint, and enhancing its marketing development in countries that it is currently operating in.  
    • The Group will continue to explore further potential opportunities within the digital business segment.


Hyphens Pharma International Ltd

Hyphens Pharma is one of Singapore's leading specialty pharmaceutical and consumer healthcare groups with a diverse footprint in ASEAN. The Group has a direct presence in Singapore, Indonesia, Malaysia, the Philippines and Vietnam, and is supplemented by a marketing and distribution network covering six  jurisdictions, namely, Bangladesh, Brunei, Cambodia, Hong Kong, Myanmar and Oman. The Group's core business comprises Specialty Pharma Principals, Proprietary Brands, and Medical Hypermart and Digital. It markets and sells a range of specialty pharmaceutical products in selected ASEAN countries through exclusive distributorship or licensing and supply agreements with brand principals, mainly from Europe and the United States. It also develops, markets and sells its own proprietary range of dermatological products and health supplements, as well as operates a medical hypermart supplying pharmaceutical products and medical supplies to healthcare professionals, healthcare institutions and retail pharmacies.

The company website is: www.hyphens.com.sg

Click here for the company's StockFacts page.

For the three months and full year ended 31 December 2018 financial results, click here.

About kopi-C: the Company brew

kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.

For previous editions of kopi-C: the Company brew, please click here.  

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