China Biologic Products Holdings Inc
Q4 2015 Earnings Call Transcript

Published: 26 Feb 2016

[Operator:]

Hello and welcome to China Biologic Products Inc. Fourth Quarter 2015 Earnings Conference Call. [Operator Instructions]. I would like to turn the call over to Mr. Bill Zima. Mr. Zima, please go ahead.

[Bill Zima:]

Thank you, operator. Hello, everyone and thank you for joining us on today's call. China Biologic announced its quarterly and full year financial results on February 25, 2016 after the market closed. An earnings release is now available on the Company's website. Today, you'll hear from China Biologic's Chairman and CEO, Mr. David Gao, who will start off the call with a review of recent Company developments, strategies and basic operating results, followed by the Company's Senior Vice President, Mr. Ming Yin, who will address financial results in more details. The CFO, Mr. Ming Yang, is also on the call and will be available during the Q&A session that follows prepared remarks. Before we proceed, I would like to remind you of our Safe Harbor statement. Our conference call may include forward-looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in our forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in China Biologic is included in our filings with the SEC which we encourage you to review before making any investment decision. The Company does not assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market conditions or otherwise, except as required by law. The Company will also discuss non-GAAP measures which are more thoroughly explained and reconciled to the most comparable measures reported under generally accepted accounting principles, in the Company's earnings release and filings with the SEC. You're reminded that such non-GAAP measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure and that non-GAAP measures are not uniformly defined by all companies, including those in the biopharmaceutical industry. Now, with that said, I'm pleased to present Mr. David Gao, Chairman and CEO of China Biologic Products. David, please go ahead.

[David Gao:]

Thank you, Bill. Hello, everyone and welcome to China Biologic's fourth quarter and fiscal year 2015 conference call. In 2015, we successfully executed our growth strategy and capitalized our new market opportunities enabling CBPO to deliver strong results that exceeded our raised guidance from the third quarter last year. Despite the negative impact of foreign currency translation. Total sales in 2015 were $297 million up 23% in RMB terms or 22% in US Dollar terms from prior. Well non-GAAP adjusted net income attributable to the company was over $100 million increasing by 34% in RMB terms or 32% in the US Dollar term so from the prior year. This is first time, our adjusted net income has exceeded the $100 million milestone. We continued to experience a strong market demand increased our plasma supply, optimize our product portfolio mix in the production capacity. We also benefited from our well managed product pricing following the new government pricing policy from our sales strategy to penetrate tier-one cities. Raw [ph] plasma material supply continues to be one of the most important factors driving our production growth. And we continue to make a great strides to increase our supply leading to double-digit growths in plasma collection volume for the full year in the row. In 2015, we added another branch collection facility in Shandong province. And continued to make progress on two collection facilities that are under construction in [indiscernible] province. We expect that the two new facilities to be operational in 2016. Furthermore, we also explored new opportunities to expand our plasma source with third party suppliers. In April, our Guizhou Taibang facility entered into an agreement with the third-party plasma fractionator. Pursuant to which, we purchased approximately 140 tonnes of source plasma in the plasma pastes for production. Quarterly the successful execution of our initial collaboration, we reached a secondary collaboration agreement in September with the same partner and which we were entrusted with operation of this collection station and again, excess to at least 500 additional tonnes of plasma over the next three years. This additional plasma supply has significantly enhanced the utilization rate of our Guizhou facility. And is expected to contribute significantly to our growth over the next three years. Supported by growing, in-house plasma collection capacities and additional external plasma source. We are able to significantly improve the utilization efficiency of our current manufacturing facilities. Construction on our new fractionation facility in Shandong continued to progress according to schedule and is expected to be operational in 2018. They're fully operational, we expect the new facility to boost our Shandong facilities annual fractionation capacity from 700 to 1,200 tonnes. Additionally, the [indiscernible] facility in [indiscernible] province in which we hold minority interest recently obtained its GMP certification. After two years production suspension and commenced production that we'll incrementally contributed to our profit in 2016. Our ability to closely monitor and react to pricing trends and supply shortages. Also contributed to our strong financial performance in 2015. This past June, the Chinese Government implemented a new drug pricing policy. Which will remove centralizing pricing controls? This policy created greater re-alliance a plan for provincial tendering mechanism. Which has imposed certain pricing pressure on the overall pharmaceutical industry in China? However, for plasma focused companies like CBPO the removal of the pricing created some opportunities, due to the large supply shortages for plasma products. By shifting our productions towards products is more attractive pricing. We were able to further boost our profitability. We will continue to carefully monitor market conditions and adjust our supply capabilities to capture any opportunities arising, at strong prices adjust to market forces. Finally, we continue to expand our marketing and sales teams and enhance our sales strategy focusing on tier-one cities particularly. As we believe, this very large markets remain underpenetrated from certain products. Especially for our IVIG product. Our efforts to penetrate this large markets provide a solid foundation for future IVIG growth. According to our estimates based on published government data. We had the largest IVIG market share among Chinese plasma products producers in 2015. Our ongoing efforts to educate doctors about the benefits of IVIG therapies to combat chronic diseases that are widely accepted and utilized in developed countries, remain a major focus for our marketing sales team. Beyond this operational achievements in 2015. We were honoured to be included in NASDAQ Biotechnology index in December, 2015. A testament to our strong track record. We also continued to make improvements in our shareholders structure in the liquidity, as we completed our follow-on offering with well our shareholders and use the proceeds to repay US Dollar denominated loans and the release the cash deposit used as security. In doing so, we have reduced our exposure to foreign currency risk and also made available additional cash, for further investment in our growth. As we head into 2016, we remain very optimistic on the strength of our growth strategy and our team is a proven track record of successful execution. We plan to continue to build our plasma collection with manufacturing facilities in a timely and efficient manner and closely monitor the demand in the pricing of products to capture market opportunities. We also expect our external supply of raw material plasma to continue to further boost our growth to 2016. We continue to expand our product portfolio in the enhanced years however existing products still continue to investment in R&D and strengthen our sales efforts particularly in tier-one cities. That concludes my part, I will now turn the call over to Ming Yin our Senior Vice President to review the full year financial results. Ming, please go ahead.

[Ming Yin:]

Thank you, David and hello, everyone. Before discussing our financial performance for the full year of 2015. I would like to address few P&L items for the fourth quarter. Total sales increased by 22.6% in RMB terms or 17.8% in US Dollar terms to $68.3 million in fourth quarter 2015. Income from operations increased by 14.7% to $22.6 million. Net income attributable to company increased by 26.4% to $16.3 million allowing non-GAAP adjusted net income attributable to company was $20.4 million representing an increase of 44.5% in RMB terms or 38.8% in US Dollar terms from the same period in 2014. Now let's move on to the full year 2015. Total sales increased by 23.4% in RMB terms for 21.9% in US Dollar terms to $296.5 million. Primarily driven by increase in sales volume on major plasma-based products. During 2015, human albumin and IVIG products remained our large two sales contributors as percentage of total sales. Sales from human albumin products and IVIG products account for 37.6% and 42.2% respectively in 2015. The sales volume of this two products increased by 16.6% and 27% respectively and average price increased by approximately 1.3% and 1.2% respectively in RMB terms in 2015 compared to the prior year. Cost of sales was $106.5 million in 2015 compared to $80 million in 2014. Cost of our sales a percent of total sales was 35.9% compared to 32.9% in 2014. The increase in cost of sales was mainly due to increased sales volume and increase plasma collection cost and the higher cost made from purchased raw [ph] plasma. Gross profit increased by 16.4% to $190 million in 2015. Gross margin was 64.1% in 2015 compared to 67.1% in 2014. Selling expenses in 2015 decreased by 6.5% to $10 million and as a percentage of total sales were 3.4% down from 4.4% in 2014. Primarily due to the decrease selling expenses placenta polypeptide. G&A expenses increased by 29% to $41.4 million in 2015 mainly due to the increase in share-based compensation expenses and asset disposal losses. Research and development expenses in 2015 were $6 million compared to $4.2 million in 2014. During 2015 and 2014, the company received the government grants totalling $1.2 million and $2.1 million respectively and recognized them as a reduction of research and development expenses. Excluding this impact research and development expenses increased by $0.9 million in 2015 from 2014 and this expenses are percentage of total sales decreased from 2.6% to 2.4%. Income from operations was $132.6 million representing an increase of 19.2% over the prior year. Operating margin was 44.7% in 2015 compared to 45.7% in 2014. Net income attributable to company increased by 25.5% to $89 million in 2015. Net margin was 30% and 29.1% in 2015 and 2014 respectively. Fully diluted net income per share was $3.27 compared to $2.71 in 2014. Non-GAAP adjusted net income attributable to the company was $101 million or $3.68 per diluted share in 2015. Representing an increase of 34% in RMB terms for 32.4% in US Dollar terms over the prior year. Long GAAP adjusted net income and diluted earnings per share excluded $11.1 million of non-cash employee share-based compensation expenses. Now I would like to address the select balance sheet and cash flow items. We have $144.9 million in cash and cash equivalents at end of 2015, primarily consist of cash on hand and demand deposits and had $38 million in time deposits. For 2015, net cash provided by operating activities was $109.4 million. The increase in net cash provided by operating activities was primarily in line with our increase in net income. Partially offset by increase in accounts receivable and inventories. Accounts receivables increased by $7.1 million during 2015 primarily due to the extended credit terms granted to certain distributors for human rabies immunoglobulin products. It's including the impact of this rabies immunoglobulin distributors accounts receivables turnover days for plasma products remained stable in 2015 compared with 2014. Inventory increased by $32.1 million in 2015 primarily due to the increase of plasma products derived from the source plasma and the plasma paste, purchased from Xinjiang Deyuan. Net cash used in investing activities was $89.8 million, which included $52.2 million payment for acquisition of property, land and equipment intangible assets and land use rights and $40.7 million payment of long-term loan to Xinjiang Deyuan, Guizhou Taibang subsidiary. Partially, offset by $2.5 million in government grants relate to property, plant and equipment. Net cash provided by financing activities in 2015 was $51.6 million mainly consisted of proceeds of $80.6 million or as from our offering our common stock in June, 2015. Proceeds of $63.2 million from maturity deposits used as security for bank loans proceeds of $15.8 million from short-term bank loan and proceeds of $7.7 million from stock options exercise, partially offset by repayment of bank loan totalling $113.5 and dividend payment of $3.7 million held in escrow by a trial court in connection with disputes with minority shareholder of Guizhou Taibang. Our working capital as of December 31, 2015 was $297.5 million and our current ratio is 5.2%. Total shareholders' equity was $467 million as of December 31, 2015 compared with $275.3 million as of December 31, 2014. Turning to our 2016 guidance, we expect total sales for 2016 to grow 21% to 23% in RMB terms and expect non-GAAP adjusted net income to grow 24% to 26% in RMB terms over 2015 financial results. This guidance does not affect any potential foreign currency translation impact. We adopted exchange rates of approximately RMB6.21 equals to $1 based on weighted average quarterly exchange rate in 2015. In translating 2015 financial results and expect the total sales and non-GAAP adjusted net income in US Dollar trends in 2016 were adversely affected by foreign currency translation impact. This guidance assumes only the organic gross and excludes acquisition and necessarily assumes no significant and reverse [ph] price change during 2016. This guidance reflects company's current and preliminary views, which are subject to change, that concludes our prepared remarks. We will now take questions. Operator, we're now ready to take some questions.

[Operator:]

Thank you. We will now begin the question-and-answer session. [Operator Instructions] and the first question comes from the Jack Hu with Deutsche Bank.

[Jack Hu:]

Actually I've two questions for now. First, can you maybe give us some color on the growth trend for IVIG and as actually IVIG product, you disclosed in the financial report. We see the growth rate actually fluctuate a little bit, so how should we think of means, going forward in 2016, maybe even in 2017. The second question is, a question regarding your and inventory days. Can you maybe give us another why our inventory days is above 400 days and actually, it's slightly higher than one of the competitive actually [indiscernible] but similar with Shanghai rush, I will - those are my two questions. Thanks.

[Ming Yin:]

Hi Jack, let me try to answer your first question. IVIG growth with the prospects. Compared with 2014 and IVIG sales were in 2015 incurred accelerated growth, as compared to albumin. There are few particular special factors driven this high IVIG growth. Number one, we had a relatively high comparison based in third quarter 2014, after major upgrade for 30 back to normal operation. With actual volume, start to delivery to the market in the summer of 2014. Rule number two, we used the pretty much all of the previous reserve that IVIG pays in the first half of 2015 in pursuing the rapid market penetrating to the tier-one cities. The third reason is, portions of purchase plasma 143 tonne plasma purchased from Xinjiang are only the IVIG paste, which we can only process into the IVIG products. The last reason, we have the contributor to the higher growth rate in the 2014 for IVIG is because we switch the production of regular IVIG to certain high premium products, especially the tetanus [ph] in the government, when we foresaw the rising price in the tetanus products. Especially in the last quarter of 2014, you can observe we own only about 3% of sales concentration from high premium products. But our sales concentration derived from the high premium products went up to approximately 9% in the first quarter of 2015. Since the regular IVIG products and high premium products are mutually exclusive, we can only produce one product at one time. So, in other words, if we maintain the 2014 sales volume for the high premium products our IVIG growth will be comparable in the second quarter of 2015. That's a reason, we believe drive the high IVIG growth in 2015. But if we look at 2015, we had only 17% volume growth for the albumin, while the IVIG, we achieved 27% growth for the reason I just explained. And looking to the 2016, we now expect the albumin growth rate will outpaced IVIG, particularly as we expect the high premium products markets to continue to be strong in 2016. We will allocate our capacity to produce high portion of high premium products instead of regular IVIG. Therefore, sales concentration from high premium in the global products will further increase. We believe this production arrangement will help us further optimize our product mix to achieve the highest profit contribution, that's my answer to your first question. To the second question regarding the accounts receivable and inventory. Let me - trying to address the question for the inventory, first. Yes, you're right our inventory turnover days might appear to be little longer than the peer company in China. But we believe there is some special reason to cause this kind of higher turnover rates. We have a comparatively higher inventory turnover days than certain Asian company you just mentioned. But if we're looking to the two subsidiary we have, the operating subsidiary Guizhou Taibang and Shandong Taibang, the situation is quite different. The Shandong Taibang, the inventory turnover days remain very stable in the past few years. So the higher inventory total days is mainly caused by the Guizhou Taibang's certain special events during the past few years. The Guizhou Taibang experienced production suspension from 2013 to 2014 early upgrade to meet the new GMP standards, while the plasma collection continues in the normal speed. So the overall, the inventory turnover days in 2013 and 2014 has been increased substantially at Guizhou level and all Guizhou facilities specifically inventory turnover days for the last quarter 2013 even reached 700 days, so that's the reason the overall, the CBPO's inventory turnover days was being drawing up because of this reason. And also, if we look at 2015 and the Guizhou Taibang purchased 143 tonnes plasma from the Xinjiang and in the end of 2015 majority of that purchased plasma is still in the inventory. So that's why, our inventory turnover days in 2015 was higher. And if we look at in the year in 2012 and 2011 is because there's like five collection center was shut down by the Guizhou local government in 2011, forcing us to slow down the production pace for the all Guizhou facility. So that's why the Guizhou facilities inventory days was being impact by those special events during the last past five years. But on the other hand, inventory turnover days at our Shandong facility has been stable and in the last few years. And one thing, we want to address is. If you look at on the end of 2015, our inventory turnover days has improved and our overall turnover days has dropped below 400 days. And for the accounts receivable at end of 2015, we have balance of $25.1 million compared to $34.4 million as of September 30, 2015 and $19.4 million as of December 31, 2014. The decrease in the accounts receivable is because we have recovered majority portion of those accounts, the credit terms blended to the CDC customers and to the hospital customers and so then distributors. And the reason why we have been inexperienced of the large accounts receivable balance and is because the strategy in penetrating in the tier-one cities and also because we have been pursuing the direct sales. I can share with you some statistics, in 2015 particularly we have 18, the hospital clients with average annual sales, the dollar amount which over RMB10 million and in our Shandong facility particularly, approximately 50% of the revenue was derived from the AAA hospitals sales. So in other words, the high portion directed the sales to the hospitals is the reason to further increase our accounts receivable balance, but if you look out on the average accounts receivable turnover days in 2015 and 2014 remain stable 27 days. Jack, hopefully I answered your question.

[Jack Hu:]

Thank you.

[Operator:]

Thank you. And the next question comes from Jessica Li with Bank of America.

[Jessica Li:]

I have two questions. First is, one the gross margin trends. So it seems that your gross margin in fourth quarter declined quite a bit versus previous quarters. So could you please just help us understand why the reduction? And how should we think about the gross margin trend going forward in future quarters as well in future years. The second question is on your pipeline, so basically would appreciate if you could provide us with more color on the progress of your pipeline. We noticed that you, the application of the IVIG was withdrawn, so any plans for resubmission? What's the impact on the future launch time, if you were to do that. And you also added two new candidates in your pipelines. If you could just provide a little bit more color on these two drug candidates and that will be very helpful? Thank you.

[Ming Yin:]

Hi, Jess. The first question regarding the gross margin decline in the fourth quarter 2015, we have about 400 basis point, that deduction, the decline in the gross margin. Our gross margin was impacted by the combination of several factors including the cost of purchased plasma and increased cost of internal plasma and all the centers and the products pricing and also the impact by the product mix. Particularly in the last quarter 2015, the drop of the gross margin was little bit larger than our prior guidance during the third quarter's call. We give the guidance about 200 to 300 basis point decrease. The reason is because the higher the sales concentration generated from the external purchased plasma. Without the impact was the purchase high cost plasma our gross margin in the last quarter 2015 will be close to 65%. During the last quarter of 2015, we have about 80% of Guizhou Taibang sales will generate by external high cost plasma. Which we purchased in during the already in 2015. And also because of purchase plasma in the early 2015, we have to prioritize process of those plasma. So in the period between the April to late summer all Guizhou facility has dedicated all the process and capacity to the Shandong purchased plasma only according with SFDA's requirements on separately processing the internal and external plasma requirements. So after we complete the processing all the Xinjiang purchased plasma, we commenced processing our own internal plasma in the third quarter. However, due to certain batch approval delay in the last quarter of 2015, we have only the less than expected the finished products available generally from our internal plasma. So consequently the gross margin impact during the 2015 fourth quarter was larger than our prior estimate. It's worth to mention, although the purchase plasma cost of is higher than our internal plasma the cost, but the purchase of plasma result in the greater, utilization rate at our Guizhou facility and provide a careless [ph] sales growth. During 2015 because of this purchase, we have been upward around the revised around guidance twice in 2015. And as operating expense will not change much with greater production sales. We incurred substantial operating cost saving at this facility. It's including certain of the special items such compensation expenses and certain non-operating and non-recurring items. Our total operating expenses as percentage of sales actually decreased from the base point in fourth quarter, 2015 and our Guizhou Taibang itself, the operating expenses maintained at the same level as 2014. For 2016, our view for the gross margins will be impact by the sales concentration generate by the external plasma cost and the ability our own internal, the product generate at our own internal plasma. Just update for the 140 tonnes of plasma the purchase from Xinjiang about 40% has been sold in 2015. So we expect the remaining 60% will be sold during the first half 2016 and therefore, the gross margin will be in the range of 58% to 60% for the first quarter of 2016 and assuming no other factors negative [ph] influence our gross margin. But for the overall to 2016 the gross margin our view will be in the range between 58% to 62%. Regarding the question for the withdrawal, for the Hep B product. Actually, we voluntarily withdrawn this registration application from SFDA for this product, following the self-inspection [ph] and the verification on the [indiscernible] trial was mandated by the SFDA in the circular issue in the July, 2015 covering applicants over 1,600 pending drugs registration applications. As probably disclosed by SFDA, the aggregate withdrawal ratio for the drug application has exceeded 80%. Prior to the withdrawal, we had to conclude the clinical study and obtained permission to proceed the on-site production, inspection for this product in October, 2015. So this withdraw is in compliance with the SFDA's new clinical regulation, which requires more stringent data provided to hospital conducting the clinical trials. Given the declined numbers of liver transplant and transplant service in China, we do not expect to withdraw to have a materially adversely affect operating results going forward. But we wish to further communicate with SFDA and also the hospital conduction this clinical study to evaluate the timeline and the suitability for resubmitting this registration application. Yes in 2015 annual report, you have observed that we have a few new products in added to the pipeline including the human cytomegalovirus immunoglobulin factor IX and human fibrin sealant. Although the majority of those pipeline candidates I expect to commence clinical trials in 2017 or later. So we believe those new drug development can further improve our plasma cultivation efficiency and plasma economics. Specifically factor IX is main treatment for the B type Hemophilia and human fibrin sealant also cause of fibrin wound, is an unique and hemostatic or adhesive in materials widely used in surgical operations to control bleeding and speed up the wound healing. It can seal all the body organs and cover holes made by the surgeon. So we believe this will be a very good complementary product to our entire hemostatic product group. It differs all the fibrin ranging products, as the latter is used as through the intravenous injection to correct the surgeon - the bleeding due to the under supply of human derived fibrin sealant product. So in the market, the complementary products are animal derived products and which, we'll use this product has very promising, the market potential with the factor IX and human fibrin sealant added to the hemostatic drugs franchise, we can further broaden our commodity and enhance our leadership to serving in the certain bleeding area. Jessica, hopefully my answers are satisfactory for you.

[Jessica Li:]

Yes, that's great. But just quickly have you, estimated the market potential for factor in line in fibrin sealant.

[Ming Yin:]

I mean the market potential I think, the factor IX, will be the first to market drug in China. There is no factor IX, in China at all. So we based on the disease occurrence weight, we believe market potential for this products probably at least 20% of factor XIII's market because of the fact B type Hemophilia patient for the fibrin sealant. This product and there's a peer company has this product and we believe this product has become the star products for the last few years in their deliver higher sales growth and also profit. So we believe, this product also have a large the market potential.

[Jessica Li:]

Well it's great. Thank you, so much.

[Operator:]

Thank you. And the next question comes from Yolanda Hu with Morgan Stanley.

[Yolanda Hu:]

I have three questions. First, on your 2016 guidance, can you help us break down into volume and ASP growth? What's the volume growth in ASP increase have you received for the guidance? Because recently some of your peers have been very aggressive on potentially it's increase, can you share with us your view towards 2016? Second, your albumin sales growth in fourth quarter was 4%. Can you explain the reason for the slowdown? And what's your expectation on the sales growth of multinationals in 2016, after relatively slow growth in 2015. Lastly, we noted that several provincial government has many new plasma centers recently such as in Guangdong. Do you expect the overall plasma sections volume to grow directly in the next few years? Also, the two plasma centers in [indiscernible] were previously expected to operation in early 2016, so is the timeline little bit delayed. What's your plan in adding more incentives in other product exists? Thank you.

[Ming Yin:]

Okay, so the question regarding the ASP and in our guidance. So, I think we want to actually clarify certain - they're appearing to be, certain Asian companies made a statement, they will increase the price and by certain percentage. We just want to give the general guideline, what we observe and what the tendering process and the progress has been, the implement by the provincial government so far. Although NDRC lift the price, the drug pricing in the June last year. The hospital procurement price for plasma farms [ph] still follow the provincial drug tendering regulation. And the tendering procedures vary a lot by each province and for each product as well. And we do observe certain price hikes at retail on the break marketed level, but as majority of our products going to directly to hospital channel. So the distributors our ex-factory price are subject to the tendering regulation. The ASP growth in RMB terms were our major products especially for albumin, IVIG improved slightly during the fourth quarter. For certain high premium products such as tetanus immunoglobulin the price increased significantly. The reason, why it started in high premium products have experienced larger magnitude as the increase, while the price among the other major products such as albumin IVIG price has been stable. Is because most of the problems have different priority timetables for implementing different drugs tenderings. Among our products tetanus in the global factor VIII and PCC are including in the so-called life savings essential drug list in most Chinese province. For which, drug procurements was prioritized and hospitals have allowed to directly purchase drugs from the manufacturers through the online procurement process. Due to the severe shortage situation. Tendering price for tetanus immunoglobulin reflects on that demand. But for products like albumin, IVIG most of province adopt the regular tendering process and it requires manufacturer to compete with suppliers in both quantity and price. As of this model, most province have to not complete a new round of tendering, same for price anyone [ph] was left. And our transaction is still forwarding the existing the tendering or price guideline issued by the government. And our recent price increase of major plasma products including albumin and IVIG mainly results from the increase of our ex-factory price to distributors, which are still within the prior government tendering price guidelines. So to answer your question, all of you for the short-term. We continue to expect a stable slightly ASP increase for major products such as albumin, IVIG. Given the delay of the provincial tendering implementation timeline. So our view of the tendering might be completed by the mid of 2016 hopefully. So by that time, we'll probably have a better visibility for the price increase for albumin, IVIG. But for our model, for our guidance we're building the current preventing price level. And for the volume for 2016, as you mentioned for the last quarter of 2015, we do actually - we only had, we have a less the gross generally from albumin compared with IVIG. The reason I just answer in the first question to because IVIG has some inventories and we have prioritized to process all those inventories. So going forward in 2016, we believe Dollar IVIG growth will be lower than albumin. So particularly in the first quarter or in 2016, we believe our albumin the growth rate will be outpace the IVIG. But in general, the albumin and IVIG growth rate will be in line with the plasma, putting the production or reflect the plasma collection growth. So for the second question, for the albumin. We do actually observe the certain, overall the market growth from the supplier perspective. So for - I just want to give a quick update for the latest batch pool of data. Overall the market size for albumin in China increased by about 14% compared to 2014 percent. Domestically produce our increased 16% outperform the in-flows products 11% growth, but in-flow albumin's still count the day percent of all those supply for the whole year. So that's for the albumin, but for the collection centers. We have a two station was announced in 2014 in Harbin. The status for two new stations, as one of the station we already finished construction facility have all the staff were ready, the equipment was in place and was waiting for the government inspection and another station is expect to start to construct in the first quarter of 2016. So the operation for those two stations will be expected in 2016. The reason for the delay is because Harbin province has not proven any new plasma station in the past 10 years. So the provincial municipal and the country government are very cautious in each pool of process. So within the each, the process they wanted involving in the process and so the delay is because of provincial government's issue. And the regarding your question for the recent new addition station in Guangdong province, yes we do observe certain peer company have been proved to establish new plasma station in 2015. There are about more than 10 new plasma stations opened and also seven collection center approved in China. Majority of the new station improved was in the Guangdong province. We were convinced that our plasma development strategy will remain focused on improving our existing collection center, collection efficiency and building centers in the region that fitting to our criteria. For instance, we have been outperforming the national collection average in the last four years and our per center collection efficiency achieved the top ranking in China. We will grade the total plasma collection centers are most important than growth driver to deliver the high growth over collection growth. To the estimate total plasma collections were only about 9% during 2015, while the number of plasma collection centers grew 12%. So we observed the limited collection [indiscernible] in Guangdong province particularly, so that might translate into limit potential collection growth in the future. As I just said earlier, we will follow our oldest center locations collection part to build new centres. Our [indiscernible] including regional total population and from the revenues percentage, economic development condition and also the prior collection history. We're also actively pursuing various strategy to broaden our collection franchise. We do not have anything further to share involved any specific plans regarding our plasma development plan. Since various level government pool resolving significant and some uncertainties.

[Yolanda Hu:]

Thank you. That was helpful.

[Operator:]

Thank you and the next question comes from Iris Wang with Credit Suisse.

[Grace Chau:]

This is Grace. Asking question on behalf of Alex. We have two questions. The first one is, in the past years since your non-GAAP net profit growth has been consistent higher than the top line growth. However in your guidance for the year 2016, your net profit growth it seems quite similar with the top line growth. So we want to ask, what is the reason behind? And our, second question is about the T-cap. I remember in the last year, you guided that $70 million CapEx for the year 2015, but I observed the CapEx turnover less than $60 million. Is it because the Harbin [ph] plasma construction being delayed and what is your guidance on the CapEx for the year 2016 and also 2017? Yes, that is my question.

[Ming Yin:]

So the first, regarding your question regarding the slow, the net income growth rate compared with the 2014 is because we purchased the 19% minority shareholder interest in August, 2014 which decreased minority interest and contributed additional $5 million into our net income during 2015, compared with 2014. So excluding this impact, non-GAAP net income in 2015 will grow about the similar. The ranges we provided for 2016 guidance. So that's my answer for your first question. So second question regarding the CapEx, yes we do actually incur certain, the savings in the CapEx in 2015. So it's because the first - the CapEx is not because of the Harbin [ph] problem stations delay. The total CapEx was estimated mainly for our new fractionation plan in Shandong. The actual CapEx in 2015 is less than our estimation is mainly due to the more favorable terms negotiated with the supplier. Especially equipment suppliers for the instalment payment structure. So that's why we incurred certain savings. For the guidance for the 2016, we expect about another RMB400 million for 2016 mainly for the building the new fractionation. Also the new fractionation facility in Shandong and the guidance for 2017 will be between RMB100 million to RMB300 million. Grace, hopefully that answers your questions.

[Grace Chau:]

Great. Thanks very much, Ming.

[Operator:]

Thank you. And this does conclude the question-and-answer session, so at this time I would like to turn the call back over to management for any closing comments.

[Ming Yin:]

Thank you all for participation and ongoing support for China Biologic. We look forward to providing you with updates on our business in the weeks, almost ahead. Have a good day.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.