(Yicai Global) Aug. 25 -- North China Pharmaceutical’s shares rose today, ending a six-day decline that saw the stock lose nearly 20 percent of its value, despite the drugmaker reporting a 99 percent plunge in first-half earnings as it returned to profit in the second quarter.

North China Pharmaceutical [SHA: 600812] gained 2.3 percent to finish at CNY9.07 (USD1.40). The broader Shanghai market edged up 0.7 percent.

Net profit was CNY1 million (USD154,400) in the six months ended June 30 , the Shijiazhuang, Hebei province-based company said in an earnings report released late yesterday. But the firm made a second-quarter profit after a CNY57.2 million (USD8.8 million) loss in the first three months of the year.

North China Pharma did not give a direct explanation for the sharp drop in first-half profit but said it faced a complex and volatile development environment and the unexpected recurrence of Covid-19 in China in the period.

It also did not provide any reasons for the turnaround in performance in the second quarter and did not give any earnings guidance.

First-half revenue fell 5.7 percent to CNY5.6 billion (USD864.7 million), the report showed.

The earnings results came out just days after news that the firm had been punished for failing to supply a drug for which it had won a bid in a centralized procurement tender for hospitals in Shandong province.

In response to speculation that North China Pharma’s breach of the supply contract was due to its low-priced winning bid hitting profit, the National Office of Joint Medicine Procurement answered media questions today.

Of the four businesses that won the bidding to supply ibuprofen sustained release capsules, North China Pharma offered the highest price, the NOJMP revealed. The price was also close to the price it sold the capsules for in some other provinces and cities, the office added.

Before centralized bulk-buying of drugs, North China Pharma’s sales from the pills was only about CNY500,000 (USD77,200) in 2020, the office said. Winning the bulk-supply bid would have ensured annual sales of over CNY20 million, but the firm failed to fulfil its obligation to honor the agreement.

Five rounds of national medicine bulk-buying tenders have been conducted so far, and North China Pharma is the only winning bidder that has failed to supply a drug in accordance with the amount agreed in the contract, the office said.

Overall, the bid winners have dutifully implemented centralized procurement deals, strictly fulfilled the contracts based on the agreed prices, and generally met medical institutions’ needs beyond the agreed amount, it added.

Editor: Peter Thomas