(Yicai Global) July 18 -- Joinn Laboratories China, a provider of pharmaceutical clinical research services, said it expects profit to have shrunk by as much as 80 percent in the first half, mainly because of a loss from a slump in the fair value of biological assets due to lower prices for experimental monkeys.

Net profit likely fell 70 percent to 80 percent to between CNY72.8 million and CNY110 million (USD10.2 million and USD15.3 million) in the six months ended June 30 from a year earlier, the Beijing-based firm said late on July 14. The net loss from changes in the fair value of biological assets was between CNY177 million and CNY189 million, it added.

Shares of Joinn [SHA: 603127] closed 2.6 percent higher at CNY37.83 (USD5.27) each in Shanghai today, after plunging by their daily trading limit of 10 percent yesterday.

Joinn provides drug preclinical research services and sells lab animals and auxiliary products. Chinese demand for experimental monkeys has surged amid a surge in new drug development since 2017, especially of Covid-19 jabs and medicines after the pandemic began in 2020.

Macaca fascicularis are the most used primates in labs, accounting for nearly 70 percent. Their market price soared to almost CNY190,000 per animal last year from an average of CNY13,800 (USD1,924) in 2017, according to a report by US business consultants Frost & Sullivan.

Lab monkey prices have declined as new drug development demand slowed this year. The price of a macaca fascicularis is now only CNY80,000 in a bidding initiated by Beijing University of Chemical Technology and announced on July 14.

In recent years, Joinn and other firms have been stocking up on lab monkeys by acquiring companies or setting up breeding bases. Joinn bought two monkey firms and built a primate breeding base for over 15,000 large animals in Wuzhou in China’s Guangxi Zhuang Autonomous Region for CNY1.8 billion (USD251 million) last year.

The plunge in Joinn’s earnings is actually caused by the firm's aggressive financial strategy, some market insiders noted. 

The firm changed the way it values biological assets from cost measurement to measurement by fair value in its 2020 earnings report.

The change was made not to manipulate Joinn’s earnings but to meet the requirements for listing on the Hong Kong Stock Exchange in February 2021, a person from the chairman’s secretary’s office told Yicai Global. The bourse requires such assets to be measured by fair value, the source added.

Editor: Martin Kadiev