SUZHOU, China, May 16 /Xinhua-PRNewswire-FirstCall/ -- China Biopharmaceuticals Holding, Inc., , a vertically integrated bio-pharmaceutical company focused on developing, manufacturing and distributing innovative drugs in the People's Republic of China, today announced fiscal results for its first quarter ended March 31, 2008.
Revenue for the first quarter of 2008 increased 78.1% to approximately $10.97 million compared to approximately $6.16 million for the first quarter of 2007. The significant increase in revenues was due to three reasons. First is the rise in selling price and sales of Erye's raw material drugs. Second, the reform of medical insurance system in rural areas of China promotes the sales of Erye's drugs. Third, the selling price of the freeze-dried drugs has increased.
Cost of goods sold for the first quarter was approximately $7.7 million, yielding a gross profit of $3.3 million and gross margins of 29.7%, compared to $1.47 million in gross profit and a gross margin of 23.9% during the first quarter of 2007. Thus, gross profits grew by 124.5% on a year-over-year basis. The increase in gross margin is attributed primarily to the increase of the gross profit of the freeze-dried drugs and raw material drugs.
Operating expenses for the three months ended March 31, 2008 were $1.1 million, up 15.4% compared to the same period in 2007. Selling, general and administration expenses for the period increased to approximately $1.07 million from $0.9 million in the first quarter of 2007, which included increased investment in overall marketing including increased costs in advertisement expenses. Research and development expenses were $17,947 in the three months ended March 31, 2008, versus $43,163. This decrease was primarily attributed to the slowing down of drug approval of the China SFDA and new regulatory policies.
Operating income for the first quarter of 2008 totaled approximately $2.2 million, a 315% increase from the $523,795 reported for the first quarter of 2007. Operating margins were 19.8% and 8.5% for the first quarter of 2008 and 2007, respectively. The increase in the operating margin was due to the Company's Erye Subsidiary strong performance in sales and increased gross margin.
For the first quarter of 2008, net income was $492,076, an improvement of $669,869, compared to a loss of $177,793 for the first quarter of 2007. Fully diluted earnings per share were $0.013 compared to loss of $0.005 for the first quarter of 2007 respectively, based up on 36.5 million fully diluted shares outstanding. The Company had increased interest expense of $356,584 during the quarter versus $347,485 a year ago. The Company also increased its provision for income taxes from $1,108 to $299,409 during the current quarter, yielding an effective tax rate of 16.5%.
"We are extremely pleased to report a healthy quarterly profit and strong cashflow on record revenues. The success of our overall marketing strategy and focusing on high margin products enabled us to achieve a record revenue quarter. We have made huge strides in overcoming the Enshi problems and getting back to focusing on building a successful business. Going forward we intend to build upon the momentum established during the first quarter of 2008 to have a very strong performance for the rest of the year.'' commented Madame Zhang Jian, Chairwoman and CFO of China Biopharmaceuticals.
Balance Sheet and Cash Flow
The Company had $2.5 million in cash and cash equivalents on March 31, 2008, versus $1.77 million at December 31, 2007. The Company had total assets of $35.4 million, an increase of $4.16 million form yearend, versus total liabilities of $30.6 million, representing an increase of only $1.9 million from yearend. Shareholders equity improved $1.2 million in the first quarter of 2008. For the first quarter of 2008, the Company generated $2.3 million in cash from operations versus a loss of $332,580 million for the same period in 2007. Four major customers accounted for approximately 36% of the net revenue for the three months ended March 31, 2008 with each customer individually accounting for 13%, 11%, 6%, and 6%, respectively. At March 31, 2008, the total receivable balance due from these customers was $1,213,581, representing 21% of total accounts receivable. For the three months ended March 31, 2007, two major customers accounted for 10% of the net revenue with each customer individually accounting for 5% and 5%, respectively.
Our main manufacturing unit, Erye, recorded a significant growth of 80% in sales revenue for the three months ended March 31, 2008. The Company is still actively looking for growth and expansion opportunities and still believes in the overall strategy of internal growth and acquisitions. Whereas Erye's top management, Ms. ZHANG Jian and Mr. SHI Mingsheng joined our China Biopharmaceuticals board of directors and are now playing an active role in our management, the Company believes that they will continue to improve our overall operations, giving play to their industrial and manufacturing and marketing expertise. This was a main factor contributing to the Company's return to profitability during the 3 months period ended March 31, 2008.
Chris Mao, CEO of China Biopharmaceuticals added, ''We anticipate that our internally generated financial resources are sufficient to provide for our organic growth. These are the keys to creating a very valuable enterprise for our shareholders. We are looking forward to new opportunities of growth and opportunities in the pharmaceutical manufacturing and stemcell fields.''
Although China's strongest earthquake in 58 years hit Sichuan Province on May 12, the Company's production was not affected and no one from the Company was injured by the disaster.
About China Biopharmaceuticals
China Biopharmaceuticals Holdings, Inc is a vertically integrated pharmaceutical company dedicated to the discovery, development, manufacturing and marketing of small and large molecule pharmaceutical products, including medicines, vaccines, and active pharmaceutical ingredients for various categories of diseases. CHBP is a U.S.-listed public company with operating subsidiaries and senior management based in China. For further information, please visit our website at http://www.cbioinc.com .
Safe Harbor Statement
The statements contained herein that are not historical facts are "forward looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. For example, when we say that going forward we intend to build upon the momentum established during the first quarter of 2008 to have a very strong performance for the rest of the year or that we anticipate that our internally generated financial resources are sufficient to provide for our organic growth, or that we are looking forward to new opportunities of growth and opportunities in the pharmaceutical manufacturing and stemcell fields, we are using forward looking statements. The forward-looking statements include risks and uncertainties, including but not limited to, general economic conditions and regulatory developments, not within our control. The factors discussed herein and expressed from time to time in our filings with the Securities and Exchange Commission could cause actual results and developments to be materially different from those expressed or implied by such statements. The forward looking statements are made only as of the date of this filing, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
CONTACT: Alan Sheinwald of HCI Emerging Growth, +1-914-669-0222 (U.S.), or
Web site: http://www.cbioinc.com/