TAI’AN CITY, Shandong, China, Nov. 15 /Xinhua-PRNewswire-FirstCall/ -- China Biologic Products, Inc. (“CBP”, “the Company”), one of the leading plasma-based pharmaceutical companies in the People’s Republic of China (“PRC”), today reported record financial results for the third quarter ended on September 30, 2007.
“During the quarter we continued to see strong demand for our plasma based products due to increased purchasing power and health consciousness of Chinese consumers although unit prices have increased greatly,” said Mr. Stanley Wong, CEO of China Biologic Products, “In addition, we have taken advantage of the favorable industry environment to improve our production facilities and to accelerate the pace of developing new drugs.”
Third Quarter 2007 Results
Revenues for the three months ended September 30, 2007 were $8.9 million, up 48.8% as compared to $6.0 million for the same period of 2006. The increase was primarily due to the rise in unit prices of plasma based products, although the Company’s unit sales volumes declined. During the third quarter of 2007, unit prices of the Company’s main products experienced growth ranging from 8.1% to 424.5% year over year. The situation of unit prices rising combined with the drop in volumes was a result of the PRC government’s stringent controls on quality in the plasma based production industry. The Company is expected to adjust its production plans and to utilize all plasma resources that are available to provide products with higher profit margins.
Human albumin, Human Immunoglobulin for Intravenous Injection and Human Rabies Immunoglobulin contributed 61.9%, 11.1% and 15.2% to the revenues, respectively.
Cost of revenues for the three months ended September 30, 2007 remained unchanged and stood at $2.3 million, accounting for 25.5% of the revenues, compared to 38.3% for the comparable period of 2006.
Gross profit was up 79.7% to $6.7 million with gross margins of 74.5% for the third quarter of 2007 compared with approximately $3.7 million and 61.7% in the third quarter of 2006, respectively. The increase of gross margin was mainly due to the rapid growth in unit sale prices.
Total operating expenses for the three months ended September 30, 2007 were $3.1 million, up 55.9% from the same period in 2006, which was primarily attributable to increased selling expenses. During this quarter, the Company incurred more marketing and sales expenses, including bonuses to salespersons, holding sales conferences, and travel related expenses. Research and development expenses were $0.2 million for the third quarter of 2007, representing 2.4% of the revenues.
Income from operations grew 106.9% to $3.6 million in the third quarter of 2007, representing operating margins of 40.0%, as compared to $1.7 million and 28.7% in the same period of 2006.
In the third quarter of 2007, the Company recorded $0.56 million and $0.61 million for provision for income taxes and minority interest, respectively.
Net income for the third quarter of 2007 was $2.3 million or $0.11 per basic and diluted share, an increase of 225.7% and 219.1% from $0.7 million and $0.03 per share, respectively for the comparable period of 2006.
Nine Months Results
Revenue for the first nine months of 2007 increased 68.8% over the comparable period in 2006 to $25.4 million. Gross profits rose 99.7% in the same period to $17.1 million, representing gross margins of 67.4%. Operating expenses in the first nine months of 2007 increased 85.0% to $5.7 million as a result of the increased selling expenses. Operating profits in the first nine months of 2007 rose 107.9% over the comparable period in 2006 to $11.4 million, representing operating margins of 44.9%. Net income for the nine months ended September 30, 2007 was $7.6 million or $0.35 per basic and diluted share, up 124.7% and 107.9% respectively.
Cash flow from operations for the nine months ended September 30, 2007 totaled $10.8 million, a huge increase compared to $0.02 million in the comparable period in 2006. Net cash used in investing activities in the first nine months of 2007 totaled $7.2 million, most of which was incurred to build the new production line.
Financial Condition
As of September 30, 2007, CBP had $6.1 million in cash, approximately $9.6 million in working capital. Shareholder’s equity at the end of the third quarter stood at $21.1 million compared to $12.7 million at the end of 2006.
Business Outlook
In recent years, the biopharmaceutical industry and the plasma-based product market have outperformed the pharmaceutical industry. According to http://www.pharmnet.com.cn, sales of blood and plasma-based drugs in China had an average growth rate of 15% in the last 5 years, reaching $372 million in 2005, and accounting for 11.7% of prescription drug sales. China’s plasma- based products market remains underserved with limited availability of products, offering substantial opportunities for China Biologic to grow its business.
The PRC government is limiting the number of companies in this industry and is not expected to issue new licenses in the foreseeable future. Besides, import of foreign plasma-based products is severely restricted, creating a relatively closed market for domestic suppliers. The overall effect of recent government regulatory reform has been to reduce competition and increase the barriers to entry, creating a favorable industry structure for China Biologic Products.
“We are very pleased to be operating in a more regulated market for plasma based products after recent reforms launched by the government,” said Mr. Stanley Wong, CEO of China Biologic Products. “We are going to continue our efforts to achieve more market share and improve our products mix.”
About China Biologic Products, Inc.
China Biologic Products, Inc., through its indirect majority-owned subsidiary Shandong Taibang, is currently the only plasma-based biopharmaceutical company approved by the government of Shandong Province, the second largest province with a population of 93 million. The company is engaged primarily in research, manufacturing, and sale of plasma-based biopharmaceutical products to hospitals and other health care facilities in China. Plasma-based Human Albumin is used mainly to increase blood volume while Immunoglobulin is used for disease prevention and treatment.
Safe Harbor Statement
This release contains certain “forward-looking statements” relating to the business of the Company and its subsidiary companies. These forward-looking statements are often identified by the use of forward-looking terminology such as “believes, expects” or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.
IR@ctbb.com.cncrocker.coulson@ccgir.com
CONTACT: Crocker Coulson, President of CCG Elite, +1-646-213-1915, or
crocker.coulson@ccgir.com; Stanley Wong, Chief Executive Officer of China
Biologic Products Inc., all for China Biologic Products Inc.
Web site: http://www.ctbb.com.cn/
