BEIJING, Aug. 14 /PRNewswire-Asia-FirstCall/ -- Lotus Pharmaceuticals, Inc. (“Lotus” or the “Company”), a growing developer and producer of prescription drugs and licensed national seller of pharmaceutical products in the People’s Republic China, today reported its financial results for the quarter and six months ended June 30, 2009.
Revenues for the second quarter of 2009 decreased 30% to $13.6 million from $19.4 million of the same period of 2008. Wholesale revenues, one of the revenue segments, accounting for 78% of total revenues, decreased 25% due to the Company’s 2009 product pricing policy(1). Average unit wholesale selling price decreased 43% in the second quarter of 2009 over the same period of 2008, while 26% increase in wholesale quantities over the second quarter 2008. Retail revenues accounting for 20% of total revenues decreased 24% due to weak consumer demand for non-essential drugs.
Gross margins for the second quarter of 2009 increased to 57.9% as compared to 50.0% in the second quarter of 2008. Dr. Zhongyi Liu, Chairman and CEO of Lotus commented, “We are very pleased with our growth in sales quantities and gross margins of this quarter. Our pricing policy for 2009 has been adjusted accordingly due to the expected inflation contraction on the wholesale level nationally. We have been able to reduce the cost of sales mainly because Active Pharmaceutical Ingredient (“API”) and essential medicine prices have dropped since the onset of economic slowdown.”
Total operating expenses for the second quarter 2009 were $2.6 million, a 63% decrease from the second quarter of 2008. The decrease resulted from the decrease of selling expenses in relation to our drugs that have established certain market shares, which was due to the profit margins we have given away to our agents who in turn are incentivized to sell our established drugs at competitive prices.
Dr. Liu commented, “We are very pleased to obtain the approval from the Beijing Land Planning Bureau for permitting us to build a new office building on our current production base which was previously industrial-use-only land in Beijing. This means that we can finally bring all of our operational units such as administration, sales, R&D and production into a single office building. This is another important step we made towards improving our operational efficiency.”
Net income for the second quarter of 2009 was $4.8 million, or $0.10 per diluted share, compared to $2.2 million, or $0.05 per diluted share, in the second quarter of 2008.
The Company’s cash position at the end of the second quarter was $1.8 million, compared to $1.3 million at the end of 2008.
“We actively exhibit at all the important drug expos in China, through which we build strong customer relationships. We continue to fulfill our promise to bring new drugs to the market and to reach out new customers,” commented Dr. Zhongyi Liu. “In addition to one new prescription drug, Qingkailing Paotengpian, we are now offering new drugs to our national sales network for the treatment of acute suppurative tonsillitis, acute upper respiratory infection, pneumonia and high fever. We are also selling two new OTC drugs: (i) NINGXIN Yishen Oral Liquid, which improves immune system and sleep, and reduces fatigue, and (ii) Shuanghuanglian Oral Liquid, which is used to treat influenza symptoms. For the three new drugs we offered, we provided promotions with introduction meetings for customers and agents in Beijing, Anhui and Inner Mongolia. Currently, we are selling a total of 15 types of drugs through our wholesale channels nationwide.”
Six-Month Results
For the six-month period ended June 30, 2009, total revenues were $25.5 million, a decrease of 18.1% from $31.1 million in the same period last year. Gross profit was $14.5 million, up 6.6% from gross profit of $13.6 million for the six months of 2008. Gross margin was 57.1%, compared to 43.8% for the first six months of 2008. Operating income was $9.5 million, compared to $4.3 million for the first six months of fiscal 2008.
Net income for the period was $8.4 million, an increase of 163% from $3.2 million in the same period last year. Earnings per share (diluted) for the first half of 2009 was $0.17, compared to $0.07 in the first half of 2008.
Improved cash flows from operating activities was $16.3 million, compared to $4.7 million in the first six months of 2008.
2009 Outlook
“We are very pleased with our bottom line growth and gross margin for the first six months of 2009. We believe we will have consistent growth for the rest of the year mainly because the majority of drugs we sell to our national network are covered under the National Health Insurance Policy, and our continuous efforts to improve operational efficiency,” said Mr. Liu. “While we are making progress in expanding our production capacity in Inner Mongolia, we believe we are on track to achieve the earnings guidance we provided previously.”
About Lotus Pharmaceuticals, Inc. ( http://www.lotuspharma.com )
Lotus Pharmaceuticals, Inc. is a growing developer and producer of prescription drugs and a licensed national seller of pharmaceutical items in the People’s Republic of China. Lotus operates Liang Fang Pharmaceutical, Ltd. and En Ze Jia Shi Pharmaceutical, Ltd. Lotus’s current drug development pipeline is focused on the treatment of cerebro-cardiovascular disease, asthma, and diabetes. More than 8,000 products are sold by Liang Fang directly and indirectly through its national sales channels to hospitals, clinics and drugs stores in 30 provinces.
Safe Harbor Statement
This press release contains “forward-looking statements” within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words “estimate,” “project,” “intent,” “forecast,” “anticipate,” “plan,” “planning,” “expect,” “believe,” “will likely,” “should,” “could,” “would,” “may,” or words or expressions of similar meaning. Such statements are not guarantees of future performance and could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including, but not limited to, changes from anticipated levels of sales, future national or regional economic and competitive and regulatory conditions, changes in relationships with customers, access to capital, increased costs, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, the time to get new drugs approved by the SFDA and other factors. Additional information regarding risks can be found in the Company’s Annual Report on Form 10K and its older filings with the SEC. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.
SOURCE Lotus Pharmaceuticals, Inc.
CONTACT: Yan ZENG, CFO of Lotus Pharmaceuticals, Inc., +86-10-6389-9868,
or zy@lotuspharma.com
Web site: http://www.lotuspharma.com/
