BEIJING, Nov. 16 /PRNewswire-Asia-FirstCall/ -- Lotus Pharmaceuticals, Inc. (“Lotus” or the “Company”) a growing developer and producer of prescriptions drugs and licensed national seller of pharmaceutical products in the People’s Republic of China, today reported third-quarter 2009 net earnings were $5.4 million, or $0.11 per diluted share, compared with $3.2 million, or $0.07 per diluted share, in 2008. Net revenues were $14.5 million during the third quarter of 2009, compared with $16.7 million in the third quarter of 2008.
The third quarter was highlighted by continued strong performance in the Company’s wholesale business. Profitability increased due to increased sales demand and successful cost-reduction actions.
“I’m pleased with our strong third-quarter results,” said Dr. Zhong Yi Liu, chairman and chief executive officer. “By slowing down our buildup of new manufacturing facility in Inner Mongolia, we have set our priority in improving our operational efficiency in Beijing by preparing for moving the separated operation units into one single location. We will maintain our focus on improving operation efficiency and maintaining client relationships, and believe we will finish the year well-positioned to enter 2010.”
Outlook
Lotus believes it is on track to meet its earnings guidance for 2009. The Company improved its cash position in the third quarter, which stood at $2.6 million as of September 30th, 2009, as compared to $1.3 million as of December 31, 2008.
In the wholesale segment which accounted for 80% of net revenues in the third quarter, the Company believes demand will continue to increase given the increases in distributor and product offerings, as well as increasing demand from existing distributors. In response to market conditions, unit average price of wholesale drugs in this segment decreased to follow deflation in raw material costs from the beginning of this year. As a result of our success in reducing purchase prices for drugs we sell but produced by third parties, prices we offer to our distributors have reduced and remained stable since the beginning of 2009, indirectly increasing incentives for them to promote our drugs. In addition, our cost reductions have proven to be effective as we managed to reduce selling expenses by reducing commissions paid to our sales representatives. Offsetting the impact of a 42% decrease in average unit selling price resulted in higher sales volume by 39% in the past nine months. The impact of these combined efforts resulted in EBIT margin in this quarter being 41%, compared to 22% in the same period last year.
In the retail segment which accounted for 19% of net revenues in the third quarter, although there was a 4% decrease from the same period last year, Lotus believes the demand for drugs treating influenza is expected to increase through the remainder of 2009 due to the upcoming of influenza season.
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.
CONTACT: Yan ZENG, CFO of Lotus Pharmaceuticals, Inc., +86-10-6389-9868,
zy@lotuspharma.com
Web site: http://www.lotuspharma.com/
