NANJING, March 16 /PRNewswire-Asia/ -- Simcere Pharmaceutical Group ("Simcere" or the "Company") (NYSE: SCR), a leading pharmaceutical company specializing in the development, manufacturing, and marketing of branded generic and proprietary pharmaceuticals in China, today reported unaudited financial results for the quarter and the fiscal year ended December 31, 2009.
Highlights
-- Total revenue was RMB539.4 million (US$79.0 million) for the fourth
quarter of 2009, compared to RMB466.9 million for the same period in
2008, representing sequential growth of 15.5%. For the full year of
2009, total revenue was RMB1,850.0 million (US$271.0 million), which
represented an increase of 6.3% from RMB1,741.1 million for the full
year of 2008.
-- Gross margin for the fourth quarter of 2009 was 83.1%, compared to
83.1% for the same period in 2008. For the full year of 2009, gross
margin was 82.6%, increased from 81.6% for the full year of 2008.
-- Income from operations was RMB44.9 million (US$6.6 million) for the
fourth quarter of 2009, a decrease of 38.2% from RMB72.7 million for
the same period in 2008. For the full year of 2009, income from
operations was RMB172.9 million (US$25.3 million), which represented a
decrease of 51.6% from RMB357.0 million for the full year of 2008.
-- Net income attributable to Simcere was RMB17.7 million (US$2.6 million)
for the fourth quarter of 2009, a decrease of 65.9% from RMB51.7
million for the same period in 2008. For the full year of 2009, net
income was RMB119.5 million (US$17.5 million), which represented a
decrease of 65.9% from RMB350.2 million for the full year of 2008.
"We are pleased to end 2009 with positive top-line growth while maintaining steady gross margin," commented Mr. Jinsheng Ren, Chairman and Chief Executive Officer of Simcere. "In particular, for the fourth quarter, we were encouraged by the strong performance of Edavarone as well as increased sales of Endu. However, the combination of higher sales and marketing expenses associated with the promotion of new drugs and increased research and development expenses impacted our operating income."
"We are confident that 2010 will be a year of growth for Simcere," continued Mr. Ren. "As national and provincial drug reimbursement lists are expected to be implemented in the second half of the year, we are optimistic that a number of our key products will experience greater market demand. In addition, we expect to receive multiple new drug approvals in 2010 which will further strengthen Simcere's product portfolio."
Mr. Ren concluded: "Last month we were pleased to announce that Zanamivir received SFDA approval and that industry veteran, Dr. Yehong Zhang has joined Simcere as president. These important announcements highlight our commitment to strengthening Simcere's management team while continuously investing in research and development to increase our competitiveness for the mid-to-long term."
2009 Fourth Quarter and Full Year Financial Results
Total revenue for the fourth quarter of 2009 was RMB539.4 million (US$79.0 million), compared to RMB466.9 million for the same period in 2008, representing sequential growth of 15.5%. For the full year of 2009, total revenue was RMB1,850.0 million (US$271.0 million), which represented an increase of 6.3% from RMB1,741.1 million for the full year of 2008.
Revenue from Edaravone injection products under the brand names Bicun and Yidasheng totaled RMB211.7 million (US$31.0 million) for the fourth quarter of 2009, which was 39.3% of the Company's product revenue for the fourth quarter of 2009, and represented an increase of 9.8% from RMB192.7 million for the same period in 2008. For the full year of 2009, revenue from Bicun and Yidasheng totaled RMB745.4 million (US$109.2 million), which represented an increase of 14.5% from RMB651.2 million for the full year of 2008.
Revenue from Endu, the Company's patented anti-cancer biotech product, amounted to RMB34.0 million (US$5.0 million) in the fourth quarter of 2009, which was 6.3% of the Company's product revenue for the fourth quarter of 2009 and represented a decrease of 41.6% from RMB58.1 million for the same period in 2008. For the full year of 2009, revenue from Endu totaled RMB124.2 million (US$18.2 million), which represented a decrease of 48.1% from RMB239.4 million for the full year of 2008.
Revenue from Sinofuan, a 5-FU sustained release implant for the treatment of cancer, amounted to RMB30.6 million (US$4.5 million) for the fourth quarter of 2009, which was 5.7% of the Company's product revenue for the fourth quarter of 2009, and represented an increase of 54.8% from RMB19.8 million for the same period in 2008. For the full year of 2009, revenue from Sinofuan totaled RMB126.3 million (US$18.5 million), which represented an increase of 205.1% from RMB41.4 million for the full year of 2008.
Revenue from other first-to-market products including Jiebaishu, a nedaplatin product and Anxin, a biapenem injection, amounted to RMB10.0 million (US$1.5 million), which was 1.9% of the Company's product revenue for the fourth quarter of 2009, and represented an increase of 70.0% from RMB5.9 million for the same period in 2008. For the full year of 2009, revenue other first-to-market products totaled RMB37.7 million (US$5.5 million), which represented an increase of 104.6% from RMB18.4 million for the full year of 2008.
Revenue from other branded generic products including Zailin and Yingtaiqing, amounted to RMB201.9 million (US$29.5 million), which was 37.5% of the Company's product revenue for the fourth quarter of 2009, and represented an increase of 6.1% from RMB190.3 million for the same period in 2008. For the full year of 2009, revenue from other branded generic products totaled RMB753.1 million (US$110.4 million), which represented a decrease of 4.2% from RMB786.4 million for the full year of 2008.
Gross margin for the fourth quarter of 2009 was 83.1%, compared to 83.1% for the same period in 2008. For the full year of 2009, gross margin was 82.6%, increased from 81.6% for the full year of 2008.
Research and development expenses for the fourth quarter of 2009 totaled RMB50.1 million (US$7.3 million), which represented an increase of 47.6% from RMB34.0 million for the same period in 2008. This increase was primarily due to the launch of new research and development projects and increased research and development headcount as a result of the Company's continued expansion of its research and development activities. As a percentage of total revenue, research and development expenses were 9.3% for the fourth quarter of 2009, compared to 7.3% for the same period in 2008. For the full year of 2009, research and development expenses totaled RMB133.0 million (US$19.5 million), compared to RMB86.1 million for the full year of 2008, representing year-over-year growth of 54.5%.
Sales, marketing and distribution expenses for the fourth quarter of 2009 were RMB297.0 million (US$43.5 million), which represented an increase of 31.5% from RMB225.8 million for the same period in 2008. As a percentage of total revenue, sales, marketing and distribution expenses were 55.1% for the fourth quarter of 2009, compared to 48.4% for the same period in 2008. This increase was primarily due to the costs of restructuring the Endu sales team and increased promotion expenses to market new drugs such as Anxin and Sinofuan. For the full year of 2009, sales, marketing and distribution expenses were RMB999.5 million (US$146.4 million), which represented an increase of 27.7% from RMB783.0 million for the full year of 2008.
General and administrative expenses were RMB56.3 million (US$8.3 million) for the fourth quarter of 2009, which represented an increase of 1.3% from RMB55.6 million for the same period in 2008. As a percentage of total revenue, general and administrative expenses decreased to 10.4% for the fourth quarter of 2009 from 11.9% for the same period in 2008. For the full year of 2009, general and administrative expenses were RMB222.1 million (US$32.5 million), which represented an increase of 14.4% from RMB194.2 million for the full year of 2008.
Share-based compensation expense, which was allocated to research and development expenses, sales, marketing and distribution expenses, and general and administrative expenses, based on the nature of the work that the employee was assigned to perform, totaled RMB6.0 million (US$0.9 million) for the fourth quarter of 2009. Share-based compensation expenses for the fourth quarter of 2008 were RMB5.7 million. For the full year of 2009, share-based compensation expenses totaled RMB23.7 million (US$3.5 million), which represented a decrease of 7.3% from RMB25.5 million for the full year of 2008.
Income from operations was RMB44.9 million (US$6.6 million) for the fourth quarter of 2009, which represented a decrease of 38.2% from RMB72.7 million for the same period in 2008. For the full year of 2009, income from operations was RMB172.9 million (US$25.4 million), which represented a decrease of 51.6% from RMB357.0 million for the full year of 2008.
Income tax expense for the fourth quarter of 2009 was RMB7.2 million (US$1.1 million), compared to RMB13.0 million for the same period in 2008. The decrease in income tax expense for the fourth quarter of 2009 was primarily due to the decrease of the net income and the entitlement of the preferential tax treatment. For the full year of 2009, income tax expense was RMB16.0 million (US$2.3 million) compared to RMB49.3 million for the full year of 2008.
Net income attributable to Simcere was RMB17.7 million (US$2.6 million) for the fourth quarter of 2009, compared to RMB51.7 million for the same period in 2008. Net income margin was 3.3% for the fourth quarter of 2009, compared to 11.1% for the fourth quarter of 2008. For the full year of 2009, net income was RMB119.5 million (US$17.5 million), which represented a decrease of 65.9% from RMB350.2 million for the same period in 2008. Net margin for the full year of 2009 was 6.5% as compared to 20.1% for the full year of 2008.
Basic and diluted earnings per American Depository Share ("ADS") for the fourth quarter of 2009 were RMB0.32 (US$0.05) and RMB0.31 (US$0.05), respectively. Basic and diluted earnings per ADS for the full year of 2009 were RMB2.08 (US$0.30) and RMB2.05 (US$0.30), respectively. One ADS represents two ordinary shares of the Company.
As of December 31, 2009, the Company had cash, cash equivalents and restricted cash of RMB458.1 million (US$67.1 million), compared to RMB813.8 million as of December 31, 2008.
Financial Statements
The unaudited condensed consolidated statements of income and balance sheets accompanying this press release have been prepared by management using U.S. GAAP. These financial statements are not intended to fully comply with U.S. GAAP because they do not present all of the financial statements and disclosures required by U.S. GAAP.
The unaudited financial statements are subject to the completion of the Company's normal year end closing procedures including the annual impairment review of goodwill and the purchase price allocation in respect of the Company's acquisitions in 2009 and are subject to change.
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions. In particular, the quotations from management in this press release contain forward-looking statements. These forward looking statements are based upon management's current views and expectations with respect to future events and are not a guarantee of future performance. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements as a result of a number of factors. Further information regarding these and other risks is included in Simcere's filings with the U.S. Securities and Exchange Commission at http://www.sec.gov . Simcere does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Conference Call
Simcere Pharmaceutical Group will host a conference call to discuss the Company's results for the fourth quarter and full year of 2009 on Tuesday, March 16, at 8:00 a.m. Eastern Time (Tuesday, March 16 at 8:00 p.m. Beijing/Hong Kong time). The management team will be on the call to discuss the results for fourth quarter and full year of 2009 and to answer questions.
To access the conference call, please dial:
United States toll-free dial-in number: +1 800 901 5213
United States toll/International dial-in number: +1 617 786 2962
South China toll-free/Chine Telecom dial-in number: +86 10 800 130 0399
North China toll-free/China Telecom dial-in number: +86 10 800 152 1490
South China toll-free/China Netcom dial-in number: +86 10 800 852 1490
Hong Kong dial-in number: +852 3002 1672
Please ask to be connected to Simcere's Q4 2009 earnings call and provide the following passcode: 65611658. Simcere will also broadcast a live audio webcast of the conference call. The broadcast will be available by visiting the "Investor Relations" section of the Company's web site at http://www.simcere.com .
Following the earnings conference call, an archive of the call will be available by dialing:
United States toll-free dial-in number: +1 888 286 8010
United States toll/International dial-in number: +1 617 801 6888
The passcode for replay participants is: 88577131. The telephone replay also will be archived on the "Investor Relations" section of the Company's web site for seven days following the earnings announcement.
About Simcere Pharmaceutical Group
Simcere Pharmaceutical Group (NYSE: SCR, Simcere) is a leading pharmaceutical company specializing in the development, manufacturing, and marketing of branded generic and proprietary pharmaceuticals in China. In recent years, Simcere has been focusing its strategy on the development of innovative pharmaceuticals and first-to-market generics, and has introduced an innovative anti-cancer medication Endu, a first-to-market medication Sinofuan, and first-to-market generics such as Bicun and Anxin. Simcere manufactures and sells antibiotics, anti-cancer medication, stroke management medication and biopharmaceutical drugs such as vaccines. Simcere concentrates its research and development efforts on the treatment of diseases with high incidence and/or mortality rates and for which there is a clear demand for more effective pharmacotherapy such as cancer, strokes, orthopaedics and infectious diseases. For more information about Simcere Pharmaceutical Group, please visit http://www.simcere.com .
For more information, please contact:
Investor and Media Contacts:
Email: ir@simcere.com
In Nanjing:
Frank Zhao
Chief Financial Officer
Simcere Pharmaceutical Group
Tel: +86-25-8556-6666 x8818
In Beijing:
Ruirui Jiang
Brunswick Group
Tel: +86-10-6566-2256
In the United States:
Kate Tellier
Brunswick Group
Tel: +1-212-333-3810
In Hong Kong:
Joseph Lo Chi-Lun
Brunswick Group
Tel: +852-3512-5000
SIMCERE PHARMACEUTICAL GROUP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT SHARE AND ADS DATA)
Three months ended
December 31,
2008 2009 2009
RMB RMB USD
Product revenue 466,849 538,074 78,828
Other revenue 55 1,279 187
Total revenue 466,904 539,353 79,015
Cost of materials and production (78,880) (90,979) (13,328)
Gross profit 388,024 448,374 65,687
Operating expenses:
Research and development expenses (33,969) (50,129) (7,344)
Sales, marketing and distribution
expenses (225,772) (296,990) (43,509)
General and administrative
expenses (55,631) (56,339) (8,254)
Income from operations 72,652 44,916 6,580
Interest income 4,198 1,458 214
Interest expense (998) (3,446) (505)
Foreign currency exchange
(losses)/gains (1,348) 32 5
Other income -- 1,880 275
Equity in losses of equity method
affiliated companies -- (1,022) (150)
Earnings before income taxes 74,504 43,818 6,419
Income tax expense (12,961) (7,199) (1,055)
Net Income 61,543 36,619 5,364
Less: Net income attributable to
the noncontrolling interest (9,832) (18,960) (2,778)
Net income attributable to
Simcere 51,711 17,659 2,586
Earnings per share attributable
to Simcere:
Basic 0.42 0.16 0.02
Diluted 0.42 0.16 0.02
Earnings per ADS attributable to
Simcere:
Basic 0.83 0.32 0.05
Diluted 0.83 0.31 0.05
Weighted average number of common
shares:
Basic 124,491,009 111,042,270 111,042,270
Diluted 124,491,009 113,458,171 113,458,171
Year ended
December 31,
2008 2009 2009
RMB RMB USD
Product revenue 1,736,832 1,836,585 269,061
Other revenue 4,311 13,386 1,961
Total revenue 1,741,143 1,849,971 271,022
Cost of materials and production (320,882) (322,456) (47,240)
Gross profit 1,420,261 1,527,515 223,782
Operating expenses:
Research and development expenses (86,089) (132,981) (19,482)
Sales, marketing and distribution
expenses (782,960) (999,519) (146,430)
General and administrative
expenses (194,233) (222,118) (32,540)
Income from operations 356,979 172,897 25,330
Interest income 34,302 8,861 1,298
Interest expense (4,693) (12,126) (1,777)
Foreign currency exchange
(losses)/gains 39,879 382 56
Other income 1,104 2,971 435
Equity in losses of equity method
affiliated companies -- (1,022) (150)
Earnings before income taxes 427,571 171,963 25,192
Income tax expense (49,285) (16,030) (2,348)
Net Income 378,286 155,933 22,844
Less: Net income attributable to
the noncontrolling interest (28,135) (36,429) (5,337)
Net income attributable to
Simcere 350,151 119,504 17,507
Earnings per share attributable
to Simcere:
Basic 2.80 1.04 0.15
Diluted 2.80 1.02 0.15
Earnings per ADS attributable to
Simcere:
Basic 5.61 2.08 0.30
Diluted 5.60 2.05 0.30
Weighted average number of common
shares:
Basic 124,921,934 115,099,258 115,099,258
Diluted 125,005,803 116,604,919 116,604,919
SIMCERE PHARMACEUTICAL GROUP
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN THOUSANDS)
December 31, December 31, December 31,
2008 2009 2009
RMB RMB USD
Assets
Current assets
Cash, cash equivalents and
restricted cash 813,766 458,145 67,119
Accounts and bills receivables,
net 748,997 751,921 110,157
Inventories 95,948 99,355 14,556
Other current assets 49,048 98,851 14,481
Total current assets 1,707,759 1,408,272 206,313
Property, plant and equipment,
net 463,059 744,713 109,101
Land use rights 114,624 146,158 21,412
Goodwill and intangible assets,
net 453,455 924,018 135,369
Investments in and advance to
affiliated companies 121,865 17,853
Other assets 39,325 58,035 8,503
Total assets 2,778,222 3,403,061 498,551
Liabilities
Current liabilities
Short-term borrowings and current
installments of long-term debt 6,000 76,000 11,134
Accounts payables 25,219 41,439 6,071
Bills payables -- 110,810 16,234
Other payables and accrued
liabilities 303,794 477,725 69,987
Total current liabilities 335,013 705,974 103,426
Long-term debt, excluding current
installments 62,000 122,685 17,973
Deferred tax liabilities 59,358 147,782 21,650
Other liabilities 20,529 21,561 3,159
Total liabilities 476,900 998,002 146,208
Equity
Simcere shareholders' equity
Ordinary shares at par 9,624 8,716 1,277
Additional paid-in capital 1,505,252 1,170,687 171,506
Accumulated other comprehensive
loss (82,130) (43,886) (6,429)
Retained earnings 820,279 939,783 137,679
Total Simcere shareholders'
equity 2,253,025 2,075,300 304,033
Noncontrolling interest 48,297 329,759 48,310
Total equity 2,301,322 2,405,059 352,343
Commitments and contingencies
Total liabilities and equity 2,778,222 3,403,061 498,551
Note: The conversions of Renminbi (RMB) into United States dollars (USD)
as at the reporting dates are based on the noon buying rate of
USD1.00 = RMB6.8259 on December 31, 2009 as set forth in the H. 10
statistical release of the Federal Reserve Board. No representation
is intended to imply that the RMB amounts could have been, or could
be, converted, realized or settled into U.S. dollars at that rate on
the reporting dates.
