3SBio Inc. Announces Second Quarter 2008 Results
Dr. Jing Lou, chief executive officer of 3SBio, commented, "We are verypleased with the steady top-line growth of our key products throughout thefirst half of 2008. Based on positive market trends and the continued strongmarket demand we are experiencing for our products we remain confident in ourability to continue to execute on our business plan. Based on these factorsand our performance in the first half of this year, we are raising our revenueguidance for the full year 2008 from US$30-$32 million to US$34-$35 million.In addition to the progress made towards our full year financial goal, we havealso made significant progress on the business development front, notably, theinitiation of a strategic partnership with AMAG Pharmaceuticals, Inc. todevelop and commercialize ferumoxytol and the rapid progression of our phaseIII programs in our portfolio."
Second Quarter 2008 Unaudited Financial Results
Net Revenues. Our net revenues amounted to RMB59.6 million (US$8.7million) in the second quarter 2008, compared to RMB43.1 million for thesecond quarter 2007, representing an increase of 38.4%. Net revenues fromEPIAO increased by 23.7% from RMB30.0 million in the second quarter 2007 toRMB37.1 million (US$5.4 million) in the second quarter 2008. Net revenuesfrom TPIAO increased 66.9% over the second quarter 2007 from RMB9.6 million toRMB16.1 million (US$2.3 million). Our TPIAO products remained our secondlargest revenue contributor, accounting for 27.0% of total net revenues forthe second quarter 2008 as compared with 22.3% in the second quarter 2007. Inaddition, revenue from our export business was RMB2.8 million (US$0.4 million),representing an increase of 70.5% over the second quarter 2007, while revenuefrom our in-licensed Iron Sucrose supplement was RMB2.1 million (US$0.3million), representing an increase of 255.9% over the second quarter 2007.
Gross Profit. Gross profit increased 38.9% to RMB54.3 million (US$7.9million) for the second quarter 2008 from RMB39.1 million in the secondquarter 2007. Gross margin was 91.1% in the second quarter 2008, marginallyincreasing from 90.8% in the second quarter 2007.
Operating Expenses. Total operating expenses increased by 54.3% toRMB39.1 (US$5.7 million) in the second quarter 2008 from RMB25.3 million inthe second quarter of 2007 primarily due to increases in sales, marketing anddistribution expense and general and administrative expense, and to a lesserextent due to an increase in research and development expense.
Research and development expense, representing 5.1% of total net revenues,increased by 62.0% to RMB3.0 million (US$0.4 million) in the second quarter2008 from RMB1.9 million, representing 4.4% of total net revenues, in thesecond quarter 2007. This increase was mainly due to expenses associated withour anti-TNF mAb and HPV vaccine programs.
Sales, marketing and distribution expense, representing 44.6% of total netrevenues, increased by 31.9% to RMB26.6 million (US$3.9 million) in the secondquarter 2008 from RMB20.1 million, representing 46.8% of total net revenues,in the second quarter 2007 as a result of increased personnel, conference,promotional and advertising costs in line with the expansion of our salesforce, marketing activities and geographical network in China.
General and administrative expense, representing 15.9% of total netrevenues, increased by 186.2% to RMB9.5 million (US$1.4 million) in the secondquarter 2008 from RMB3.3 million, representing 7.7% of total net revenues, inthe second quarter 2007. This increase was primarily a result of increases inpersonnel
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