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"During the quarter we continued to see strong demand for our plasma basedproducts due to increased purchasing power and health consciousness of Chineseconsumers although unit prices have increased greatly," said Mr. Stanley Wong,CEO of China Biologic Products, "In addition, we have taken advantage of thefavorable industry environment to improve our production facilities and toaccelerate the pace of developing new drugs."
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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 increasewas primarily due to the rise in unit prices of plasma based products,although the Company's unit sales volumes declined. During the third quarterof 2007, unit prices of the Company's main products experienced growth rangingfrom 8.1% to 424.5% year over year. The situation of unit prices risingcombined with the drop in volumes was a result of the PRC government'sstringent controls on quality in the plasma based production industry. TheCompany is expected to adjust its production plans and to utilize all plasmaresources that are available to provide products with higher profit margins.
Human albumin, Human Immunoglobulin for Intravenous Injection and HumanRabies Immunoglobulin contributed 61.9%, 11.1% and 15.2% to the revenues,respectively.
Cost of revenues for the three months ended September 30, 2007 remainedunchanged 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% forthe 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 wasmainly due to the rapid growth in unit sale prices.
Total operating expenses for the three months ended September 30, 2007were $3.1 million, up 55.9% from the same period in 2006, which was primarilyattributable to increased selling expenses. During this quarter, the Companyincurred more marketing and sales expenses, including bonuses to salespersons,holding sales conferences, and travel related expenses. Research anddevelopment 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 of2007, representing operating margins of 40.0%, as compared to $1.7 million and28.7% in the same period of 2006.
In the third quarter of 2007, the Company recorded $0.56 million and $0.61million for provision for income taxes and minority interest, respectively.
Net income for the third quarter of 2007 was $2.3 million or $0.11 perbasic and diluted share, an increase of 225.7% and 219.1% from $0.7 millionand $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 thecomparable period in 2006 to $25.4 million. Gross profits rose 99.7% in thesame period to $17.1 million, representing gross margins of 67.4%. Operatingexpenses in the first nine months of 2007 increased 85.0% to $5.7 million as aresult of the increased selling expenses. Operating profits in the first ninemonths 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 endedSeptember 30, 2007 was $7.6 million or $0.35 per basic and diluted share, up124.7% and 107.9% respectively.
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