VANCOUVER, May 17 /PRNewswire-FirstCall/ - Dragon Pharmaceutical Inc. ("Dragon Pharma" or the "Company" TSX: DDD; OTCBB: DRUG), an international manufacturer of antibiotics, today announced its financial results for the first quarter ended March 31, 2010.
Results for the Quarter Ended March 31, 2010
The Company recorded $49.06 million of revenues for the quarter ended March 31, 2010, representing 33% growth from $36.96 million for the same period of 2009. Net income was $1.58 million, representing 9% increase from $1.45 million for the same period of 2009. Earnings per share (basic and diluted) were $0.02 compared to $0.02 for the same period of 2009.
Sales from the Penicillin Division increased 17% from the same period of 2009 to $14.69 million, accounting for 30% of the Company's total revenues for the first quarter of 2010. The Company expanded its production capacity of Clavulanic Acid in the fourth quarter of 2009 to 135 tons, therefore during the first quarter ended March 31, 2010, sales volume increased 42% to 31 tons from 22 tons for the same period of 2009. Sales from Cefalexin and Cefadrozil, two other main products in the division, decreased 3% from the same period of 2009 mainly due to lower selling prices resulting from oversupply of such products in the Chinese market.
Sales from the Cephalosporin Division increased 41% from the same period of 2009 to $34.37 million, accounting for 70% of the total sales of the Company for the first quarter of 2010. This was mainly due to the market price of 7-ACA rose 27% during the first quarter of 2010 as compared to the same period of 2009, since the price then was depressed due to the financial crisis. The production level of 7-ACA remained same since it was running at full capacity. During the quarter, the Company continued to use more of its 7-ACA production for in-house downstream applications. As a result, the sales volume of 7-ACA reduced 21% from 135 tons to 107 tons while the sales of Cephalosporin crude bulk APIs and formulation drugs increased 348% and 9% respectively as compared to the same quarter of 2009.
Cost of sales for the quarter ended March 31, 2010 was $36.96 million compared to $30.55 million for the same period in 2009. The increase in the cost of sales was mainly due to the increase in production output and sales of products from both Penicillin and Cephalosporin Divisions. Gross profit and gross margin for the quarter ended March 31, 2010 were $12.09 million and 24.7% compared to $6.41 million and 17.4% for the same period of 2009. The increase in overall gross margin was mainly due to the margin improvements for Clavulanic Acid as well as 7-ACA for the first quarter of 2010.
Net income was $1.58 million, representing 9% increase from $1.45 million for the same period of 2009. Earnings per share (basic and diluted) were $0.02 compared to $0.02 for the same period of 2009.
For further information, please refer to the Company's 10-Q, which has been filed with the U.S. Securities and Exchange Commission and the Ontario Securities Commission. The full financial statements are also available on Dragon's website at http://www.dragonpharma.com.
Additional Information and Where to Find It
As previously disclosed, the Company has entered into an agreement and plan of merger with Chief Respect Limited, a Hong Kong corporation, Datong Investment Inc., a Florida corporation and a wholly owned subsidiary of Chief Respect Limited, and Mr. Yanlin Han. The Company has filed with the Securities and Exchange Commission (the "SEC") a Schedule 13E-3, and a preliminary proxy statement for the meeting of stockholders of the Company to be convened to approve the merger. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, THE COMPANY'S STOCKHOLDERS AND INVESTORS ARE URGED TO READ THE PROXY STATEMENT (INCLUDING THE DEFINITIVE PROXY STATEMENT, WHEN IT BECOMES AVAILABLE) AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. When completed a final proxy statement will be mailed to our stockholders. Investors and stockholders may obtain a free copy of the proxy statement when it becomes available, and other documents filed by us with the SEC, at the SEC's web site at http://www.sec.gov. Free copies of the proxy statement, when it becomes available, and our other filings with the SEC may also be obtained from us. Free copies of our filings may be obtained by directing a request to Dragon Pharmaceutical, Inc., 650 West Georgia Street, Suite 310, Vancouver, British Columbia, Canada V6B 4N9 Attention: Maggie Deng, Secretary.
The Company and certain of its directors, executive officers and other members of management and employees may, under SEC rules, be deemed to be "participants" in the solicitation of proxies from our stockholders with respect to the proposed merger. Information regarding the persons who may be considered "participants" in the solicitation of proxies will be set forth in our proxy statement relating to the proposed merger when it is filed with the SEC. Information regarding certain of these persons and their beneficial ownership of our common stock as of March 15, 2010, is set forth in our preliminary proxy statement which was filed with the SEC on April 1, 2010. Additional information regarding the interests of such potential participants will be included in the proxy statement and the other relevant documents filed with the SEC when they become available.
About Dragon Pharmaceutical Inc.
Dragon Pharmaceutical, incorporated in Florida and headquartered in Vancouver, Canada, is a leading manufacturer and distributor of a broad line of high-quality antibiotic products including Clavulanic Acid and 7-ACA, a key intermediate to produce cephalosporin antibiotics and formulated drugs. Dragon Pharma is the third largest 7-ACA producer and the dominant manufacturer and market leader of Clavulanic Acid products in China. Dragon Pharma utilizes its nationwide sales distribution network, close customer relationships, understanding of local markets and customer needs and low cost structure to outperform its international and domestic peers. With an annual capacity of 780 tons, Dragon Pharma is the largest exporter of 7-ACA in China. To learn more about Dragon Pharmaceutical Inc., please visit http://www.dragonpharma.com.
SOURCE Dragon Pharmaceutical Inc.