LAIYANG, China, May 15 GenesisPharmaceuticals Enterprises, Inc. (OTC Bulletin Board: GTEC) ("Genesis" or the"Company"), a U.S. pharmaceutical company with its principal operations in thePeople's Republic of China, today announced its financial results for thequarter ended March 31, 2008, the Company's third quarter of its fiscal yearended June 30, 2008. A 10QSB Form was filed for the quarter with the U.S.Securities Exchange Commission that is available through the Company's websiteand from the SEC.
"We are pleased to report financial results that confirm the growingpopularity of our products. Our best selling products continue to beClarithromycin sustained-release tablets and Itopride Hydrochloride granules.Sales for Baobaole chewable tablets, our first Chinese herbal over the counterdrug product, have grown rapidly since we introduced it at the end of 2007,"said Mr. Cao Wubo, Chairman and CEO of Genesis Pharmaceuticals Enterprises,Inc. "We have several new drugs that are still in various stages of approvalfrom China's State Food and Drug Administration, and we believe that we willbe able to introduce four new drugs in the near future."
Third Quarter of Fiscal Year 2008 Results
Total revenue in the third quarter ended March 31, 2008 was $28.1 million,up 48.5% from $18.9 million in the prior year's period. This increase inrevenue was mostly due to increased sales of the Company's two most popularproducts, Clarithromycin sustained-release tablets and Itopride HydrochlorideGranules as well as sales of Baobaole chewable tablets, which grew rapidlyfrom the time the product was first launched in the second quarter of fiscalyear 2008.
Gross profit in the third quarter ended March 31, 2008 totaled $21.8million, an increase of 60.7% from $13.5 million in the prior year's period.Gross margin was 77.4%, compared to 71.5% in the prior year's period. Theincrease of gross profit was due to increased sales of higher profit marginproducts, better control over raw material purchases and more efficientmanufacturing.
Research and development expenses in the third quarter ended March 31,2008 totaled $1.0 million, up slightly from the prior year's period. Theseresearch and development expenses were related primarily to payments to thetwo research institutes with which the Company has collaborative agreements.
Selling, general and administrative expenses in the third quarter endedMarch 31, 2008 totaled $12.1 million, up 25.6% from $9.7 million in the prioryear's period. The majority of this increase was because of an increase incommissions to sales representatives. Starting January, 2008, the Companyincreased its sales commissions to provide better incentives to its salesrepresentatives. Administrative expenses related to being a public companyalso increased in fiscal year 2008.
Operating income in the third quarter ended March 31, 2008 totaled $8.7million, a 195.8% increase from $2.9 million in the prior year's period,representing operating margin of 30.8%.
Other expenses in the third quarter ended March 31, 2008 totaled $2.0million, compared to $80,000 in the prior year's period. The significantincrease in the Company's other expense was related primarily to a $1.2million unrealized loss on trading securities, a $0.5 million amortizationexpense on discounted debt and a $0.2 million loss from discontinuedoperations.
Net income for the third quarter ended March 31, 2008 totaled $4.5 million,which is $0.01 per basic and fully diluted share, up 138.46% from net incomeof $1.9 million, which was $0.02 per basic and fully diluted share for thecorresponding period in fiscal year 2007. This decrease in earnings per basicand fully diluted shares was due to additional shares and warrants beingissued in connection with the reverse merger that took place in October 2007,subscriptions and exercised options.