NANJING, China, Aug. 17 /PRNewswire-Asia/ -- Simcere Pharmaceutical
Group ("Simcere" or the "Company") (NYSE:SCR), a leading
manufacturer and supplier of branded generic and innovative
pharmaceuticals in China, today reported unaudited financial
results for the quarter ended June 30, 2009. Highlights -- Total
revenue was RMB424.4 million (US$62.1 million) for the second
quarter of 2009, a decrease of 2.7% from RMB436.2 million for the
same period in 2008. -- Income from operations was RMB37.9 million
(US$5.5 million) for the second quarter of 2009, a decrease of
61.4% from RMB98.1 million for the same period in 2008. -- Net
income attributable to Simcere was RMB37.2 million (US$5.5 million)
for the second quarter of 2009, a decrease of 60.9% from RMB95.2
million for the same period in 2008. -- Gross margin for the second
quarter of 2009 was 82.3%, compared to 81.7% for the same period in
2008. --The Company's board of directors approved a new share
repurchase program under which Simcere Pharmaceutical Group may
purchase up to US$50 million worth of its issued and outstanding
American depositary shares ("ADSs"). The new program is in addition
to the share repurchase program announced in November 2008. Mr.
Jinsheng Ren, Chairman and Chief Executive Officer of Simcere
Pharmaceutical Group, commented: "While gross margin was stable in
the second quarter, total revenues declined slightly. Sales of
edaravone products, our single largest revenue contributor, saw
solid growth for the quarter, while performance of Endu and other
generic drugs was slower than expected. We were encouraged,
however, by the strong performance of other first-to-market drugs,
especially Sinofuan which saw exceptional growth during the
quarter. "Looking forward, we will continue efforts to build our
sales force as we invest in sales, marketing and R&D to support
Simcere's middle-and-long-term sustainable growth," Mr. Ren
continued. In the second quarter, Simcere completed the acquisition
of a 37.5% stake in Jiangsu Yanshen Biological Technology Stock
Co., Ltd., a China-based developer and manufacturer of vaccines.
Also, Shanghai Celgen Bio-Pharmaceutical Co., Ltd. ("Shanghai
Celgen"), in which Simcere entered into a share purchase agreement
to acquire an approximately 35% equity interest in May 2009, is
preparing for the launch of its major biogeneric etanercept drug,
which is waiting for approval from the PRC State Food and Drug
Administration ("SFDA"). The acquisition of Shanghai Celgen is
expected to be completed in the third quarter this year. 2009
Second Quarter Financial Results Total revenue for the second
quarter of 2009 was RMB424.4 million (US$62.1 million), which
represented a decrease of 2.7% from RMB436.2 million for the same
period in 2008. For the first six months of 2009, total revenue was
RMB866.9 million (US$126.9 million), representing an increase of
4.3% from RMB830.8 million for the same period in 2008. Revenue
from Endu, the Company's patented anti-cancer biotech product,
amounted to RMB32.1 million (US$4.7 million) in the second quarter
of 2009, which was 7.6% of the Company's product revenue for the
second quarter of 2009 and represented a decrease of 49.1% from
RMB63.1 million for the same period in 2008. For the first six
months of 2009, revenue from Endu totaled RMB68.6 million (US$10.0
million), which represented a decrease of 45.9% from RMB126.9
million for the same period in 2008. Revenue from edaravone
injection products under the brand names Bicun and Yidasheng
totaled RMB183.0 million (US$26.8 million) for the second quarter
of 2009, which was 43.3% of the Company's product revenue for the
second quarter of 2009, and represented an increase of 24.0% from
RMB147.6 million for the same period in 2008. For the first six
months of 2009, revenue from Bicun and Yidasheng totaled RMB342.6
million (US$50.2 million), which represented an increase of 14.3%
from RMB299.7 million for the same period in 2008. Revenue from
other first-to-market products including Jiebaishu, a nedaplatin
product, Sinofuan, a 5-FU sustained release implant for the
treatment of cancer, and Anxin, a biapenem injection for the
treatment of serious infections launched in the fourth quarter of
2008, amounted to RMB45.9 million (US$6.7 million) for the second
quarter of 2009, which was 10.8% of the Company's product revenue
for the second quarter of 2009. For the first six months of 2009,
revenue from other first-to-market products totaled RMB78.6 million
(US$11.5 million). Revenue from Sinofuan reached RMB34.6 million
(US$5.1 million) for the second quarter, representing a 615.2%
year-over-year growth. Revenue from other branded generic products
amounted to RMB161.9 million (US$23.7 million) or 38.3% of the
Company's product revenue for the second quarter of 2009, a
decrease of 24.7% from RMB215.0 million for the same period in
2008. For the first six months of 2009, revenue from other branded
generic products totaled RMB369.7 million (US$54.1 million), which
was a decrease of 4.9% from RMB388.8 million for the same period in
2008. Gross margin for the second quarter of 2009 was 82.3%,
compared to 81.7% for the same period in 2008. For the first six
months of 2009, gross margin was 82.4%, the same as in the first
six months of 2008. Research and development expenses for the
second quarter of 2009 totaled RMB25.0 million (US$3.7 million), an
increase of 89.1% from RMB13.2 million for the same period in 2008.
This increase was primarily due to increased research and
development headcount as the Company continued to expand its
research and development activities. As a percentage of total
revenue, research and development expenses were 5.9% in the second
quarter of 2009, compared to 3.0% for the same period in 2008. For
the first six months of 2009, research and development expenses
totaled RMB50.0 million (US$7.3 million), compared to RMB31.0
million for the same period in 2008. Sales, marketing and
distribution expenses for the second quarter of 2009 were RMB235.5
million (US$34.5 million), which represented an increase of 19.0%
from RMB197.9 million for the same period in 2008. As a percentage
of total revenue, sales, marketing and distribution expenses were
55.5% for the second quarter of 2009, compared to 45.4% for the
same period in 2008. This increase was primarily due to hiring of
additional staff and the increased sales, marketing and
distribution expenses for promoting the Company's major products
such as Bicun and Sinofuan. For the first six months of 2009,
sales, marketing and distribution expenses were RMB455.3 million
(US$66.7 million), which represented an increase of 25.6% from
RMB362.5 million for the same period in 2008. General and
administrative expenses were RMB50.9 million (US$7.5 million) for
the second quarter of 2009, which represented an increase of 8.4%
from RMB47.0 million for the same period in 2008. As a percentage
of total revenue, general and administrative expenses increased to
12.0% for the second quarter of 2009 from 10.8% for the same period
in 2008. For the first six months of 2009, general and
administrative expenses were RMB110.2 million (US$16.1 million),
which represented an increase of 17.2% from RMB94.0 million for the
same period in 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 RMB5.6 million (US$0.8 million) for the second
quarter of 2009. Share-based compensation expenses for the second
quarter of 2008 were RMB6.4 million. For the first six months of
2009, share-based compensation expenses totaled RMB11.9 million
(US$1.7 million), which represented a decrease of 11.4% from
RMB13.4 million for the same period in 2008. Income from operations
was RMB37.9 million (US$5.5 million) for the second quarter of
2009, which represented a decrease of 61.4% from RMB98.1 million
for the same period in 2008. For the first six months of 2009,
operating income was RMB98.9 million (US$14.5 million), which
represented a decrease of 49.9% from RMB197.3 million for the same
period in 2008. Income tax benefit for the second quarter of 2009
was RMB3.4 million (US$0.5 million), compared to an income tax
expense of RMB18.1 million for the same period in 2008. The
decrease in income tax expense for the second quarter of 2009 was
primarily due to lower taxable income, the reduced income tax rates
for certain operating subsidiaries effective from 2009 and the
recognition of deferred tax benefits by certain operating
subsidiaries as a result of the tax losses incurred in the second
quarter of 2009. For the first six months of 2009, income tax
expense was RMB4.2 million (US$0.6 million) compared to RMB34.9
million for the same period in 2008. Net income attributable to
Simcere was RMB37.2 million (US$5.5 million) for the second quarter
of 2009, compared to RMB95.2 million for the same period in 2008.
Net income margin was 8.8% for the second quarter of 2009, compared
to 21.8% for the second quarter of 2008. For the first six months
of 2009, net income was RMB85.4 million (US$12.5 million), which
represented a decrease of 58.8% from RMB207.3 million for the same
period in 2008. Net margin for the first six months of 2009 was
9.9% as compared to 24.9% for the same period in 2008. Basic and
diluted earnings per American Depository Share ("ADS") for the
second quarter of 2009 were RMB0.64 (US$0.09) and RMB0.63 (US$0.09)
respectively. Basic and diluted earnings per ADS for the first six
months of 2009 were RMB1.44 (US$0.21) and RMB1.43 (US$0.21)
respectively. One ADS represents two ordinary shares of the
Company. As of June 30, 2009, the Company had cash, cash
equivalents and restricted cash of RMB636.3 million (US$93.2
million), compared to RMB813.8 million as of December 31, 2008.
Share Repurchase Program In November 2008, the Company's board of
directors authorized a share repurchase program, under which the
Company may repurchase up to US$50.0 million of issued and
outstanding ADSs from the open market or in block trades. As of
June 30, 2009, 5.8 million ADSs have been repurchased. The Company
will continue to repurchase issued and outstanding ADSs depending
on market conditions, the trading price of its ADSs and other
factors. In addition to the share repurchase program announced in
November 2008, the board of directors has approved a new share
repurchase program. Under the terms of the new share repurchase
program, Simcere Pharmaceutical Group may purchase up to US$50
million worth of its issued and outstanding ADSs. The repurchases
will be made from time to time on the open market at prevailing
market prices or in block trades and subject to restrictions
relating to volume, price and timing. The Company may effect
buyback transactions pursuant to Rule 10b5-1 under the Securities
Exchange Act of 1934, as amended. The timing and extent of any
purchases will depend upon market conditions, the trading price of
its ADSs and other factors. The Company expects to implement this
share repurchase program in a manner consistent with market
conditions and the interest of the shareholders. The Company's
board of directors will review the share repurchase program
periodically, and may authorize adjustment of its terms and size
accordingly. The Company plans to fund repurchases made under this
program from its available cash balance. 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. 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 and the section under "Financial
Outlook" 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 filing 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 second quarter 2009 on Tuesday, August
18, 2009 at 8 a.m. Eastern Time (Tuesday, August 18, at 8 p.m.
Beijing/Hong Kong time). The management team will be on the call to
discuss the results for second quarter 2009 and to answer
questions. To access the conference call, please dial: United
States toll-free dial-in number: +1 800 510 0705 International
dial-in number: +1 617 597 5363 North China toll-free dial-in
number: +86 10 800 152 1490 South China toll-free dial-in number:
+86 10 800 130 0399 China toll free / Netcom: +86 10 800 852 1490
Hong Kong dial-in number: +852 3002 1672 Please ask to be connected
to Simcere's Q2 2009 earnings call and provide the following
passcode: 78992895. 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
dial-in number: +1 617 801 6888 The passcode for replay
participants is: 77592594. 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 manufacturer and supplier of branded
generic and innovative 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 and stroke management
medication. 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/ .
SIMCERE PHARMACEUTICAL GROUP UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT SHARE
AND ADS DATA) Three months ended June 30, 2008 2009 2009 RMB RMB
USD Product revenue 435,839 422,862 61,911 Other revenue 359 1,514
222 Total revenue 436,198 424,376 62,133 Cost of materials and
production (79,957) (75,113) (10,997) Gross profit 356,241 349,263
51,136 Operating expenses: Research and development expenses
(13,221) (24,997) (3,660) Sales, marketing and distribution
expenses (197,939) (235,509) (34,481) General and administrative
expenses (46,955) (50,898) (7,452) Income from operations 98,126
37,859 5,543 Interest income 11,395 2,948 432 Interest expense
(2,761) (2,172) (318) Foreign currency exchange gains 11,524 312 46
Other income 1,104 1,092 160 Earnings before income taxes 119,388
40,039 5,863 Income tax (expense) benefit (18,087) 3,424 501 Net
Income 101,301 43,463 6,364 Less: Net income attributable to the
noncontrolling interest (6,135) (6,222) (911) Net income
attributable to Simcere 95,166 37,241 5,453 Earnings per share
attributable to Simcere: Basic 0.76 0.32 0.05 Diluted 0.74 0.32
0.05 Earnings per ADS attributable to Simcere: Basic 1.52 0.64 0.09
Diluted 1.48 0.63 0.09 Weighted average number of common shares:
Basic 125,043,205 116,136,745 116,136,745 Diluted 128,622,041
117,492,520 117,492,520 Six months ended June 30, 2008 2009 2009
RMB RMB USD Product revenue 828,768 859,496 125,838 Other revenue
2,072 7,386 1,081 Total revenue 830,840 866,882 126,919 Cost of
materials and production (146,077) (152,433) (22,317) Gross profit
684,763 714,449 104,602 Operating expenses: Research and
development expenses (30,994) (50,044) (7,327) Sales, marketing and
distribution expenses (362,458) (455,288) (66,658) General and
administrative expenses (93,982) (110,186) (16,132) Income from
operations 197,329 98,931 14,485 Interest income 21,802 5,517 808
Interest expense (3,243) (4,675) (684) Foreign currency exchange
gains 38,079 228 33 Other income 1,104 1,092 160 Earnings before
income taxes 255,071 101,093 14,802 Income tax (expense) benefit
(34,869) (4,168) (610) Net Income 220,202 96,925 14,192 Less: Net
income attributable to the noncontrolling interest (12,919)
(11,511) (1,685) Net income attributable to Simcere 207,283 85,414
12,507 Earnings per share attributable to Simcere: Basic 1.66 0.72
0.11 Diluted 1.62 0.72 0.11 Earnings per ADS attributable to
Simcere: Basic 3.32 1.44 0.21 Diluted 3.23 1.43 0.21 Weighted
average number of common shares: Basic 125,025,500 118,368,384
118,368,384 Diluted 128,188,815 119,050,014 119,050,014 SIMCERE
PHARMACEUTICAL GROUP UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS (AMOUNTS EXPRESSED IN THOUSANDS) December 31, June 30, June
30, 2008 2009 2009 RMB RMB USD Assets Current assets Cash, cash
equivalents and restricted cash 813,766 636,337 93,166 Accounts and
bills receivables, net 748,997 638,060 93,417 Inventories 95,948
111,222 16,284 Other current assets 49,048 80,753 11,822 Total
current assets 1,707,759 1,466,372 214,689 Property, plant and
equipment, net 463,059 500,318 73,251 Land use rights 114,624
113,385 16,601 Goodwill and intangible assets, net 453,455 439,199
64,303 Investment in an affiliated company -- 195,540 28,629 Other
assets 39,325 37,967 5,558 Total assets 2,778,222 2,752,781 403,031
Liabilities Current liabilities Short-term borrowings and current
installments of long-term debt 6,000 6,000 878 Accounts and bills
payables 25,219 30,587 4,478 Other payables and accrued liabilities
303,794 394,458 57,754 Total current liabilities 335,013 431,045
63,110 Long-term debt, excluding current installments 62,000 62,000
9,077 Deferred tax liabilities 59,358 58,554 8,573 Other
liabilities 20,529 20,999 3,074 Total liabilities 476,900 572,598
83,834 Equity Simcere shareholders' equity Ordinary shares at par
9,624 8,987 1,316 Additional paid-in capital 1,505,252 1,269,793
185,909 Accumulated other comprehensive loss (82,130) (56,476)
(8,269) Retained earnings 820,279 905,693 132,601 Total Simcere
shareholders' equity 2,253,025 2,127,997 311,557 Noncontrolling
interest 48,297 52,186 7,640 Total equity 2,301,322 2,180,183
319,197 Commitments and contingencies Total liabilities and equity
2,778,222 2,752,781 403,031 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 = RMB6.8302 on June 30,
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. For
further information, please contact: In Nanjing: Simcere
Pharmaceutical Group Frank Zhao Chief Financial Officer Tel:
+86-25-8556-6666 ext. 8818 Email: In the United States: Brunswick
Group LLC Kate Tellier Tel: +1-212-333-3810 In Beijing: Brunswick
Group LLC Ruirui Jiang Tel: +86-10-6566-2256 In Hong Kong:
Brunswick Group LLC Joseph Lo Chi-Lun Tel: +852-3512-5000
DATASOURCE: Simcere Pharmaceutical Group CONTACT: In Nanjing, Frank
Zhao, Chief Financial Officer of Simcere Pharmaceutical Group,
+86-25-8556-6666 x8818, or ; or in the United States, Kate Tellier,
+1-212-333-3810, or in Beijing, Ruirui Jiang, +86-10-6566-2256, or
in Hong Kong, Brunswick Group LLC, Joseph Lo Chi-Lun,
+852-3512-5000, all of Brunswick Group LLC for Simcere
Pharmaceutical Group Web site: http://www.simcere.com/
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