Simcere Pharmaceutical Group Reports Preliminary Unaudited First Quarter 2013 Results

NANJING, China, May 9, 2013 /PRNewswire/ -- Simcere Pharmaceutical Group ("Simcere" or the "Company") (NYSE: SCR), a leading pharmaceutical company specializing in the development, manufacturing, and marketing of branded generic and proprietary pharmaceuticals in China, today reported preliminary unaudited financial results for the quarter ended March 31, 2013.

Highlights

  • Total revenue was RMB528.7 million (US$85.1 million) for the first quarter of 2013, compared to RMB487.6 million for the same period in 2012, representing an increase of 8.4%.
  • Gross margin for the first quarter of 2013 was 79.2%, compared to 82.0% for the same period in 2012.
  • Income from operations was RMB50.2 million (US$8.1 million) for the first quarter of 2013, compared to RMB43.3 million for the same period in 2012, representing an increase of 16.0%.
  • Net income attributable to Simcere was RMB29.9 million (US$4.8 million) for the first quarter of 2013, an increase of 4.6% from RMB28.6 million for the same period in 2012.

Mr. Hongquan Liu, Executive Director and Chief Executive Officer of Simcere Pharmaceutical Group, commented, "We experienced moderate sales growth in the first quarter despite sustained pricing restrictions from the government and intensifying competition. I am pleased that our overall business performance improved during the quarter and that both Sales and Marketing expenses and General and Administrative expenses as percentages of our total revenue decreased slightly."

On March 11, 2013, the Company announced that it received a "going private" proposal. Simcere's Board of Directors has formed a special committee to consider the proposed transaction.

2013 First Quarter Financial Results

Total revenue for the first quarter of 2013 was RMB528.7 million (US$85.1 million), compared to RMB487.6 million for the same period in 2012, representing an increase of 8.4%.

The table below sets forth the Company's top 10 products by revenue for the three months ended March 31, 2013:

In Thousands


Three months ended  March 31, 2013

Three months ended March 31, 2012



RMB

USD

% of total 
revenue  

RMB

% of total 
revenue

Change

Products

Therapeutic Area 







Edaravone

Neuroscience

144,256

23,227

27.3%

160,902

33.0%

(10.3%)

Endu

Oncology

80,228

12,917

15.2%

56,350

11.6%

42.4%

Zailin 

Infectious Disease

62,569

10,074

11.8%

60,033

12.3%

4.2%

Yintaiqing

Inflammation

48,456

7,802

9.2%

33,147

6.8%

46.2%

Sinofuan

Oncology

32,644

5,256

6.2%

39,290

8.1%

(16.9%)

Biqi 

Gastroenterology

24,419

3,932

4.6%

21,908

4.5%

11.5%

Kechuanning

Respiratory

17,524

2,822

3.3%

13,870

2.8%

26.3%

Jiebaishu

Oncology

17,153

2,762

3.2%

15,227

3.1%

12.6%

Anxin

Infectious Disease

16,626

2,677

3.1%

15,514

3.2%

7.2%

Anqi 

Infectious Disease

13,673

2,201

2.6%

15,773

3.2%

(13.3%)

Others


71,181

11,461

13.5%

55,595

11.4%

28.0%

Total 


528,729

85,131

100.0%

487,609

100.0%

8.4%

For more information about the above products, please visit our corporate website: www.simcere.com

Gross margin for the first quarter of 2013 was 79.2%, compared to 82.0% for the same period in 2012. The decrease was primarily due to the percentage decrease in sales of drugs with higher gross margins and certain fixed overhead costs incurred before the commercial production of influenza vaccine products.

Research and development expenses for the first quarter of 2013 totaled RMB44.9 million (US$7.2 million), which represented a decrease of 7.0% from RMB48.3 million for the same period in 2012. The decrease was primarily due to the completion of development of the Company's influenza vaccine product and its transition to commercial manufacturing. As a percentage of total revenue, research and development expenses decreased to 8.5% for the first quarter of 2013 from 9.9% for the same period in 2012.

Sales, marketing and distribution expenses for the first quarter of 2013 were RMB259.6 million (US$41.8 million), which represented an increase of 0.3% from RMB258.8 million for the same period in 2012. As a percentage of total revenue, sales, marketing and distribution expenses decreased to 49.1% for the first quarter of 2013 from 53.1% for the same period in 2012.

General and administrative expenses were RMB64.0 million (US$10.3 million) for the first quarter of 2013, which represented a decrease of 1.6% from RMB65.1 million for the same period in 2012. As a percentage of total revenue, general and administrative expenses decreased to 12.1% for the first quarter of 2013 from 13.3% for the same period in 2012.

Share-based compensation expenses, which were 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 relevant employee was assigned to perform, totaled RMB9.8 million (US$1.6 million) for the first quarter of 2013. Share-based compensation expenses for the first quarter of 2012 were RMB3.8 million. The increase was primarily due to restricted shares granted to our management in the second half of 2012.

Income from operations was RMB50.2 million (US$8.1 million) for the first quarter of 2013, representing an increase of 16.0% from RMB43.3 million for the same period in 2012.

Income tax expense for the first quarter of 2013 was RMB6.5 million (US$1.0 million), compared to income tax expense of RMB2.6 million for the same period in 2012. The effective income tax rate increased to 23.9% in the first quarter of 2013 from 10.4% for the same period in 2012. The lower effective income tax rate in the first quarter of 2012 was primarily due to the impact of other operating income of RMB15.6 million in the first quarter of 2012 recorded by our subsidiary located in the British Virgin Islands which is not subject to income tax.

Net income attributable to Simcere was RMB29.9 million (US$4.8 million) for the first quarter of 2013, compared to RMB28.6 million for the same period in 2012. Net margin, representing net income attributable to Simcere divided by total revenue, was 5.7% for the first quarter of 2013, compared to 5.9% for the same period in 2012.

Basic and diluted earnings per American Depository Share ("ADS") for the first quarter of 2013 were RMB0.57 (US$0.09) and RMB0.56 (US$0.09), respectively. One ADS represents two ordinary shares of the Company.

As of March 31, 2013, the Company had cash and pledged bank deposits of RMB332.9 million (US$53.6 million), compared to RMB201.6 million as of December 31, 2012.

Financial Information

The preliminary unaudited condensed consolidated statements of income and balance sheets accompanying this press release have been prepared by management using U.S. GAAP. This preliminary financial information is not intended to fully comply with U.S. GAAP because it does not present all of the financial information 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 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 filings with the U.S. Securities and Exchange Commission at 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 first quarter of 2013 on Thursday, May 9, at 8:00 a.m. Eastern Time (Thursday, May 9 at 8:00 p.m. Beijing/Hong Kong time). The management team will be on the call to discuss the results for the first quarter of 2013 and to answer questions.

To access the conference call, please dial:

International toll:

+65.6723.9381

United States toll-free:

+1.866.519.4004

United States toll:

+1.718.354.1231

China Domestic toll:

800.819.0121

China Domestic mobile toll:

400.620.8038

Hong Kong toll:

+852.2475.0994

Please ask to be connected to Q1 2013 Simcere Pharmaceutical Group Earnings Conference Call and provide the following passcode: 58031483.

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 www.simcere.com.

Following the earnings conference call, an archive of the call will be available by dialing:

United States toll-free:

+1. 855.452.5696

United States toll:

+1. 646.254.3697

The passcode for replay participants is 58031483. 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 pharmaceutical company specializing in the development, manufacturing, and marketing of branded and proprietary pharmaceuticals in China. 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, cardiovascular disease, infectious diseases and pain. For more information about Simcere Pharmaceutical Group, please visit www.simcere.com.

Investor and Media Contacts:


Email: ir@simcere.com



In Nanjing:

In the United States:

Jie Liu D'Elia 

Cindy Zheng

Vice President

Brunswick Group

Simcere Pharmaceutical Group 

Tel: 1-212-333-3810

Tel: 86-25-8556-6666*8857



In Beijing:

Yue Yu

Brunswick Group

Tel: 86-10-5960-8600

 

SIMCERE PHARMACEUTICAL GROUP

PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT SHARE AND ADS DATA)



Three months ended March 31,


2012

2013

2013


RMB

RMB

USD

Product revenue

487,609

528,729

85,131

Total revenue

487,609

528,729

85,131

Cost of materials and production

(87,838)

(110,047)

(17,719)

Gross profit

399,771

418,682

67,412





Operating expenses and other operating income:




Research and development

(48,286)

(44,930)

(7,234)

Sales, marketing and distribution

(258,792)

(259,557)

(41,791)

General and administrative

(65,082)

(64,012)

(10,307)

Other operating income

15,650

-

-

Income from operations

43,261

50,183

8,080





Interest income

861

868

140

Interest expense

(20,193)

(13,101)

(2,109)

Foreign currency exchange gains (losses)

(57)

(26)

(4)

Other  income

4,081

1,190

191

Losses of equity method affiliated

company

(2,543)

(11,853)

(1,909)

Earnings  before income taxes

 

25,410

27,261

4,389





Income tax expense

(2,637)

(6,506)

(1,047)

Net Income       

22,773

20,755

3,342





Less: Net loss attributable to the
          non-controlling interest

5,851

9,188

1,479

Net income attributable to Simcere

28,624

29,943

4,821





Earnings  per share attributable to Simcere:




Basic

0.26

0.28

0.05

Diluted

0.26

0.28

0.05





Earnings  per ADS attributable to Simcere:




Basic

0.53

0.57

0.09

Diluted

0.53

0.56

0.09





Weighted average number of common shares:




Basic

108,438,176

105,157,800

105,157,800

Diluted

108,703,148

106,128,250

106,128,250

 

SIMCERE PHARMACEUTICAL GROUP

PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS EXPRESSED IN THOUSANDS)



December 31,

March 31,

March 31,


2012

RMB

2013

RMB

2013

USD





Assets




Current assets




Cash and pledged bank deposits

201,556

332,917

53,603

Assets held for sale

90,550

90,550

14,580

Bills receivable

679,630

614,257

98,901

Accounts receivable, net

413,481

419,796

67,591

Inventories

120,932

97,521

15,702

Other current assets

237,248

221,442

35,654

Total current assets

1,743,397

1,776,483

286,031

Property, plant and equipment, net

853,546

848,367

136,596

Land use rights

128,220

127,466

20,523

Goodwill and intangible assets, net

519,334

512,119

82,456

Investments in and advances to affiliated companies

56,785

41,487

6,680

Other non-current assets

71,381

96,304

15,506

Total assets

3,372,663

3,402,226

547,792

Liabilities




Current liabilities




Short-term borrowings

675,779

735,770

118,466

Accounts payable

47,136

35,371

5,695

Bills payable

15,000

-

-

Other payables and accrued liabilities

471,603

444,518

71,572

Total current liabilities

1,209,518

1,215,659

195,733

Long-term borrowings

2,000

2,000

322

Deferred tax liabilities

56,120

50,072

8,062

Other liabilities

32,657

31,657

5,097

Total liabilities

1,300,295

1,299,388

209,214

Shareholders' equity




Simcere shareholders' equity




Ordinary shares at par

8,258

8,259

1,330

Additional paid-in capital

853,551

863,329

139,004

Accumulated other comprehensive loss

(104,147)

(104,211)

(16,779)

Retained earnings

1,254,464

1,284,407

206,802

Total equity attributable to Simcere

2,012,126

2,051,784

330,357

Non-controlling interest

60,242

51,054

8,221

Total shareholders' equity

2,072,368

2,102,838

338,578

Commitments and contingencies




Total liabilities and shareholders' equity

3,372,663

3,402,226

547,792

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 = RMB6.2108 on March 31, 2013 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.

SOURCE Simcere Pharmaceutical Group



RELATED LINKS
http://www.simcere.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.