Lotus Pharmaceuticals, Inc. Reports Strong 2008 Financi...( utilities and labor costs incomparison ...),Health

"According to Chinese government's recent universal healthcare plan, the government will spend RMB850 billion ($124.3 billion) in the next three years to provide accessible and affordable healthcare to the country's 1.3 billion people. We see this as a wonderful opportunity because demands for drugs and active pharmaceutical ingredients ('APIs') are expected to increase and we believe could continue to increase until 2020. We also anticipate the decrease of drugs' pricings due to the open bidding system and government's restrictions on hikes of drugs prices.

"We entered into 2008 with a strong push to increase collections of our outstanding account receivables ('AR') and reduced outstanding AR amount significantly in 2008. We intend to maintain the AR level of 2008 and to request customers to prepay orders prior to our shipment of drugs. We ended the year with committed footprint in Inner Mongolia, the acquisition of intellectual rights of two drugs, application and the submission of two drugs to the SFDA. We achieved our goals for the year and exceeded our financial objectives."

Commentary

The 2008 revenue increase was attributed to wholesale revenues which increased by 57%. The increases were primarily due to strong sales in Brimonidine Tartrate Eye Drops and third party manufactured drugs. 100% of the prescription drugs Lotus sold are covered under the National Health Insurance program. The Company has promoted strongly the sale of Brimonidine Tartrate Eye Drops and gained national exclusive rights to five third-party manufactured prescription drugs. Lotus believes that due to the strong market demand for these drugs, together with the Company's sales and marketing efforts, steady growth is expected in 2009 regardless of the softening of the economy. The decrease in retail sales from L
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