NANJING, China, Aug. 10, 2012 /PRNewswire-Asia/ -- 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 June 30, 2012.
Mr. Jinsheng Ren, Chairman and Chief Executive Officer of Simcere Pharmaceutical Group said, "In the second quarter of 2012, Simcere's revenue and gross margin remained largely stable. While sales of edaravone, Endu and Sinofuan continued to grow compared with the first quarter of 2012, year-over-year sales performance was below our expectation. During the quarter, we increased our marketing efforts for branded generic drugs such as Zailin, Yingtaiqing and Biqi which helped drive sales growth in these key products but impacted profitability."
"In the second quarter, we were encouraged by sales of our new Category 1 drug Iremod and Shanghai Celgen's biogeneric drug Qiangke," continued Mr. Ren. "We also received approval to initiate clinical studies for our oncology drug candidate Thiophenib and continue to see strong progress with the four additional new drug candidates currently under clinical trials."
2012 Second Quarter Financial Results Total revenue for the second quarter of 2012 was RMB528.7 million (US$83.2 million), compared to RMB546.4 million for the same period in 2011, representing a decrease of 3.2%. For the first six months of 2012, total revenue was RMB1,016.3 million (US$160.0 million), representing a decrease of 1.2% from RMB1,028.6 million for the same period in 2011.
The tables below set forth the Company's top 10 products by revenue for the three months ended June 30, 2012 and six months ended June 30, 2012:
In ThousandsThree months ended June 30, 2012Three months ended June 30, 2011RMB USD % of totalRMB% of totalChangeProductsTherapeutic Arearevenue revenue Edaravone
Infectious Disease 61,6309,70111.7%43,7628.00%
Infectious Disease 14,8812,3422.8%18,0433.30%
Infectious Disease 14,7752,3262.8%14,3712.60%
(3.2%)Six months ended June 30, 2012Six months ended June 30, 2011RMB USD % of totalRMB% of totalChangeProductsTherapeutic Arearevenue revenue Edaravone
Infectious Disease 121,66219,15012.0%105,24510.20%
Infectious Disease 30,6554,8253.0%34,9103.40%
Infectious Disease 30,2894,7683.0%25,6682.50%
(1.2%)For more information about the above products, please visit our corporate website: www.simcere.com.Gross margin for the second quarter of 2012 was 83.9%, compared to 84.9% for the same period in 2011. For the first six months of 2012, gross margin was 83.0%, compared to 84.4% for the first six months of 2011.
Research and development expenses for the second quarter of 2012 totaled RMB55.0 million (US$8.7 million), which represented an increase of 36.9% from RMB40.1 million for the same period in 2011. This increase was due primarily to the increased expenditure on on-going research and development projects, as well as a reduction of RMB5.5 million in government research and development grants recognized compared with the same period in 2011. As a percentage of total revenue, research and development expenses increased to 10.4% for the second quarter of 2012 from 7.3% for the same period in 2011. For the first six months of 2012, research and development expenses totaled RMB103.2 million (US$16.3 million), compared to RMB82.7 million for the same period in 2011.
Sales, marketing and distribution expenses for the second quarter of 2012 were RMB291.4 million (US$45.9 million), which represented an increase of 0.9% from RMB288.9 million for the same period in 2011. As a percentage of total revenue, sales, marketing and distribution expenses increased to 55.1% for the second quarter of 2012 from 52.9% for the same period in 2011. This increase was due primarily to increased spending on promotional activities for branded generic pharmaceutical products, such as Zailin, Yingtaiqing and Biqi. For the first six months of 2012, sales, marketing and distribution expenses were RMB550.2 million (US$86.6 million), which represented a decrease of 0.6% from RMB553.3 million for the same period in 2011.General and administrative expenses were RMB55.7 million (US$8.8 million) for the second quarter of 2012, which represented a decrease of 25.3% from RMB74.7 million for the same period in 2011. As a percentage of total revenue, general and administrative expenses decreased to 10.5% for the second quarter of 2012 from 13.7% for the same period in 2011. For the first six months of 2012, general and administrative expenses were RMB120.8 million (US$19.0 million), which represented a decrease of 15.4% from RMB142.8 million for the same period in 2011.
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 RMB2.7 million (US$0.4 million) for the second quarter of 2012. Share-based compensation expenses for the second quarter of 2011 were RMB7.8 million. The decrease was primarily due to the expiration of the first and second batches of restricted shares. For the first six months of 2012, share-based compensation expenses totaled RMB6.5 million (US$1.0 million), which represented a decrease of 56.7% from RMB15.1 million for the same period in 2011.
Income from operations was RMB41.6 million (US$6.5 million) for the second quarter of 2012, representing a decrease of 48.0% from RMB79.9 million for the same period in 2011, which was primarily due to a decrease in revenue. The Company recorded other operating income of RMB20.0 million in the second quarter of 2011 in connection with the settlement with former shareholders of Jiangsu Quanyi Biological Technology Stock Co., Ltd ("Jiangsu Quanyi") regarding the Company's 2009 acquisition of a 37.5% equity interest in Jiangsu Quanyi. For the first six months of 2012, income from operations was RMB84.8 million (US$13.4 million), which represented a decrease of 22.6% from RMB109.6 million for the same period in 2011.
Income tax expense for the second quarter of 2012 was RMB0.3 million (US$0.04 million), compared to income tax expense of RMB0.7 million for the same period in 2011. For the first six months of 2012, income tax expense was RMB2.9 million (US$0.5 million), compared to RMB5.8 million for the same period in 2011.
Net income attributable to Simcere was RMB27.0 million (US$4.2 million) for the second quarter of 2012, compared to RMB73.7 million for the same period in 2011. Net margin, representing net income attributable to Simcere divided by total revenue, was 5.1% for the second quarter of 2012, compared to 13.5% for the same period in 2011. For the first six months of 2012, net income attributable to Simcere was RMB55.6 million (US$8.8 million), which represented a decrease of 45.3% from RMB101.6 million for the same period in 2011. Net margin for the first six months of 2012 was 5.5%, compared to 9.9% for the same period in 2011.
Basic and diluted earnings per American Depository Share ("ADS") for the second quarter of 2012 were RMB0.50 (US$0.08) and RMB0.50 (US$0.08), respectively. Basic and diluted earnings per ADS for the first six months of 2012 were RMB1.03 (US$0.16) and RMB1.03 (US$0.16), respectively. One ADS represents two ordinary shares of the Company.
As of June 30, 2012, the Company had cash, cash equivalents and restricted cash of RMB288.7 million (US$45.4 million), compared to RMB262.6 million as of December 31, 2011.
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 StatementThis 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 CallSimcere Pharmaceutical Group will host a conference call to discuss the Company's results for the second quarter of 2012 on Friday, August 10 at 8:00 a.m. Eastern Time (Friday, August 10 at 8:00 p.m. Beijing/Hong Kong time). The management team will be on the call to discuss the results for the second quarter of 2012 and to answer questions.
To access the conference call, please dial:International toll:
+65.6723.9381United States toll-free:
+1.866.519.4004United States toll:
+1.718.354.1231China Domestic toll:
800.819.0121 China Domestic mobile toll:
400.620.8038 Hong Kong toll:
+852.2475.0994Please ask to be connected to Q2 2012 Simcere Pharmaceutical Group Earnings Conference Call and provide the following passcode: 15292591.
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:
+1.866.214.5335United States toll:
+1.718.354.1232The passcode for replay participants is 15292591. 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 GroupSimcere 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: email@example.comIn Nanjing:
Simcere Pharmaceutical Group
Tel: 86-25-8556-6666 ext 8857
In the United States:
In Hong Kong:
Joseph Lo Chi-Lun
Tel: 852-3512-5000 SIMCERE PHARMACEUTICAL GROUP
PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT SHARE AND ADS DATA) Three months ended June 30,Six months ended June 30,201120122012201120122012RMBRMBUSDRMBRMBUSDProduct revenue
159,978Total revenue546,363528,73483,2261,028,5651,016,343159,978Cost of materials and production
(27,223)Gross profit463,602443,61969,828868,331843,390132,755Operating expenses:Research and development
(16,251)Sales, marketing and distribution
(86,598)General and administrative
(19,018)Other operating income20,000--20,00015,6502,463Income from operations
(6,274)Foreign currency exchange gains (losses)
Equity in losses of equity method affiliated
(775)Earnings before income taxes 71,06220,2473,18797,15145,6577,187Income tax expense
(456)Net Income70,35119,9913,14791,34942,7646,731Less: Net loss attributable to the noncontrolling interest3,3556,9831,09910,247
2,020Net income attributable to Simcere73,706
8,751Earnings per share attributable to Simcere:Basic
0.08Earnings per ADS attributable to Simcere:Basic
0.16Weighted average number of common shares: Basic
SIMCERE PHARMACEUTICAL GROUP
PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN THOUSANDS) December 31,June 30,June 30,2011RMB2012RMB2012USDAssetsCurrent assetsCash, cash equivalents and restricted cash
99,569Accounts receivable, net
19,580Other current assets
29,185Total current assets1,847,3331,652,921260,180Property, plant and equipment, net
142,521Land use rights
21,739Goodwill and intangible assets, net
99,385Investments in and advance to an affiliated company91,355
13,672Other non-current assets
551,569LiabilitiesCurrent liabilitiesShort-term borrowings and current portion of long-term borrowings
3,148Other payables and accrued liabilities
67,538Total current liabilities1,462,5471,244,849195,947Long-term borrowings, excluding current portion
315Deferred tax liabilities
5,059Total liabilities1,540,4201,322,741208,208Shareholders' equitySimcere shareholders' equity Ordinary shares at par
1,322Additional paid-in capital
141,642Accumulated other comprehensive loss
197,202Total equity attributable to Simcere 2,056,1812,056,692323,735Noncontrolling interest137,516124,68219,626Total shareholders' equity2,193,6972,181,374343,361Commitments and contingenciesTotal liabilities and shareholders' equity
551,569Note: 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 = RMB6.3530 on June 30, 2012 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|
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