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| 8-K - DRAGON PHARMACEUTICAL INC | v179452_8k.htm |
EXHIBIT
99
PRESS
RELEASE
DRAGON
PHARMA REPORTS 2009 FULL YEAR FINANCIAL RESULTS
Vancouver, Canada - Dragon
Pharmaceutical Inc. ("Dragon Pharma" or the "Company" TSX: DDD; OTCBB: DRUG;
BBSE: DRP), an international manufacturer of antibiotics, today announced its
financial results for the fiscal year ended December 31, 2009.
Results
for the Fiscal Year Ended December 31, 2009
The
Company reported $165.77 million of revenues for the year ended December 31,
2009, representing 9% growth from $151.95 million for the same period in 2008.
$133.64 million, or approximately 81%, of the sales for 2009 were generated from
the sales of products in the Chinese market, and the remaining $32.13 million,
or approximately 19%, were generated from the sales of products in the markets
outside of China.
Sales
from the Cephalosporin Division increased 9% from the same period of 2008 to
$112.99 million, accounting for 68% of the total sales of the Company. During
the year, the Company further increased its production level and achieved a
utilization rate of 83% for the production of 7-ACA. The Company’s business
strategy is to establish vertically integrated production lines covering
Cephalosporin intermediates, crude bulk active pharmaceutical ingredients (APIs)
and formulation drugs. As larger volumes of 7-ACA were used for in-house
downstream applications, sales of 7-ACA decreased 21% while sales of
Cephalosporin crude bulk APIs and formulation drugs increased 99% and 12%
respectively.
Sales
from the Penicillin Division increased 10% from the same period of 2008 to
$52.78 million, accounting for 32% of the Company’s total revenues. The increase
in sales was mainly driven by the good performance of the Company’s core product
Clavulanic Acid. As the marker leader of Clavulanic Acid in China and top
supplier in the emerging market, the Company maintained its sales momentum and
achieved 29% of year-over-year growth in sales of Clavulanic Acid products.
Sales volumes increased 55% to 94 tons from 61 tons in the same period of 2008.
Mainly due to the larger production volumes as well as the improvement in
fermentation technology, gross margin of Clavulanic Acid further improved to 44%
from 31% in 2008. Sales from Cefalexin and Cefadrozil, two other main products
in the division, decreased 10% from the same period of 2008 mainly due to
oversupply of such products in the Chinese market.
Cost of
sales for the year ended December 31, 2009 was $135.40 million compared to
$127.40 million for the same period of 2008. The increase in the cost of sales
was mainly due to larger scale production and increased sales of products from
both the Penicillin and Cephalosporin divisions. Gross profit and
gross margin for the year ended December 31, 2009 were $30.37 million and 18%
compared to $24.54 million and 16% for the same period of 2008. The increase in
overall gross margin was mainly due to the margin improvement for Clavulanic
Acid products for 2009.
Net
income was $8.26 million, representing 21% of increase from $6.82 million for
the same period of 2008. Earnings per share (basic and diluted) were $0.12
compared to $0.10 for the same period of 2008.
The
company’s current production facilities for 7-ACA and Clavulanic Acid have been
operating close to their maximum capacity. Since the current campus is
surrounded by residential complex and has no room for further expansion, the
Company negotiated with the local government and acquired new premises to
relocate present production facilities as well as to accommodate capacity
expansion for the next five years. The management estimated that the capital
expenditure on the new site will be $100 million.
Since the
relocation will cause asset losses and operational costs, the Municipal
Government of the City of Datong has agreed to subsidize $36 million to the
Company. As at December 31, 2009, the Company received advance of the subsidy of
$16,673,000 from the Government. The Company expects that the government fund
will cover the losses and costs of the relocation; however, the Company also
anticipates that there will be uncertainties in the construction, relocation and
trial production.
For
further information, please refer to the Company's 10-K, which has been filed
with the U.S. Securities and Exchange Commission and the Ontario Securities
Commission. The full financial statements are also available on Dragon's website
at www.dragonpharma.com.
Dragon
to Be Acquired in Going Private Transaction
As
previously announced on March 26, 2010, the Company has entered into a
definitive merger agreement to be acquired by an entity controlled by Mr. Yanlin
Han, our Chairman and Chief Executive Officer, for $0.82 per share in
cash. Mr. Han is the largest shareholder of the Company owning 37.95%
of the total outstanding shares. Under the terms of the merger
agreement, Dragon Pharma's shareholders, other than Mr. Han and shareholders who
exercise their dissenter's rights, will receive $0.82 in cash for each
outstanding share of Dragon Pharma's common stock. The merger is
expected to close in the second quarter of 2010 and is subject to certain
closing conditions, including approval by Dragon Pharma's shareholders, meeting
certain requirements of the Toronto Stock Exchange, and other closing conditions
set forth in the merger agreement.
Additional
Information and Where to Find It
This
press release may be deemed to be solicitation material in respect of the
proposed merger discussed above. In connection with the proposed
merger, we plan to file a proxy statement with SEC. INVESTORS AND SHAREHOLDERS
ARE ADVISED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final proxy statement will
be mailed to our shareholders. Investors and shareholders may obtain a free copy
of the proxy statement when it becomes available, and other documents filed by
us with the SEC, at the SEC's web site at http://www.sec.gov and on the
Company's web site at http://www.dragonpharma.com/. Free copies of the proxy
statement, when it becomes available and our other filings with the SEC may also
be obtained from us. Free copies of our filings may be obtained by directing a
request to Dragon Pharmaceutical, Inc., Suite 310, 650 West Georgia Street,
Vancouver, British Columbia, Canada V6B 4N9 Attention: Maggie Deng,
Secretary.
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The
Company and certain of its directors, executive officers and other members of
management and employees may, under SEC rules, be deemed to be "participants" in
the solicitation of proxies from our shareholders with respect to the proposed
merger. Information regarding the persons who may be considered "participants"
in the solicitation of proxies will be set forth in our proxy statement relating
to the proposed merger when it is filed with the SEC. Information regarding
certain of these persons and their beneficial ownership of our common stock as
of March 15, 2010 is also set forth in our annual report on Form 10-K for the
year ended December 31, 2009 which was filed with the SEC on March 31,
2010. Additional information regarding the interests of such
potential participants will be included in the proxy statement and the other
relevant documents filed with the SEC when they become available.
About
Dragon Pharmaceutical Inc.
Dragon
Pharmaceutical, incorporated in Florida and headquartered in Vancouver, Canada,
is a leading manufacturer and distributor of a broad line of high-quality
antibiotic products including Clavulanic Acid and 7-ACA, a key intermediate to
produce cephalosporin antibiotics and formulated drugs. Dragon Pharma is the
third largest 7-ACA producer and the dominant manufacturer and market leader of
Clavulanic Acid products in China. Dragon Pharma utilizes its nationwide sales
distribution network, close customer relationships, understanding of local
markets and customer needs and low cost structure to outperform its
international and domestic peers. With an annual capacity of 780 tons, Dragon
Pharma is the largest exporter of 7-ACA in China. To learn more about Dragon
Pharmaceutical Inc., please visit www.dragonpharma.com.
Safe
Harbor Statement
This
press release contains forward looking statements, including but not limited to,
that the Company will continue to experience growth in sales of its main
products, that it will continue to be able to improve its production technology,
that it will continue to achieve continuous growth in business and profitability
in the near future, that it will continue to utilize its current facilities at
their maximum capacities, that there will be growth in the Chinese and the
international market and that the merger will be consummated. These statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those anticipated in the forward looking statements.
Readers should not place undue reliance on forward looking statements, which
only reflect the views of management as of the date hereof. The Company does not
undertake the obligation to publicly revise these forward looking statements to
reflect subsequent events or circumstances. Readers should carefully review the
risk factors and other factors described in its periodic reports filed with the
Securities and Exchange Commission
FOR MORE INFORMATION
CONTACT:
Dragon Pharmaceutical
Inc.
Maggie
Deng, Chief Operating Officer
or
Karen
Huang, Manager, Business Research & Development
Telephone:
+1(604)-669-8817 or
North
America Toll Free: 1-877-388-3784
Email:
ir@dragonpharma.com
Website:
http://www.dragonpharma.com
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