Dragon Pharmaceutical Inc.
OTC Bulletin Board : DRUG
TSX : DDD

Dragon Pharmaceutical Inc.

August 14, 2007 22:51 ET

Dragon Pharmaceutical Reports Growth in Sales and Profits During Second Quarter of 2007

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2007) - Dragon Pharmaceutical Inc. (TSX:DDD)(OTCBB:DRUG)(BBSE:DRP) today announced the financial results for the second quarter ended June 30, 2007.

Highlights of the Second Quarter, 2007

- Sales increased 48% to $20.55 million from $13.89 million for the same period of 2006, and increased 19% as compared to the first quarter 2007;

- Gross profit and gross margin increased to $3.98 million and 19.36% from $2.39 million and 17.24% for the same period of 2006;

- Operating income increased 5.6 times to $1.17 million from $0.18 million in the same period of 2006;

- Net income was $0.45 million, compared to a net loss of $0.32 million for the same period of 2006. Net income for the second quarter of 2007 was net of a non-cash stock based compensation of $1.02 million.

Strong Sales Growth in the Low Season

Dragon experienced significant revenue growth in the second quarter of 2007 which was normally regarded as the low season during the year. Net sales increased 48% to $20.55 million from $13.89 million for the same period of 2006 and increased 19% sequentially as compared to the first quarter of 2007. The Company experienced revenue growth for all three divisions with 37%, 134% and 44% year-over-year growth rate for the Chemical, Pharma and Biotech divisions respectively.

The revenue growth was mostly driven by the increase in both the sale volume and the price of 7ACA product. As the prices for Penicillin intermediates tripled during the past 12 months, more customers have turned to other alternatives such as cephalosporin drugs, which have led to the increase in both the sale volume and price for 7ACA product. During the quarter, 146 tons of 7ACA were sold, which were 107% of the 137 tons of production output.

The Company has also increased its export sales of Clavulanic Acid by 26% compared with the same period of last year to $2.38 million. The Company obtained three new customers in China and three in India during the quarter, which is expected to provide a good foundation for the continuous growth during the third quarter.

The revenue growth of the Pharma Division was also significant. Total sales reached $3.67 million, representing an increase of 96% sequentially from the first quarter and 134% from the same period of 2006.

Significant increase in Gross Profit

During this quarter, the Company increased its production level and achieved a utility rate of 91% for 7ACA and 90% for Clavulanic Acid, and the unit cost for 7ACA dropped by 12% as compared to prior year period. The gross profit and gross margin increased to $3.98 million and 19.36% as compared to $2.39 million and 17.24% for the same period of 2006.

"We are glad that the Company delivered very strong growth in this low summer season," said Mr. Yanlin Han, Chairman and CEO of the Company. "We believe the same growth drivers from the market and customers will be stronger for the rest of this year. With strengthened competitive advantages, management believes that we can achieve continuous growth in business and profitability."

The Company is also pleased to announce the results of the Annual Shareholders Meeting which was held on August 13, 2007 in Datong, China.

The shareholders have re-elected the following eight members as the Board of Directors of the Company: Mr. Yanlin Han, Dr. Alexander Wick, Mr. Zhanguo Weng, Dr. Yiu Kwong Sun, Ms. Xuemei Liu, Mr. Peter Mak, Dr. Heinz Frey, and Mr. Jin Li.

This press release contains forward looking statements, including but not limited to, that it will continue to achieve continuous growth in business and profitability in the near future. 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.

Contact Information