EXHIBIT 99
Dragon Announces 2004 Year End Results
Vancouver- March 30, 2005. Dragon Pharmaceutical Inc. (TSX: DDD; OTC BB: DRUG;
BBSE: DRP) today announced results for the twelve-month period ended December
31, 2004.
Highlights for 2004
o Generated revenues of $3.71 million and a net loss of $0.94 million, or
$0.05 per share for the full year of 2004.
o Continued momentum in developing the International market; Launched
rh-Erythropoietin ("EPO") product in Ecuador, Dominican Republic, Kosovo
and Trinidad-Tobago in addition to existing markets in China, India, Egypt,
Peru and Brazil.
o Entered into an agreement with Suzhou Zhongkai Bio-Pharmaceuticals Company
Limited to in-license the exclusive right to commercialize its Recombinant
Human Granulocyte Colony Stimulating Factor ("rhG-CSF") product worldwide,
excluding China.
o Subsequent to year-end:
o Completed the acquisition of Oriental Wave Holding Limited ("Oriental
Wave") and transformed itself into a diversified and growth oriented
pharmaceutical company with three key business units: Chemical
division for bulk pharmaceutical chemical, Biotech division for
recombinant drugs (EPO and G-CSF) and Pharma division for prescription
and over-the-counter drugs.
o Decided to construct a new state-of-the-art EPO production facility in
Datong city, China and relocate the EPO production from the current
facility in Nanjing city, China which will be closed in August 2005.
o Foreclosed on 2.23 million Dragon's common shares from Dr. Liu that
partially secured debt owed by Dr. Liu to the Company.
Financial Review for 2004
The Company posted revenues of $3.71 million in 2004 compared to $3.65 million
in 2003. Net loss for 2004 was narrowed down to $0.94 million or $0.05 per share
from a loss of $1.99 million or $0.10 per share in 2003. Sales in China and
outside of China were $2.66 million and $1.05 million, respectively for 2004
compared to $2.26 million and $1.39 million respectively for 2003.
During 2004, an 18% growth in sales was achieved in China, which was partially
offset by lower international sales outside of China. During 2004, the Company
implemented a new non-fixed sales compensation system for the Company's direct
sales team in China, which provided more incentive for the Company's sales
representatives to focus on delivering results. International sales in 2004 were
lower than those in 2003 because the Company sold product with a limited shelf
life at a reduced price in Brazil during 2003, and we did not experience similar
sales during 2004.
After the completion of the acquisition of Oriental Wave, the new Board of
Directors decided to build a brand new state-of-art EPO production facility in
Datong city, China and to relocate the EPO production from its current facility
in Nanjing city. The Company will locate the new EPO production site adjacent to
the Chemical division, which already includes the entire basic production
infrastructure such as power, steam, purified water supply and water treatment
facilities. As a result of the relocation decision, Dragon has decided to close
the Nanjing facility in August 2005 and has written off and accelerated the
depreciation and amortization of certain assets during 2004 of $938,000. This
write off was offset by the gain from foreclosure of 2.23 million Dragon shares
previously owned by Dr. Liu and that partially secured his amount due to the
Company. According to the comprehensive settlement agreement dated April 4,
2004, Dr. Liu placed 2.23 million Dragon's shares in escrow as partial security
for his amount due to the Company. These shares, which were forfeited effective
December 31, 2004 and are to be cancelled, were valued at $2.61 million and
resulted in the Company's recovery of $2.11 million of the amount that was
previously written-off in prior years. Dr. Liu still owes the Company
approximately $2.48 million although this balance due is carried on the
Company's balance sheet at a nominal value of $100. Dragon is considering what
further actions may be taken against Dr. Liu.
"We are encouraged by the growth of our market in China. On the international
front, we continue to receive remarkable progress by receiving four additional
market approvals during the second half of 2004: Ecuador, Dominican Republic,
Trinidad-Tobago and Kosovo" stated Dr. Alexander Wick, President of Dragon
Pharmaceutical. "We believe our decision to relocate the EPO production site to
Datong will allow us to increase the EPO output by two to three times than that
of the current facility in Nanjing and to capitalize on infrastructure
advantages and the efficiency of local operational management. As previously
announced, it is the Company's intention to supply EPO product from this new
facility to fulfil the anticipated demands of the Chinese and other developing
markets which are currently supplied from our Chinese facility in Nanjing while
we will use the new EPO to be produced in Europe specifically for the European
market as well as for new indication developments in the EPO field. Although the
main European patent for EPO expired in most European countries in December
2004, the European regulatory authority, EMEA, has not clearly indicated the
approval process for the EPO from generic competitors. However, we are confident
that we will be among the early candidates to enter the market with our new
European made EPO product."
About Dragon Pharmaceutical Inc.
On January 12, 2005, Dragon completed the acquisition of Oriental Wave Holding
Limited. As a result of the acquisition, Dragon has transformed itself into a
diversified generic pharmaceutical diversified and growth oriented
pharmaceutical company with three key business units: Chemical division for bulk
pharmaceutical chemical (Clavulanic Acid and 7-ACA), Biotech division for
recombinant drugs (EPO and G-CSF) and Pharma division for prescription and
over-the-counter drugs. The Company, after the acquisition, has significantly
increased the size of operations and now has approximately 3,000 employees,
including over 1,200 sales representatives in China, four manufacturing
facilities (three in Datong city and one in Nanjing city) and approximately 40
key products currently in the market. Selected 2004 pro-forma financials for the
newly combined Dragon will be announced in a separate press release shortly.
For further information please contact:
Dragon Pharmaceutical Inc.
Garry Wong, CFA, IMBA
Telephone: +1-(604)-669-8817 or North America Toll Free: 1-877-388-3784
Email: irdragon@dragonpharma.com
Website: www.dragonpharma.com
or
Renmark Financial Communications Inc.
John Boidman : jboidman@renmarkfinancial.com
Sylvain Laberge : slaberge@renmarkfinancial.com
Media - Cynthia Lane : clane@renmarkfinancial.com
Telephone: +1-(514) 939-3989
Website: www.renmarkfinancial.com
This press release contains forward looking statements. These statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward looking statement.
Factors that might cause such a difference include, but are not limited to, the
following: (1) risks and uncertainties relating to the political and regulatory
environment in China; (2) that the Company will be able to successfully
construct and operate a biotech production facility in Datong, China that will
be able increase production and operate more efficiently than its facility in
Nanjing; and (3) that the Company will be able to successfully sell its EPO
product in Europe.
Readers should not place undue reliance on forward looking statements, which
only reflect the view 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 with the Securities and Exchange Commission.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31.
(in U.S. Dollars) 2004 2003
Sales $ 3,705,261 $ 3,648,149
Cost of sales 1,546,028 1,184,896
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Gross profit 2,159,233 2,463,253
Selling, general and administrative expenses (3,354,522) (3,391,430)
Depreciation of property and equipment and
amortization of license and permit (706,941) (743,080)
Net write off of land-use right and property and
equipment (937,777) (165,912)
New market and EPO development expenses (246,080) (216,560)
Provision for doubtful accounts - (29,450)
Loan interest expense (4,223) (6,357)
Stock-based compensation - -
Development of insulin, G-CSF and rhTPO - -
Recovery (write-down) of amount owing from related party 2,106,486 -
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Operating income (loss) (983,824) (2,089,536)
Interest and other income 41,106 138,802
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Loss before income taxes (942,718) (1,950,734)
Income taxes - 44,000
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Net (loss) for the year $ (942,718) $ (1,994,734)
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(Loss) per share - basic and diluted $ (0.05) $ (0.10)
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Weighted average number of
common shares outstanding
Basic and diluted 20,551,440 20,348,195
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CONSOLIDATED BALANCE SHEETS
As at December 31
(in U.S. Dollars) 2004 2003
ASSETS
- ------
Current Assets
Cash and short term securities $ 2,161,781 $ 3,126,667
Accounts receivable 1,382,019 1,265,676
Inventories 585,565 1,090,464
Due from a director 100 -
Prepaid and deposits 401,727 139,595
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4,531,192 5,622,402
Total current assets
Property and equipment 873,036 2,089,352
Due from related party - Hepatitis B vaccine project - 100
Patent rights - related party - 500,000
License and permit 2,372,207 2,924,198
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Total assets $ 7,776,435 $ 11,136,052
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current
Accounts payable and accrued liabilities $ 1,548,144 $ 1,428,257
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Commitments
Stockholders' Equity
Share capital
Authorized: 50,000,000 common shares at
par value of $0.001 each
Issued and outstanding: 18,376,000 common shares
(December 31, 2003 - 20,462,000 common shares) 18,376 20,462
Additional paid in capital 24,176,970 26,708,870
Accumulated other comprehensive (loss) (34,807) (32,007)
Accumulated deficit (17,932,248) (16,989,530)
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Total stockholders' equity 6,228,291 9,707,795
- ------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 7,776,435 $ 11,136,052
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