Mr. Movens added, "Though distributed products launched in the fourth quarter Fiscal 2008 remained a significant driver of our sales, second quarter Fiscal 2009 had solid growth on our overall product line over the corresponding period of Fiscal 2008. We continue to make inroads towards improved market share of both new and existing products while we work to maintain our current market share on what is now becoming a broader basket of products in our portfolio."
"Our strategy remains to grow the business effectively by maximizing our sales on our approved products born out of our various paths of development. Towards the end of Fiscal 2008, the weight of distributed product sales significantly increased. This trend has continued through the first six months of Fiscal 2009 and will most likely continue on a short-term basis. Overall, we are pleased with the direction of the Company and our continued focus on executing Caraco's business plan is a major factor in the Company's success."
Second Quarter and First Six Months Fiscal 2009 Results
During the second quarter and first six months of Fiscal 2009, net sales
were
The gross profit margin as a percentage of net sales for the second
quarter and first six months of Fiscal 2009 decreased to 18% and 20%,
respectively, as compared to 44% during both of the corresponding periods of
Fiscal 2008. The decreases were primarily due to the weight of increased sales
of distributed products versus the sales of manufactured products, which had
an impact on the overall margin percentage. Net sales for distributed products
during the second quarter and first six months of Fiscal 2009 were
Mr. Movens stated, "Manufactured product margins have remained fairly stable period to period. This rate may or may not remain at current levels in future periods. To date we have had constant downward pricing pressure. We are hopeful that manufactured margins remain in line with Fiscal 2008 as we continue to manage, among other things, various factors such as changes in product sales mix, the balance of product sold to the various classes of trade, price erosion, new competitors entering the market and protecting and growing our market share. We can not determine the mix of distributed product sales versus manufactured product sales in any given period as it depends on our ability to gain market share on each product and is relative to when the FDA approves any given product in either category of product and the revenue potential of that product once it has been approved."
Selling, general and administrative ("SG&A") expenses during the second
quarter and first six months of Fiscal 2009 were
Total R&D expenses for the second quarter and first six months of Fiscal
2009 were
Mr. Movens said, "As we have previously disclosed, we have implemented development strategies with various third parties both domestic and abroad, in addition to the Sun Pharma products agreements that are intended to complement both the Caraco and Sun Pharma development pipeline. We also anticipate additional development agreements will be entered into in order to eliminate any future gaps in our calendar of approvals that we anticipate from the FDA. We expect these agreements to remain key future contributors to our business in addition to our own internal product development. We continue to fortify our internal development by adding formulators to our research and development team and increasing the number of products we have in development."
Mr. Movens stated, "The expansion of our facilities should be completed
prior to the end of Fiscal 2009. The manufacturing facility that we are
building, along with our new distribution facility which we recently leased,
should provide the capacity we need to supply our customers effectively. Our
training and succession planning is being enhanced to support our growth and
predict future operational efficiencies and improved outcome in quality. We
continue to work in collaboration with the
"Our internal efforts, combined with Sun Pharma, in developing new products continue to pick up momentum and should permit us to grow at the level of our guidance. The current level of growth is at a high level which may not be sustainable. Based on our current distribution and sale and marketing agreements with Sun Pharma and our internal portfolio of products and future approved products, we believe we will achieve 25% growth in sales for Fiscal 2009, compared to Fiscal 2008," added Mr. Movens.
Mr. Movens stated, "The Company intends to aggressively move forward with the development of new products. We believe that R&D remains to be a significant driver of future growth. While the development of new products will continue to impact our cash R&D expense and EPS, we believe that we will continue to have the cash and other means available to meet increased working capital requirements, fund anticipated Paragraph IV certification litigation legal expenses, and finance further capital investments. Product development is a critical element in meeting future expectations."
"We are pleased with our overall results and the direction of the company. We look towards building on our manufacturing sales where possible while measuring the balance required to optimize our gross profit on both distributed and manufactured products. We have many projects in place that should result in improved efficiencies and productivity both from a systems and operational perspective. We will continue to work at lowering costs while maintaining quality throughput in production. As we work through reviewing various target acquisition opportunities that come available to us we may determine that we need additional cash to complete a particular acquisition. Though this could result in future borrowings, we currently remain debt free," Mr. Movens concluded.
This press release should be read in conjunction with our Form 10-Q, which provides more detailed information on the results of the second quarter and first six months of Fiscal 2009.
Safe Harbor: This news release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are contained in the Corporation's filings with the Securities and Exchange Commission, including Item 1A to the Corporation's annual report on Form 10-K, and include, but are not limited to: information of a preliminary nature that may be subject to adjustment, potentially not obtaining or delay in obtaining FDA approval for new products, governmental restrictions on the sale of certain products, development by competitors of new or superior products or less expensive products or new technology for the production of products, the entry into the market of new competitors, market and customer acceptance and demand for new pharmaceutical products, availability of raw materials, timing and success of product development and launches, dependence on few products generating majority of sales, product liability claims for which the Company may be inadequately insured, and other risks identified in this report and from time to time in our periodic reports and registration statements. These forward-looking statements represent our judgment as of the date of this report. We disclaim, however, any intent or obligation to update our forward-looking statements.
Financial Statements to Follow CARACO PHARMACEUTICAL LABORATORIES, LTD. (A subsidiary of Sun Pharmaceutical Industries Limited) STATEMENTS OF INCOME (UNAUDITED) Six months ended Quarter ended September 30, September 30, 2008 2007 2008 2007 Net sales $230,465,165 $76,754,883 $122,188,425 $41,354,567 Cost of goods sold 184,879,891 42,871,307 100,186,562 23,338,768 Gross profit 45,585,274 33,883,576 22,001,863 18,015,799 Selling, general and administrative expenses 8,055,246 6,436,725 4,237,244 3,034,058 Research and development costs - affiliate - 5,440,000 - 5,440,000 Research and development costs - other 11,065,940 8,389,210 5,581,711 5,103,723 Operating income 26,464,088 13,617,641 12,182,908 4,438,018 Other income Interest income 420,259 886,455 142,486 419,162 Other income 420,259 886,455 142,486 419,162 Net income before income taxes 26,884,347 14,504,096 12,325,394 4,857,180 Income taxes 9,020,309 1,367,966 3,901,421 236,265 Net income $17,864,038 $13,136,130 $8,423,973 $4,620,915 Net income per common share Basic $0.54 $0.46 $0.25 $0.16 Diluted $0.44 $0.34 $0.21 $0.12 Weighted number of shares Basic 33,035,602 28,739,315 33,389,920 28,739,315 Diluted 40,565,004 38,483,864 40,593,328 38,640,844
SOURCE Caraco Pharmaceutical Laboratories, Ltd.