Dragon Sells EPO Business; Focus on Antibiotic Core Business
VANCOUVER, November 14, 2007 /PRNewswire-FirstCall/ - Dragon Pharmaceutical Inc. today announced that it has entered an agreement with an unaffiliated party for the sale of its EPO business which accounted for less than 3% of Dragon's consolidated revenue for the first nine months of 2007. The decision was made based on the studies of the EPO market which showed limited growth potential, if not downward trend, during the next three years. The Company considers this decision an important part of Dragon's ongoing strategy to fully focus on its core business of antibiotic product lines that have shown tremendous growth over the past years.
Over the past three years, Dragon's revenues from antibiotic products increased from $31.23 million for the year of 2005 to approximately $60 million for the first nine months of 2007, reflecting the strong market demand as well as enhanced competitiveness of the Company in antibiotic products. Mainly due to the strong growth of antibiotic products, EPO business only accounted for less than 3% of total revenues for the first nine months of 2007, as compared to 11% of the total revenues for the year of 2005. Since EPO business is no longer a significant and growing component of our product portfolio, the Company decided that it is in the best interests of its shareholders to sell its EPO business and concentrate all its resources on the antibiotic product lines which offered the greatest growth potential.
According to the agreement, the EPO business will be sold for $2.08 million. The transaction is expected to be completed during the fourth quarter of 2007. Because of this disposal, the Company recorded a non-cash impairment charge of $2.64 million during the current quarter related to the write down of the intangible assets and goodwill associated with the Biotech division which was created as a result of the reverse take-over of Dragon Pharmaceutical Inc. by Oriental Wave Holdings Limited on January 12, 2005. During the three and nine months ended September 30, 2007, the Company recognized $0.97 million and $2.12 million after-tax income from continuing operations.
"Our EPO business performed well during the past years. However, an in-depth review of the EPO business has concluded that it is very demanding in market resources but with very limited growth potential," said Mr. Yanlin Han, Chairman and CEO of the Company. "We are focusing our efforts in the antibiotic market which we intend to lead while showing a sustainable and growing profit. In addition, the Company is also actively exploring additional business opportunities in broadening its core antibiotic product offerings and increasing production capacities. We are confident that the benefits of all these initiatives will be reflected in the Company's performance in the future."
This press release contains forward looking statements such as the Company's Chemical and formulation business to be competitive and successful in the marketplace. 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 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.
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Posted: November 2007