Simcere Pharmaceutical Group Reports Preliminary Unaudited Fourth Quarter And Full Year 2012 Results

Simcere Pharmaceutical Group Reports Preliminary Unaudited Fourth Quarter And
                            Full Year 2012 Results

PR Newswire

NANJING, China, March 7, 2013

NANJING, China, March7, 2013 /PRNewswire/ -- Simcere Pharmaceutical Group
("Simcere" or the "Company") (NYSE: SCR), a leading pharmaceutical company
specializing in the development, manufacturing, and marketing of branded
generic and proprietary pharmaceuticals in China, today reported preliminary
unaudited financial results for the fourth quarter and full year ended
December31, 2012.

Highlights

  oTotal revenue was RMB540.1million (US$86.7million) for the fourth
    quarter of 2012, compared to RMB511.0million for the same period in 2011,
    representing an increase of 5.7%. For the full year of 2012, total revenue
    was RMB2,083.0million (US$334.3 million), representing an increase of
    2.1% from RMB2,040.5million in 2011.

  oGross margin for the fourth quarter of 2012 was 81.1%, compared to 82.3%
    for the same period in 2011. For the full year of 2012, gross margin was
    82.7%, compared to 83.9% in 2011.

  oLoss from operations for the fourth quarter of 2012 was RMB78.2 million
    (US$12.5million), primarily due to a non-cash impairment charge of
    RMB97.2 million(US$15.6 million), as the result of a write-down of
    intangible assets, goodwill, and assets held for sale associated with the
    acquisition of Jiangsu Quanyi Biological Technology Stock Co., Ltd.
    ("Jiangsu Quanyi") in 2009. For the full year of 2012, income from
    operations was RMB39.6 million (US$6.4 million), which represented a
    decrease of 72.4% from RMB143.5million in 2011.

  oNet loss attributable to Simcere for the fourth quarter of 2012 was
    RMB20.8 million (US$3.3 million), compared to net income attributable to
    Simcere of RMB42.8million for the same period in 2011. For the full year
    of 2012, net income attributable to Simcere was RMB57.0 million (US$9.1
    million), which represented a decrease of 68.1% from RMB178.4million in
    2011.

Mr. Hongquan Liu, Executive Director and Chief Executive Officer of Simcere
Pharmaceutical Group, commented, "With the ongoing implementation of a series
of healthcare reform policies, drug prices continued to trend down in 2012.
Despite the challenging environment and intense competition, our sales in the
fourth quarter grew moderately. While we believe market conditions will remain
challenging in 2013, our priorities will continue to be strengthening
promotion of our key products, accelerating market access and hospital
listings, and reducing costs."

The Company also announced that Mr. Alan Au joined the Company as an
independent director and chairman of the audit committee in March 2013. Mr. Au
has over 15 years of experience in the financial service and investment
sectors relating to healthcare in Asia. He is a Certified Public Accountant in
the U.S. and holds the Chartered Financial Analyst designation. Mr. Au
received his Bachelor's degree in Psychology from the Chinese University of
Hong Kong in 1995, and a Master's degree in Management from Columbia
University in 2007.

2012 Fourth Quarter and Full Year Financial Results

Total revenue for the fourth quarter of 2012 was RMB540.1million
(US$86.7million), compared to RMB511.0million for the same period in 2011,
representing an increase of 5.7%. For the full year of 2012, total revenue was
RMB2,083.0 million (US$334.3 million), representing an increase of 2.1% from
RMB2,040.5million in 2011.

The tables below set forth the Company's top 10 products by revenue for the
three months ended December 31, 2012 and the year ended December 31, 2012:

In Thousands
                              ThreemonthsendedDecember31,2012  ThreemonthsendedDecember31,2011
                              RMB          USD         %oftotal   RMB           % of total   Change
Products    TherapeuticArea                           revenue                    revenue
Edaravone   Neuroscience      184,601      29,631      34.2%        172,303       33.7%        7.1%
Endu        Oncology          77,567       12,450      14.4%        65,397        12.8%        18.6%
Zailin      Infectious        53,642       8,610       9.9%         56,790        11.1%        (5.5%)
            Disease
Yintaiqing  Inflammation      48,686       7,814       9.0%         56,443        11.0%        (13.7%)
Sinofuan    Oncology          38,244       6,139       7.1%         42,789        8.4%         (10.6%)
Biqi        Gastroenterology  19,622       3,149       3.6%         11,786        2.3%         66.5%
Jiebaishu   Oncology          15,772       2,532       2.9%         18,696        3.7%         (15.6%)
Kechuanning Respiratory       13,132       2,108       2.4%         13,351        2.6%         (1.6%)
Anqi        Infectious        11,073       1,777       2.1%         12,957        2.5%         (14.5%)
            Disease
Anxin       Infectious        10,722       1,721       2.0%         10,877        2.1%         (1.4%)
            Disease
Others                        67,079       10,767      12.4%        49,631        9.8%         35.2%
Total                         540,140      86,698      100.0%       511,020       100.0%       5.7%

                              Year ended December 31, 2012    Year ended December 31, 2011
                              RMB        USD      %oftotal  RMB        %oftotal Change
Products    TherapeuticArea                      revenue                revenue
Edaravone   Neuroscience      702,698    112,791  33.7%       770,967    37.8%        (8.9%)
Endu        Oncology          271,214    43,533   13.0%       263,046    12.9%        3.1%
Zailin      Infectious        229,303    36,806   11.0%       191,006    9.4%         20.1%
            Disease
Yintaiqing  Inflammation      177,884    28,552   8.5%        185,441    9.1%         (4.1%)
Sinofuan    Oncology          159,884    25,663   7.7%        178,146    8.7%         (10.3%)
Biqi        Gastroenterology  86,242     13,843   4.1%        82,034     4.0%         5.1%
Jiebaishu   Oncology          69,553     11,164   3.4%        68,344     3.3%         1.8%
Anxin       Infectious        56,396     9,052    2.7%        45,919     2.3%         22.8%
            Disease
Anqi        Infectious        51,495     8,265    2.5%        58,592     2.9%         (12.1%)
            Disease
Kechuanning Respiratory       46,357     7,441    2.2%        42,268     2.0%         9.7%
Others                        231,940    37,229   11.2%       154,784    7.6%         49.8%
Total                         2,082,966  334,339  100.0%      2,040,547  100.0%       2.1%



For more information about the above products, please visit the Company's
corporate website:

www.simcere.com.

Gross margin for the fourth quarter of 2012 was 81.1%, compared to 82.3% for
the same period in 2011. For the full year of 2012, gross margin was 82.7%,
compared to 83.9% in 2011.

Research and development expenses for the fourth quarter of 2012 totaled
RMB60.2million (US$9.7million) which represented a decrease of 14.7% from
RMB70.6 million for the same period in 2011. This was due primarily to an
addition of RMB7.9million (US$1.3 million) in government research and
development grants recognized compared to the same period in 2011. As a
percentage of total revenue, research and development expenses decreased to
11.1% for the fourth quarter of 2012 from 13.8% for the same period in 2011.
For the full year of 2012, research and development expenses totaled
RMB228.7million (US$36.7million), compared to RMB198.7million in 2011.

Sales, marketing and distribution expenses for the fourth quarter of 2012 were
RMB284.5million (US$45.7million), which represented a decrease of 1.0% from
RMB287.4million for the same period in 2011. As a percentage of total
revenue, sales, marketing and distribution expenses decreased to 52.7% for the
fourth quarter of 2012 from 56.2% for the same period in 2011. For the full
year of 2012, sales, marketing and distribution expenses were
RMB1,140.8million (US$183.1million), which represented an increase of 0.8%
from RMB1,132.0million in 2011.

General and administrative expenses were RMB74.4million (US$11.9million) for
the fourth quarter of 2012, which represented a decrease of 1.8% from
RMB75.8million for the same period in 2011. As a percentage of total revenue,
general and administrative expenses decreased to 13.8% for the fourth quarter
of 2012 from 14.8% for the same period in 2011. For the full year of 2012,
general and administrative expenses were RMB256.0million (US$41.1million),
which represented a decrease of 11.2% from RMB288.1million in 2011.

Share-based compensation expenses, which were allocated to research and
development expenses, sales, marketing and distribution expenses, and general
and administrative expenses, based on the nature of the work that the relevant
employee was assigned to perform, totaled RMB10.0million (US$1.6million) for
the fourth quarter of 2012, compared to RMB6.3million for the same period in
2011, which was primarily due to new issuance of restricted shares. For the
full year of 2012, share-based compensation expenses totaled RMB20.4million
(US$3.3million), a decrease of 30.4% from RMB29.3million in 2011, which was
primarily due to the completion of the vesting period of the first and second
batches of restricted shares in November 2011 and March 2012, respectively.

Loss from operations for the fourth quarter of 2012 was RMB78.2 million
(US$12.5million), compared to income from operations of RMB1.6million for
the same period in 2011. Loss from operations was primarily attributable to a
non-cash impairment charge of RMB97.2 million (US$15.6 million) as the result
of a write-down of intangible assets, goodwill, and assets held for sale
associated with the acquisition of Jiangsu Quanyi in 2009. Simcere has
determined a write-down of assets and goodwill of Jiangsu Quanyi is required
due to lowered expectation for future sales and profitability of its vaccine
products currently under development. For the full year of 2012, income from
operations was RMB39.6million (US$6.4million), which represented a decrease
of 72.4% from RMB143.5million in 2011.

Income tax benefit for the fourth quarter of 2012 was RMB11.9 million (US$1.9
million), compared to income tax benefit of RMB41.9million for the same
period in 2011. The significant income tax benefit in the fourth quarter of
2011 was primarily due to the improved financial results at one of the
Company's subsidiaries during 2011, resulting in the reversal of the valuation
allowance previously made against the deferred tax assets of this subsidiary
amounting to RMB32.3 million in the fourth quarter of 2011. For the full year
of 2012, income tax benefit was RMB5.6million (US$0.9million), compared to
income tax benefit of RMB35.4million in 2011.

Net loss attributable to Simcere for the fourth quarter of 2012 was RMB20.8
million (US$3.3 million), compared to net income attributable to Simcere of
RMB42.8million for the same period in 2011. The net loss, as mentioned
previously, was primarily attributable to the non-cash impairment charge of
RMB97.2 million (US$15.6 million) as the result of a write-down of intangible
assets, goodwill and assets held for sale associated with the acquisition of
Jiangsu Quanyi in 2009. For the full year of 2012, net income attributable to
Simcere was RMB57.0 million (US$9.1 million), which represented a decrease of
68.1% from RMB178.4million in 2011. Net margin, representing net income
attributable to Simcere divided by total revenue, for the full year of 2012
was 2.7%, compared to 8.7% in 2011.

Basic and diluted net loss per American Depository Share ("ADS") for the
fourth quarter of 2012 were RMB 0.40 (US$0.06) and RMB 0.39 (US$0.06),
respectively. Basic and diluted earnings per ADS for the full year of 2012
were RMB1.06 (US$0.17) and RMB1.06 (US$0.17), respectively. One ADS represents
two ordinary shares of the Company.

As of December 31, 2012, the Company had cash, cash equivalents and restricted
cash of RMB201.6million (US$32.4million), compared to RMB262.6million as of
December31, 2011.

Financial Information

The preliminary unaudited condensed consolidated statements of income and
balance sheets accompanying this press release have been prepared by
management using U.S. GAAP. This preliminary financial information is not
intended to fully comply with U.S. GAAP because it does not present all of the
financial information and disclosures required by U.S. GAAP.

Safe Harbor Statement

This press release contains forward-looking statements. These statements
constitute "forward-looking" statements within the meaning of Section21E of
the Securities Exchange Act of 1934, as amended, and as defined in the U.S.
Private Securities Litigation Reform Act of 1995. These forward-looking
statements can be identified by terminology such as "anticipate," "believe,"
"estimate," "expect," "forecast," "intend," "may," "plan," "project,"
"predict," "should" and "will" and similar expressions. In particular, the
quotations from management in this press release contain forward-looking
statements. These forward looking statements are based upon management's
current views and expectations with respect to future events and are not a
guarantee of future performance. Furthermore, these statements are, by their
nature, subject to a number of risks and uncertainties that could cause actual
performance and results to differ materially from those discussed in the
forward-looking statements as a result of a number of factors. Further
information regarding these and other risks is included in Simcere's filings
with the U.S. Securities and Exchange Commission at www.sec.gov. Simcere does
not undertake any obligation to update any forward-looking statement, except
as required under applicable law.

Conference Call

Simcere Pharmaceutical Group will host a conference call to discuss the
Company's results for the fourth quarter and full year of 2012 on Thursday,
March 7, 2013 at 8:00 a.m. Eastern Time (Thursday, March 7 at 9:00 p.m.
Beijing/Hong Kong time). The management team will be on the call to discuss
the results for the fourth quarter and full year of 2012 and to answer
questions.

To access the conference call, please dial:

International toll:   +65.6723.9381
United States toll-free:     +1.866.519.4004
United States toll:    +1.718.354.1231
China Domestic toll-free:        800.819.0121
China Domestic mobile toll-free:              400.620.8038
Hong Kong toll:     +852.2475.0994

Please ask to be connected to Q4 2012 Simcere Pharmaceutical Group Earnings
Conference Call and provide the following passcode: 12783585.

Simcere will also broadcast a live audio webcast of the conference call. The
broadcast will be available by visiting the "Investor Relations" section of
the company's web site at www.simcere.com.

Following the earnings conference call, an archive of the call will be
available by dialing:

United States toll-free:  +1.855.452.5696
United States toll:        +1.646.254.3697

The passcode for replay participants is 12783585. The telephone replay also
will be archived on the "Investor Relations" section of the company's website
for seven days following the earnings announcement.

About Simcere Pharmaceutical Group

Simcere Pharmaceutical Group (NYSE: SCR, Simcere) is a leading pharmaceutical
company specializing in the development, manufacturing, and marketing of
branded and proprietary pharmaceuticals in China. Simcere concentrates its
research and development efforts on the treatment of diseases with high
incidence and/or mortality rates and for which there is a clear demand for
more effective pharmacotherapy such as cancer, strokes, cardiovascular
disease, infectious diseases and pain. For more information about Simcere
Pharmaceutical Group, please visit www.simcere.com.

Investor and Media Contacts:
Email: ir@simcere.com

In Nanjing:                 In the United States:
Jie Liu D'Elia              Cindy Zheng
Vice President                 Brunswick Group
Simcere Pharmaceutical Group Tel: 1-212-333-3810
Tel: 86-25-8556-6666*8857
In Beijing:
Yue Yu
Brunswick Group
Tel: 86-10-5960-8600





Simcere Pharmaceutical Group

PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts expressed IN THOUSANDS, EXCEPT SHARE AND ADS DATA) 
                         ThreemonthsendedDecember31,      Year ended December 31,
                         2011        2012        2012         2011        2012        2012
                         RMB         RMB         USD          RMB         RMB         USD
Product revenue          511,020     540,140     86,698       2,040,547   2,082,966   334,339
Total revenue            511,020     540,140     86,698       2,040,547   2,082,966   334,339
Cost of materials and    (90,614)    (101,935)   (16,361)     (328,159)   (361,071)   (57,956)
production
Gross profit             420,406     438,205     70,337       1,712,388   1,721,895   276,383
Operating expenses and
other operating income:
Research and development (70,583)    (60,216)    (9,666)      (198,722)   (228,717)   (36,711)
Sales, marketing and     (287,428)   (284,518)   (45,668)     (1,131,974) (1,140,810) (183,113)
distribution
General and              (75,784)    (74,384)    (11,940)     (288,144)   (255,999)   (41,091)
administrative
Impairment on goodwill,
intangible assets        -           (97,247)    (15,609)     -           (97,247)    (15,609)

and assets held for sale
Other operating income   15,000      -           -            50,000      40,439      6,491
Income/(loss) from      1,611       (78,160)    (12,546)     143,548     39,561      6,350
operations
Interest income          1,036       1,256       202          4,676       4,066       653
Interest expense         (11,034)    (13,897)    (2,231)      (42,342)    (69,258)    (11,117)
Foreign currency         1,108       (81)        (13)         7,732       (923)       (148)
exchange gains/(losses)
Other income            846         3,244       521          15,036      11,429      1,834
Equity in
(losses)/incomes of      (1,974)     6,062       973          (12,192)    (4,859)     (780)
equity method
affiliated company
Income/(loss) before
income taxes             (8,407)     (81,576)    (13,094)     116,458     (19,984)    (3,208)


Income tax benefit       41,866      11,919      1,913        35,371      5,581       896
Net                      33,459      (69,657)    (11,181)     151,829     (14,403)    (2,312)
Income/(loss)
Less: Net loss
attributable to
the                9,338       48,857      7,842        26,560      71,360      11,454
noncontrolling
interest
Net income/(loss)        42,797      (20,800)    (3,339)      178,389     56,957      9,142
attributable to Simcere
Income/(loss) per share
attributable to Simcere:
Basic                    0.39        (0.20)      (0.03)       1.63        0.53        0.09
Diluted                  0.39        (0.20)      (0.03)       1.61        0.53        0.09
Income/(loss) per ADS
attributable to Simcere:
Basic                    0.78        (0.40)      (0.06)       3.25        1.06        0.17
Diluted                  0.77        (0.39)      (0.06)       3.23        1.06        0.17
Weighted average number  109,941,646 105,220,991 105,220,991  109,738,705 106,996,531 106,996,531
of common shares: Basic
Diluted                  110,477,166 105,764,663 105,764,663  110,525,257 107,370,830 107,370,830





SIMCERE PHARMACEUTICAL GROUP
PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN THOUSANDS)


                               December31, December31, December31,
                               2011            2012            2012

                               RMB             RMB             USD
Assets
Current assets
Cash, cash equivalents and     262,557         201,556         32,352
restricted cash
Assets held for sale           -               90,550          14,534
Bills receivable               814,822         679,630         109,088
Accounts receivable, net       462,050         413,481         66,368
Inventories                    126,708         120,932         19,411
Other current assets           181,196         237,248         38,081
Total current assets           1,847,333       1,743,397       279,834
Property, plant and equipment, 925,815         853,546         137,004
net
Land use rights                139,707         128,220         20,581
Goodwill and intangible        648,408         519,334         83,359
assets, net
Investments in and advance to  91,355          56,785          9,115
an affiliated company
Other non-current assets       81,499          71,381          11,457
Total assets                   3,734,117       3,372,663       541,350
Liabilities
Current liabilities
Short-term borrowings and
current portion of long-term 816,150         675,779         108,470
borrowings
Accounts payable               52,191          47,136          7,566
Bills payable                  28,379          15,000          2,408
Other payables and accrued     565,827         471,603         75,697
liabilities
Total current liabilities      1,462,547       1,209,518       194,141
Long-term borrowings,          -               2,000           321
excluding current portion
Deferred tax liabilities       46,248          56,120          9,008
Other liabilities              31,625          32,657          5,242
Total liabilities              1,540,420       1,300,295       208,712
Shareholders' equity
Simcere shareholders' equity
Ordinary shares at par         8,532           8,258           1,326
Additional paid-in capital     954,750         853,551         137,004
Accumulated other              (104,608)       (104,147)       (16,717)
comprehensive loss
Retained earnings              1,197,507       1,254,464       201,355
Total equity attributable to   2,056,181       2,012,126       322,968
Simcere
Noncontrolling interest        137,516         60,242          9,670
Total shareholders' equity     2,193,697       2,072,368       332,638
Commitments and contingencies
Total liabilities and          3,734,117       3,372,663       541,350
shareholders' equity

Note: The conversions of Renminbi (RMB)into United States dollars (USD)as at
the reporting dates are based on the noon buying rate of USD1.00 = RMB6.2301
on December 31, 2012 as set forth in the H. 10 statistical release of the
Federal Reserve Board. No representation is intended to imply that the RMB
amounts could have been, or could be, converted, realized or settled into U.S.
dollars at that rate on the reporting dates.

SOURCE Simcere Pharmaceutical Group

Website: http://www.simcere.com
 
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