China BCT Reports Third Quarter and Nine-Month FY2012 Results

LIUZHOU, China, Nov. 14, 2012 /PRNewswire/ -- China BCT Pharmacy Group, Inc., (OTC BB: CNBI), ("China BCT" or the "Company"), a leading pharmaceutical distributor, retail pharmacy, and manufacturer of pharmaceutical products in Guangxi Province, China, today announced results for the three and nine month periods ended September 30, 2012.

Third Quarter 2012 Highlights

"In the third quarter, the trend of strong pressure on wholesale prices and margins continued," said Mr. Huitian Tang, Chief Executive Officer of the Company. "Government pressure on those margins through a zero profit policy for drug sales by the hospitals, a ceiling on drug price increases during the contract bidding process and a mandate for hospitals to take the lowest bid price in all cases continue. These are the challenges that we are addressing. However we have yet to halt the decline in operating profit from our wholesale activities which has declined 32% for the first nine months of the year and 68% for the third quarter. We have put a great deal of effort into expanding our retail operations to offset the wholesale declines and results are encouraging. Our operating profit from our retail activities is up 10% for the year so far, although expansion costs have reduced profitability for the third quarter by 11%."

Third Quarter 2012 Results

Third quarter 2012 revenue decreased 18% to $55.4 million from $67.5 million in the third quarter of 2011, was mainly due to selling price pressures in the pharmaceutical distribution segment.

Revenue from the Company's pharmaceutical distribution segment decreased 23% year-over-year to $38.6 million, or 70% of total revenue in the third quarter of 2012.

Revenue from the Company's retail pharmacy segment decreased 1% year-over-year to $13.5 million, or 24% of total third quarter revenue. A $1.2 million decrease in sales due to the closure of 17 stores over the last twelve months was partly offset by a $0.5 million increase from newly opened stores.

Revenue from the Company's manufacturing segment fell 8% year-over-year to $3.3 million, or 6% of total third quarter revenue.

Gross profit fell 34% year-over-year to $10.7 million, from $16.3 million for the same period of 2011. Gross profit margin was reduced to 19.4%, as compared to 24.2% in the comparable period last year. The decrease in gross profit margin in the third quarter of 2012 mainly reflected the price pressures on sales to hospitals from the PRC government-mandated collective tender process and pressures on prices of drugs sold to health care community centers via the government-controlled prices of drugs on the prescribed list within the Basic Drug Catalogue.

Within pharmaceutical distribution, operating profit margin decreased to 6.6% in the third quarter of 2012 from 16.0% in the third quarter of 2011. Operating profit margin for the retail pharmacy segment decreased to 15.9% from 17.7% in the third quarter of 2011. Manufacturing segment operating profit margin was 42.3% and 53.8% during the three months ended September 30, 2012 and 2011, respectively.

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China BCT Reports Third Quarter and Nine-Month FY2012 Results