General and administrative expenses were RMB55.6 million (US$8.1 million) for the third quarter of 2009, which represented an increase of 24.6% from RMB44.6 million for the same period in 2008. As a percentage of total revenue, general and administrative expenses increased to 12.5% for the third quarter of 2009 from 10.1% for the same period in 2008. For the first nine months of 2009, general and administrative expenses were RMB165.8 million (US$24.3 million), which represented an increase of 19.6% from RMB138.6 million for the same period in 2008.

Share-based compensation expense, which was 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 employee was assigned to perform, totaled RMB5.8 million (US$0.8 million) for the third quarter of 2009. Share-based compensation expenses for the third quarter of 2008 were RMB6.5 million. For the first nine months of 2009, share-based compensation expenses totaled RMB17.7 million (US$2.6 million), which represented a decrease of 11.1% from RMB19.9 million for the same period in 2008.

Income from operations was RMB29.0 million (US$4.3 million) for the third quarter of 2009, which represented a decrease of 66.6% from RMB87.0 million for the same period in 2008. For the first nine months of 2009, operating income was RMB128.0 million (US$18.8 million), which represented a decrease of 55.0% from RMB284.3 million for the same period in 2008.

Income tax expense for the third quarter of 2009 was RMB4.7 million (US$0.7 million), compared to RMB1.5 million for the same period in 2008. The increase in income tax expense for the third quarter of 2009 was primarily due to the release of the valuation allowance utilized by the earnings of an operating subsidiary in the same period of 2008. For the first nine months of 2009, income tax expense was RMB8.8 million (US$1.3 million) compared to RMB36.3 million for the same period in 2008.

Net income attributable to Simcere was RMB16.4 million (US$2.4 million) for the third quarter of 2009, compared to RMB91.2 million for the same period in 2008. Net income margin was 3.7% for the third quarter of 2009, compared to 20.6% for the third quarter of 2008. For the first nine months of 2009, net income was RMB101.8 million (US$14.9 million), which represented a decrease of 65.9% from RMB298.4 million for the same period in 2008. Net margin for the first nine months of 2009 was 7.8% as compared to 23.4% for the same period in 2008.

Basic and diluted earnings per American Depository Share ("ADS") for the third quarter of 2009 were RMB0.29 (US$0.04) and RMB0.29 (US$0.04) respectively. Basic and diluted earnings per ADS for the first nine months of 2009 were RMB1.75 (US$0.26) and RMB1.73 (US$0.25) respectively. One ADS represents two ordinary shares of the Company.

As of September 30, 2009, the Company had cash, cash equivalents and restricted cash of RMB448.1 million (US$65.6 million), compared to RMB813.8 million as of December 31, 2008.

SOURCE Simcere Pharmaceutical Group