DK Sinopharma third quarter sales increase 66% to $7,290,685

Nov 29 2010

DK Sinopharma, Inc. (OTC Bulletin Board: DKSP) ("DK Sinopharma" or the "Company"), announced its third quarter 2010 financial results. The Company's quarterly report on Form 10-Q was filed with the U.S. Securities & Exchange Commission on November 22, 2010.

Third Quarter 2010 Highlights

Sales increased by 66% year-over-year to $7,290,685.

Gross profit increased by 58% year-over-year to $3,088,846.

Net Income increased to $2,191,362 or a 139% year-over-year increase.

Earnings per share increased by $0.04 to $0.07 per share

"We are very pleased with our third quarter results and we are confident we will be able to continue our growth in sales and profit by expanding our market share and increasing our brand recognition. Our product lines are becoming increasingly visible in hospitals across China," stated Professor Dongke Zhao, President, Chief Executive Officer and Chairman of DK Sinopharma, Inc.

Third Quarter 2010 Results

Sales for the three months ended September 30, 2010 increased by 66% to $7,290,685 as compared with $4,382,522 for products sold in the same period ended September 30, 2009.  This increase is primarily due to an increase in sales for our new products, Galanthamine Hydrobromide, Cow-bezoar Detoxicating tables, Ganhai Stomach Recovery capsules, Camptothecine, VC Honeysuckle-fructusforsythiae tables and compound Salvia Root tablets. Sales to new customers have also contributed to the increase in sales.

Gross profit increased 58% to $3,088,846 for the three months ended September 30, 2010, as compared to $1,956,019 for the three months ended September 30, 2009. Our gross profit margin fell 3% to 42% as of the three months ended September 30, 2010 from 45% as of the same period in 2009, mainly due to the increase in subcontracting charges.

In the three months ended September 30, 2010, selling, general and administrative expenses were $998,913, a decrease of 15%, as compared to $1,177,302 compared to the same period of 2009. The decrease for the 3 months ended September 30, 2010 was due primarily to decrease in amortization of intangible assets, advertising expenses and the reversal of a write-off related to an advance made to a supplier.

As a result of the above, in the three months ended September 30, 2010, Net Income increased to $2,191,362 as compared with the corresponding periods in 2009 of $918,266, representing a 139% year-over-year increase.

Nine months Results

In the nine months ended September 30, 2010, we achieved revenue of $20,018,100, an increase of 47% as compared with $13,575,614 for products sold in the same period ended September 30, 2009.  This increase is primarily due to the launch of new products and successful sales to new customers.  The Company's new products launched in 2010 were Galanthamine Hydromide, Hydroxycamptothecin, Tanshinone IIA, Cow-bezoar Detoxicating table, Ganhai Stomach Recovery capsule, Camptothecine, VC Honeysuckle-fructus Forsythiae table and compound Salvia Root. Increase in sales prices of the Company's major products, namely, Huanglong Cough & Dyspenca Capsules, Gynecological Inflammation Relieving Capsules, Hepatitis B Relieving and Curing Capsules and Sprain Relieving Plaster and successful market penetration into a new province, Jilin province, have also contributed to the increase in sales revenue.

Gross profit increased 36% to $8,262,544 for the nine months ended September 30, 2010, as compared to $6,072,254 for the nine months ended September 30, 2009. Our gross profit margin fell 4% to 41% as of the nine months ended September 30, 2010 from 45% as of the same period in 2009, mainly due to the increase in subcontracting charges and costs of raw and packing materials; effectively, the overall percentage increase in cost of sales offset an overall percentage increase in net sales

Selling, general and administrative expenses was $2,846,732 for the nine months ended September 30, 2010, an increase of 1% as compared to $2,814,031 for the same periods in 2009.

Net income achieved for nine months ended September 30, 2010 was $5,161,402, as compared with the corresponding periods in 2009 of $3,203,419, representing an increase of 61%.

Recent Events

On Sept. 16th, 2010, DK Sinopharma, Inc. successfully co-hosted the National Digestive & Cardiovascular Diseases Academic Conference along with China Pharmacology Academic Council and School of Medicine of Dalian University in Dalian. Many experts and scholars in digestive and cardiovascular systems attended the conference, including 92 doctors from large hospitals across the country.

On September 27, 2010, DK Sinopharma, Inc. successfully co-hosted the 2nd China Western Gynecological Diseases Research Forum along with China Physician Association Gynecology Branch and Shaanxi Pharmacology Academic Council. Many experts and scholars in gynecology attended the conference, including 146 gynecologists from large hospitals across China.