Question-and-Answer Session
Operator
(Operator instructions) And your first question comes from the line of Ding Ding from SIG. Please proceed.
Ding Ding - Susquehanna Financial Group
Thank you. Congratulations on a strong quarter and closing the financing yesterday. I noticed you have a very strong quarter for Sunstone this past quarter. Can you share with us what drove Sunstone growth this quarter, any other factors in addition to the favorable fourth-quarter seasonality? And secondly, what is your expectation on the impact of volume and margin on Sunstone business due to China healthcare reform going forward? Thank you.
David Gao
Okay. Thank you Ding Ding. Here is David. I think the person probably I should ask to answer the question is Fred and Martyn if you have any comments on this. Just the short answer, I think obviously the Q4 is always the strongest of quarter of Sunstone and actually, but even compare with the fourth quarter in 2007 Sunstone still has a very strong growth. The reason is obviously there is several products, that is very strong. The top product is to treat the cold, the common symptom for the children's, (inaudible) still at a point of high growth, that is, our market growth rate is over 15%, which does really constitute about 50% of the Sunstone actually GoodBaby products. And secondly the largest products, which is to treat the cough for the children's has an extraordinary strong growth because that product has just launched since last two or three years and also we have some new product launch. Obviously that is not a significant contribution yet, however it is going to start actually to show the contribution in Q1. So, not just I would say so far even we have not finished Q1, we are right in the March, but our January and February sales is still very strong and for the healthcare reform, healthcare reform there is still many kind of changes, still not very clear, even the government published the policies, but the execution of the details is not very clear outright. However in general, we would think that reform would benefit for the companies, especially targeting the high-end, both in the low-end market. But the high-end market obviously is going to be benefit from the stimulus plan and also to free the pricing free the high-end of pricing for the drugs that is on the nonessential list, drug list. But for the low end is the reform has a broader coverage, actually in the China government to talk about by 2012 as I mentioned in my remarks, they won’t have a 100% coverage for the whole China. This is significant, if you just talk about $20 or maybe $30 or $40 per person and at times 800 million farmers is going to be huge market. I think our company, especially Sunstone, will have a strong reserve in our pipeline, which we really have the drugs approved by the SFDA, we came quickly to capture that market segment.
- To read the full transcript on Seeking Alpha, click here »
