First Quarter Revenue Grows 23.7% Year-over-year to RMB68.6 Million (US$10.0 Million); Operating Income Grows 41.7% Year-over-year to RMB20.1 million (US$2.9 million); Company Reiterates FY2009 Revenue Guidance

SHENYANG, China, May 19 /PRNewswire-Asia-FirstCall/ -- 3SBio Inc. (Nasdaq: SSRX) ('3SBio' or 'the Company'), a leading China-based biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, today announced its unaudited financial results for the first quarter ended March 31, 2009.

    First Quarter 2009 Financial Highlights:
    -- Total net revenues increased 23.7% over the first quarter of 2008 to
       RMB68.6 million (US$10.0 million).
    -- Operating income (non-GAAP) for the first quarter of 2009 was
       RMB20.6 million (US$3.0 million), an increase from RMB14.6 million
       (US$2.1 million) for the first quarter of 2008. GAAP operating income
       was RMB20.1 million (US$2.9 million) for the first quarter of 2009, an
       increase from RMB14.2 million (US$2.0 million) for the first quarter of
       2008.
    -- Net income (non-GAAP) for the first quarter of 2009 was RMB21.0 million
       (US$3.1 million), compared to RMB20.2 million (US$2.9 million) for the
       first quarter of 2008. GAAP net income for the quarter was
       RMB15.9 million (US$2.3 million) for the first quarter of 2009,
       compared to GAAP net income of RMB19.8 million (US$2.8 million) for the
       first quarter of 2008.
    -- Earnings per share (non-GAAP) for the first quarter of 2009 were
       RMB0.14 (US$0.02), compared to RMB0.13 (US$0.02) for the first quarter
       of 2008. GAAP earnings per share were RMB0.11 (US$0.02) for the first
       quarter of 2009, compared to GAAP earnings per share of RMB0.13
       (US$0.02) for the first quarter of 2008.

* Please refer to 'Non-GAAP Financial Measures: Reconciliation of GAAP to non-GAAP' section below for the definition and rationale of all of the non-GAAP measures. Non-GAAP items for the three-month period ended March 31, 2008 have been included as comparatives to conform to the current year's presentation basis.

    First Quarter 2009 Business Highlights:
    -- EPIAO, the Company's flagship injectable recombinant human
       erythropoietin ('EPO') products, demonstrated resilient growth despite
       a challenging environment, with net revenue from EPIAO rising 21.0%
       over the first quarter of 2008 to RMB42.9 million (US$6.3 million) in
       the first quarter of 2009.
    -- TPIAO net revenue increased 21.3% to RMB18.7 million (US$2.7 million)
       in the first quarter of 2009. TPIAO, the Company's protein-based
       therapeutic recombinant human thrombopoietin ('TPO') products,
       demonstrated its continued success in a slowing economy.
    -- 3SBio continued to work closely with the SFDA to advance the regulatory
       approval of the three new product programs submitted in 2008: 36,000 IU
       dosage formulation of EPIAO, NuLeusin, and TPIAO label extension for
       the treatment of ITP.
    -- Construction continued on schedule on the Company's new EPIAO plant,
       which will support the future growth of EPIAO and serve as the first
       step towards exploring global biosimilar opportunities.

'3SBio had a strong start to 2009, delivering revenue growth and demonstrating the continued acceptance of our keystone EPIAO and TPIAO products in domestic and international markets,' commented Dr. Jing Lou, Chief Executive Officer of 3SBio. 'Our operating margin was solid and we continued to generate positive cash flow, strengthening our bottom line performance while ensuring 3SBio is in a financial position to pursue synergistic business development opportunities that will positively benefit our company. 3SBio has worked diligently to develop a portfolio of current and future pharmaceutical products, and we remain on track to achieve our 2009 financial and operational objectives.'

First Quarter 2009 Unaudited Financial Results

Net revenues. Net revenues increased by 23.7% to RMB68.6 million (US$10.0 million) for the first quarter of 2009 from RMB55.5 million (US$7.9 million) for the same period of 2008. This increase was largely due to continued strength from TPIAO and EPIAO products which increased by 21.3% and 21.0%, respectively, over the same period of 2008, and to a lesser degree by impressive growth from export sales which grew 75.6% and our iron product sales which grew 47.5% over the same period of last year.

The growth in sales from EPIAO was driven in part by an expanded oncology sales force, which continued to perform well. TPIAO remained 3SBio's second largest revenue contributor in the quarter, accounting for 27.3% of total net revenues. Export sales exceeded RMB3.3 million (US$0.5 million), and sales of 3SBio's IV Iron Sucrose rose to RMB2.0 million (US$0.3 million) for the first quarter of 2009.

Gross profit. As a result of continued sales growth from key products despite the economic situation, gross profit increased by 23.8% to RMB62.6 million (US$9.2 million) for the first quarter of 2009 from RMB50.6 million (US$7.2 million) for the same period of 2008. Gross margin increased slightly to 91.3% for the first quarter of 2009 from 91.1% for the first quarter of 2008 and 90.6% for the fourth quarter of 2008.

Operating income. Non-GAAP operating income for the first quarter of 2009 grew 40.7% year-over-year to RMB20.6 million (US$3.0 million). GAAP operating income was RMB20.1 million (US$2.9 million) for the first quarter 2009, an increase of 41.7% from operating income of RMB14.2 million (US$2.0 million) for the same period of 2008.

Operating expenses. Non-GAAP operating expenses were RMB42.1 million (US$6.2 million) for the first quarter of 2009. GAAP operating expenses were RMB42.5 million (US$6.2 million) for the first quarter of 2009, an increase of 16.8% from GAAP operating expenses of RMB36.4 million (US$5.2 million) for the same period of last year. Increase in operating expenses was largely driven by the increased sales & marketing expenses as 3SBio continued necessary marketing efforts.

    -- Research and development ('R&D') cost.  GAAP R&D cost for the first
       quarter of 2009 was RMB2.5 million (US$0.4 million), or 3.6% of net
       revenue, compared to RMB2.8 million (US$0.4 million), or 5.0% of net
       revenue for the same period of last year. The decline in R&D cost for
       the first quarter of 2009 was due to the conclusion of several major
       trials in the last quarter of 2008.
    -- Sales, marketing and distribution expenses. GAAP sales, marketing and
       distribution expenses for the first quarter of 2009 were
       RMB32.9 million (US$4.8 million), compared to RMB25.6 million
       (US$3.7 million) for the same period of last year. This represented a
       slight increase to 48.0% of net revenue for the first quarter of 2009,
       compared to 46.2% of net revenue for the same period of last year. The
       increase was primarily attributable to higher sales activities in
       general, continued investment in building the TPIAO brand and EPIAO
       penetration of the Oncology market.
    -- General and administrative expenses. GAAP general and administrative
       expenses for the first quarter of 2009 were RMB7.1 million
       (US$1.0 million), representing a decrease of 11.3% from general and
       administrative expenses of RMB8.0 million (US$1.1 million) for the same
       period of 2008. This marked a decline to 10.3% of net revenue for the
       first quarter of 2009, compared to 14.4% of net revenue for the first
       quarter of 2008.

* Please refer to 'Non-GAAP Financial Measures: Reconciliation of GAAP to Non-GAAP' section below for specific non-GAAP operating expenses measures.

Interest income. The Company recorded net interest income of RMB4.1 million (US$0.6 million) for the first quarter of 2009, as compared RMB7.4 million (US$1.1 million) for the same period in 2008. As experienced last quarter, the decrease in interest income was partially due to the decrease in the prevailing market interest rates in the first quarter of 2009 compared to the same period of last year.

Net income. Non-GAAP net income for the first quarter of 2009 was RMB21.0 million (US$3.1 million), excluding share-based compensation and recognition of an impairment loss of RMB4.6 million (US$0.7 million) on available-for-sale securities. This was comparable to non-GAAP net income of RMB20.2 million (US$2.9 million) for the first quarter of 2008.

GAAP net income was RMB15.9 million (US$2.3 million) for the first quarter 2009, compared to net income of RMB19.8 million (US$2.8 million) for the same period of 2008. GAAP net income was largely impacted by the recognition of an impairment loss on available-for-sale securities. Based on the current market condition and the performance of the available-for-sale securities held by the Company, the Company expects no further impairment losses from the financial instruments currently being held.

Cash and cash equivalents/Time deposits.