Global Pharma Management

Shanghai Medical Technology Co., a Chinese provider of Hemodialysis equipment and other related supplies and services, including disposable and diagnostic products, throughout Eastern China for the second quarter of 2008 increased 24.2% to $9.8 million compared to $7.9 million for the same period last year.

During the second quarter of 2008 were derived from an increase in sales volume, as the company added new customers including hospitals and clinics, and patients covered by government reimbursement plans. Hemodialysis equipment and related disposables generated a majority of net sales for the second quarter of 2008, while disposables comprised approximately 50% of net sales.

Gross profit for the second quarter of 2008 was up 18.5% to $3.6 million, compared to $3.0 million for the same period last year, yielding gross margins of 36.5% and 38.3%, respectively. The slight decrease in gross margins was due to increasing competition, which caused pricing pressure especially at the larger hospitals. Operating expenses for the second quarter were $1.35 million compared to $0.48 million for the same period last year. The increase was due primarily to financing costs, sales and marketing expenditures in entering new markets and management's decision to expand the organization to accommodate future growth while targeting larger volume sales. Operating margins were 22.7% compared to 32.2% for the second quarter of 2008 and 2007, respectively.

Net income was $3.55 million for the six months ended June 30, 2008, an increase of $0.16 million, or approximately 4.8% compared to the same period last year. This equated to earnings of $0.18 per diluted share, compared to $0.23 per diluted share for the first six months of 2007 based on 20 and 15 million diluted shares, respectively.

Net revenues increased approximately 26.3% to $20 million for the six months ended June 30, 2008 as compared to $15.8 million for the same period last year. Operating expenses for the six months ended June 30, 2008 were $2.3 million compared to $0.96 million for the same period in 2007, an increase of 139.5%. Operating income for the six months ended June 30, 2008 was $5 million, an increase of 2.4% compared to $5.1 million for the six months ended June 30, 2007.