C & O Pharmaceutical Technology (Holdings) says net profit increased 18% to HK$30 million ($5.5 million) for the three months ended 31 December 2009 (2QFY10).

Group revenue grew 18% to HK$170 million due to its increased marketing efforts in building its corporate brand name among doctors and patients in China as well as increased sales in Exclusive and C&O Branded products.

In 2QFY10, sales of Exclusive products improved 13% to HK$114 million while sales of C&O Branded products jumped 30% to HK$52 million year-on-year. The implementation of the Essential Drug List (EDL) and the expanded National Health Insurance Catalog have also contributed to the sales growth of these two product segments.

C & O Pharmaceutical Technology says its balance sheet remains strong, with total cash (including fixed deposits held at banks and cash and cash equivalents) increased from HK$193 million as at 30 June 2009 to HK$233 million as at 31 December 2009.

The ongoing healthcare reform carried out by the Chinese government will continue to shape the operating landscape of the pharmaceutical industry, says C & O Pharmaceutical Technology.

Subsequent to the promotion of the Essential Drug List, the Chinese government recently expanded the National Health Insurance Catalog. Two C&O Branded products have been included in the updated catalog, namely Amoxicillin Granules and Clarithromycin Dispersible Tablets. The group believes the inclusion of these products will generate higher demand for its C&O Branded products.

In line with the group’s strategy of building its corporate brand name, it says it will also continue to strengthen its product portfolio and it intends to add another two new C&O Branded products, namely Levocarnitine Injection and Cefuroxime Axetil Capsule, in the coming quarter. Levocarnitine Injection is used for the supplementary treatment of carnitine deficiency diseases, while Cefuroxime Axetil Capsule is an oral complementary product to its existing C&O Branded product, Cefuroxime Sodium for Injection, a cephalosporin antibiotic. This means C & O Pharmaceutical Technology will have 24 C&O Branded products and 2 Exclusive products in the National Health Insurance Catalogue.

The board has declared an interim dividend of 0.5 cents and a special interim dividend of 3.5 cents to shareholders, totalling 4 cents. In aggregate, this represents a dividend yield of 14% based on the closing share price of 28.5 cents on 9 February 2010.