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Ester-C drives growth at Zila


The nutraceuticals unit of pharma company Zila saw a 75 per cent increase in revenue in the third quarter, driven by sales of its Ester-C vitamin C product the company reported.

The nutraceuticals business generated revenues of $8.1 million during the quarter to April 30, compared with $4.6 million during same period of 2002. Income was $2.1 million, up from $757,000 last year. Sales of Ester-C were up 93 per cent, according to the Phoenix-based firm, which has used heavy TV and consumer advertising to promote the product.

In contrast, sales of the low margin saw palmetto products declined 59 per cent as the company continued its plan to exit that business. The company recorded a charge of $120,000 in the quarter to reduce the carrying value of its saw palmetto inventory to the current market price. The sale of its remaining saw palmetto inventories is expected to be completed during the fiscal fourth quarter ending July 31, 2003, it said.

Gross margin at the unit was however affected by higher costs for ascorbic acid, the principal raw material for Ester-C, although the company said that it believes ascorbic acid prices have peaked and will be decreasing over coming months.

In the business overall, which includes a pharmaceuticals and biotechnology unit, revenues were up 49 per cent over last year's third quarter.

Douglas D. Burkett, Ph.D., chairman, CEO and president of Zila , said: "Investors have begun to take notice of the dramatic turnaround we have achieved at Zila over the last year, and the momentum we have begun to develop throughout the company. Our quarterly revenue growth was exceptionally strong thanks to the continued growth of Ester-C and our financial performance has improved for three consecutive quarters."

Zila's reduced net loss in the quarter to $639,000, compared with $2.1 million in the third quarter of fiscal 2002. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) improved by $1.2 million.