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Tongjitang Chinese Medicines Company (NYSE: TCM)reported that revenues dropped 36% in Q4 to 115 million RMB ($16.9 million). For the full year 2008, revenues were down 24% to 451 million RMB ($66.1 million).

In Q4, the company took $14.5 million in writedowns from its two acquisitions, Guizhou LLF and Qinghai Pulante. These charges put net income into negative territory at a loss of 79 million RMB ($11.6 million). Without the charges (and a $.3 million share-based compensation item), EBITDA was 23 million RMB ($3.4 million), less than half of last year’s 57 million RMB.

Tongjitang’s problem is declining sales of its premier product, the osteoporosis treatment Xianling Gubao (XLGB). Tongjitang has been telling investors that XLGB’s sales were being hurt by counterfeiters, but solving that problem in court hasn’t done much to improve revenues. XLGB posted 37% lower revenues in Q4. In a search for some hopeful news, management pointed out that the products revenues saw a sequential increase over Q3, although XLGB’s revenues are typically higher during winter months.

Even the company’s acquisitions aren’t doing particularly well; Guizhou Long-Life Pharmaceutical Company Limited contributed just 2.5 million RMB in revenue during Q4, about 50% of its 5.1 million RMB of sales in Q3. Qinghai Pulante did not close until Q4, so it hasn’t figured in the company’s financial reports.

The company still has much of its IPO cash on hand, though even that is slowly ebbing away without much to brag about in terms of new assets. Tongjitang ended the year with 516 million RMB ($75.6 million) of cash and cash equivalents, down from 798 million RMB two years earlier. Investors responded to the news by selling. Tongjitang’s shares fell 64 cents (18%) to $2.98. At this price, the company has a market capitalization of $100 million, which is only about $25 million more than cash on hand.

Last year at this time, Tongjitang’s Chairman offered to take the company private at $10 per share, an offer that was eventually withdrawn. Tongjitang has had the right to buy back $20 million of its shares. Shareholders should hope the company hasn’t begun exercising the right and can start now. Meanwhile, Fosun Pharmaceutical has been buying shares of Tongjitang’s stock in bits and pieces, quietly amassing a 13% stake in the company.

Disclosure: none.

Source: Tongjitang Chinese Medicines Reports Dismal Q4