November 1 -- Kangmei Pharmaceutical’s (600518.SH) inventory increased by 600 million yuan in the third quarter of 2011, although traditional Chinese medicine prices fell, reports the National Business Daily.

The traditional Chinese medicine price index fell to 110.86 points yesterday, down from 127.22 points in June and marking a 13% drop quarter-on-quarter. Zhang Shipeng, a traditional medicine practitioner at the Hebei Anguo market, said the prices of 80 to 90 percent of traditional Chinese medicines have fallen 50 percent this year. The price of astragalus dropped to 20 yuan per kilogram at present, down from 30 yuan in February. Pseudo-ginseng fell to 200-300 yuan per kilogram from 700 yuan in March.

Kangmei Pharmaceutical’s inventory, which includes astragalus, salvia, Chinese yam and platycodon grandiforus, was worth 1.74 billion yuan in the first three quarters of 2011.

The firm reported that its revenue increased 86 percent year-on-year to 4.27 billion yuan in the first three quarters of 2011, and its net profit jumped 36 percent year-on-year to 640 million yuan, with a comprehensive gross margin of 30.5 percent. It posted a 26-percent year-on-year increase in third-quarter net profit to 205 million yuan. Its revenue in the third quarter grew 78 percent year-on-year to 1.48 billion yuan.

Kangmei Pharmaceutical’s net profit growth was less than its revenue growth in the third quarter due to a lower gross margin from traditional Chinese medicine trading.