ECR Pharmaceuticals, which markets the Company's branded prescription products, contributed $18.7 million, for the full fiscal year, up from $2.8 million for the two months after ECR was acquired on February 27, 2009.
Cost of sales decreased as a percentage of sales to 44% from 52%. The increase in higher margin branded product sales of our ECR subsidiary was the primary reason for the change. Also contributing to this trend were strong sales of Hydrocortisone with Acetic Acid otic solution.
Sales, General and Administrative expenses increased to $45.1 million from $33.3 million primarily due to a full year of selling expense related to ECR's sales force versus the prior year with only two months of this expense. Additionally, payments to the Company's partner on Dorzolamide with Timolol ophthalmic solution increased, partially due to a $2.1 million one-time payment to terminate the agreement in January 2010.
Research and Development costs increased by 2% to $7.6 million from $7.4 million, as the Company's work on several new development projects more than offset the decline in costs associated with a clinical trial which the Company completed earlier this fiscal year.
Royalty income increased to $3.6 million from $0.6 million due to the royalties on products divested by the Company's Midlothian Laboratories division and increased royalties on Brometane. Contract research income increased to $0.9 million from $0.1 million due to work performed for a company in the branded prescription product market.
Net income increased to $31.1 million or $2.50 per fully diluted share in fiscal 2010 compared to a net income of $9.8 million or $.84 per fully diluted share for the prior year.
David Seltzer, President and CEO, commented: "We are very pleased with results for the fourth quarter and year end as we reported the best results ever in the Company's history. Our generic and branded business made great contributions to our success, and we are very excited about our future. We believe that our pipeline of products and our strong balance sheet will continue to facilitate the growth of the Company."
SOURCE Hi-Tech Pharmacal Co., Inc.