As several of our major products including Clarithromycin Sustained-released Tablets, Itopride Hydrochloride granules and Baobaole chewable tablets have entered into their maturity, we expect to maintain Clarithromycin Sustained-released Tablets sales at its current level and continue experiencing the decrease in sales of Itopride Hydrochloride granules and Baobaole chewable tablets. Additionally, our Hongrui facility renovation work was completed in October 2010 and we have recently received the GMP certificate for this facility. We have relaunched several of the traditional Chinese medicines acquired in the February 2009 Hongrui acquisition and we expect to see more sales being generated from those products for the remaining of the year.
Jiangbo Pharmaceuticals today announced that Laiyang Jiangbo Pharmaceutical Co. has entered into a letter of intent with Shandong Xinkangqi Medical Company, a regional wholesale drug distributor in Shandong Province, pursuant to which Laiyang Jiangbo plans to acquire 100% of the outstanding equity of Xinkangqi. Xinkangqi's unaudited revenue and net income in 2010 are estimated to be approximately $180 million and $4.4 million, respectively. The transaction purchase price will be finalized upon conclusion of the due diligence process. The Company expects that the acquisition will close by the end of September 2011.
"We are very pleased to announce the entry into the LOI with Xinkangqi which we believe has a strong presence in Shandong, one of China's largest provinces with over 94 million inhabitants. Xinkangqi currently distributes many of our products and we anticipate achieving meaningful synergies by vertically integrating our manufacturing operations with Xinkanqi's distribution business after the transaction is closed. We plan to continue to evaluate strategic uses for our substantial remaining cash balance, including additional acquisitions in the fragmented distribution sector. Among our current operational goals, we plan to build Xinkangqi into one of the largest vertically-integrated wholesale drug distributors in Shandong."
The Company reaffirms its guidance of revenues for fiscal year 2011 of between $94 million and $96 million, but withholds its previous guidance of net income. The management needs additional time to observe and evaluate the situation of higher raw material costs which is expected to affect the Company's profitability of fiscal year 2011.
"While our top-selling drugs have reached a mature phase in their product lifecycles, we believe their revenue run-rates can be maintained in the near-term. In the second half of fiscal 2011, we expect a continued increase in sales of our new line of Felodipine sustained-release tablets and incremental revenue from the re-launch of several traditional Chinese medicines at our Hongrui facility."
Management continues to estimate that the portfolio of TCM drugs to be manufactured at Hongrui will generate revenues of $7 million to $15 million during the first year of production, beginning in the second quarter of fiscal year 2011. Felodipine is expected to generate revenues of $8 million to $12 million during the first twelve months after its launch, which took place this quarter. Therefore, based on its current outlook, the Company reaffirms guidance for fiscal year 2011 of revenues between $94 million and $96 million and net income, excluding the impact from change in fair value of derivative liabilities and expenses related to the Company's convertible debentures, between $29 million and $31 million.
"We ended the quarter with over $123 million in cash and are evaluating ways to deploy our capital to enhance the growth and profitability of our product portfolio and improve our strategic positioning within China's rapidly growing pharmaceutical industry. In particular, we are targeting strategic acquisitions that will strengthen our market position and vertically integrate our operations."
Combined sales of the Company's top four products in fiscal year 2010 are expected to decline by 15% to 20% in fiscal year 2011, reflecting intensifying competition and the Chinese government's control over drug pricing under recent health care reform policies. Incremental sales from the Company's recently approved Felodipine sustained release tablets and from the Company's TCM products to be manufactured at Hongrui are expected to largely offset this decline in 2011.
Management estimates that the portfolio of TCM drugs to be manufactured at Hongrui will generate revenues of $7 million to $15 million during the first year of production, beginning in the second quarter of fiscal year 2011. Felodipine is expected to generate revenues of $8 million to $12 million during the first twelve months after its launch, which took place in the first quarter of fiscal year 2011.
Based on current information, the Company expects that revenues for fiscal year 2011 will be in the range of $94 million and $96 million and net income, excluding the impact from change in fair value of derivative liabilities and expenses related to the Company's convertible debentures, will be in the range of $29 million and $31 million.
"We believe that our strong balance sheet and cash position provides Jiangbo with unique flexibility to acquire innovative new products and pursue strategic acquisitions. Presently we are evaluating select opportunities to enhance our growth prospects, strengthen our market position and vertically integrate our operations. With the transitional year of 2010 behind us, we believe that we are well positioned to create value for shareholders in 2011 and beyond."
We are very excited to begin the commercial launch of Felodipine SR tablets, which we believe will be a key revenue and profit growth driver for us in the next few years. We estimate revenue potential for this drug to be between $8 million and $12 million in the first twelve months of launch with a projected gross margin of at least 70%. We believe the addition of Felodipine SR tablets will enrich our product portfolio and will strengthen our competitive market position, while providing more cost effective new medicine to meet growing patient demand.
Jiangbo Pharmaceuticals today announced that the Company received approval from the Chinese State Food and Drug Administration ("SFDA") to start producing Felodipine sustained release ("SR") tablets. Jiangbo believes that it has the necessary manufacturing equipment and capacity to produce Felodipine SR tablets. The Company expects to complete the pilot production requirements and receive final distribution approval from Shandong Food and Drug Administration in July 2010. The Company plans to initiate commercial distribution immediately following the receipt of such approval. Management anticipates the drug to be a meaningful contributor to its revenue and profit starting in fiscal 2011 and estimates revenue potential for this drug to be between $8 million and $12 million in the first twelve months of launch with a projected gross margin of at least 70%.
"Improving our operational efficiency, building our pipeline and strengthening our management team are expected to be our top priorities right now. We are already taking steps to address these challenges and look forward to providing updates on our progress."
Jiangbo's management has begun reviewing the existing marketing and sales system, including sales force compensation and incentive and effectiveness of our advertising activities. The Company is planning to take steps to reduce and eliminate operational inefficiencies and drive sales growth. The Company recognizes the need to improve its product pipeline in order to ensure long term growth. In the past several months, the Company has been actively searching for new branded drug opportunities to license or acquire. Management expects revenues to improve in the second half of fiscal 2010. As such, the Company is maintaining its fiscal 2010 revenue guidance of $96 million to $98 million and operating income guidance of $42 million to $44 million.