Chinese biotech 3SBio (NASDAQ:SSRX) is still trading well below its IPO price from last year, and its second-quarter earnings release isn't going to help it much.

Revenue looked great and was up 38% year over year. Sales of newer TPIAO, which stimulates platelet production after chemotherapy, clocked in a 67% year-over-year increase. That surpassed the 24% growth of its flagship product, EPIAO, a knockoff of Amgen's (NASDAQ:AMGN) Epogen and Johnson & Johnson's (NYSE:JNJ) Procrit.

Unfortunately, that's where the good news ends. 3SBio's operating expenses -- mostly sales, general, and administrative expenses -- grew much faster than revenue, resulting in operating income that was less than 11% higher than the year-ago quarter. Add to that additional categories headed in the wrong direction -- lower interest income and higher taxes -- and net profit was actually down 17% year over year.

As with any biotech company, 3SBio's value isn't based so much on what it's earning right now, but rather on what the future holds. 3SBio should be able to increase its revenue in the coming years, given the three filings with the Chinese State Food and Drug Administration expected this year. Two are expansions of its current products, TPIAO and EPIAO, and the third is a new product, NuLeusin, a treatment for a type of kidney cancer.

3SBio has also broadened its pipeline through a licensing deal. In May, the company licensed the rights to market AMAG Pharmaceuticals' (NASDAQ:AMAG) ferumoxytol, an intravenous iron replacement, in China. Assuming 3SBio didn't overpay -- the milestone payments weren't disclosed -- this seems like a good move, as the company will be able to use its existing sales force to market the drug.

Investors willing to take the risk in China will likely do OK with 3SBio. Just as with China Medical Technologies (NASDAQ:CMED) and WuXi PharmaTech (NYSE:WX), being in a high-growth industry in a high-growth country should do wonders for its long-term prospects. 3SBio just needs to get its operating margins under control, which shouldn't be a problem if it continues to grow revenue at the same stellar clip.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a selection of the Income Investor newsletter. The Fool has a disclosure policy.