China Biologic Products Reports First Quarter 2008 Results

PRNewswire
May 15, 2008

-- Net income increased 19.4% year-over-year to $2.3 million or 11 cents per

share basic

TAI'AN, Shandong, China, May 15 /Xinhua-PRNewswire-FirstCall/ -- China Biologic Products, Inc. (OTC: CBPO) (BULLETIN BOARD: CBPO) ("CBP" or the "Company"), one of the leading plasma-based pharmaceutical companies in the People's Republic of China ("PRC"), today reported financial results for the first quarter ended on March 31, 2008.

  First Quarter 2008 Highlights
  -- Revenues increased 2.2% year-over-year to 7.8 million
  -- Gross profits increased 33.6% to $5.9 million over the first quarter
     of 2007, representing gross margin of 75.2%
  -- Operating income totaled $3.6 million, a 28.5% increase over the first
     quarter of 2007
  -- Net income increased 19.4% year-over-year to $2.3 million, or $0.11 per
     share

"Despite the further tightened blood inspection process from the PRC government, we continued to see strong demand and price increases for our plasma-based products due to the increased purchasing power and health consciousness of Chinese consumers," said Mr. Stanley Wong, CEO of China Biologic Products. "We will continue our efforts to secure plasma supply as well as to upgrade our product portfolio. We are optimistic about our growth prospects, given that our new production line is expected to be in place by mid-2008, and is expected to expand our production capacity to 500-800 metric tons per annum."

  During the quarter, the Company achieved the following milestones:
  -- Common stocks commenced trading on the Over-the-Counter Bulletin Board
     (the "OTCBB");
  -- "High-concentration Human Hepatitis B Immunoglobulin" R&D Project was
     listed in the National Torch Plan of China;

  First Quarter 2008 Results

Revenues for the first quarter of 2008 were $7.8 million, a 2.2% increase, compared to $7.7 million for the same period of 2007. The increase in revenues during the first quarter of 2008 is primarily attributable to a general increase in prices of plasma-based products together with foreign exchange translation benefits. During the first quarter of 2008, the Company's plasma- based products increased in price by approximately 78.4%, weighted average, period to period, which was offset by a decrease of in the volume of sales for three of the Company's products, including human albumin. The Company's temporary suspension of production for 70 days during fourth quarter 2007, for maintenance and for the building of the new production line, had a temporary effect on the supply of finished products available for sale in the first quarter of 2008.

Gross profits increased 33.6% to $5.9 million with gross margins of 75.2% for the first quarter of 2008, compared with approximately $4.4 million and 57.5% in the first quarter of 2007, respectively. The increase in gross margin was mainly due to the increased sales of higher margin products.

Total operating expenses for the first quarter of 2008 were $2.3 million, up 42.6% from the same period in 2007. Selling expenses increased 2.7% to $0.49 million. General and administrative expenses increased 68.8%, which was mainly attributable to the increase in personnel costs and auditing and legal fees. There were also increased activities related to investor relations and raising the profile of the Company in the US capital market. Research and development expenses increased 22.6% to $0.18 million.

Income from operations grew 28.5% to $3.6 million in the first quarter of 2008, representing operating margins of 46.3%, as compared to $2.8 million and 36.9% during the same period of 2007.

Provision for income taxes increased 64.5% year-over-year, to over $0.7 million. The Company provisioned its income tax for the first quarter of 2008 at the new PRC corporate unified income tax rate of 25%, as compared to the 15% preferential tax rate during the fiscal year 2007. The Company is in the process of applying for status as a new or high technology company in order to qualify for the favorable tax rate of 15%.

Net income for the first quarter of 2008 increased 19.4% year-over-year, to $2.3 million, or $0.11 per basic share and $0.10 per diluted share.

Financial Condition

As of March 31, 2008, CBP had $5.2 million in cash, approximately $10.5 million in working capital and a current ratio of 2.2. Shareholders' equity at the end of the first quarter of 2008 stood at $25.8 million, compared to $22.4 million at the end of 2007.

  Recent Development
  (1) Management change

On May 9, 2008, Mr. Stanley Wong resigned as President and Chief Executive Officer of the Company, effective as of June 1, 2008. He will continue to serve as a consultant to the Company until the end of 2008 in order to ensure a smooth transition for the management. At the same time, Mr. Chao Ming Zhao resigned from his position as Chief Financial Officer in order to take over Mr. Wong's role as President and Chief Executive Officer, and Mr. Y. Tristan Kuo, the Company's Vice President-Finance, has been appointed to as the Company's new Chief Financial Officer, effective June 1, 2008.

  (2) The Company announced its receipt of SFDA approval to Supply
      Cryoprecipitate in the second quarter of 2008.
  (3) The Company received approval SFDA for Clinical Trial of Human
      Prothrombin Complex.

  Business Outlook

In recent years, the biopharmaceutical industry and the plasma-based product market have outperformed the pharmaceutical industry. The market for plasma-based products in China remains underserved with limited availability of products, offering substantial opportunities for China Biologic to grow its business.

The PRC government is limiting the number of companies in this industry and is not expected to issue new licenses in the foreseeable future. Furthermore, the import of foreign plasma-based products is severely restricted, creating a relatively closed market for domestic suppliers. The overall effect of recent government regulatory reform has been to reduce competition and increase the barriers to entry, creating a favorable industry structure for China Biologic.

To achieve its objective to become a first-class biopharmaceutical enterprise in China, the Company will continue to seek to secure its market position by enhancing existing products, introducing new products to meet customer demand, delivering quality products to customers in a timely manner and maintaining the already established industry reputation.

"We are very pleased to be operating in a more regulated market for plasma-based products after recent reforms launched by the government," said Mr. Stanley Wong, CEO of China Biologic Products. "We are going to continue our efforts to gain more market share and improve our product mix."

About China Biologic Products, Inc.

China Biologic Products, Inc., through its indirect majority-owned subsidiary Shandong Taibang, is currently the only plasma-based biopharmaceutical company approved by the government of Shandong Province, the second largest province with a population of 93 million. The company is engaged primarily in research, manufacturing, and sale of plasma-based biopharmaceutical products to hospitals and other health care facilities in China. Plasma-based Human Albumin is used mainly to increase blood volume while Immunoglobulin is used for disease prevention and treatment.

Safe Harbor Statement

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the general ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( www.sec.gov ). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.

                     -- FINANCIAL TABLES FOLLOW --



                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
                  AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

  A S S E T S
                                                  March 31,   December 31,
                                                    2008           2007
                                                 (Unaudited)    (Audited)
  CURRENT ASSETS:
    Cash                                      $   5,152,629 $    5,010,033
    Accounts receivable, net of allowance for
     doubtful accounts of $1,281,172
     and $1,238,772 as of March 31, 2008 and      1,311,347        316,869
    December 31, 2007, respectively
    Notes receivable                                 42,840         41,130
    Other receivables                               441,526        425,163
    Other receivable- related party                 300,948        290,307
    Inventories                                  11,520,085      9,505,074
    Prepayments and deferred expense                243,073        138,756
          Total current assets                   19,012,448     15,727,332

  PLANT AND EQUIPMENT, net                       17,072,037     15,434,124

  OTHER ASSETS:
    Prepayments-non-current                         850,130        711,459
    Long term prepayment - related party            537,928        516,456
    Intangible assets, net                          930,584        915,874
          Total other assets                      2,318,642      2,143,789

                Total assets                  $  38,403,127 $   33,305,245

   L I A B I L I T I E S    A N D    S H A R E H O L D E R S'   E Q U I T Y

  CURRENT LIABILITIES:
    Accounts payable                          $   2,471,482 $    2,677,587
    Short term loans - bank                                        685,500
    Short term loan - minority shareholder          752,720        722,674
    Other payables and accrued liabilities        1,353,242      1,200,068
    Other payable - land use right                  317,896        305,571
    Dividend payable                                915,762        506,626
    Customer deposits                             1,362,936        398,794
    Taxes payable                                 1,291,653        384,788
          Total current liabilities               8,465,691      6,881,608

  COMMITMENT AND CONTINGENCIES                       40,030        142,120

  MINORITY INTEREST                               4,110,623      3,885,892

  SHAREHOLDERS' EQUITY:
    Common stock, $0.0001 par value,
     100,000,000 shares authorized,
     21,434,942 shares issued and
     outstanding at March 31, 2008
     and December 31, 2007, respectively              2,143          2,143
    Paid-in-capital                               9,388,305      9,388,305
    Statutory reserves                            4,866,031      4,513,077
    Retained earnings                             7,798,152      5,883,306
    Accumulated other comprehensive income        3,732,152      2,608,794
          Total shareholders' equity             25,786,783     22,395,625

                Total liabilities and
                  shareholders' equity        $  38,403,127 $   33,305,245



               CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
             FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                                 (Unaudited)

                                                   2008            2007

  REVENUES                              $        7,849,007 $     7,677,852

  COST OF SALES                                  1,948,898       3,261,376

  GROSS PROFIT                                   5,900,109       4,416,476

  OPERATING EXPENSES
   Selling expenses                                494,529         497,613
   General and administrative                    1,584,128         938,598
   expenses
   Research and development expenses               183,782         149,907
  TOTAL OPERATING EXPENSES                       2,262,439       1,586,118

  INCOME FROM OPERATIONS                         3,637,670       2,830,358

  OTHER EXPENSES
   Finance expense                                  22,973          44,645
   Other expense                                       412           7,665
  TOTAL OTHER EXPENSES                              23,385          52,310

  INCOME BEFORE PROVISION FOR INCOME
   TAXES AND MINORITY INTEREST                   3,614,285       2,778,048

  PROVISION FOR INCOME TAXES                       740,482         450,110

  NET INCOME BEFORE MINORITY INTEREST            2,873,803       2,327,938

  LESS MINORITY INTEREST                           606,003         429,095

  NET INCOME                                     2,267,800       1,898,843

  FOREIGN CURRENCY TRANSLATION GAIN              1,123,359          92,773

  OTHER COMPREHENSIVE INCOME            $        3,391,159 $     1,991,616

  BASIC EARNINGS PER SHARE
   Weighted average number of shares            21,434,942      21,434,942
   Earnings per share                   $             0.11 $          0.09

  DILUTED EARNINGS PER SHARE
   Weighted average number of shares            21,964,168      21,434,942
   Earnings per share                   $             0.10 $          0.09



               CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                                 (UNAUDITED)

                                                 2008              2007

  CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                            $     2,267,800  $      1,898,843
   Adjustments to reconcile net income
    to cash provided by operating activities:
       Minority Interest                         606,003           429,095
       Depreciation                              274,361           162,022
       Amortization                               26,157            10,859
       Loss on disposal of equipment                 166
       Allowance for doubtful accounts                              58,437
     Change in operating assets and
      liabilities:
       Accounts receivable                      (960,482)         (517,358)
       Notes receivable                                           (433,843)
       Other receivables                           1,285          (494,298)
       Other receivables - shareholders            1,398          (604,391)
       Inventories                            (1,585,462)         (498,242)
       Prepayments and deferred
        expenses                                 (96,457)           44,701
       Accounts payable                         (310,692)          145,858
       Other payables and accrued
        liabilities                              101,089           651,234
       Customer deposits                         927,456
       Taxes payable                             871,964           382,165
       Contingent liability                     (105,707)
         Net cash provided by operating        2,018,879         1,235,082
         activities

  CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to plant and equipment           (1,249,620)       (1,151,674)
   Additions to construction in
    progress                                                      (151,066)
   Additions to intangible assets                 (3,285)
   Advances on building, equipment and
    intangible assets purchases                 (106,777)         (560,523)
         Net cash used in investing
          activities                          (1,359,682)       (1,863,263)

  CASH FLOWS FINANCING ACTIVITIES:
   Proceeds from short term loan - bank                          1,290,100
   Payments on short term loan - bank           (698,850)
   Payments on long term debt                                     (129,010)
   Dividends paid to minority                                     (479,608)
    shareholders
         Net cash (used in) provided by
          financing activities                  (698,850)          681,482

  EFFECTS OF EXCHANGE RATE CHANGE IN CASH        182,249             9,890

  INCREASE IN CASH                               142,596            63,191

  CASH, beginning of period                    5,010,033         4,268,220

  CASH, end of period                    $     5,152,629  $      4,331,411


  For more information, please contact:

  Company Contact:
   Mr. Stanley Wong
   CEO
   China Biologic Products, Inc.
   Tel:   +86-538-620-2306
   Email: IR@chinabiologic.com
   Web:   http://www.chinabiologic.com/

  Investor Relations Contact:
   Mr. Crocker Coulson
   President
   CCG Elite Investor Relations
   Tel:   +1-646-213-1915 (NY office)
   Email: crocker.coulson@ccgir.com
   Web:   http://www.ccgelite.com/

CONTACT: Company Contact, Mr. Stanley Wong, CEO, China Biologic Products,
Inc., +86-538-620-2306, IR@chinabiologic.com; Investor Relations Contact, Mr.
Crocker Coulson, President, CCG Elite Investor Relations, +1-646-213-1915 (NY
office), crocker.coulson@ccgir.com

SOURCE: China Biologic Products, Inc.

Web site: http://www.chinabiologic.com/
http://www.ccgelite.com/


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