China Biologic Products Announces Record Second Quarter 2009 Results

PRNewswire
Aug 17, 2009

TAI'AN, China, Aug. 17 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (OTC: CBPO) (BULLETIN BOARD: CBPO) ("China Biologic," or the "Company"), one of the leading plasma-based pharmaceutical companies in the People's Republic of China ("PRC"), operating through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co. Ltd. ("Taibang") and Chongqing Dalin Biologic Technologies Co., Ltd. ("Dalin") and its equity investment in Xi'an Huitian Blood Products Co., Ltd. ("Huitian"), reported record financial results for the second quarter of 2009.

  Second Quarter 2009 Highlights

  -- Revenues increased 178.2% year-over-year to a record $33.2 million
  -- Revenues excluding the acquisition of Dalin increased 57.5%
     year-over-year to $18.8 million
  -- Gross profit increased 189.8% to $24.0 million, compared to the second
     quarter of 2008, representing a gross margin of 72.4%
  -- Operating income increased 232.8%, year-over-year to $16.5 million,
     representing an operating margin of 49.8%
  -- Net income attributable to controlling interest was up 242.7%
     year-over-year to $7.0 million, or $0.32 per diluted share
  -- Non-GAAP net income* was $8.3 million or $0.38 per diluted share, a
     151.5% increase over $3.3 million in the second quarter of 2008, or
     $0.15 per diluted share

  * Excluding non-cash employee compensation expenses and changes in the
    fair value of warrants. See "About Non-GAAP Financial Measures" as well
    as the reconciliation table of non-GAAP net income to GAAP net income at
    the end of the press release.

"We are pleased to report another quarter of solid results for our second quarter of 2009. We achieved strong organic growth and benefitted from the consolidation of our Dalin acquisition," said Mr. Chao Ming Zhao, CEO of China Biologic Products. "We believe that as a result of these acquisitions we are now strategically positioned as the leading non-state-owned plasma-based biopharmaceutical company in China. We continue to work to integrate these acquisitions to obtain additional synergies and economies of scale."

During the second quarter of 2009, the Company achieved the following milestones:

  -- China Biologic completed the acquisition of a 90% equity interest in
     Dalin and in Dalin's 54% majority-owned operating subsidiary, Qianfeng
     Biological Products Co., Ltd. ("Qianfeng"), one of the largest
     plasma-based biopharmaceutical companies in China, located in Guiyang,
     Guizhou Province, for a total consideration of RMB 194,400,000
     (approximately $28.5 million)

  -- China Biologic successfully raised an aggregate principal amount of
     $9.6 million through the issuance of 3.8% senior secured convertible
     notes due 2011 to certain accredited investors led by Essence
     International Investment Limited

  Second Quarter of 2009 Results

Revenues for the second quarter of 2009 increased 178.2% to a record $33.2 million, compared to $11.9 million in the second quarter of 2008. The increase in revenues for the second quarter of 2009 is primarily attributable to the revenue consolidation of Dalin, a general increase in the price of plasma-based products, and a 5.2% increase due to foreign exchange translation. During the second quarter of 2009, Dalin contributed to $14.4 million in revenue, or 43.4% of total revenues, an increase of 52.7% from the first quarter of 2009. Taibang accounted for $18.8 million in revenue, or 56.6% of total revenues, an increase of 60.3% from the first quarter of 2009. Revenues, excluding the acquisition of Dalin, increased 57.5% year-over-year, as prior to January 1, 2009, Taibang contributed to 100% of the Company's revenues.

All of the Company's approved products, except human hepatitis B immunoglobulin, recorded price increases ranging from 2.1% to 46.1%. The Company's major plasma-based product, human albumin, contributed to 47.4% of sales in the second quarter of 2009, as compared to 57.8% in same period a year ago. Revenues from human albumin products increased by 128.5%, while the average sales price increased by 2.1%. The Company's human immunoglobulin for intravenous injection product represented 42.6% of revenues in the second quarter of 2009, as compared to 17.4% in the second quarter of 2008; its revenues and average sales price increased by 583.7% and 13.3%, respectively. The Company's human tetanus immunoglobulin products represented 1.0% of revenues in the second quarter of 2009, as compared to 8.6% of the revenues in the second quarter of 2008, its revenue contribution decreased 66.5% and its average sales price increased 46.1%. The approved human rabies immunoglobulin products represented 2.8% of revenue in the second quarter of 2009 compared to 3.6% a year ago, and its revenues and average sales price increased by 116.2% and 37.5%, respectively.

Gross profit for the second quarter of 2009 was $24.0 million, up 189.8% from $8.3 million in the second quarter of 2008. Gross margin was 72.4% for the second quarter of 2009, compared to 69.5% for the second quarter of 2008. The increase in the gross profit margin was primarily associated with general price increase and increase in sales of higher margin products.

Total operating expenses in the second quarter of 2009 rose 125.5% to $7.5 million. Selling expenses increased 118.3% to $1.1 million, compared to $0.5 million in the second quarter of 2008. The increase in selling expenses is primarily due to the consolidation of Dalin's selling activities as well as increased marketing efforts to increase direct sales to new hospitals. As a percentage of sales, selling expenses in the second quarter of 2009 were 3.4%, down from 4.3% a year ago due to the expanded sales following the Dalin acquisition. General and administrative ("G&A") expenses increased 137.4% to $6.0 million. As a percentage of sales, G&A expenses decreased to 18.1% for the second quarter of 2009, from 21.2% for the same period in 2008, primarily due to the expanded sales following the Dalin acquisition. The dollar increase was mainly due to an increase in personnel-related costs and increase in depreciation and amortization expenses in connection with the Company's acquisition of Dalin as result of fair value adjustments, as well as additional professional service charges related to the acquisition of Dalin. The Company also incurred $27,594 in non-cash employee compensation expenses as a result of grants to employees, consultants and directors made under the 2008 Equity Incentive Plan, compared to $1.3 million for the same period in 2008.

Research and development expenses increased 31.5% to $0.4 million, or 1.1% of total revenue compared to $0.3 million in the second quarter of 2008 or 2.3% of total revenue. The dollar increase was due primarily to the consolidation of Dalin and increased costs from continuing clinical trial on new products. Total other expenses in the second quarter of 2009 were $2.3 million. The Company recognized of a loss $1.3 million from the adoption of a new accounting rule effective January 1, 2009, which requires the changes in the fair value of warrants to be recognized in earnings each quarter. No such charge occurred in the second quarter of 2008. The Company recorded a loss of $90,390 in equity income in connection with its 35% equity interest investment in Huitian, the Company's unconsolidated affiliate, compared to a gain of $40,247 in the first quarter of 2009 due to the additional depreciation and amortization expenses arising from assets write-up as a result of the equity investment. Net interest expense was $0.9 million for the second quarter of 2009 compared to an interest income of $846 for the same period in 2008. The increase in interest expense is primarily due to financing related to the acquisition of Dalin.

Provision for income taxes increased 40.4% to $3.0 million for the second quarter of 2009, compared to $2.1 million for the same period last year. The increase in provision for income taxes is mainly due to the consolidation of Dalin, which was offset by the decrease of Taibang's provision for income taxes as Taibang accrued its 2008 taxes at 25% before it was granted a 15% preferential tax rate for the 2008 tax year in early 2009. The effective tax rate for the quarter was 20.9%, as compared to 43.2% in the same period of 2008.

Net income attributable to controlling interest for the second quarter of 2009 was $7.0 million, up 242.7% from $2.0 million in second quarter of 2008. Fully diluted earnings per share were $0.32 for the second quarter of 2009, compared to $0.09 in second quarter of 2008. Compared to the first quarter of 2009, net income attributable to controlling interest which includes the consolidation of Dalin, increased 63.7% from $4.3 million. Non-GAAP net income in the second quarter of 2009 was $8.3 million or $0.38 per fully diluted share, an increase of 151.5% from non-GAAP net income of $3.3 million, or $0.15 per fully diluted share in the second quarter of 2008.*

  * Excluding non-cash employee compensation expenses and changes in the
    fair value of warrants. See "About Non-GAAP Financial Measures" as well
    as the reconciliation table of non-GAAP net income to GAAP net income at
    the end of the press release.

  Six Months Results

For the first six months of 2009, total revenue was $54.3 million, up 174.7% from the first six months of 2008. Revenues excluding the acquisition of Dalin increased 54.4% year-over-year. Gross profit for the first six months of 2009 was $39.0 million, up 174.6% from $14.2 million in the comparable period a year ago. Gross margin of 71.7% remained unchanged from the first quarter of 2008. Income from operations for the period was $26.6 million, up 209.4% from $8.6 million in the first six months of 2008. Net income for the first six months of 2009 was $11.2 million, up 161.0% from $4.3 million in the first six months of 2008. Fully diluted earnings per share were $0.52 for the first six months of 2009 compared to $0.20 in the first six months of 2008. Adjusting for non-cash charges associated with non-cash employee compensation expenses and changes in the fair value of warrants, the non-GAAP net income for the first six months of 2009 was $13.0 million or $0.60 per fully diluted share, an increase of 133.1% from non-GAAP net income of $5.6 million or $0.26 per fully diluted share.

Financial Condition

As of June 30, 2009, the Company had $49.5 million in cash, approximately $17.1 million in working capital and a current ratio of 1.3. Shareholder's equity at the end of the second quarter of 2009 was $76.5 million, compared to $42.0 million at the end of 2008. The Company generated $28.4 million in net cash from operating activities for the second quarter of 2009.

Recent Developments

In July 2009, China Biologic hosted a forum of industry experts to discuss and provide advice to the Company regarding how to create synergies among its subsidiaries including, the initiation of research and development of new drugs, efficient use of resources among the subsidiaries, quality control procedures during collection, production and distribution processes, and other expert opinions to create long-term, sustainable growth for the Company.

Business Outlook

The recent outbreak of the H1N1 flu, known as the swine flu, and the HFMD or known as the hand foot and mouth disease, has further increased the demand for plasma-based products. The Company expects that a pandemic outbreak of the flu could prompt an increase in demand for the Company's human immunoglobulin for intravenous injection ("IVIG") product, which is mainly used for acute infection, autoimmune diseases and other immune deficiencies caused by decreased or abolished antibody production capabilities. During the second quarter of 2009, the Company experienced an unusual increase in the demand for its IVIG product. IVIG, which has a higher gross margin, contributed to over 42% of revenues during the second quarter of 2009, therefore, contributing to a higher percentage increase in revenue compared to the same period last year and from the first quarter of 2009. Continued strong sales of IVIG in 2009 will be dependent on the continued availability of the plasma supply for production and sales.

During the second quarter of 2009, the Company continued to experience a lower percentage of sales for human album representing approximately 47.4%, compared to 57.8% a year ago. Human albumin is relatively easier to produce than other plasma-based products, therefore, yielding a lower gross margin and more competition in the market. Although the percentage of revenue from human album is gradually decreasing with new product sales increasing, the Company expects Human Albumin sales will still remain as the main contributor to the Company's 2009 revenue.

As one of the first plasma based manufacturers to receive GMP certification in 1999 and with increased regulation on the plasma industry, China Biologic has implemented strict quality control procedures over the plasma collection process, manufacturing, and distribution channels in order to ensure that each of the Company's products are safe. Such careful quality control process has been applied to Taibang over the years and has enabled it to produce high quality plasma-based products.

The same quality control process is now gradually being implemented at Dalin's majority owned subsidiary, Qianfeng. During the second quarter of 2009, the Company implemented a comprehensive marketing program to expand Qianfeng's distribution channels via direct sales to hospitals, as compared to Qianfeng's previous strategy to sell largely through distributors.

The Company expects that direct sales to hospitals will lead to lower selling expenses. Moreover, China Biologic believes it can ensure proper storage and handling of the product, further enhancing Qianfeng's quality control procedures.

Despite the State Food and Drug Administration's implementation of a 90-day quarantine period for plasma raw materials, effective July 1, 2008, the Company was ahead of the industry and took measures to minimize the effects of this new regulation. Currently, the Company's inventory level of raw materials is in line with current availability of plasma collection from its own plasma collection stations. Combined, China Biologic's indirect majority-owned subsidiaries have a total plasma collection capacity of greater than 500 metric tons per year. The Company expects to achieve such collection levels under current conditions, assuming no major changes in the Chinese government's regulation on the plasma industry.

With the acquisition of Dalin and the equity investment in Huitian, China Biologic is now the largest non-state owned plasma-based biopharmaceutical company in China. It is expected to have a total market share of approximately 15% based on management's estimate from the products approved for sales by the PRC government.

"We expect the tight supply/demand situation for plasma-based products to persist for some time, which bodes well for our fundamental outlook," remarked Mr. Zhao. "We will, however, continue to focus on a strong research and development efforts aimed at bringing new, higher margin products to market. We will also continue to integrate our acquisitions and work to increase our capacity utilization."

Conference Call

China Biologic will host a conference call at 9:00 a.m. EDT on Monday, August 17, 2009 to discuss the 2009 second quarter financial results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1-866-800-8648. International callers should dial +1-617-614-2702. The pass code for the call is 87475342. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Monday, August 17, 2009 at 11:00 a.m. EDT. To access the replay, dial 1-888-286-8010. International callers should dial +1-617-801-6888. The conference pass code is 40692580

                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
       FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008

                          Three Months Ended        Three Months Ended
  Adjusted Net Income       June 30, 2009              June 30, 2008
  Net Income (Loss)
   Diluted EPS          Net Income   Diluted EPS   Net Income  Diluted EPS
  Adjusted Amount -
   Non GAAP             $8,294,071         $0.38    $3,297,342       $0.15
  Non-cash employee
   compensation (1)        $27,594         $0.00     1,263,188        0.06

  Loss in fair value
   of warrant
   liabilities (2)      $1,295,732         $0.06            --       $0.00
  Amount per
   consolidated
   statement of         $6,970,745         $0.32    $2,034,154       $0.09
   operations
  Weighted average
   number of shares -
   diluted              21,811,473                  21,664,429


                              Six Months Ended         Six Months Ended
  Adjusted Net Income          June 30, 2009            June 30, 2008
  Net Income (Loss)
   Diluted EPS          Net Income   Diluted EPS   Net Income  Diluted EPS
  Adjusted Amount -
   Non GAAP            $12,972,785         $0.60    $5,565,142       $0.26
  Non-cash employee
   compensation (1)        $54,967         $0.00    $1,263,188       $0.06

  Loss in fair value
   of warrant
   liabilities (2)      $1,688,755         $0.08            --       $0.00
  Amount per
   consolidated
   statement of
   operations          $11,229,063         $0.52    $4,301,954       $0.20
  Weighted average
   number of Shares     21,527,509                  21,808,852

  (1) Non-cash compensation expenses related to options granted to employees
      and directors under the Company's 2008 Equity Incentive Plan
  (2) Adoption of a new accounting rule effective January 1, 2009 requires
      changes in the fair value of warrants to be recognized in earnings
      each quarter.


  Use of Non-GAAP Financial Measures

GAAP results for the three months and six months ended June 30, 2009 and June 30, 2008 include non-cash compensation expenses related to options granted to employees and directors under the Company's 2008 Equity Incentive Plan and the adoption of a new accounting rule effective January 1, 2009 that requires changes in the fair value of warrants to be recognized in earnings each quarter. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of this item in this release. The Company's management believes that this non-GAAP measure provides investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

About China Biologic Products, Inc.

China Biologic Products, Inc. (the "Company"), through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co. Ltd. and Chongqing Dalin Biologic Technologies Co., Ltd, and its equity investment in Xi'an Huitian Blood Products Co., Ltd., is currently the largest non-state- owned plasma-based biopharmaceutical company in China. The Company is a fully integrated biologic products company with plasma collection, production and manufacturing, research and development, and commercial operations. The Company's plasma-based biopharmaceutical products are irreplaceable during medical emergencies, and are used for the prevention and treatment of various diseases. It sells its products to hospitals and other healthcare facilities in China.

Safe Harbor Statement

This release may contain certain "forward-looking statements" relating to the business of China Biologic Products, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the Company's acquisitions and acquisition strategy and the benefits of the acquisitions, including the expected impact on the Company's 2009 revenues and net income; the 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 (http://www.sec.gov/). All forward-looking statements attributable to the Company or 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 STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
      FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                                 (Unaudited)

                             Three months ended         Six months ended
                                   June 30,                 June 30,
                               2009        2008         2009         2008

  REVENUES                $33,181,545 $11,925,842  $54,330,143  $19,774,849
  COST OF SALES             9,161,765   3,638,128   15,376,695    5,587,026

  GROSS PROFIT             24,019,780   8,287,714   38,953,448   14,187,823
  OPERATING EXPENSES
    Selling expenses        1,114,614     510,565    1,694,110    1,005,094
    General and admini-
     strative expenses      6,004,802   2,529,780    9,827,709    4,121,854
    Research and develop-
     ment expenses            367,856     279,833      835,583      463,615
      Total operating
       expenses             7,487,272   3,320,178   12,357,402    5,590,563
  INCOME FROM OPERATIONS   16,532,508   4,967,536   26,596,046    8,597,260

  OTHER EXPENSES
    Equity in income of
     unconsolidated
     affiliate                 90,390          --       50,143           --
    Change in fair value of
     warrant liabilities    1,295,732          --    1,688,755           --
    Interest expense
     (income), net            883,914        (846)   1,254,767       14,182
    Other expense
     (income), net            (16,005)     52,041       35,310       52,452
      Total other
       expenses, net        2,254,031      51,195    3,028,975       66,634
  INCOME BEFORE PROVISION
   FOR INCOME TAXES AND
   NONCONTROLLING
   INTEREST                14,278,477   4,916,341   23,567,071    8,530,626
  PROVISION FOR INCOME
   TAXES                    2,982,101   2,123,843    5,012,295    2,864,325

  NET INCOME BEFORE
   NONCONTROLLING
   INTEREST                11,296,376   2,792,498   18,554,776    5,666,301
  Less: Net income
   attributable to
   noncontrolling
   interest                 4,325,631     758,344    7,325,713    1,364,347
  NET INCOME ATTRIBUTABLE
   TO CONTROLLING
   INTEREST                 6,970,745   2,034,154   11,229,063    4,301,954

  OTHER COMPREHENSIVE
   INCOME
    Foreign currency
     translation
     adjustments              (1,250)    632,130       17,387    1,574,829
    Comprehensive income
     attributable to
     noncontrolling
     interest                 (9,213)    116,824      (26,977)     301,291
  COMPREHENSIVE INCOME    $6,960,282  $2,783,108  $11,219,473   $6,178,074

  BASIC EARNINGS PER SHARE
    Weighted average
     number of shares     21,442,909  21,434,942   21,438,948   21,434,942
    Earnings per share         $0.33       $0.09        $0.52        $0.20

  DILUTED EARNINGS PER SHARE
    Weighted average
     number of shares     21,811,473  21,664,429   21,527,509   21,808,852
    Earnings per share         $0.32       $0.09        $0.52        $0.20



               CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
                  AS OF JUNE 30, 2009 AND DECEMBER 31, 2008

                                   ASSETS

                                          June 30, 2009   December 31, 2008

  CURRENT ASSETS:                           (Unaudited)
    Cash                                    $49,479,021         $8,814,616
    Accounts receivable, net of allowance
     for doubtful accounts of $1,274,001
     And $1,268,052 as of June 30, 2009
     and December 31, 2008 respectively         980,696            313,087
    Account Receivable - related party          795,080                 --
    Dividend receivable                         147,055            147,256
    Other receivables                           473,975            356,957
    Other receivables - related party           797,138                 --
    Inventories                              27,316,217         14,949,196
    Prepayments and deferred expense          1,928,553            614,704
      Total current assets                   81,917,735         25,195,816

  PLANT AND EQUIPMENT, net                   27,631,919         19,299,364

  OTHER ASSETS:
    Investment in unconsolidated
     affiliate                                6,474,950          6,533,977
    Refundable deposit for potential
     acquisition                                     --         14,181,800
    Prepayments-non-current                   4,362,343            955,874
    Intangible assets, net                   21,977,205          1,002,561
    Goodwill                                 12,425,589                 --
      Total other assets                     45,240,087         22,674,212

        Total assets                       $154,789,741        $67,169,392

                    LIABILITIES AND SHAREHOLDERS' EQUITY

  CURRENT LIABILITIES:
    Accounts payable                         $3,704,482         $2,481,889
    Notes payable                                    --             29,340
    Short term loan - bank                   13,580,550                 --
    Short term loans - holder of
     noncontrolling shareholder               4,424,723            773,277
    Other payables and accrued
     liabilities                             15,722,686          3,962,931
    Other payables - land use right              29,265              1,683
    Other payable - related party             3,082,731                 --
    Accrued interest - holder of
     noncontrolling shareholder                 911,084                 --
    Distribution payable to holder of
     noncontrolling shareholder                 447,821          3,252,354
    Customer deposits                         7,838,187          1,091,792
    Taxes payable                             5,567,794          4,060,010
    Long term bank loan - current
     maturities                               3,369,500                 --
    Investment payable                        6,139,984          3,275,501
      Total current liabilities              64,818,807         18,928,777

  OTHER LIABILITIES:
    Non-current other payable - land
     use right                                  324,141            323,707
    Notes payable, net of discount of
     $9,533,784 as of June 30, 2009              41,534                 --
    Long term loan - bank, net of
     current maturities                              --          5,868,000
    Derivative liability - conversion
     option                                   5,796,562                 --
    Fair value of derivative
     instrument                               7,276,964                 --
      Total other liabilities                13,439,201          6,191,707
        Total Liabilities                    78,258,008         25,120,484
  COMMITMENTS AND CONTINGENCIES                      --                 --

  EQUITY:
    Common stock, $0.0001 par value,
     100,000,000 shares authorized,
     21,474,942 and 21,434,942 shares
     issued and outstanding at June 30,
     2009 and December 31, 2008,
     respectively                                 2,147              2,143
    Paid-in-capital                          10,255,255         10,700,032
    Statutory reserves                       11,738,002          6,989,801
    Retained earnings                        20,943,538         15,392,253
    Accumulated other comprehensive
     income                                   4,176,685          4,159,298
      Total shareholders' equity             47,115,627         37,243,527

  NONCONTROLLING INTEREST                    29,416,106          4,805,381

      Total equity                           76,531,733         42,048,908

        Total Liabilities                  $154,789,741        $67,169,392



                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                                 (Unaudited)

                                                   2009             2008
  CASH FLOWS FROM OPERATING
   ACTIVITIES:
    Net income attributable to
     controlling interest                       $11,229,063       $4,301,954
    Net income attributable to
     non-controlling interest                     7,325,713        1,364,347
    Consolidated net income                      18,554,776        5,666,301
    Adjustments to reconcile net income to
     cash provided by operating activities:
      Depreciation                                1,589,625          579,754
      Amortization                                1,704,248           53,192
      (Gain) Loss on disposal of
       equipment                                       (506)           1,900
      Recovery of bad debt previously
       reserved                                     (22,311)        (107,583)
      Allowance for bad debt - accounts
       receivables                                    9,635               --
      Allowance for bad debt - other
       receivables                                  397,101               --
      Stock based compensation                       54.967        1,263,188
      Change in fair value of warrant
       liabilities                                1,688,755               --
      Amortization of deferred note
       issuance cost                                 25,323               --
      Amortization of discount on
       convertible notes                             20,356               --
      Equity in loss of unconsolidated
       affiliate                                     50,143               --
  Change in operating assets and
   liabilities:
    Notes receivable                                     --          (23,694)
    Accounts receivable                            (676,036)        (477,858)
    Accounts receivable - related party            (375,810)              --
    Other receivables                               (23,082)        (210,576)
    Other receivables - shareholders                     --            1,419
    Inventories                                  (4,130,960)      (2,571,137)
    Prepayments and deferred expenses              (750,937)        (241,377)
    Accounts payable                                (50,767)        (294,290)
    Other payables and accrued
     liabilities                                  4,573,201          683,527
    Accrued interest                                 21,178               --
    Accrued interest  - holder of
     noncontrolling interest                        911,084               --
    Customer deposits                             4,251,476          264,990
    Taxes payable                                   608,063        2,134,302
    Contingent liability                                 --         (107,273)
      Net cash provided by operating
       activities                                28,429,522        6,623,785

  CASH FLOWS FROM INVESTING ACTIVITIES:
    Cash acquired through acquisition            11,943,673               --
    Payments made for acquisition               (10,373,854)              --
    Purchase of plant and equipment              (1,865,746)      (2,245,627)
    Additions to intangible assets               (1,014,766)         (10,269)
    Proceeds from sale of equipment                      --            3,546
    Advances on non-current assets                 (590,428)         (32,945)
    Net cash used in investing
     activities                                  (1,901,121)      (2,285,295)

  CASH FLOWS FINANCING ACTIVITIES:
    Proceeds from warrants conversion               113,700               --
    Proceeds from issuance of
     convertible notes                            8,971,337               --
    Repayments of former shareholders
     loan in acquiring company                   (2,652,737)              --
    Proceeds from short term bank loan           13,513,754               --
    Payments on short term loans - bank                  --         (709,200)
    Payments on long term loan - bank            (5,862,800)              --
    Dividends paid to noncontrolling
     interest shareholders                               --         (283,680)
      Net cash provided by (used in)
       investing activities                      14,083,254         (992,880)

  EFFECTS OF EXCHANGE RATE CHANGE IN CASH            52,750          419,599

  INCREASE IN CASH                               40,664,405        3,765,209

  CASH and CASH EQUIVALENTS,
   beginning of year                              8,814,616        5,010,033

  CASH and CASH EQUIVALENTS, end of year        $49,479,021       $8,775,242

  SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
    Income taxes paid                            $4,351,056         $850,605
    Interest paid (net of capitalized
     interest)                                     $715,158          $29,901
    Non-cash investing and financing
     activities
      Reclassification of warrant
       liability to paid-in capital
       upon warrants conversion                    $125,009              $--
      Dividend paid in exchange of holder
       of noncontrolling interest loan           $3,736,773              $--
      Dividend paid by offsetting loan
       due from holder of
       noncontrolling interest                   $3,720,649              $--
      Net assets acquired with prepayments
       made in prior periods                    $14,159,124              $--
      Net assets acquired with unpaid
       investment                                $2,849,321              $--
      Plant and equipment acquired with
       prepayments made in prior periods           $131,103              $--


  For more information, please contact:

  Company Contact:
   Mr. Y. Tristan Kuo
   Chief Financial Officer
   China Biologic Products, Inc.
   Tel:   +86-538-6202206
   Email: IR@chinabiologic.com
   Web:   http://www.chinabiologic.com/

  Investor Relations Contact:
   Mr. Crocker Coulson, President
   CCG Investor Relations
   Tel:   +1-646-213-1915 (NY office) or
   Mr. Gary Chin
   Tel:   +1-646-213-1909
   Email: crocker.coulson@ccgir.com
   Web:   http://www.ccgirasia.com/

SOURCE: China Biologic Products, Inc.

CONTACT: Company Contact: Mr. Y. Tristan Kuo, Chief Financial Officer of
China Biologic Products, Inc., +86-538-6202206, or IR@chinabiologic.com;
Investor Relations Contact: Mr. Crocker Coulson, President of CCG Investor
Relations, +1-646-213-1915 (NY office) or Mr. Gary Chin, +1-646-213-1909, or
crocker.coulson@ccgir.com

Web Site: http://www.chinabiologic.com/
http://www.ccgirasia.com/


print email rss
© 2014 China Biologic Products, Inc. All Rights Reserved.