China Biologic Products Announces Record Fourth Quarter and Full Year 2009 Results

PRNewswire
Mar 23, 2010

            - Full-year revenue grew 154.5% to $119.0 million

- Non-GAAP adjusted net income rose 135.0% to $31.3 million, or $1.38 per
                              diluted share

TAI'AN, Shandong, China, March 23 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO) ("China Biologic" or the "Company"), one of the leading plasma-based biopharmaceutical companies in the People's Republic of China ("PRC"), operating through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co. Ltd. ("Taibang") and Guiyang Dalin Biologic Technologies Co., Ltd. ("Dalin") and its equity investment in Xi'an Huitian Blood Products Co., Ltd. ("Huitian"), today reported financial results for the fourth quarter and year ended December 31, 2009.

  Fourth Quarter 2009 Highlights

  -- Revenues increased 185.6% year-over-year to $37.6 million
  -- Excluding Dalin, revenues rose 46.7% year-over-year to $19.3 million or
     51.4% of total revenue
  -- Gross profit increased 208.6% year-over-year to $27.3 million,
     representing a gross margin of 72.7% as compared to 67.2% a year ago
  -- Operating income grew 342.3% year-over-year to $20.8 million,
     representing an operating margin of 55.2%
  -- GAAP net loss attributable to controlling interest was $3.8 million, or
     $0.17 per share, including a $14.7 million charge related to change in
     the fair value of derivative liabilities
  -- Non-GAAP adjusted net income was $11.1 million or $0.44 per diluted
     share, a 242.4% increase from $3.2 million or $0.15 per diluted share
     in the fourth quarter of 2008
  -- The Company's common stock began trading on the NASDAQ Global Market on
     December 2, 2009

"With our successful integration of Dalin, China Biologic achieved record top and bottom line results and significant growth in fiscal 2009, said Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic. "In addition, we believe that the successful implementation of the Company's strategic marketing efforts has attracted more donors to our plasma collection centers and has resulted in an increase in our overall collection volume. With a continued shortage of plasma supply, the Company has continued to work to enhance our production plans and increase our output and we have been able to maximize our yield per unit of plasma collected to realize a higher profit margin. Fiscal 2009 was also a special year for us and our shareholders as the Company's common stock began trading on the NASDAQ Global Market.

  Full-Year 2009 Highlights

  -- Revenues increased 154.5% year-over-year to a record $119.0 million,
     exceeding our guidance of $90 to $100 million
  -- Excluding the acquisition of Dalin, revenues grew 43.1 % year-over-year
     to $66.9 million
  -- Gross profit rose 164.1% to $86.4 million, representing a gross margin
     of 72.6% as compared to 70.0% a year ago
  -- Operating income increased 201.8%, to $61.4 million, representing an
     operating margin of 51.6%
  -- GAAP net income attributable to controlling interest was $1.3 million,
     or $0.07 per diluted share, including a $29.6 million charge related to
     change in the fair value of derivative liabilities
  -- Non-GAAP adjusted net income was $31.3 million or $1.38 per diluted
     share, a 135.0% increase from $13.3 million or $0.62 per diluted share
     in 2008

During the full year 2009, the Company achieved the following key milestones:

  -- Closed the acquisition of 90% interest in Dalin, and its 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.  Starting from
     January 1, 2009, Qianfeng's operations were consolidated into the
     Company's financial results.
  -- Completed the purchase of 35% equity interest in Xi'an Huitian Blood
     Products Co, Ltd ("Huitian"), a plasma-based biopharmaceutical company
     in Xi'an, Shaanxi Province
  -- Qianfeng received renewal of SFDA certification, valid until September
     2014, of compliance with Good Manufacturing Practices ("GMP") for its
     production facility with 400 tons of annual production capacity for
     plasma-based products.
  -- China Biologic was named to Forbes Magazine's Fifth Annual List of
     Asia's "200 Best Under a Billion" for the year 2009. To assemble its
     Best Under a Billion for the Asia-Pacific region, Forbes considered
     only listed entities with sales under $1 billion, that have posted
     solid top and bottom-line gains, and appear to be headed for more.

  Fourth Quarter 2009 Results

For the three months ended December 31, 2009, total revenues reached a record $37.6 million, up 185.6% from the same period a year ago. Excluding revenues from Dalin, which was acquired in January 2009, revenues rose 46.7% to $19.3 million from $13.2 million a year ago. The strong organic growth was partly attributable to increased demand for the Human immunoglobulin for intravenous injection product ("IVIG") product ahead of potential price increase in 2010.

Gross profit for the fourth quarter 2009 was $27.3 million, up 208.6% from $8.9 million in the comparable period a year ago. Gross margin also increased to 72.7% from 67.2% year-over-year. The gross profit and margin increases were primarily attributable to the consolidation of Dalin and price increases implemented during the year.

Operating expenses increased 58.1% year-over-year to $6.6 million, primarily reflecting consolidation of Dalin in the 2009 quarter. Income from operations for the period was $20.8 million, a 342.3% increase from $4.7 million a year ago.

Income taxes increased to $3.0 million from $0.2 million, primarily reflecting a higher effective tax rate of 61.7% as compared to 3.7% in the year ago quarter. The higher effective tax rate was due to non-cash expenses incurred in 2009 that are not deductible under PRC tax law.

GAAP net loss attributable to controlling interest for was $3.8 million, or $0.17 per diluted share, and included a $14.7 million charge related to change in fair value of derivative liabilities, as compared to net income of $3.2 million, or $0.15 per diluted share, in the year ago quarter.

Excluding non-cash employee compensation expenses, change in the fair value of derivative liabilities and adding back interest related to the convertible notes under the if-converted method, non-GAAP adjusted net income for the three months ended December 31, 2009 was $11.1 million, or $0.44 per diluted share, up 242.4% from $3.2 million or $0.15 per diluted share in the year ago quarter.

Full Year 2009 Results

Revenues for the full year 2009 increased 154.5% to a record $119.0 million from $46.8 million in 2008. The increase in revenues is primarily attributable to the consolidation of Dalin, which was acquired in April 2009, beginning January 2009. During 2009, Dalin accounted for $52.1 million in revenues, or 43.8% of total revenues. Excluding Dalin, 2009 base revenues grew 43.1% year-over-year to $66.9 million from $46.8 million. Growth in base revenue was primarily due to increase in the prices of plasma-based products, higher sales volume and a modest increase related to foreign exchange translation.

Human albumin product revenues rose 118.9% year-over-year to $59.2 million, accounting for 49.7% of sales in 2009, as compared to 57.8% in 2008. Revenue growth reflected volume increase of 117.8% and an average selling price (ASP) increase of 0.5%. IVIG revenues grew 324.4% to $43.7 million in 2009 and represented 36.8% of total revenues, as compared to 22.0% of revenues in 2008. Increase in human immunoglobulin for intravenous injection revenues included sales volume and ASP increases of 293.4% and 7.9%, respectively. Sales of the human tetanus immunoglobulin product rose 76.9% to $2.6 million, contributing 2.2% of total revenues as compared to 3.1% in 2008. Sales volume and ASP for human tetanus immunoglobulin increased 40.2% and 26.2%, respectively. Sales volume for human hepatitis B immunoglobulin and human rabies immunoglobulin products decreased, due to a temporary shortage of vaccines needed to generate each type of raw material, by 0.5% and 5.1%, respectively.

Gross profit for 2009 was $86.4 million, up 164.1% from $32.7 million in 2008. Gross margin was 72.6% in 2009, as compared to 70.0% in the prior year. The increase in gross profit and margin were primarily due to the consolidation of Dalin operations, an increase in the ASP across the products and management's ability to maintain efficiencies in the production process.

Total operating expenses in the full year 2009 increased 102.0% to $25.0 million, versus $12.4 million in the prior year period. As a percentage of sales revenue, total expenses decreased to 21.0% for the full year 2009 from 26.5% in 2008.

Selling expenses increased 59.5% to $3.5 million from $2.2 million in 2008. The dollar increase in selling expenses was primarily due to the consolidation of Dalin's selling activities, increased marketing efforts to increase direct sales to new hospitals, and expansion of the sales force in Qianfeng to expand into new sales territories.

General and administrative ("G&A") expenses rose 120.2% to $19.8 million. As a percentage of sales, G&A expenses decreased to 16.6% in 2009 from 19.2% for full year 2008. The dollar increase in G&A expenses was mainly due to an increase in the administrative salary and employee benefit costs, higher depreciation and amortization expenses and professional service charge in connection with the Dalin acquisition. The Company incurred $62,281 in non- cash stock-based compensation expense, as compared to $1.3 million for the full year 2008.

Research and development expenses in 2009 increased 42.5% to $1.7 million, or 1.4% of total revenues, as compared to $1.2 million, or 2.5% of total revenue, in 2008. The dollar increase was primarily due to the consolidation of Dalin and increased costs from continuing clinical trials on new products during the 2009 period.

Total net other expenses in the full year 2009 were $33.3 million, as compared to $0.4 million in the prior year, primarily reflecting a charge related to change in the fair value of warrant liabilities and higher interest expenses in 2009. The Company recognized a loss of $29.6 million related to change in the fair value of warrant liabilities. No such charge was required in 2008. Net interest expense increased to $3.9 million for the full year 2009 from $0.4 million in 2008, primarily due to higher interest expense related to financing in the acquisition of Dalin, as well as the interest accrued to Qianfeng's strategic investors.

Provision for income taxes increased 128.7% to $10.5 million in 2009, from $4.6 million in 2008. The effective tax rate for 2009 was 37.4%, as compared to 23.1% in 2008. The increase in effective tax rate was due to the $29.6 million non-cash expense incurred in 2009 that is not deductible under PRC tax law, resulting in an overstated effective tax rate.

GAAP net income attributable to controlling interest in 2009 was $1.3 million, as compared to net income attributable to controlling interest of $12.0 million in 2008. Diluted earnings per share were $0.07 as compared to earnings per share of $0.56 a year ago. Non-GAAP adjusted net income for 2009 was $31.3 million or $1.38 per diluted share, an increase of 135% from $13.3 million, or $0.62 per diluted share for the full year 2008. Non-GAAP adjusted net income and diluted earnings per share in 2009 exclude $29.6 million charge related to change in the fair value of derivative liabilities, non-cash employee compensation expenses, and adding back interest related to the convertible notes under the if-converted method.

Financial Condition

As of December 31, 2009, the Company had $53.8 million in cash and cash equivalents, approximately $44.4 million in working capital, and a current ratio of 1.9x. Total shareholder's equity for the fiscal year ended on December 31, 2009 was $50.5 million, as compared to $37.8 million at the end of 2008. The Company generated $50.3 million in net cash from operating activities in 2009 as compared to $20.0 million in 2008.

The Company believes that it has sufficient funds to support its strategic growth outlook, including capital expenditure plans of approximately $15 million in 2010 to expand the plasma collection network, both for new constructions and for the scale up existing collection stations, and upgrading the fractionation facility in Qianfeng.

Recent Developments

On February 2, 2010, China Biologic appointed Dr. Xiangmin Cui to serve as an independent member of its board of directors, as the Chairman of the Compensation Committee, and as a member on the Audit and Nominating Committees. Dr. Cui filled the vacancy left by Dr. Gan's January 8, 2010 resignation to dedicate more time to her other professional activities.

On March 1, 2010, China Biologic's special committee of independent directors appointed by the Company's board of directors in the wake of the recent allegations against certain directors and an employee of the Company has retained O'Melveny & Myers LLP, an international law firm, to advise the special committee and to assist in the investigation of the allegations.

2010 Guidance and Business Outlook

China Biologic expects 2010 revenue to be in the range between $142 million and $149 million. This guidance assumes only organic growth and does not include and excludes acquisitions or approval for the construction of new plasma collection stations. The guidance does not assume any material price or volume increases during 2010.

The Company expects 2010 adjusted net income to be in the range of $34 million to $36 million, excluding any non-cash charge related to change in the fair value of derivative liabilities and stock-based compensation expense, and any adjustments in the U.S. federal income tax provision in 2010 related to the expiration of the look-through exception for Subpart F income on December 31, 2009.

As a matter of policy, the Company does not intend to update this guidance during the year.

Mr. Zhao added, "Through the dedication and commitment of our hard working employees, we have been able to successfully increase our presence in the plasma-based biopharmaceutical product market in China. We estimate our current market share is at approximately 18%. We plan to continue our marketing efforts to increase public awareness of plasma donation, as well as provide appropriate nutritional supplement compensation to plasma donor, and apply for the construction of additional plasma collection stations."

"With our aggressive research and development efforts in the past few years, Human Prothrombin Complex Concentrate and Human Coagulation Factor VIII have successful completed clinical trials and have submitted applications to the SFDA for official production permit and product certification. The Company looks forward to SFDA approval of these products in the second half of 2010 and expects to launch the commercial production of the products in late 2010 or early 2011. We believe that the addition of these two new products will broaden our product portfolio and improve our mix, enhance the Company's competitive position and maximize the yield from our current plasma supply."

Conference Call

China Biologic will host a conference call at 9:00 a.m. EDT on Wednesday, March 24, 2010, to discuss the fourth quarter 2009 and year-end financial results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 877- 409-5468. International callers should dial +1-702-894-2400. The pass code for the call is 64404888. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Wednesday, March 24, 2010 at 11:00 a.m. EDT. To access the replay, dial 800-642-1687, international callers should dial +1-706-645-9291. The conference pass code is 64404888.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures that exclude non- cash compensation expenses related to options granted to employees and directors under the Company's 2008 Equity Incentive Plan and changes in the fair value of derivative liabilities, including warrants and derivative instruments (including the conversion option) embedded in the Company's Senior Secured Convertible Notes. 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 these non-GAAP measures provide 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., through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co. Ltd. and Guiyang 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. The Company sells its products to hospitals and other healthcare facilities in China. Please see the Company's website http://www.chinabiologic.com/ for additional information.

Safe Harbor Statement

This release may contain certain "forward-looking statements" relating to the business of China Biologic Products, Inc. and its subsidiaries. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the achievability of the financial guidance provided by the management; the success of the R&D pipeline projects, SFDA approval and commercial launch of new products; the Company's ability to build new or expand existing plasma collection stations; the Company's ability 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, and 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 -


  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  FOR THE THREE MONTHS AND FISCAL-YEAR ENDED DECEMBER, 2009 AND 2008

                                    Three Months Ended    Three Months Ended
                                    December 31, 2009     December 31, 2008
                                       Net     Diluted     Net      Diluted
  Net Income (Loss) Diluted EPS      Income       EPS     Income     EPS
  Adjusted Net Income  - Non GAAP  $11,069,396   $0.44   $3,233,097   $0.15
  Non-cash employee compensation(1)      $0.00   $0.00       27,926   $0.00
  Loss in fair value of derivative
   liabilities(2)                  $14,695,101   $0.59        $0.00   $0.00
  Interest of Convertible Notes(3)    $144,892   $0.01        $0.00
  Net Income attributable to
   controlling interest            $(3,770,597) $(0.17)   $3,205,171  $0.15
  Weighted average number of
   shares - diluted                 24,947,251            21,556,342



                                     Fiscal Year Ended   Fiscal Year Ended
                                     December 31, 2009   December 31, 2008
                                       Net     Diluted      Net      Diluted
  Net Income (Loss) Diluted EPS      Income      EPS      Income      EPS
  Adjusted Net Income - Non GAAP  $31,255,377  $1.38  $13,297,398   $0.62
  Non-cash employee compensation(1)   $62,281  $0.00   $1,311,727   $0.06
  Loss in fair value of derivative
   liabilities(2)                 $29,626,189  $1.31        $0.00   $0.00
  Interest of Convertible Notes(3)   $302,010  $0.01
  Net Income attributable to
   controlling interest            $1,264,897  $0.07  $11,985,671   $0.56
  Weighted average number of
    Shares                         22,644,342          21,556,342

  (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 derivative liabilities to be recognized
      in earnings each quarter.
  (3) Interest of Convertible Notes is added back to net income attributable
      to controlling interest using the if-converted method.


                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

       CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
   FOR THE THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008

                              (Unaudited)
                          Three months ended         Twelve months ended
                              December 31,              December 31,
                            2009         2008         2009          2008

  REVENUES              $37,628,272  $13,176,396  $118,998,155  $46,751,160
  COST OF REVENUES       10,284,313    4,315,499    32,621,908   14,040,602

  GROSS PROFIT           27,343,959    8,860,897    86,376,247   32,710,558

  OPERATING EXPENSES
        Selling
         expenses         1,215,663      426,733     3,529,242    2,212,073
        General and
         administrative
         expenses         4,810,277    3,240,133    19,807,123    8,996,220
        Research and
         development
         expenses           564,606      501,842     1,662,690    1,166,494
           Total
            operating
            expenses      6,590,546    4,168,708    24,999,055   12,374,787

  INCOME FROM
   OPERATIONS            20,753,413    4,692,189    61,377,192   20,335,771
  OTHER EXPENSES
   (INCOME)
        Equity in
         income of
         unconsolidated
         affiliate         (586,076)    (175,231)     (566,984)    (175,231)
        Change in fair
         value of
         derivative
         liabilities     14,695,101            0    29,626,189            0
        Other income -
         related party      (97,447)           0       (97,447)           0
        Interest
         expense, net     1,950,711      381,028     3,930,249      373,497
        Other expense,
         net                (14,257)     141,123       358,699      251,390
           Total other
            expenses,
            net          15,948,032      346,920    33,250,706      449,656
  INCOME BEFORE
   PROVISION FOR INCOME
   TAXES AND
   NONCONTROLLING
   INTEREST               4,805,381    4,345,269    28,126,486   19,886,115
  PROVISION FOR INCOME
   TAXES                  2,965,782      159,462    10,513,100    4,596,603
  NET INCOME BEFORE
   NONCONTROLLING
   INTEREST               1,839,599    4,185,807    17,613,386   15,289,512
  Less: Net income
   attributable to
   noncontrolling
   interest               5,610,194      980,636    16,348,489    3,303,841
  NET INCOME
   ATTRIBUTABLE TO
   CONTROLLING INTEREST  (3,770,595)   3,205,171     1,264,897   11,985,671
  OTHER COMPREHENSIVE
   INCOME:
        Foreign
         currency
         translation
         adjustments        174,304      151,152       523,906    2,144,091
  COMPREHENSIVE INCOME  $(3,596,301)  $3,356,323    $1,788,803  $14,129,762
  BASIC EARNINGS PER
   SHARE:
        Weighted
         average number
         of shares       22,486,993   21,434,942    21,754,911   21,434,942
        Earnings per
         share              $(0.17)        $0.15         $0.06        $0.56
  DILUTED EARNINGS PER
   SHARE:
        Weighted
         average number
         of shares       22,486,993   21,556,342    22,644,342   21,556,342
        Earnings per
         share              $(0.17)        $0.15         $0.07        $0.56



               CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
                      AS OF DECEMBER 31, 2009 AND 2008

                                   ASSETS
                                            December 31,       December 31,
                                               2009              2008

  CURRENT ASSETS:
              Cash and cash
               equivalents                   $53,843,951        $8,814,616
              Accounts receivable, net
               of allowance for
               doubtful accounts of
               $1,254,955 and
               $1,268,052 as of
               December 31, 2009 and
               2008, respectively              1,767,076           313,087
              Accounts receivable -
               related party                     222,617                 0
              Dividend receivable                      0           147,256
              Other receivables                2,186,441           356,957
              Inventories, net of
               allowance for obsolete
               of $519,333 and $0 as
               of December 31, 2009
               and 2008, respectively         35,132,724        14,949,196
              Prepayments and deferred
               expense                         1,299,125           614,704
              Deferred tax assets              1,053,771                 0
                  Total current
                  assets                      95,505,705        25,195,816

  PLANT AND EQUIPMENT, net                    28,873,413        19,299,364

  OTHER ASSETS:
              Investment in
               unconsolidated
               affiliate                       6,627,355         6,533,977
              Refundable deposit for
               potential acquisition                   0        14,181,800
              Prepayments - non-
               current                         3,223,960           955,874
              Intangible assets, net          21,180,322         1,002,561
              Goodwill                        12,425,589                 0
                          Total other
                           assets             43,457,226        22,674,212

                          Total assets      $167,836,344       $67,169,392



                            LIABILITIES AND EQUITY

  CURRENT LIABILITIES:
              Accounts payable                $3,701,843         $2,481,889
              Notes payable                       48,598             29,340
              Short term loans - bank          4,474,350                  0
              Short term loans -
               holder of
               noncontrolling interest         3,652,500            773,277
              Other payables and
               accrued liabilities            19,246,814          3,962,931
              Other payable - related
               parties                         3,086,940                  0
              Accrued interest -
               holder of
               noncontrolling interest         2,068,526                  0
              Distribution payable to
               holder of
               noncontrolling interest               587          3,252,354
              Customer deposits                3,868,577          1,091,792
              Taxes payable                    8,774,079          4,060,010
              Investment payable               2,195,365          3,275,501
                  Total current liabilities   51,118,179         18,927,094

  OTHER LIABILITIES:
              Other payable - land use
               right                             323,687            325,390
              Notes payable, net of
               discount of $8,464,380
               as of December 31, 2009            89,760                  0
              Long term loan - bank,
               net of current
               maturities                              0          5,868,000
              Derivative liability -
               conversion option              19,960,145                  0
              Fair value of derivative
               instruments                    12,701,262                  0
                          Total other
                           liabilities        33,074,854          6,193,390

                          Total
                           liabilities        84,193,033         25,120,484

  COMMITMENTS AND CONTINGENCIES

  EQUITY:
      Common stock, $0.0001 par value, 100,000,000 shares
      authorized,
              23,056,442 and 21,434,942 shares
              issued and outstanding at
              December 31, 2009 and
              2008, respectively                   2,305             2,143
     Additional paid-in-capital               22,517,077        10,700,032
     Statutory reserves                       17,414,769         6,989,801
     Retained earnings                         5,302,605        15,392,253
     Accumulated other
      comprehensive income                     5,276,791         4,752,885
             Total shareholder s' equity      50,513,547        37,837,114


  NONCONTROLLING INTEREST                     33,129,764         4,211,794

          Total equity                        83,643,311        42,048,908

          Total liabilities and
            shareholder s' equity           $167,836,344       $67,169,392


               CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

                                                 2009             2008
  CASH FLOWS FROM OPERATING ACTIVITIES:
            Net income attributable to
             controlling interest             $1,264,897       $11,985,671
            Net income attributable to
             noncontrolling interest          16,348,489         3,303,841
            Consolidated net income           17,613,386        15,289,512
            Adjustments to reconcile
             net income to cash
             provided by operating
             activities:
                    Depreciation               2,709,623         1,088,155
                    Amortization               3,358,532            61,095
                    Loss on disposal of
                     equipment                   224,548           214,663
                    Recovery of bad
                     debt previously
                     reserved                    (31,826)          (56,462)
                    Allowance for bad
                     debt - accounts
                     receivable                   18,737                 0
                    Allowance for bad
                     debt - other
                     receivables and
                     prepayments                 280,796           560,668
                    Allowance for
                     obsolete
                     inventories                 519,333                 0
                    Deferred tax assets       (1,053,124)                0
                    Impairment of
                     assets                            0           415,873
                    Stock based
                     compensation                 62,281         1,311,727
                    Change in fair
                     value of warrant
                     liabilities              29,626,189                 0
                    Amortization of
                     deferred note
                     issuance cost               247,199                 0
                    Amortization of
                     discount on
                     convertible notes           100,253                 0
                    Equity in income of
                     unconsolidated
                     affiliate                  (566,984)         (175,231)
                Change in operating
                 assets and
                 liabilities:
                    Notes receivable                   0            43,245
                    Accounts receivable       (1,707,714)           81,980
                    Accounts receivable
                     - related party             197,284                 0
                    Other receivables         (1,744,794)          (33,462)
                    Other receivables -
                     related party                     0             1,442
                    Inventories              (12,456,975)       (4,695,495)
                    Prepayments and
                     deferred expenses          (248,794)         (459,019)
                    Accounts payable             (58,467)         (376,527)
                    Other payables and
                     accrued
                     liabilities               7,058,773         2,658,552
                    Accrued interest -
                     holder of
                     noncontrolling
                     interest                  2,068,526                 0
                    Customer deposits            274,768           653,514
                    Taxes payable              3,809,437         3,585,237
                    Contingent
                     liability                         0          (149,428)
                    Net cash provided
                     by operating
                     activities               50,300,987        20,020,039

  CASH FLOWS FROM INVESTING ACTIVITIES:
            Cash acquired through
             acquisition                      11,946,933                 0
            Proceeds from dividend
             receivable                          384,087                 0
            Payments made for
             acquisition                     (10,373,854)                0
            Payments made for
             unconsolidated affiliate         (3,225,420)       (3,171,300)
            Purchase of plant and
             equipment                        (1,873,371)       (4,033,667)
            Additions to intangible
             assets                           (2,106,203)          (83,259)
            Proceeds from sale of
             equipment                            36,771            73,641
            Prepayments for potential
             acquisition                               0       (14,181,800)
            Refunds of advances on non-
             current assets                    1,174,346                 0
            Advances on non-current
             assets                           (2,823,743)         (270,119)
                    Net cash provided
                     by investing
                     activities               (6,860,454)      (21,666,504)

  CASH FLOWS FROM FINANCING ACTIVITIES:
            Proceeds from notes payable           19,246            28,830
            Proceeds from warrants
             conversion                        3,649,770                 0
            Proceeds from stock option
             exercised                           350,000                 0
            Proceeds from issuance of
             convertible notes                 8,967,516                 0
            Repayments of former
             shareholders loan in
             acquiring company                (2,841,302)                0
            Proceeds from short term
             loans - bank                     13,517,442                 0
            Payments on short term
             loans - bank                    (18,355,572)         (720,750)
            Repayment of non-
             controlling shareholder
             loan                               (772,803)                0
            Proceeds from long term
             loan-bank                                 0         5,766,000
            Distribution paid to
             noncontrolling interest
             shareholders                     (2,969,372)         (288,300)
                    Net cash provided
                     by financing
                     activities                1,564,925         4,785,780

  EFFECTS OF EXCHANGE RATE CHANGE IN
   CASH                                           23,877           665,268

  INCREASE IN CASH                            45,029,335         3,804,583

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

  CASH and CASH EQUIVALENTS, end of
   year                                      $53,843,951        $8,814,616

  SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
            Income taxes paid                 $8,021,981        $1,523,867
            Interest paid (net of
             capitalized interest)            $1,131,271          $108,170
            Non-cash investing and
             financing activities:
                Unpaid investment in
                 unconsolidated
                 affiliate                            $0        $3,218,565
                Reclassification of
                 warrant liability to
                 paid-in capital upon
                 warrants conversion          $6,306,275                $0
                Convertible notes
                 exercised                    $2,187,330                $0
                Distribution paid by
                 offsetting accounts
                 receivable - related
                 party                          $944,036                $0
                Distribution paid in
                 exchange of holder of
                 noncontrolling
                 interest loan                $3,665,250                $0
                Distribution paid by
                 offsetting loan and
                 interest due from
                 holder of
                 noncontrolling
                 interest                     $4,647,924                $0
                Net assets acquired
                 with prepayments made
                 in prior periods            $14,250,492           $78,905
                Net assets acquired
                 with unpaid investment       $2,850,098                $0
                Plant and equipment
                 acquired with
                 prepayments made in
                 prior periods                $2,296,113                $0
                Land use right acquired
                 with prepayments made
                 in prior periods               $146,610                $0



  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:
   Ms. Lei Huang, Account Manager
   CCG Investor Relations
   Phone: +1-646-833-3417
   Email: lei.huang@ccgir.com
   Web:   http://www.ccgirasia.com/

   Mr. Crocker Coulson, President
   Phone: +1-646-213-1915
   Email: crocker.coulson@ccgir.com

SOURCE: China Biologic Products, Inc.

CONTACT: Company Contact: Mr. Y. Tristan Kuo, Chief Financial Officer,
China Biologic Products, Inc., +86-538-6202206, or IR@chinabiologic.com; or
Investor Relations Contact: Ms. Lei Huang, Account Manager, CCG Investor
Relations, +1-646-833-3417, or lei.huang@ccgir.com; or Mr. Crocker Coulson,
President, +1-646-213-1915, or crocker.coulson@ccgir.com

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