China Biologic Products Announces Record Second Quarter 2010 Results

PRNewswire
Aug 16, 2010

                -- Q2 revenue grew 23.3% to $40.9 million

       -- Non-GAAP adjusted net income grew 31.2% to $10.9 million

TAI'AN, China, Aug. 16 /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 its second quarter ended June 30, 2010.

  Second Quarter 2010 Highlights
  -- Revenues increased 23.3% year-over-year to $40.9 million
  -- Gross profit rose 32.6% year-over-year to $31.8 million, representing a
     gross margin of 77.9%, as compared to 72.4% a year ago
  -- Operating income grew 37.7% to $22.8 million
  -- GAAP net income attributable to controlling interest was $12.9 million,
     or $0.49 per diluted share, including a $2.3 million non-cash gain from
     change in the fair value of derivative liabilities
  -- Excluding the non-cash gain, interest on convertible notes and non-cash
     employee compensation, non-GAAP adjusted net income was $10.9 million
     or $0.41 per diluted share, a 31.2% increase from $8.3 million or $0.38
     per diluted share a year ago

"Our second quarter results were very strong, with 23.3% growth in revenues and 31.2% growth in adjusted net income, primarily driven by robust demand and a favorable pricing environment for our plasma-based products," said Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic. "We are moving forward with establishing our two new plasma collection stations in Yishui and Ninyang counties in Shandong Province, and expect to begin trial collections at the new locations by the end of the year. We also increased our focus on marketing and educational medical conferences in the second quarter, as part of our strategy to strengthen our ties with hospitals and clinics, since we believe that direct sales to these customers can secure our market share and support our long-term growth."

Second Quarter 2010 Results

Revenue for the second quarter of 2010 increased 23.3% to $40.9 million, from $33.2 million in the same 2009 period. Revenue growth is primarily attributable to price increases ranging from 0.1% to 433.5% across the Company's plasma-based product portfolio. Rising pricing reflects continued supply shortage in China's plasma industry. The Company generally expects pricing to remain stable during the balance of the year, while management continues to monitor the impact of China's health care reform efforts on procurement and pricing for products listed within China's National Medical Insurance Catalog. Among the Company's product groups, while Human Albumin pricing remained flat relative to the second quarter of 2009, it remained the largest revenue contributor at 46.4% of total sales. Human Immunoglobulin for Intravenous Injection, the Company's most in-demand product group and second largest revenue contributor at 39.3% of total sales, experienced average year-over-year price increases of 26.9% in second quarter 2010. Human Hepatitis B Immunoglobulin experienced the sharpest average price increase among the Company's product categories, up 433.5% compared to the prior year period, and contributed 6.9% of total revenues in second quarter 2010.

Gross profit for the second quarter of 2010 was $31.8 million, up 32.6%, from $24.0 million in the second quarter of 2009. Gross profit margin expanded to 77.9% from 72.4% in the same period a year ago and 74.9% in the first quarter of 2010. The gross profit margin expansion was primarily attributable to the increase in the average selling price, as well as some volume increase, of the Company's plasma products quarter-over-quarter.

Operating expenses in the second quarter increased 21.3% to $9.1 million, from $7.5 million in the same period last year. Higher expenses primarily reflected a 258.2% increase in research and development spending, mostly related to development of two late stage pipeline projects for which the Company expects to receive SFDA approval in early 2011. Selling expenses increased 66.6% year-over-year to $1.9 million due to intensified promotion and conferences activities as the Company continues its efforts in expanding its penetration into hospital and inoculation centers. General and administrative expenses decreased 1.6% year-over-year in the second quarter of 2010 to $5.9 million, or 14.4% of total sales, versus $6.0 million, or 18.1% of total sales for the same period in 2009.

The decrease in general and administrative expenses is due mainly to reduced general payroll and employee benefits and outside services, as well as decreases in legal expenses and office supplies.

Income from operations in the 2010 second quarter was $22.8 million, a 37.7% increase from $16.5 million during the same period a year ago. Operating margin rose to 55.7% from 49.8% year-over-year.

Total other income was $1.9 million in the 2010 second quarter, as compared to net other expense of $2.3 million in the same 2009 period. The increase primarily reflected a $2.3 million gain related to change in the fair value of warrant liabilities.

Income taxes increased to $5.1 million in the 2010 second quarter, from $3.0 million in the prior year. The effective tax rate was 20.6% in the second quarter, as compared to 20.9% same quarter last year.

Net income attributable to controlling interest for the 2010 second quarter was $12.9 million, or $0.49 per diluted share, and included a $2.3 million non-cash gain related to change in the fair value of derivative liabilities. Net income during the 2009 second quarter was $7.0 million, or $0.32 per diluted share, which included a non-cash $1.3 million charge related to change in the fair value of warrants.

Excluding non-cash employee compensation expenses, change in the fair value of derivative liabilities and interest related to the convertible notes under the if-converted method, non-GAAP adjusted net income for the three months ended June 30, 2010 was $10.9 million, or $0.41 per diluted share, up 31.2% from $8.3 million, or $0.38 per diluted share, in the same 2009 period.

Six Months Results

For the first six months of 2010, total revenue was $68.0 million, up 25.2% from the first six months of 2009. Gross profit for the first six months of 2010 was $52.1 million, up 33.9% from $39.0 million in the comparable period a year ago. Gross margin for the first six months of 2010 was 76.7%, as compared to 71.7% for the same period in 2009. The increase in gross margin was due mainly to the increases in selling prices of the Company's products, which ranged from 1.3% to 375.0%. Income from operations for the period was $36.0 million, up 35.3% from $26.6 million in the first six months of 2009. Net income for the first six months of 2010 was $23.5 million, up 109.1% from $11.2 million in the first six months of 2009. Fully diluted earnings per share were $0.90 for the first six months of 2010 compared to $0.52 in the first six months of 2009. Excluding non-cash employee compensation expenses, change in the fair value of derivative liabilities and interest related to the convertible notes under the if-converted method, non-GAAP adjusted net income for the six months ended June 30, 2010 was $18.5 million, or $0.70 per diluted share, an increase of 41.8% from non-GAAP net income of $13.0 million or $0.60 per fully diluted share for the six months ended June 30, 2009.

Financial Condition

As of June 30, 2010, the Company had $56.3 million in cash and cash equivalents, approximately $63.9 million in working capital, and a current ratio of 2.4. Total stockholders' equity at the end of the quarter was $78.8 million, up 59.3% from $49.5 million at the end of 2009.

The Company generated $19.4 million in net cash from operating activities during the first half of 2010, as compared to $28.4 million in the same period of 2009. The decline in operating cash flow was primarily due to an increase in inventory, accounts receivable and income taxes paid. Higher inventory reflected increased plasma collection and timing of SFDA approval of finished plasma goods, while higher accounts receivable reflects increased end-user sales to hospitals.

Recent Events and Updates

On July 7, 2010 and July 20, 2010, Shandong Taibang established Ning Yang Taibang Plasma Company and Yi Shui Taibang Plasma Company, both 100% owned by Shandong Taibang for the purpose of constructing and operating two recently government-approved plasma stations in Shandong Province, PRC. Once the new plasma stations are operational, the Company will have 18 total plasma stations and expects the two new plasma stations will increase aggregate plasma collection capacity by up to an additional to 80 metric tons over the next few years.

2010 Guidance and Business Outlook

China Biologic maintained its guidance for 2010 revenues in the range of $142 million and $149 million and 2010 adjusted net income in the range of $34 million and $36 million. As part of its scheduled annual maintenance and inspection process, the Company shut down its facility in Qianfeng for approximately 45 days in June and July and its Taibang facility for 30 days beginning in late July. Due to careful planning of production and inventories, this is expected to have minimal impact to the company's revenue generation.

Guidance for 2010 adjusted net income excludes any non-cash gain or loss related to change in the fair value of derivative liabilities, 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, and excludes any acquisitions, new product approvals or operational impact from new plasma stations. The guidance also does not assume any material price or volume increases during the year.

China Biologic's applications for Human Prothrombin Complex Concentrate and Human Coagulation Factor VIII remain under SFDA review. As a result of internal changes at the SFDA that have delayed processing of new drug applications, management expects to commercially launch these two products in early 2011. Management expects that these new products will enrich the Company's product portfolio and enhance its competitive position in the plasma-based product market.

Mr. Zhao added, "Results for the first half of 2010 confirm that China Biologic's strategy is on track and our strong balance sheet and our operating cash flow provides us with the resources to take advantage of opportunities created by rising consumer demand and tight supply conditions based on strict government regulation. We plan to expand our plasma supply through building new collection stations and increasing the capacity of our existing stations. Our investment in R&D is expected to bring additional advanced, higher margin products into our portfolio. We are also working to increase our relationships with our end customers through carefully targeted marketing activities and we continue to evaluate opportunities to acquire additional collection and production assets that can further strengthen our leading position in the industry."

Conference Call

China Biologic will host a conference call at 8:00 a.m. ET on Monday, August 16, 2010, to discuss the second quarter 2010 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 94191315. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Monday, August 16, 2010 at 9:00 a.m. ET. To access the replay, dial 800-642-1687, international callers should dial +1-706-645-9291. The conference pass code is 94191315.

                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
              FOR THE THREE MONTHS ENDED JUNE 30, 2010, AND 2009

                         Three Months Ended   Three Months Ended
                            June 30, 2010        June 30, 2009
                             Net     Diluted      Net     Diluted
                           Income      EPS      Income      EPS
  Adjusted net income -
   non GAAP              10,936,852   $0.41    8,335,605   $0.38
  Non-cash employee
   compensation (1)          45,948   $0.00       27,594   $0.00
  Loss (income) in fair
   value of derivative   (2,270,829) $(0.09)  91,295,732   $0.06
   liabilities (2)
  Net income
   attributable to
   controlling interest
   for diluted EPS (3)   13,161,733   $0.49    7,012,279   $0.32
  Interest add-back on
   convertible notes        284,190               41,534
  Net income
   attributable to
   controlling interest  12,877,543            6,970,745
  Weighted average
   number of shares -
   diluted               26,599,255           21,811,473



                             Six Months Ended   Six Months Ended
                              June 30, 2010      June 30, 2009
                             Net      Diluted     Net     Diluted
                           Income       EPS     Income      EPS
  Adjusted net income -
    GAAP                 18,452,929    $0.70  13,014,319   $0.60
  Non-cash employee
   compensation (1)         617,841    $0.02      54,967   $0.00
  Loss (income) in fair
   value of derivative
   liabilities (2)       (6,104,406)  $(0.23)  1,688,755   $0.08
  Net income
   attributable to
   controlling interest
   for diluted EPS (3)   23,939,494    $0.90  11,270,597   $0.52
  Interest add-back on
   convertible notes        456,311               41,534
  Net income
   attributable to
   controlling interest  23,483,183           11,229,063
  Weighted average
   number of shares
   - diluted             26,541,685           21,527,509


  (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) Net Income attributable to controlling interest for calculating
      diluted earnings per share includes interest add-back on Convertible
      Notes.



  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 ability of the Company to achieve the financial guidance provided by the management; the ability of the Company to win SFDA approval for its research and development pipeline projects, and commercially launch new products; the Company's ability to build new or expand existing plasma collection stations and increase plasma collection capacity; the Company's ability to otherwise achieve its commercial objectives, including its ability to gain market share and further strengthen the Company's leadership in the PRC plasma market; 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 -


              CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                AS OF JUNE 30, 2010 and DECEMBER 31, 2009

                                 ASSETS
                                            June 30,        December 31,
                                              2010              2009
                                          (Unaudited)
  CURRENT ASSETS:
     Cash and cash equivalents            $56,263,131       $53,843,951
     Accounts receivable, net
      of allowance for doubtful
      accounts of $1,253,975 and
      $1,254,955 as of June 30,
      2010 and December 31, 2009,
      respectively                          5,658,429         1,767,076
     Accounts receivable -
      related party                           229,817           222,617
     Other receivables                      2,291,010         2,186,441
     Inventories, net of
      allowance for obsolete of
      $742,269 and $519,333 as
      of June 30, 2010 and
      December 31, 2009,
      respectively                         41,434,786        35,132,724
     Prepayments and deferred
      expense                               1,848,327         1,299,125
     Deferred tax assets                    1,119,908         1,053,771
         Total current assets             108,845,408        95,505,705

  PLANT AND EQUIPMENT, net                 35,598,253        28,873,413

  OTHER ASSETS:
     Investment in unconsolidated
      affiliate                             7,001,553         6,627,355
     Prepayments - non-current              2,637,092         3,223,960
     Intangible assets, net                19,988,081        21,180,322
     Goodwill                              12,425,589        12,425,589
         Total other assets                42,052,315        43,457,226

  Total assets                           $186,495,976      $167,836,344

                         LIABILITIES AND EQUITY

  CURRENT LIABILITIES:
     Accounts payable                      $3,268,413        $3,701,843
     Notes payable                                 --            48,598
     Short term loans - bank                5,965,650         4,474,350
     Short term loans - holder
      of noncontrolling interest                   --         3,652,500
     Other payables and accrued
      liabilities                          20,592,061        19,246,814
     Other payable - related
      parties                               3,100,153         3,087,527
     Accrued interest - holder
      of noncontrolling interest                   --         2,068,526
     Customer deposits                      4,051,003         3,868,577
     Taxes payable                          7,509,571         8,774,079
     Investment payable                        78,800         2,195,365
     Current maturities of notes
      payable, net of discount of
      $7,112,409 as of June 30,
      2010                                    387,591                --
         Total current liabilities         44,953,242        51,118,179

  OTHER LIABILITIES:
     Other payable - land use right           324,265           323,687
     Derivative liability -
      conversion option                    13,522,842        19,960,145
     Fair value of derivative
      instruments                           8,658,837        12,701,262
     Notes payable, net of
      discount of $8,464,380 as
      of December 31, 2009                         --            89,760
         Total other liabilities           22,505,944        33,074,854

                Total liabilities          67,459,186        84,193,033

   COMMITMENTS AND CONTINGENCIES

  EQUITY:
     Common stock, $0.0001 par
      value, 100,000,000 shares
      authorized, 23,513,533 and
      23,056,442 shares issued and
      outstanding at June 30, 2010
      and December 31, 2009,
      respectively                              2,351             2,305
     Additional paid-in-capital            28,070,754        22,517,077
     Statutory reserves                    23,233,527        17,414,769
     Retained earnings                     22,967,030         5,302,605
     Accumulated other comprehensive
      income                                4,520,744         4,227,394
         Total shareholders' equity        78,794,406        49,464,150

  NONCONTROLLING INTEREST                  40,242,384        34,179,161

         Total equity                     119,036,790        83,643,311

                 Total liabilities
                  and equity             $186,495,976      $167,836,344



              CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
        FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
                               (Unaudited)

                        Three months ended            Six months ended
                             June 30,                     June 30,
                       2010           2009           2010           2009
  REVENUES:
    Revenues       $40,580,807    $33,030,868    $67,442,329    $53,936,737
    Revenues -
     related party     327,509        150,677        564,540        393,406
      Total
       revenues     40,908,316     33,181,545     68,006,869     54,330,143

  COST OF REVENUES:
    Cost of
     revenues        9,058,906      9,161,765     15,857,760     15,376,695

  GROSS PROFIT      31,849,410     24,019,780     52,149,109     38,953,448

  OPERATING EXPENSES:
    Selling
     expenses        1,856,881      1,114,614      2,799,789      1,694,110
    General and
     administrative
     expenses        5,905,950      6,004,802     10,868,202      9,827,709
    Research and
     development
      expenses       1,317,483        367,856      2,486,138        835,583
       Total
        operating
         expenses    9,080,314      7,487,272     16,154,129     12,357,402

  INCOME FROM
   OPERATIONS       22,769,096     16,532,508     35,994,980     26,596,046

  OTHER (INCOME)
   EXPENSE:
    Equity in
     loss (income) of
     unconsolidated
     affiliate        (157,114)        90,390       (345,655)        50,143
    Change in
     fair value of
     derivative
     liabilities    (2,270,829)     1,295,732     (6,104,406)     1,688,755
    Interest
     expense, net      439,005        883,914        620,058      1,254,767
    Other income -
     related party        (449)            --       (914,738)            --
    Other expense,
     net               102,914        (16,005)       197,234         35,310
      Total other
       (income)
       expense, net (1,886,473)     2,254,031     (6,547,507)     3,028,975

  INCOME BEFORE
   PROVISION FOR
   INCOME TAXES AND
   NONCONTROLLING
   INTEREST         24,655,569      14,278,477    42,542,487     23,567,071

  PROVISION FOR
   INCOME TAXES      5,086,881       2,982,101     8,282,947      5,012,295

  NET INCOME        19,568,688      11,296,376    34,259,540     18,554,776

  Less: Net income
   attributable to
   noncontrolling
   interest          6,691,145       4,325,631    10,776,357      7,325,713

  NET INCOME
   ATTRIBUTABLE TO
   CONTROLLING
   INTEREST         12,877,543       6,970,745    23,483,183     11,229,063

  OTHER COMPREHENSIVE
   INCOME:
    Foreign
     currency
     translation
     adjustments       274,049          (1,250)      293,350         17,387
    Comprehensive
     (income) loss
     attributable to
     noncontrolling
     interest          162,723         (33,362)      138,768        393,940
  COMPREHENSIVE
   INCOME          $13,314,315      $6,936,133   $23,915,301    $11,640,390


  BASIC EARNINGS
   PER SHARE:
    Weighted average
     number of
     shares         23,511,435      21,442,909    23,449,508     21,438,948
    Earnings per
     share               $0.55           $0.33         $1.00          $0.52

  DILUTED EARNINGS
   PER SHARE:
    Weighted
     average number
     of shares      26,599,255      21,811,473    26,541,685     21,527,509
    Earnings per
     share               $0.49           $0.32         $0.90          $0.52



              CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
                               (Unaudited)

                                              2010               2009
  CASH FLOWS FROM OPERATING
   ACTIVITIES:
     Net income attributable to
      controlling interest                $23,483,183        $11,229,063
     Net income attributable to
      noncontrolling interest              10,776,357          7,325,713
     Consolidated net income               34,259,540         18,554,776
     Adjustments to reconcile net
      income to cash provided by
      operating activities:
             Depreciation                   1,670,321          1,589,625
             Amortization                   1,740,659          1,704,248
             (Gain) Loss on disposal
              of equipment                      3,020               (506)
             Recovery of bad debt
              previously reserved              (8,973)           (22,311)
             Allowance for bad debt -
              other receivables and
              prepayment                      432,895            406,736
             Allowance for obsolete
              inventories                     219,897                 --
             Deferred tax assets              (61,571)                --
             Stock based compensation         617,841             54,967
             Change in fair value of
              derivative liabilities       (6,104,406)         1,688,755
             Amortization of deferred
              note issuance cost              171,667             25,323
             Amortization of discount
              on convertible notes            312,259             20,356
             Equity in (income) loss
              of unconsolidated affiliate    (345,655)            50,143
     Change in operating assets and
      liabilities:
             Accounts receivable           (3,861,953)          (676,036)
             Accounts receivable -             (6,264)          (375,810)
              related party
             Other receivables                (95,231)           (23,082)
             Inventories                   (6,351,255)        (4,130,960)
             Prepayments and deferred
              expenses                       (849,198)          (750,937)
             Accounts payable                (446,713)           (50,767)
             Other payables and
              accrued liabilities           1,252,134          4,594,379
             Accrued interest -
              holder of noncontrolling
              interest                     (2,068,526)           911,084
             Customer deposits                169,398          4,251,476
             Taxes payable                 (1,294,805)           608,063
  Net cash provided by operating
   activities                              19,355,081         28,429,522

  CASH FLOWS FROM INVESTING
   ACTIVITIES:
     Cash acquired through
      acquisition                                  --         11,943,673
     Payments made for acquisition         (4,022,288)       (10,373,854)
     Purchase of plant and equipment       (6,154,212)        (1,865,746)
     Additions to intangible assets           (87,769)        (1,014,766)
     Advances on non-current assets          (471,667)          (590,428)
                 Net cash used in
                  investing activities    (10,735,936)        (1,901,121)

  CASH FLOWS FROM FINANCING
   ACTIVITIES:
     Proceeds from warrants
      conversion                              689,160            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 loans
      - bank                                5,867,600         13,513,754
     Payments on short term loans
      - bank                               (4,400,700)                --
     Payments on long term loan
      - bank                                       --         (5,862,800)
     Repayments of non-controlling
      shareholder loan                     (3,652,500)                --
     Payments on notes payables               (48,595)                --
     Distribution paid to
      noncontrolling interest
      shareholders                         (4,864,240)                --
                 Net cash (used in)
                  provided by financing
                  activities               (6,409,275)        14,083,254

  EFFECTS OF EXCHANGE RATE CHANGE IN
   CASH                                       209,310             52,750

  INCREASE IN CASH                          2,419,180         40,664,405

  CASH and CASH EQUIVALENTS,
   beginning of periods                    53,843,951          8,814,616

  CASH and CASH EQUIVALENTS, end of
   periods                                $56,263,131        $49,479,021

  SUPPLEMENTAL DISCLOSURE OF CASH
   FLOW INFORMATION
     Income taxes paid                     $9,500,399         $4,351,056
     Interest paid                           $161,684           $715,158
  Non-cash investing and financing
   activities:
     Reclassification of derivative
      liability to equity related to
      conversion of convertible notes      $2,498,957                $--
     Reclassification of derivative
      liability to equity related to
      exercise  of warrants                $1,747,765           $125,009
     Distribution paid in exchange
      of holder of noncontrolling
      interest loan                               $--         $3,736,773
     Distribution paid by offsetting
      accounts receivable - related
      party                                       $--         $3,720,649
     Net assets addition with unpaid
      commitment                                  $--         $2,849,321
     Intangible assets acquired with
      prepayments made in prior periods      $440,070                $--
     Plant and equipment acquired with
      prepayments made in prior periods      $629,166        $14,290,227



  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. Kalle Ahl, Account Manager
   CCG Investor Relations
   Tel:   +1-646-833-3417
   Email: kalle.ahl@ccgir.com
   Web:   http://www.ccgirasia.com/

   Mr. Crocker Coulson, President
   Tel:   +1-646-213-1915
   Email: crocker.coulson@ccgir.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; or
Investor Relations Contacts -- Mr. Kalle Ahl, Account Manager, +1-646-833-3417,
kalle.ahl@ccgir.com, or Mr. Crocker Coulson, President, +1-646-213-1915, or
crocker.coulson@ccgir.com, both of CCG for CBPO

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