China Biologic Products Announces Record Second Quarter 2009 Results

TAI'AN, China, Aug. 17 /PRNewswire-Asia-FirstCall/ -- China Biologic
Products, Inc. (OTC 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.

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