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American Oriental Bioengineering Reports Fourth Quarter and Full Year 2009 Financial Results
Date:3/15/2010

NEW YORK, March 15 /PRNewswire-Asia-FirstCall/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), ("the Company" or "AOBO"), a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter ("OTC") products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2009.

Fourth Quarter 2009 Financial Performance

Revenue in the fourth quarter of 2009 increased 3.9% year over year to $100.0 million from $96.3 million, reflecting continued demand for the Company's core prescription and OTC pharmaceutical products.

    -- Revenue from pharmaceutical products increased 4.8% to $85.0 million
       from $81.2 million in the prior year's fourth quarter, driven by
       increased demand for the Jinji Series of products, Shuanghuanglian
       Injection Powder, the Cease Enuresis Soft Gel and Patch, as well as the
       newly-launched products such as YuYeQingHuo Capsules and Shedanchan
       beiye.  Revenue from prescription pharmaceutical products increased
       56.2% to $44.6 million from $28.5 million in the prior year, reflecting
       a year over year increase in sales from prescription formulated Jinji
       capsule, Boke and CCXA products.  The overall increase in sales was
       also supported by continuous marketing efforts, an increase in new
       product offerings, as well as expansion of coverage to previously
       unaddressed rural markets.  OTC pharmaceutical products generated $40.4
       million in revenue during the fourth quarter of 2009, in comparison to
       $52.6 million in the prior year's period, reflecting lower sales
       performance of Jinji Yimucao, a drug included in China's Essential Drug
       list, as distributors reduced orders in anticipation of price
       reductions in government tenders, starting in the fourth quarter.

    -- Nutraceutical products generated revenue of approximately $11.4 million
       in the fourth quarter of 2009, up 18.7% from $9.6 million in the prior
       year period, reflecting increased sales of new beverage products
       launched in the beginning of 2009.

    -- The Company generated $3.6 million from its distribution business, Nuo
       Hua, in the fourth quarter of 2009.

Gross profit in the fourth quarter of 2009 was $52.6 million compared to $60.0 million in the fourth quarter of 2008. Gross margin was 52.6%, compared to 62.4% in the prior year period, reflecting continued revenue mix shift to CCXA's generic product sales as well as increasing raw material prices.

Operating income in the fourth quarter of 2009 increased 28.5% to $14.9 million compared with $11.6 million in the prior year period. Selling and marketing expenses decreased 17.4% to $14.1 million from $17.1 million in the prior year period, and advertising expense decreased 22.7% to $9.5 million in the fourth quarter of 2009, compared to $12.3 million in the prior year period. Research and development expenses increased to $6.7 million compared with $0.6 million in the prior year, reflecting the Company's efforts in R&D activities including the setup of the centralized R&D centre in Beijing, China in 2009. General and administrative expenses increased 35.5% to $6.5 million from $4.8 million in the prior year period, primarily driven by increased expenses on optimizing the management team in view of the changing market environment and on the accounting-related professional fees resulting from the increased number of subsidiaries being audited and additional audit fees.

Net income attributable to controlling interest for the fourth quarter of 2009 was $11.7 million, compared to $7.8 million in the prior year period. Excluding $1.4 million of interest expense on convertible securities, $0.2 million of amortized financing costs related to the Company's outstanding convertible notes and $0.3 million capitalization of debt interest, the Company's net income attributable to controlling interest was $0.14 per diluted share, reflecting an increase of approximately 40.0% compared to $0.10 per diluted share in the same period of 2008.

2009 Financial Performance

Revenue for the fiscal year 2009 increased 11.9% to $296.2 million from $264.6 million in 2008. During the same time period, gross profit decreased by 3.9% to $166.8 million from $173.6 million in the year 2008. Prescription pharmaceutical products generated revenue of $115.8 million, up 32.4% from $87.4 million in the year 2008, and OTC pharmaceutical products generated revenue of $128.4 million, down 6.6% from $137.5 million in 2008. The CCXA and Boke businesses contributed revenue of $34.9 million and $49.0 million, respectively, during the fiscal year 2009, compared with $24.8 million and $38.2 million in 2008. Revenue from CCXA and Boke increased by 40.8% and 28.2%, respectively, compared to the prior year, reflecting sustainable growth of the subsidiaries. Revenue from nutraceutical products increased 14.2% to $39.1 million from $34.3 million in the year before. Revenue from Nuo Hua's distribution business was $12.9 million compared to $5.5 million in 2008.

Operating income in the year 2009 was $58.8 million compared to $63.5 million in the year 2008. Net income attributable to controlling interest for the year 2009 was $41.4 million, compared to $47.1 million in the prior year period. Excluding $5.8 million of interest expense on convertible securities, $0.9 million of amortized financing costs related to the Company's outstanding convertible notes and $0.8 million capitalization of debt interest, the Company's net income attributable to controlling interest was $0.53 per diluted share.

Balance Sheet

As of December 31, 2009, the Company had $94.4 million in cash and cash equivalents, including restricted portions, and generated approximately $25.4 million of operating cash flow during the year of 2009. Working capital was $130.9 million in 2009, reflecting an increase of 50.4% compared to $87.1 million in 2008. Accounts receivable turnover days was 58 and inventory turnover days was 32 in 2009.

Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented, "We are very pleased with our 2009 performance despite the increasingly challenging economic environment worldwide and China's rapidly changing regulatory environment. In 2009, we expanded our product portfolio, strengthened our leading brands and diversified our operations. Going into 2010, we'll continue to strengthen our core competencies in production, sales and marketing and distribution reach, and we'll particularly focus on R&D efforts to ensure that we are well-prepared to capture the tremendous amount of opportunities in China's dynamic healthcare sector."

Conference Call

The Company will hold a conference call at 8:00 am ET on Monday, March 15, 2010, to discuss its results. Listeners may access the call by dialing 1-800-261-3417 or 1-617-614-3673 for international callers, access code: 25821500. A webcast will also be available through AOBO's website at http://www.bioaobo.com . A replay of the call will be available through March 22, 2010. Listeners may access the replay by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 59269795.

About American Oriental Bioengineering, Inc.

American Oriental Bioengineering, Inc. is a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter products.

Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other factors identified in the Company's filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2009, may cause actual results or events to differ materially from those described in the forward looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

    For more information, please contact:

     Integrated Corporate Relations, Inc.
     Ashley M. Ammon
     Tel:   +1-646-277-1200



           AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME AND
                             COMPREHENSIVE INCOME

                            THREE MONTHS ENDED              YEAR ENDED
                               DECEMBER 31,                DECEMBER 31,
                             2009         2008          2009          2008

    Revenues            $100,032,887  $96,270,506  $296,150,780  $264,643,058

    Cost of sales         47,425,009   36,222,784   129,367,775    91,031,274

    GROSS PROFIT          52,607,878   60,047,722   166,783,005   173,611,784

    Selling and
     marketing expenses   14,142,993   17,117,853    40,996,370    39,774,330
    Advertising costs      9,536,612   12,342,238    31,896,992    34,102,538
    Research and
     development costs     6,652,704      602,868     7,922,357     1,528,991
    General and
     administrative
     expenses              6,457,024    4,765,273    21,168,566    18,074,956
    Depreciation and
     amortization
     expenses                920,037    1,371,108     6,038,625     4,383,215
    Purchased in-
     process research
     and development
     expenses                     --   12,255,248            --    12,255,248

    Total operating
     expenses             37,709,370   48,454,588   108,022,910   110,119,278

    INCOME FROM
     OPERATIONS           14,898,508   11,593,134    58,760,095    63,492,506

    Equity in earnings
     (loss) from
     unconsolidated
     entities              2,374,211     (542,395)    2,075,139    (1,132,986)
    Interest income
     (expense), net       (1,440,239)  (1,414,233)   (5,746,382)   (2,571,015)
    Other expenses          (405,558)     199,731      (569,661)      (65,843)

    INCOME BEFORE
     INCOME TAXES         15,426,922    9,836,237    54,519,191    59,722,662
    Income tax             3,753,893    1,980,173    13,216,986    12,635,472

    NET INCOME            11,673,029    7,856,064    41,302,205    47,087,190

    Net income (loss)
     attribute to non-
     controlling
     interest                    (79)      27,575       118,945       (27,575)

    NET INCOME
     ATTRIBUTE TO
     CONTROLLING
     INTEREST             11,673,108    7,828,489    41,421,150    47,059,615

    OTHER COMPREHENSIVE
     INCOME                  706,638       24,474     1,362,038    15,767,870

    COMPREHENSIVE
     INCOME              $12,379,746   $7,852,963   $42,783,188   $62,827,485

    EARNINGS PER COMMON
     SHARE
    Basic                      $0.16        $0.10         $0.56         $0.62
    Diluted                    $0.14        $0.10         $0.53         $0.61

    WEIGHTED AVERAGE
     SHARES OUTSTANDING
    Basic                 74,673,067   74,566,818    74,612,602    76,504,035
    Diluted               89,494,201   86,915,928    89,286,621    82,254,185



           AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS

                                               DECEMBER 31,      DECEMBER 31,
                                                  2009              2008

    CURRENT ASSETS
    Cash and cash equivalents                  $91,126,486       $68,060,769
    Restricted Cash                              3,298,379         2,575,741
    Accounts receivable, net                    57,215,978        36,982,167
    Inventories, net                            10,015,711        13,042,123
    Advances to suppliers and prepaid
     expenses                                   13,901,180         3,593,979
    Notes receivable                               288,476           708,076
    Refundable deposit                                  --         6,396,996
    Deferred tax assets                            824,451           347,216
    Other current assets                         1,246,647           744,903
            Total Current Assets               177,917,308       132,451,970

    LONG-TERM ASSETS
    Property, plant and equipment, net          95,468,265        98,154,443
    Land use rights, net                       153,604,196       148,988,870
    Other long term assets                       7,909,086         6,347,174
    Construction in progress                    28,975,386        25,385,835
    Deferred tax assets                            134,268         1,313,832
    Other intangible assets, net                18,695,554        23,690,440
    Goodwill                                    33,164,121        33,164,121
    Investments in and advances to equity
     investments                                57,325,887        54,963,064
    Unamortized financing costs                  3,287,694         4,215,983
           Total Long-Term Assets              398,564,457       396,223,762

                TOTAL ASSETS                  $576,481,765      $528,675,732

    LIABILITIES AND SHAREHOLDERS' EQUITY

                                               DECEMBER 31,      DECEMBER 31,
                                                   2009              2008

    CURRENT LIABILITIES
    Accounts payable                            $7,497,143       $12,287,887
    Notes payables                               3,392,575         3,262,877
    Other payables and accrued expenses         22,320,757        19,766,652
    Taxes payable                                  947,338           420,671
    Short-term bank loans                       10,384,368         7,140,148
    Current portion of long-term bank
     loans                                          60,108            58,659
    Other liabilities                            2,199,280         2,253,440
    Deferred tax liabilities                       172,473           178,931
          Total Current Liabilities             46,974,042        45,369,265

    LONG-TERM LIABILITIES
    Long-term bank loans, net of current
     portion                                       743,957           804,521
    Long-term notes payable                             --           269,908
    Deferred tax liabilities                    15,961,465        17,635,511
    Unrecognized tax benefits                    2,746,561                --
    Convertible Notes                          115,000,000       115,000,000
         Total Long-Term Liabilities           134,451,983       133,709,940
              TOTAL LIABILITIES                181,426,025       179,079,205

    EQUITY
    SHAREHOLDERS' EQUITY
    Preferred stock, $0.001 par value;
     2,000,000 shares authorized;
      1,000,000 shares issued and
      outstanding at December 31,
      2009 and December 31, 2008,
      respectively                                   1,000             1,000
    Common stock, $0.001 par value;
     150,000,000 shares authorized;
      78,321,439 and 78,249,264 shares
      issued and outstanding at December
      31, 2009 and December 31, 2008,
      respectively                                  78,321            78,249
    Common stock to be issued                      388,000           376,335
    Prepaid forward repurchase contract        (29,998,616)      (29,998,616)
    Additional paid-in capital                 199,829,921       197,046,688
    Retained earnings (the restricted
     portion of retained earnings is
       $23,757,901 at December 31, 2009
        and $19,924,918 at December 31,
        2008, respectively)                    191,173,754       149,752,604
    Accumulated other comprehensive
     income                                     33,050,224        31,688,186
         Total Shareholders' Equity            394,522,604       348,944,446
    Non-controlling Interest                       533,136           652,081
                TOTAL EQUITY                   395,055,740       349,596,527
        TOTAL LIABILITIES AND EQUITY          $576,481,765      $528,675,732


               Working capital                 130,943,266        87,082,705

SOURCE American Oriental Bioengineering, Inc.

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