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American Oriental Bioengineering and China Aoxing Pharmaceutical Enter Into Strategic Alliance

- Joint Effort to Capitalize on China's Narcotic and Pain-Management Market

Opportunity -

NEW YORK, April 15 /PRNewswire-FirstCall/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), a leading marketer, distributor and manufacturer of pharmaceutical and healthcare products in China, and China Aoxing Pharmaceutical Company, Inc. (OTC Bulletin Board: CAXG) ("China Aoxing"), a China-based pharmaceutical company specializing in research, development, manufacturing and distribution of narcotic and pain-management products, today announced that they have formed a strategic alliance to jointly commercialize and develop narcotic and pain-management products in China. As part of this alliance, American Oriental Bioengineering will make an equity investment of $18.0 million in China Aoxing.

The size of the narcotic and pain-management market in China is estimated to be roughly US$300 million today, highly underdeveloped versus Western countries, and growing at an estimated compound annual growth rate of 23 percent.(1) China Aoxing is one of only a few manufacturers designated by the China State Food & Drug Administration (SFDA) to operate in the highly regulated narcotics industry.

Under the terms of the agreement, American Oriental Bioengineering makes an equity investment of $18.0 million in exchange for 30 million shares of newly-issued China Aoxing common stock, priced at US$0.60 per share, and owns approximately 38% of China Aoxing. Additionally, with today's announcement, China Aoxing closed its previously announced acquisition of Shijiazhuang Lerentang Pharmaceutical Company Ltd. ("LRT"), a China-based pharmaceutical company focused on pain-management products.

China Aoxing and American Oriental Bioengineering intend to collaborate on sales of China Aoxing's current product portfolio, particularly Naloxone, as well as commercialization of China Aoxing's narcotic drug development pipeline, which includes Oxycodone and Tilidine. The agreement also includes working together in the areas of marketing, branding, international product licensing and research and development.

Mr. Tony Liu, Chairman and CEO of American Oriental Bioengineering, commented, "We found China Aoxing to be a leading pharmaceutical company specializing in new narcotic and pain-management products in China, with very strong research and development capabilities as well as a broad pipeline of products. These two characteristics are complementary to our long-term objectives. Today's announcement allows us to be increasingly flexible in China's dynamic and ever-changing healthcare marketplace, and we are particularly excited about growth opportunities for narcotic and pain-management products in China. Not only is it a vast and relatively untapped market, but it also has extremely high barriers to entry."

Mr. Zhenjiang Yue, Chairman and CEO of China Aoxing, said, "We are delighted to partner with American Oriental Bioengineering, a leading pharmaceutical company in China's healthcare market. Their interest in our core competencies, namely research and development and GMP-certified manufacturing of narcotics, validates our efforts to capitalize on the nascent pain-management opportunity in China. We also look forward to utilizing their sales and marketing expertise and their distribution network for our extended product offering from our newly acquired LRT, a well-known, pain-management focused company with 127 SFDA-approved products in China."

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 in China. For more information, visit

About China Aoxing Pharmaceutical Company, Inc.

China Aoxing Pharmaceutical Company, Inc. (OTC Bulletin Board: CAXG) is a pharmaceutical company in China specializing in research, development, manufacturing and distribution of a variety of narcotics and pain-management products. Headquartered in Shijiazhuang City, the pharmaceutical capital of China, outside of Beijing, the Company has the largest product pipeline and largest manufacturing facility (1.2 million sq. ft.) for highly regulated narcotic medicines, addressing a very under-served and fast-growing market in China. Its facility is one of the few GMP facilities licensed for narcotics medicines. The Company has two drugs on the market and has received China SFDA licenses for research and clinical development of seven more medications such as Oxycodone, Tilidine, Buprenorphine and Pholcodine. The Company is working closely with the Chinese government and SFDA to assure the strictly regulated availability to medical professionals of its narcotic drugs and pain medicines throughout China.

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, 2007, 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.

(1) Estimate based on a statistical sample of hospitals located in 16

metropolitan areas in China between 2002-2005.

SOURCE American Oriental Bioengineering, Inc.
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