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China Pharma Holdings, Inc. Announces Record 2007 Year End Results

-- Fiscal year Revenue Increased 51.9% to $33.2 Million

-- Fiscal year Net Income Increased 49.3% to $12.8 Million

-- The Company Provides Guidance of 40% Growth in Revenue for 2008

NEW YORK and HAIKOU, Hainan, China, March 31 /Xinhua-PRNewswire-FirstCall/ -- China Pharma Holdings, Inc. ("China Pharma") (OTC Bulletin Board: CPHI) which develops, manufactures, and markets generic and branded bio-pharmaceutical products in China, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2007 ("FY07").

Fourth Quarter 2007 Financial Results

Revenues for the fourth quarter of 2007 increased approximately 12.3% to approximately $9.1 million, from $8.1 million in the prior year's quarter. Revenues in the quarter were driven by organic growth reflecting an increased market penetration of existing portfolio products. The slower revenue growth rate from the quarter a year ago, was primary attributed to two new drug approvals during the third quarter in 2006 which accelerated sales in the fourth quarter of 2006 due to their launch. However, the Company has positioned itself for new approvals in 2008 as the Chinese SFDA has resumed normal operations.

Gross profit in the fourth quarter of 2007 increased approximately 28.6% to $4.5 million from $3.5 million in the fourth quarter of 2006. The gross profit margin increased to 49.5% in the fourth quarter of 2007, compared to 43.2% in the prior year's quarter.

Operating income for the fourth quarter of 2007 increased 78.8% to $4.8 million from $2.7 million for the same quarter in 2006. Operating margins were 52.7% during the fourth quarter of 2007 compared to 33.3% in 2006. The increase resulted from revenue growth and the recovery of bad debt during the fourth quarter of 2007.

Earnings before taxes accelerated 40.7% in the fourth quarter of 2007 to $3.9 million or 42.5% of revenue, versus $2.75 million or 34% o 105,573 87,612

Net Cash from Operating Activities 2,801,898 (1,736,333)

Cash Flows from Investing Activities:

Purchase of property and equipment (51,841) (182,346)

Proceeds from the sale of intangibles 1,509,741 --

Purchase of intangible assets (2,937,431) (9,657)

Net Cash from Investing Activities (1,479,531) (192,003)

Cash Flows from Financing Activities:

Proceeds from sale of common stock and

warrants 3,797,183 --

Proceeds from exercise of warrants 119,000 --

Proceeds from short term notes payable 2,586,252 2,140,943

Payments of short term notes payable (6,705,456) --

Proceeds from loan from shareholder -- 22,650

Payment of offering costs -- (58,167)

Net Cash Proceeds from Financing

Activities (203,021) 2,105,426

Effect of Exchange Rate Changes on

Cash 54,548 18,131

Net Change in Cash 1,173,894 195,221

Cash and Cash Equivalents at Beginning

of Period 656,441 461,220

Cash and Cash Equivalents at End of

Period $ 1,830,335 $ 656,441

Supplemental Cash Flow Disclosure:

Cash paid for interest $ 160,250 $ 87,690

Cash paid for income taxes -- 851,335

For more information, please contact:

China Pharma Holdings, Inc.

Sophia Yu

Tel: +86-898-6681-1730


HC International, Inc.

Alan Sheinwald

Tel: 914-669-0222


f revenue during the fourth quarter of 2006. The Company recognized tax credits of $162,872 and $730,560 for 2007 and 2006, respectively. After taking these credits into account, net income for the fourth quarter of 2007 increased 15.8% to $4.0 million, up from $3.5 million in the same period last year. The net profit margin was 44% for the fourth quarter of 2007, versus 43% for the fourth quarter of 2006. Diluted earnings per share (EPS) in the fourth quarter of 2007 were $0.10. Earnings per share were $0.10 in fourth quarter of 2006 as well. The weighted average share counts used to calculate diluted EPS for the fourth quarter of 2007 and 2006 were 37.3 million and 34.7 million, respectively.

Ms. Zhilin Li, President and Chief Executive Officer of China Pharma commented, "The China SFDA implemented a new regulation (Provisions for Drug Registration) for the new drug approval process on October 1st, 2007. In December 2007, we received approval of Bumetanide from the Chinese SFDA. We are encouraged by this very positive sign that the SFDA has resumed its procedures for approving new drugs and expect that several additional drugs in our development pipeline will be approved in 2008. Going forward, we will continue to focus on increasing production output to fully utilize our 8 modern GMP certified production lines. Our future growth will be driven by leveraging our R&D capabilities, which are supplemented through relationships with various pharmaceutical research institutions, to extend our development pipeline while commercializing new drugs, and further expanding our distribution network to broaden market penetration. We are positioned extremely well to capitalize on the long-term secular growth drivers in place in the pharmaceutical industry, which include the rapid economic growth empowering consumers to receive better treatments, which will be supported by an increase in government spending for individual healthcare in China and the market expansion of the CMS which covers both urban and rural population."

Fiscal Year 2007 Financial Results

For the fiscal year 2007, revenues were $33.2 million, up 51.9% from $21.8 million for 2006. The growth was attributed to strong market demand for the Company's existing products, which was complemented by further expansion of the marketing and sales distribution network. During 2007, many of the Company's products achieved broader market and brand acceptance. In 2007, the Company's branded cold and flu medicine, PusenOK, contributed approximately 12.5% or $3 million to total revenues, an increase of 36.4% from 2006. During the same period, the sales of Neurotrophicpetide increased 84.0%, Andrographolide increased 59.8%, Hepatocyte increased 44.2% and Gastrodin increased 38.9%.

Gross profit for the fiscal year ended December 31, 2007 was $15.6 million, an increase of approximately 54.2% from $10.1 million in 2006. The gross margin was 46.9% in 2007 as compared to 46.2% in 2006, continuing the Company's consistent trend of improving gross margins.

Operating expenses totaled $3.3 million for the fiscal year 2007 compared to $1.5 million for 2006. The increase was primarily related to higher selling expenses related to the expansion of the Company's sales and distribution network to increase its market penetration. More specifically, salaries, commissions and other expenses were increased as the Company added 70 new sales representatives in 2007.

Operating income for the fiscal year 2007 totaled $12.3 million compared to $8.6 million for 2006, representing a 42.1% increase. Operating margins were 37% and 39.4% for 2007 and 2006, respectively.

Net income for the fiscal year 2007 improved 49.3% to $12.8 million, from $8.6 million for the fiscal year 2006. The increase in net income was due primarily to the overall growth in product revenues and the collection of previously recorded bad debts. Net profit margins were 38.6% and 39.3% for the fiscal years 2007 and 2006, respectively, with the slight reduction being primarily due to an increase of sales and marketing expenses. Diluted EPS for the fiscal year ended December 31, 2007 were $0.34 compared to $0.25 for 2006. The weighted average numbers of shares outstanding to calculate the diluted earnings per share were 37.3 million and 34.7 million, respectively.

Balance Sheet and Cash Flow Discussion

On December 31, 2007, the Company had $1.8 million in cash and equivalents and stockholders' equity of $39.8 million as compared with stockholders' equity of$20.9 million on December 31, 2006. Net cash from operations was $2.8 million for the twelve months ended December 31, 2007, as compared with net cash from operations of negative $1.7 million during 2006.

Total accounts receivable, less an allowance for doubtful accounts, was $18.6 million on December 31, 2007 as compared to $12.1 million on December 31, 2006. The increase in accounts receivable was due primarily to substantially higher revenues. The Company has had a good track record of customer collections since inception.

"We are very pleased to report another year of record revenue and net income. The Company performed well both in terms of financial performance and execution of our key business strategies. Our diversified portfolio and development strategy focused on therapeutics targeting high mortality and high population diseases enabled us to deliver a strong financial performance in 2007. Additionally, our investment in marketing has proven to be successful and we anticipate further benefits in 2008. The organic growth of our existing portfolio was due primarily to the expansion of our distribution network and increased market penetration. We believe that we have put in place the operating foundation and growth strategies which will enable us to sustain our growth and maintain our position as a leading generic drug company in China," Ms. Li concluded.

Revenue Guidance

China Pharma has developed a diversified portfolio of therapeutic products with strong market potential and maintains strong relationships with leading research institutions in China. The Company continues to expand its marketing channels by growing its sales force. In addition, the China SFDA has resumed normal procedures for approving new drugs. Therefore, the Company's management believes that revenue will grow at least 40%, and to $46.5 million in 2008.

Conference Call and Webcast

The Company will conduct a conference call to discuss the fourth quarter 2007 results today, March 31, 2008, at 11:00 am EDT. Listeners may access the call by dialing 1-800-762-8908, conference ID 3862567. This conference call will be broadcast live over the Internet and can be accessed by clicking this link: . A replay of the call will also be available shortly after the call on China Pharma's website for 90 days.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. develops, manufactures, and markets generic and brand bio-pharmaceutical products in China that treat a wide range of conditions, including infections, hepatitis, cardiovascular and CNS diseases, and other prevailing diseases. Helpson Bio-pharmaceutical Co., Ltd. (Helpson), a specialty pharmaceutical company headquartered in Haikou City, Hainan province in China, is a wholly owned subsidiary of China Pharma Holdings. For more information about China Pharma Holdings, Inc., please visit .

Safe Harbor Statement:

Certain statements in this press release and oral statements made by China Pharma on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand, increased competition, failure to obtain or maintain intellectual property protection, downturns in the Chinese economy, uncompetitive levels of research and development, failure to obtain regulatory approvals, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.



December 31, December 31,

2007 2006


Current Assets:

Cash and cash equivalents $ 1,830,335 $ 656,441

Trade accounts receivable, less

allowance for doubtful

accounts of $2,440,852 and

$1,562,494, respectively 18,572,976 12,101,979

Other receivables, less allowance

for doubtful accounts of

$43,908 and $27,517,

respectively 496,313 355,554

Deferred offering costs -- 59,390

Advances to suppliers 3,481,948 2,255,877

Inventory 14,448,771 10,277,887

Total Current Assets 38,830,343 25,707,128

Non-current Assets:

Property and equipment, net of

accumulated depreciation of

$1,003,802 and $619,645,

respectively 2,625,216 2,725,173

Intangible assets, net of

accumulated amortization of

$221,715 and $135,656, respectively 2,063,252 65,344

Deferred tax assets 187,509 16,736

Total Non-current Assets 4,875,977 2,807,253

TOTAL ASSETS $43,706,320 $28,514,381



Current Liabilities:

Trade accounts payable $ 297,299 $ 477,291

Accrued expenses 261,301 104,216

Accrued taxes payable 311,009 167,419

Other payables 86,161 185,096

Advances from customers 261,583 141,871

Accounts payable - related parties -- 22,650

Short-term notes payable 2,693,428 6,533,649

Total Current Liabilities 3,910,781 7,632,192

Research and development

commitments 34,181 31,980

Total Liabilities 3,944,962 7,664,172

Stockholders' Equity:

Common stock, $0.001 par value,

60,000,000 shares authorized,

37,278,938 and 34,723,056

shares issued and

outstanding, respectively 37,279 34,723

Additional paid-in capital 11,678,606 7,764,979

Foreign currency translation

adjustment 2,839,304 663,871

Retained earnings 25,206,169 12,386,636

Total Stockholders' Equity 39,761,358 20,850,209


EQUITY $43,706,320 $28,514,381




For the years

ended December 31,

2007 2006

Revenue $33,186,324 $21,843,262

Cost of revenue 17,619,180 11,745,815

Gross profit 15,567,144 10,097,447

Operating expenses:

Selling expenses 1,436,609 260,128

General and administrative 1,879,306 1,213,828

Total operating expenses 3,315,915 1,473,956

Income from operations 12,251,229 8,623,491

Non-operating income


Interest income 31,805 991

Interest expense (237,398) (145,881)

Other income 611,025 108,485

Total non-operating income

(expense) 405,432 (36,405)

Income before taxes 12,656,661 8,587,086

Income tax benefit 162,872 --

Net income $12,819,533 $8,587,086

Comprehensive income - foreign

currency translation

adjustments 2,175,433 563,945

Comprehensive income $14,994,966 $9,151,031

Earnings Per Share:

Basic $ 0.35 $ 0.25

Diluted $ 0.34 $ 0.25

Weighted Average Shares


Basic 37,009,655 34,723,056

Diluted 37,259,909 34,723,056



For the years ended December 31,

2007 2006

Cash Flows from Operating Activities:

Net income $12,819,533 $8,587,086

Depreciation and amortization 422,443 397,001

Gain on sale of intangibles (580,922) --

Changes in assets and liabilities:

Trade accounts receivable (5,413,718) (6,077,526)

Other receivables (111,660) 42,642

Advances to suppliers (1,028,199) (61,345)

Inventory (3,325,681) (4,214,702)

Deferred tax assets (162,872) 115,564

Deferred offering costs 60,952 --

Trade accounts payable (204,372) (219,427)

Accrued expenses 73,451 86,265

Accrued taxes payable 126,812 (407,744)

Other payables 20,558 (71,759)

Advances from customers

SOURCE China Pharma Holdings, Inc.
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