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China Pharma Holdings, Inc. Reports Third Quarter 2009 Financial Results and Corporate Updates

HAIKOU CITY, China, Nov. 11 /PRNewswire-Asia-FirstCall/ -- China Pharma Holdings, Inc. ("China Pharma") (NYSE/AMEX: CPHI), which manufactures, and markets specialty pharmaceutical products in China, today announced financial results for the third quarter ended September 30, 2009.

    Third Quarter 2009 Financial Highlights

    -- Revenue increased 23.1% to $15.5 million from $12.6 million in the
       third quarter of 2008;

    -- Net Income, including adjustment in Bad Debt Estimates, was $7.2
       million, compared to $4.3 million in the third quarter of 2008;

    -- Year-to-Date Net Cash from Operations increased by 59% to $6.4 million
       compared to $4.0 million for the same period of 2008; and

    -- EPS was $0.17, compared to $0.10 in the third quarter of 2008.

For the three months ended September 30, 2009, we saw an increase of 23% in revenue to $15.5 million compared to the same period of last year. This is an increase of $2.9 million from the $12.6 million we generated in the corresponding period of 2008. Notably, third quarter sales in the Anti-Viro/Infection & Respiratory product category rose by 36% over the same period a year ago to approximately $6.1 million. Our CNS and Cerebral & Cardio Vascular drugs performed steadily by generating $5.6 million revenue during the third quarter, compared to $5.9 million in the same period of 2008. Our Other Products category (including our tumor drug Granisetron and various other products) saw an increase of 36% over last year to $2.3 million. Our Digestive product sales rose by 184% to $1.5 million, mainly due to the sales contribution from our new product Tiopronin. During this quarter we saw Tiopronin generating close to $800,000 in sales. This is progressing better than expected.

Gross Profit for the three months ended September 30, 2009 was $6.5 million, which is about 7% higher compared to the $6.1 million for the third quarter of 2008. Gross profit margin for the current quarter is 42%, compared to 49% in the third quarter of 2008. The lower gross profit margin in the third quarter of 2009 was due to faster revenue growth of lower margin products.

Selling and G&A expenses in the third quarter of 2009 rose to $1.3 million from $0.9 million as the company expanded its distribution network.

Given our good record on not losing any receivables, we now feel more comfortable in our ability to collect our account receivables. After analyzing our receivable collection history and also a number of other factors including macro economy and industry bad debt experience rates, management revised bad debt allowance estimates. The change in the estimate for bad debt reserve resulted in a benefit of $2.8 million for the third quarter of 2009.

Operating income for the third quarter of 2009, including the effect of the change in bad debt estimate, was $8.1 million, an increase of 72% from $4.7 million for the same period in 2008.

Net income for the third quarter of 2009 (which also includes the effect of the change in bad debt estimate) increased 69% to $7.2 million, up from $4.3 million reported in the same period of 2008. Diluted earnings per share was $0.17 in the third quarter of 2009, compared to $0.10 in the third quarter of 2008.

Balance Sheet

As of September 30, 2009, the Company had cash and cash equivalents of $3.8 million, which represented 4.0% of total assets, compared to $6.9 million, or 9.2% of total assets, as of December 31, 2008.

    Business Update
    -- On August 18, 2009, the Company announced that it has received official
       approval from China's State Food and Drug Administration ("SFDA") for
       the production of generic Omeprazole Sodium for Injection. Omeprazole
       is a well-known Proton Pump Inhibitor (PPI) which is widely utilized to
       treat gastroesophageal reflux disease (GERD). Omeprazole is on China's
       National Medical Reimbursement Insurance List, allowing insured
       patients to receive reimbursement for the cost of injections, and has
       been included in the WHO (World Health Organization) Model List of
       Essential Medicines in March 2009. Sales of Omeprazole kicked off
       in the fourth quarter of this year.
    -- On September 30, 2009, China Pharma Holdings stock began trading on
       NYSE/AMEX under the symbol: CPHI.
    -- The Company participated in the following conferences and meet
       institutional investors throughout the events.

       -- Roth China Conference, held October 12-14, 2009, in Miami Beach, FL.
       -- Rodman & Renshaw Annual Global Investment Conference, held September
          9-11, 2009, in New York City.
       -- Maxim 3rd Annual Growth Conference, held September 29, 2009, in New
          York City.

Financial Guidance

CPHI is reiterating its guidance of 20% top line growth for the full year 2009, on a year over year basis.

China Pharma's President and CEO, Ms. Zhilin Li, stated, "We are pleased to report a quarter with continued revenue growth supported by increased marketing efforts and distribution expansion. In the third quarter of 2009, several newly-launched products started to show great potential in sales. Our third quarter performance also reflects the significant progress to manage our receivables collection efforts. With regards to our recent listing onto the NYSE Amex, we feel proud to have reached this important milestone. Our success of this listing underscores our commitment to generating long-term value for our shareholders."

Conference Call

The Company will hold a conference call at 8:00 am ET on November 12, 2009 to discuss fiscal third quarter 2009 results. Listeners may access the call by dialing 1-866-271-6130 or 1-617-213-8894 for international callers, access code: 14971758. A webcast will also be available through CPHI's website at . A replay of the call will be accessible through November 19, 2009 by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 89842045.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. is a specialty pharmaceutical company with rapidly growing profit that develops, manufactures, and markets treatments for a wide range of high incidence and high mortality conditions in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective, high margin business model is driven by market demand and supported by eight scalable GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding distribution network across 30 provinces, municipalities and autonomous regions. The Company is registered in Delaware, USA. Hainan Helpson Medical & Biotechnology Co., Ltd. (Helpson), located in Haikou City, Hainan Province, China, is a wholly owned subsidiary of China Pharma Holdings, Inc. 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.

    For more information, please contact:

    China Pharma Holdings, Inc.
     Tel:   +86-898-6681-1730

    ICR, Inc.
     Christine Duan
     Tel:   +1-203-682-8200

                           CHINA PHARMA HOLDINGS, INC.

                                              September 30,      December 31,
                                                   2009              2008

    Current Assets:
    Cash and cash equivalents                   $3,844,777        $6,927,149
    Trade accounts receivable, less
     allowance for doubtful
     accounts of $2,415,886 and
     $4,474,175, respectively                   49,018,104        36,008,095
    Other receivables, less allowance for
     doubtful accounts of $20,306 and
     $54,242, respectively                         115,414           163,957
    Advances to suppliers                        1,868,111         3,031,694
    Inventory                                   14,915,582        13,139,750
    Deferred tax assets                            252,394           461,596
    Total Current Assets                        70,014,382        59,732,241
    Non-current Assets:
    Property and equipment, net of
     accumulated depreciation of
     $1,863,014 and $1,483,267,
     respectively                                6,872,135         6,738,368
    Intangible assets, net of accumulated
     amortization of $1,132,055 and
     $547,567, respectively                     15,321,200         6,162,549
    Advances for purchases of intangible
     assets and property and equipment           3,101,289         2,838,679
    Total Non-current Assets                    25,294,624        15,739,596
    TOTAL ASSETS                               $95,309,006       $75,471,837

    Current Liabilities:
    Trade accounts payable                      $3,638,398        $1,049,268
    Accrued expenses                                44,864            56,075
    Accrued taxes payable                        1,456,375         1,170,003
    Other payables                                 276,227            42,813
    Advances from customers                        804,176           693,178
    Other payables - related parties                75,741            75,741
    Short-term notes payable                     3,802,504         2,480,231
    Total Current Liabilities                   10,098,285         5,567,309
    Long term research and development
     commitments                                    36,563            36,474
    Total Liabilities                           10,134,848         5,603,783
    Stockholders' Equity:
    Common stock, $0.001 par value;
     60,000,000 shares authorized;
     42,278,938 shares issued and
     outstanding                                    42,279            42,279
    Additional paid-in capital                  21,066,338        21,066,338
    Retained earnings                           58,166,838        43,039,819
    Accumulated comprehensive income
     - foreign currency translation
       adjustment                                5,898,703         5,719,618
    Total Stockholders' Equity                  85,174,158        69,868,054
     EQUITY                                    $95,309,006       $75,471,837

                           CHINA PHARMA HOLDINGS, INC.
                             AND COMPREHENSIVE INCOME

                            For the three months       For the nine months
                             ended September 30,       ended September 30,
                              2009         2008         2009         2008

    Revenue                $15,522,953  $12,610,642  $42,116,290  $35,606,490
    Cost of revenue          8,979,083    6,494,266   23,724,155   17,730,026

    Gross profit             6,543,870    6,116,376   18,392,135   17,876,464

    Operating expenses
    Selling expenses           807,231      529,432    2,013,915    1,323,854
    General and
     administrative            521,676      410,287    1,563,330    1,324,452
    Bad debt expense
     (benefit)              (2,836,495)     491,781   (2,101,710)   1,571,594
    Total operating
     expenses (benefit)     (1,507,588)   1,431,500    1,475,535    4,219,900

    Income from operations   8,051,458    4,684,876   16,916,600   13,656,564

    Non-operating income
    Interest income              3,956       26,224       25,265       31,259
    Interest expense           (24,436)     (34,629)    (103,143)    (130,342)
    Total non-operating
     income (expense)          (20,480)      (8,405)     (77,878)     (99,083)

    Income before taxes      8,030,978    4,676,471   16,838,722   13,557,481
    Income tax expense         867,750      424,993    1,711,703    1,078,163
    Net income              $7,163,228   $4,251,478  $15,127,019  $12,479,318

    Basic earnings per
     share                       $0.17        $0.10        $0.36        $0.32
    Basic weighted average
     shares outstanding     42,278,938   42,278,938   42,278,938   39,523,464

    Net income              $7,163,228   $4,251,478  $15,127,019  $12,479,318
    Foreign currency
     adjustments                85,896      133,713      179,085    2,853,755
    Comprehensive income    $7,249,124   $4,385,191  $15,306,104  $15,333,073

                          CHINA PHARMA HOLDINGS, INC.

                                        For the nine months ended September 30,
                                                  2009             2008

    Cash Flows from Operating Activities:
    Net income                                $15,127,019      $12,479,318
    Bad debt expense (benefit)                 (2,101,710)       1,571,594
    Depreciation and amortization                 986,310          505,595
    Compensation paid with warrants                    --          120,042
    Gain or loss on disposal of property
     and equipment                                  4,027               --
    Deferred tax assets                           210,171         (209,434)
    Changes in assets and liabilities:
    Trade accounts receivable                 (10,845,652)     (13,130,468)
    Other receivables                              82,949          195,026
    Advances to suppliers                       1,170,103          651,833
    Inventory                                  (1,742,681)         855,485
    Trade accounts payable                      2,772,775          184,627
    Accrued expenses                              (11,339)        (138,021)
    Accrued taxes payable                         393,724          602,480
    Other payables                                233,155          (48,535)
    Advances from customers                       109,238          386,922
    Net Cash from Operating Activities          6,388,089        4,026,464

    Cash Flows from Investing Activities:
    Purchase of property and equipment           (255,273)        (125,753)
    Purchase of intangible assets              (7,622,877)        (428,641)
    Advances for purchases of intangibles
     and property and equipment                (2,921,715)      (5,856,412)
    Proceed from sale of property and
     equipment                                      1,096               --
    Net Cash from Investing Activities        (10,798,769)      (6,410,806)

    Cash Flows from Financing Activity:
    Proceeds from issuance of short term
     notes payable                              3,799,775               --
    Payments of short term notes payable       (2,484,468)      (2,814,744)
    Proceeds from issuance of common
     stock and warrants                                --        9,268,938
    Net Cash from Financing Activity            1,315,307        6,454,194

    Effect of Exchange Rate Changes on
     Cash                                          13,001          (61,509)
    Net Increase (Decrease) in Cash and
     Cash Equivalents                          (3,082,372)       4,008,343
    Cash and Cash Equivalents at
     Beginning of Period                        6,927,149        1,830,335
    Cash and Cash Equivalents at End of
     Period                                    $3,844,777       $5,838,678

    Supplemental Cash Flow Disclosure:
    Cash paid for interest                       $103,143         $130,342
    Cash paid for income taxes                  1,413,306        1,289,596

SOURCE China Pharma Holdings, Inc.

SOURCE China Pharma Holdings, Inc.
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