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China Pharma Holdings, Inc. Reports Record 2008 Year End Financial Results and Corporate Updates

    Financial Highlights

    -- Fiscal year Revenue up 53.6%, to $50.96 Million, exceeding guidance of

    -- Fiscal year Net Income up 39.1%, to 17.83 Million

    -- Fiscal year Gross Margin 49.6%, up from 46.9% for 2007

    -- EPS increased 28% reaching $0.44 per share compared to $0.35 for 2007

    Recent and Upcoming Events

    -- Clinical Trials of Novel Antibiotic Combination Approved by SFDA and

    -- SFDA Production Approval Received for Tiopronin Enteric-Coated Capsules
       to treat Hepatitis B

    -- Ant-hypertension drug, Candesartan, Entered Clinical Trials

    -- Dry Power Production Line: Expansion Completed and Operating

HAIKOU CITY, China, March 17 /PRNewswire-Asia-FirstCall/ -- China Pharma Holdings, Inc. ("China Pharma") (OTC Bulletin Board: CPHI), which develops, manufactures, and markets specialty pharmaceutical products in China, today announced financial results for the year ended December 31, 2008.

For the 12 months up to December 31 2008, the Company continuously demonstrated consistent top and bottom line growth and improved financial performance. The increase in company revenue exceeded 53.9%, reaching approximately $50.97 million, compared with $33.19 million of 2007. This rapid growth was accounted for by increases in sales of existing products, and increases in the share of sales by new products. China Pharma is working closely with several pharmaceutical research institutions to develop and further launch more products to meet our customers' needs. Our focus is to create a steady increase to the bottom line. We have seen in the past that the diversified portfolio and distribution channels are keys to company operation. Diligent exploration of potential innovations of the pharmaceutical industry and of the domestic market is essential to create value for our shareholders.

For the year ended December 31 2008, sales of the Company's flag-ship product PuSen OK increased by 76.6%, and the sales of other products also improved dramatically: year-on-year Alginic Sodium Diester increased by 75.5%, Granisetron increased by 60.47%, Clarithromycin increased by 57.4%.

The financial operational performance for the 12 months ended December 31, 2008 was clearly improved compared to the 12 months ended December 31, 2007. Gross profit for 2007 was approximately $15.57 million, and the gross profit margin was 46.9%, while the 2008 gross profit was $25.29 million and the gross profit margin increased to reach 49.6%. The gross profit increased by approximately $9.72 million, or 62.5% from 2007 to 2008, which was mainly due to the continued revenue growth in 2008 and increased cost control, and also to the continued launch of new products.

The operating income for the year ended December 31, 2008 was $19,730,304, compared to $12,251,229 for the same period of 2007, an increase of $7.48 million, or 61.1%. The operating gross margin was 38.7% and 36.9%, for fiscal year 2008 and fiscal year 2007, respectively.

Due to substantial increases in sales revenue and gross profit, and effective cost control in 2008, the net income for the year ended December 31, 2008, excluding the effect of foreign exchange transactions, increased to approximately $17.83 million, which was 39.1% higher than the $12.82 million for the year ended December 31, 2007. The net profit margins were 35.0% and 38.6% respectively in fiscal year 2008 and fiscal year 2007. The decrease in net profit margin was due to the effect of the increasing income tax from 0% to 9%. The Company did not have any income tax in 2007, when the Company was still in the preferential tax period of 0%, while in 2008, due to the Company's location in the special economic zone of Hainan, the Company was granted a favorable rate of 9%. Excluding the effect of the increasing income tax, net income increased 54.4%.

Earnings per common share for the 12 months ended December 31, 2008, increased 28.0% reaching $0.44 per share compared to $0.35 per share for the 12 months ended December 31, 2007.

Analysis of balance sheet and cash flow statement

As of December 31, 2008, the Company possessed cash and cash equivalents of $6,927,149, which represented 9.2% of total assets; compared with $1,830,335 in the same period for 2007, which represented 4.2% of the total assets. Compared with the position of December 31, 2007, this was an increase of $5,096,814, or 278.5%. This was a combined result of an improvement in net cash generated from operating activities and an increase in net cash proceeds from financing activities.

In the year ended December 31, 2008, the operating activity cash flow increased to $6.54 million, a substantial increase of 222.6%, compared to $2.03 million for the same period in 2007. The main reason was the increase in revenue and net income, and improvement in accounts receivable collection.

China Pharma's President and CEO, Ms. Zhilin Li said, "We achieved the successes stated above, despite the global economic crisis and challenges within the Chinese Pharmaceutical industry. The Chinese Health Care Reform will be implemented in 2009. The build up of a national basic healthcare system will have a deep impact on the entire Chinese society and on the healthcare industry. We will continue to launch strong innovative products, and adapt to the changing policy environment with our operating model and diversified portfolio. We will explore the opportunities in this environment and work for a better future!"

Conference Call Details

The Company will hold a conference call on Wednesday 18 March at 8:30 a.m. EDT. To participate in the conference call, please dial +1 866-277-1181 (Toll Free) ten minutes prior to the scheduled conference call time. International callers should dial +1 617-597-5358. The conference pass code is 24632342. If you are unable to participate in the call at this time, a replay will be available on Wednesday March 18, 2009 at 12:00 p.m. EDT, through Wednesday March 25, 2009. To access the replay, please dial +1 888-286-8010. International callers should dial 1-617-801-6888. The conference pass code is 43849468. This conference call will be broadcast live over the Internet and can be accessed by clicking this link: .

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 a scalable GMP-certified manufacturing infrastructure. 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 Bio-pharmaceutical 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 .

                           CHINA PHARMA HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS

                                                December 31,      December 31,
                                                   2008              2007
    ASSETS                                                         (Restated)
    Current Assets:
     Cash and cash equivalents                   $6,927,149        $1,830,335
     Trade accounts receivable, less
      allowance for doubtful
      accounts of $4,474,175 and
      $2,440,852, respectively                   36,008,095        18,572,976
     Other receivables, less allowance for
      doubtful accounts of $54,242 and
      $43,908, respectively                         163,957           413,596
     Advances to suppliers                        3,031,694         2,757,320
     Inventory                                   13,139,750        14,448,771
     Deferred tax assets                            461,596           187,509
    Total Current Assets                         59,732,241        38,210,507
    Non-current Assets:
     Property and equipment, net of
      accumulated depreciation of
      $1,483,267 and $1,003,802,
      respectively                                6,738,368         2,625,216
     Intangible assets, net of accumulated
      amortization of $547,567 and
      $221,715, respectively                      6,162,549         2,063,252
     Advances for purchases of intangible
      assets and property and equipment           2,838,679           807,345
    Total Non-current Assets                     15,739,596         5,495,813
    TOTAL ASSETS                                $75,471,837       $43,706,320

    Current Liabilities:
     Trade accounts payable                      $1,049,268          $297,299
     Accrued expenses                                56,075           261,301
     Accrued taxes payable                        1,170,003           311,009
     Other payables                                  42,813            86,161
     Advances from customers                        693,178           261,583
     Other payables - related parties                75,741                --
     Short-term notes payable                     2,480,231         2,693,428
    Total Current Liabilities                     5,567,309         3,910,781
     Research and development commitments            36,474            34,181
    Total Liabilities                             5,603,783         3,944,962
    Stockholders' Equity:
     Common stock, $0.001 par value,
      60,000,000 shares authorized,
      42,278,938 and 37,278,938
      shares issued and outstanding,
      respectively                                   42,279            37,279
     Additional paid-in capital                  21,066,338        11,678,606
     Retained earnings                           43,039,819        25,206,169
     Foreign currency translation
      adjustment                                  5,719,618         2,839,304
    Total Stockholders' Equity                   69,868,054        39,761,358
     EQUITY                                     $75,471,837       $43,706,320

                           CHINA PHARMA HOLDINGS, INC.
                            AND COMPREHENSIVE INCOME

                                             For the Years ended December 31,
                                                  2008              2007

    Revenue                                    $50,968,660       $33,186,324
    Cost of revenue                             25,678,239        17,619,180

    Gross profit                                25,290,421        15,567,144

    Operating expenses:
     Selling expenses                            2,040,596         1,436,609
     General and administrative expenses         1,671,715         1,139,160
     Bad debt expense                            1,847,806           740,146
    Total operating expenses                     5,560,117         3,315,915

    Income from operations                      19,730,304        12,251,229

    Non-operating income (expenses):
     Interest income                                45,168            31,805
     Interest expense                             (131,027)         (237,398)
     Other income (expenses)                      (103,177)          611,025
    Total non-operating income (expense)          (189,036)          405,432

    Income before income taxes                  19,541,268        12,656,661
    Income tax (expense) benefit                (1,707,618)          162,872
    Net income                                 $17,833,650       $12,819,533
    Comprehensive income - foreign
     currency translation adjustments            2,880,314         2,175,433
    Comprehensive income                       $20,713,964       $14,994,966

    Earnings Per Share:
    Basic                                            $0.44             $0.35
    Diluted                                          $0.44             $0.34
    Weighted Average Shares Outstanding:
    Basic                                       40,216,096        37,009,655
    Diluted                                     40,216,096        37,259,909

                           CHINA PHARMA HOLDINGS, INC.

                                              For the Years ended December 31,
                                                   2008               2007
    Cash Flows from Operating Activities:
    Net income                                  $17,833,650       $12,819,533
    Depreciation and amortization                   719,475           422,443
    Compensation paid with warrants                 123,794                --
    Gain on sale of intangibles                          --          (580,922)
    Changes in assets and liabilities:
     Trade accounts receivable                  (15,937,676)       (5,413,718)
     Other receivables                              273,086           (32,234)
     Advances to suppliers                          (87,978)       (1,881,451)
     Inventory                                    2,243,138        (3,325,681)
     Deferred tax assets                           (257,447)         (162,872)
     Deferred offering costs                             --            60,952
     Trade accounts payable                         720,659          (204,372)
     Accrued expenses                              (219,301)           73,451
     Accrued taxes payable                          825,119           126,812
     Other payables                                 (48,072)           20,558
     Other payables - related parties               (52,804)               --
     Advances from customers                        407,617           105,573
    Net Cash from Operating Activities            6,543,260         2,028,072

    Cash Flows from Investing Activities:
     Purchase of property and equipment            (199,645)          (51,841)
     Construction in progress                    (4,111,045)               --
     Purchase of intangible assets               (4,184,080)       (2,937,431)
     Advances for purchases of intangibles
      property and equipment                     (1,946,479)          773,906
     Proceeds from the sale of intangibles               --         1,509,741
    Net Cash from Investing Activities          (10,441,249)         (705,625)

    Cash Flows from Financing Activities:
     Proceeds from sale of common stock           9,268,938         3,797,183
     Proceeds from exercise of warrants                  --           119,000
     Proceeds from short term notes
      payable                                     2,441,739         2,586,252
     Payments of short term notes payable        (2,829,545)       (6,705,456)
    Net Cash from Financing Activities            8,881,132          (203,021)

    Effect of Exchange Rate Changes on
     Cash                                           113,671            54,468
    Net Change in Cash                            5,096,814         1,173,894
    Cash and Cash Equivalents at
     Beginning of Period                          1,830,335           656,441
    Cash and Cash Equivalents at End of
     Period                                      $6,927,149        $1,830,335

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.
     Diana Huang
     Tel:   +86-898-6681-1730

     The Ruth Group
     Sara Ephraim
     Tel:   +1-646-536-7002

SOURCE China Pharma Holdings, Inc.
Copyright©2009 PR Newswire.
All rights reserved

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