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China Pharma Holdings, Inc. Reports Full Year 2009 Financial Results

HAIKOU CITY, China, March 5 /PRNewswire-Asia-FirstCall/ -- China Pharma Holdings, Inc. ("China Pharma") (NYSE/Amex: CPHI), which develops, manufactures, and markets specialty pharmaceutical products in China, today announced financial results for the fiscal year ended December 31, 2009.

    Full Year 2009 Financial Highlights
    -- Revenue increased 21% to $61.7 million from $51.0 million for 2008;
    -- Net income increased 13% to $20.2 million from $17.8 million in 2008;
    -- 2009 cash flow from operations increased by 63% to $10.7 million
       compared to $6.5 million for 2008; and
    -- EPS was $0.48, compared to $0.44 in 2008.

In 2009, revenue increased 21% to $61.7 million from $51.0 million in 2008, due to contribution from new products as well as increased contribution from existing products. Sales of Antiviral & Respiratory drugs increased 31% to $24.7 million from the prior year. Digestive product sales increased 114% to $4.8 million, driven by Tiopronin and Omeprazole Sodium, two new drugs released in Q2 and Q4 of 2009, respectively. Sales of CNS, Cardio & Cerebro-vascular products decreased 3% to $21.5 million. Sales of other products (including tumor drug Granisetron, and various other products) increased 41% to $10.7 million from the prior year.

Gross profit in 2009 increased to $25.7 million from $25.3 million in 2008. Gross profit margin in 2009 was 42%, compared to 50% in 2008. The decrease in gross margin was largely a result of a higher proportion of lower-margin products, including EDL-listed drugs, in the sales mix.

Operating expenses decreased 45% to $3.0 million from $5.6 million, due to the change in the Company's estimate for bad debt reserve in the third quarter of 2009. Selling expenses for the year increased 33% to $2.7 million from $2.0 million in 2008 as the company expanded its distribution network. General and administrative expenses increased 28% to $2.1 million in 2009 from $1.7 million in 2008. In 2009, the Company realized a bad debt benefit of $1.8 million, compared to a bad debt expense of $1.8 million in 2008.

Operating income for the year increased 15% to $22.6 million, compared to $19.7 million in 2008.

Net income for 2009 increased 13% to $20.2 million from $17.8 million in the previous year. Earnings Per Share was $0.48 in 2009, compared to $0.44 in 2008. The share count used to calculate EPS was 42.3 million fully diluted shares, compared to 40.2 million shares in the prior year.

In the year ended December 31, 2009, cashflow from operating activity rose to $10.67 million, an increase of 63% over the $6.54 million for the same period in 2008. The main reasons for the improvement in operating cashflow were faster collection of accounts receivables and an increase of Net Income in 2009.

Balance Sheet

As of December 31, 2009, the Company had cash and cash equivalents of $3.6 million, which represented 3.6% of total assets, compared to $3.8 million, or 4.0% of total assets, as of September 30, 2009 and $6.9 million, or 9.2% of total assets, as of December 31, 2008.

    Business Update
    -- On January 21, 2010, the Company announced that the clinical trials for
       Candesartan, an anti-hypertension drug, has been completed and the
       generic drug production application has been submitted to the SFDA. In
       China, nearly 60% of all urban adults aged 65 years and over suffer
       from hypertension, and prevalence in urban areas is expected to reach
       100 million by 2011. Candesartan is listed in the China's National
       (Medical) Insurance Catalog ("NIC"), allowing patients to be reimbursed
       by the government.

Financial Guidance

The Company expects revenue growth of 20% to 25% for 2010, on a year over year basis.

China Pharma's President and CEO, Ms. Zhilin Li, stated, "We are very pleased with our 2009 results, which have continued to yield a net income margin above 30%. After adding two new drugs in 2009, our core portfolio now has 20 products, and we have a number of new products in various stages of registration, including Rosuvastatin (generic for Crestor) and an antibiotic, that are in clinical trials. Going forward, we will continue to invest to strengthen our product portfolio. The Healthcare Reform in China is now moving ahead steadily but forcefully, with important implications for the pharmaceutical industry. We believe the changes will be favorable for highly profitable companies like ours with innovative drugs. We also believe the changes may cause attractive acquisition opportunities to appear. To that end, we are monitoring the market for strategic opportunities to take advantage of the current fragmented nature of the pharmaceutical industry landscape in China."

Conference Call

The Company will hold a conference call at 8:00 am ET on March 5, 2010 to discuss full year 2009 results. Listeners may access the call by dialing 1-800-237-9752 or 1-617-847-8706 for international callers, access code: 29285530. A webcast will also be available through CPHI's website at . A replay of the call will be accessible through March 12, 2010 by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 49104434.

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.
     Phone: +86-898-6681-1730

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

                           CHINA PHARMA HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS

                                                          December 31,
                                                    2009              2008
    Current Assets
      Cash and cash equivalents                  $3,634,753        $6,927,149
      Trade accounts receivable, less
       allowance for doubtful
       accounts of $2,718,358 and
       $4,474,175, respectively                  51,238,339        36,008,095
      Other receivables, less allowance
       for doubtful accounts of $3,556
       and $54,242, respectively                     78,525           163,957
      Advances to suppliers                       1,798,446         3,031,694
      Inventory                                  14,233,073        13,139,750
      Deferred tax assets                           319,820           461,596
    Total Current Assets                         71,302,956        59,732,241
    Property and Equipment, net of
     accumulated depreciation of
     $2,020,462 and $1,483,267,
     respectively                                 6,705,873         6,738,368
    Intangible assets, net of accumulated
     amortization of $1,359,048 and
     $547,567, respectively                      19,332,284         6,162,549
    Advances for intangible assets and
     property and equipment                       3,599,949         2,838,679
    TOTAL ASSETS                               $100,941,062       $75,471,837

    Current Liabilities
      Trade accounts payable                     $3,957,923        $1,049,268
      Accrued expenses                               47,435            56,075
      Accrued taxes payable                       1,528,691         1,170,003
      Other payables                                 58,191            42,813
      Advances from customers                     1,037,693           693,178
      Other payables-related parties                 75,741            75,741
      Notes payable                               3,802,726         2,480,231
    Total Current Liabilities                    10,508,400         5,567,309
    Long-term research and development
     commitments                                     36,565            36,474
    Total Liabilities                            10,544,965         5,603,783
    Stockholders' Equity
      Common stock - $0.001 par value;
       60,000,000 shares authorized;
       42,308,350 shares and 42,278,938
       shares outstanding, respectively              42,308            42,279
      Additional paid-in capital                 21,178,114        21,066,338
      Retained earnings                          63,272,868        43,039,819
      Accumulated other comprehensive
       income                                     5,902,807         5,719,618
    Total Stockholders' Equity                   90,396,097        69,868,054
     EQUITY                                    $100,941,062       $75,471,837

                           CHINA PHARMA HOLDINGS, INC.
                            AND COMPREHENSIVE INCOME

                                                    For the Years Ended
                                                        December 31,
                                                   2009              2008
    Revenue                                    $61,696,620       $50,968,660
    Cost of revenue                             36,046,259        25,678,239
    Gross profit                                25,650,361        25,290,421
    Operating expenses
      Selling expenses                           2,705,550         2,040,596
      General and administrative expenses        2,147,081         1,671,715
      Bad debt expense (benefit)                (1,816,785)        1,847,806
    Total operating expenses                     3,035,846         5,560,117
    Income from operations                      22,614,515        19,730,304
    Interest income                                 30,695            45,168
    Interest expense                              (154,182)         (131,027)
    Other income (expense)                           3,540          (103,177)
    Income before income taxes                  22,494,568        19,541,268
    Provision for income taxes                  (2,261,519)       (1,707,618)
    Net income                                  20,233,049        17,833,650
    Other comprehensive income - foreign
     currency translation adjustment               183,189         2,880,314
    Comprehensive income                       $20,416,238       $20,713,964
    Basic and diluted earnings per share             $0.48             $0.44

                           CHINA PHARMA HOLDINGS, INC.

                                                    For the Years Ended
                                                        December 31,
                                                   2009              2008
    Cash Flows from Operating Activities
      Net income                               $20,233,049       $17,833,650
      Depreciation and amortization              1,368,888           719,475
      Bad debt expense (benefit)                (1,816,785)        1,847,806
      Stock-based compensation                      41,804           123,794
      Changes in assets and liabilities:
        Trade accounts receivable              (13,366,578)      (17,778,209)
        Other receivables                          136,587           265,813
        Advances to suppliers                    1,240,118           (87,978)
        Inventory                               (1,060,083)        2,243,138
        Deferred tax assets                        142,846          (257,447)
        Trade accounts payable                   3,044,387           720,659
        Accrued expenses                            (8,775)         (219,301)
        Accrued taxes payable                      355,587           825,119
        Other payables                              15,274           (48,072)
        Other payables-related parties                  --           (52,804)
        Advances from customers                    342,607           407,617
    Net Cash Provided by Operating
     Activities                                 10,668,926         6,543,260

    Cash Flows from Investing Activities
      Purchase of property and equipment          (143,082)       (4,310,690)
      Construction in progress                          --                --
      Purchase of intangible assets            (12,154,561)       (4,184,080)
      Advances for intangible assets and
       property and equipment                   (3,063,066)       (1,946,479)
    Net Cash Used in Investing Activities      (15,360,709)      (10,441,249)

    Cash Flows from Financing Activities
      Proceeds from exercise of warrants            70,001                --
      Proceeds from sale of common stock                --         9,268,938
      Proceeds from short-term notes
       payable                                   3,800,681         2,441,739
      Payments of short-term notes payable      (2,485,060)       (2,829,545)
    Net Cash Provided by Financing
     Activities                                  1,385,622         8,881,132

    Effect of Exchange Rate Changes on Cash         13,765           113,671
    Net Increase (Decrease) in Cash             (3,292,396)        5,096,814
    Cash and Cash Equivalents at
     Beginning of Year                           6,927,149         1,830,335
    Cash and Cash Equivalents at End of
     Year                                       $3,634,753        $6,927,149

SOURCE China Pharma Holdings, Inc.

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SOURCE China Pharma Holdings, Inc.
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