Net Income Before Minority Interest Increased 98.6% Year-Over-Year
to $10.2 Million TAIAN CITY, China, March 31
/Xinhua-PRNewswire-FirstCall/ -- China Biologic Products, Inc.
(OTC:CBPO) (BULLETIN BOARD: CBPO) ('China Biologic,' or 'the
Company'), one of the leading plasma-based pharmaceutical companies
in the People's Republic of China ('PRC'), today reported record
financial results for the fiscal year ended December 31, 2007. Full
Year 2007 Highlights -- Revenues increased 45.7% year-over-year to
a record $32.4 million -- Gross profit increased 77.8% to $22.5
million over 2006, representing gross margin of 69.3% -- Operating
income increased 106.3%, from 2006 to $12.8 million, representing
operating margin of 39.4% -- Net income before minority interest
was up 98.6% year-over-year to $10.2 million -- Net income after
minority interest was up 114.3% year-over-year to $8.2 million, or
$0.37 per diluted share 'Despite a shortage of plasma supply that
drove the prices of our products significantly higher during the
last year, we continued to see strong demand for our plasma based
products due in large part to the increased purchasing power and
health consciousness of Chinese consumers,' said Mr. Stanley Wong,
CEO of China Biologic Products, Inc. 'We were able to secure our
supply of plasma through the additional acquisition of certain
assets of two plasma collection stations in Guangxi Province in
2007. In addition, we adjusted our production plans and
strengthened our R&D capability to maximize our profit
margins.' Full Year 2007 Results Revenues increased 45.7% to $32.4
million during the fiscal year ended December 31, 2007, compared to
revenues of $22.2 million for the fiscal year ended December 31,
2006. The increase in revenues is primarily attributable to a
general increase in the price of plasma based products, which was
partially offset by a decrease in sales volumes for two of the
Company's products. During fiscal year 2007, management implemented
a strategy to reduce the Company's dependency on the sales of human
albumin. As a result, sales volumes for human hepatitis B
immunoglobulin and human rabies immunoglobulin products increased
by 44.2% and 82.4%, respectively, while the sales volume for
approved human albumin and human immunoglobulin for intravenous
injection decreased by 2.1% and 16.4%, respectively, for the fiscal
year ended December 31 2007, as compared to the same period in
2006. All of the Company's approved products recorded price
increases ranging from 7.8% to 294.1%. Among the factors that
contributed to the growth in revenue, foreign exchange translation
accounted for 6.8% of the increase. According to an SFDA
spokeswoman, Ms. Yan Jiang Ying, in a September 2007 press
conference, there is a critical shortage in the market supply of
human albumin due to the shortage of plasma raw materials.
According to Ms. Yan, the overall market supply of human albumin
was 117, 127 and 48 metric tons during 2005, 2006 and the first
eight months of 2007, respectively. The Company's sales of human
albumin products for 2005, 2006 and 2007 were 4.2, 6.0 and 5.9
metric tons, respectively, which the management believes, in light
of the SFDA supply data, represents a steady increase in its market
share for the periods 2005, 2006 and 2007 from 3.6%, to 4.7% and to
8.2%, respectively. The Company's revenue from operations decreased
during the fourth quarter of 2007 largely due to the Company's
suspension of its production for 70 days at the beginning of the
fourth quarter of 2007 for annual maintenance and due to the delay
in the PRC governmental approval process for plasma based products
during the period. The Company's annual maintenance had occurred
during the third quarter in previous years but was postponed to the
fourth quarter and the period was extended so as to coincide with
the building of the Company's new production line and the upgrading
of the Company's production technology. As a result, the Company's
raw materials and work-in-process, as of December 31, 2007,
increased by $2.9 million to $7.9 million, from $5.0 million, as of
December 31, 2006. In addition, the approval process for plasma
based products was prolonged during the fourth quarter of 2007 as
the PRC government further tightened its blood inspection process.
Due to this delayed approval process, the Company's inventory was
increased but the finished goods available for sale was reduced,
resulting in lower revenue in the fourth quarter of 2007, as
compared to same period in 2006. Management expects that the
interruption in production will only have a temporary impact on the
Company's results of operation for fiscal year 2008. Cost of sales
increased 3.6%, from 2006 to $9.9 million. This increase was mainly
due to a 4.8% increase in foreign exchange translation that offset
an actual 1.2% reduction in cost of revenues. Cost of revenues as a
percentage of sales was 30.7% for 2007, as compared to 43.2% in
2006. The decrease in cost of revenue as a percentage of sales is
primarily due to the favorable selling price increase, as well as
management's ability to maintain efficiencies in its production
process. Gross profit increased 77.8% from 2006 to $22.5 million,
representing gross margin of 69.3%. Operating expenses increased by
$3.3 million, or 50.5%, from 2006 to $9.7 million for the fiscal
year ended December 31, 2007. The increase was primarily
attributable to increased selling expenses during the 2007 period.
Selling expenses for 2007 increased to $4.4 million, which is
primarily due to management's marketing strategy to reduce the
Company's dependency on sales of human albumin and to promote other
products. The Company aggressively launched marketing efforts by
holding more conferences in conjunction with its distributors in
most major cities, at an additional cost of approximately $1.4
million for the fiscal year 2007. In connection with these
marketing efforts, its sales force also incurred additional
entertainment and traveling expenses of approximately $0.2 million.
Moreover, the increase was also due to the award of sales bonuses
of $0.6 million to employees for their outstanding achievement in
achieving revenue goals. General and administrative expenses
increased by $0.6 million to $4.7 million in 2007, which was
primarily attributable to the increase of wages and personnel
related expenses, as the Company added new administrative employees
to accommodate for its revenue growth. Research and development
expenses for 2007 were $0.6 million, a slight increase of 2.4% from
2006. The provision for income taxes increased 176.6% year over
year to $2.1 million for the year ended December 31, 2007 with an
effective tax rate of 16.9%. Net income before minority interest in
2007 increased 98.6% year-over-year to $10.2 million, due directly
to an increase in the demand for the Company's products as well as
its ability to control costs. Financial Condition The Company
financed its operations primarily through cash flows from
operations, short-term bank loans, as well as equity contributions
by its shareholders. As of December 31, 2007, it had approximately
$5.0 million in cash and cash equivalents, primarily consisting of
cash on hand and demand deposits. Net cash provided by operating
activities was $12.3 million for 2007. The decrease in accounts
receivable provided $3.4 million in net cash, as the Company was
able to shorten the payment terms to customers, and was offset by
the increase in inventory. Net cash used for investing activities
for 2007 was $8.8 million due to the additional capital
expenditures in plant and equipment for production and plasma
collecting operations to support continued strong growth. Net cash
used by financing activities for 2007 totaled $3.1 million, as
compared to $4.1 million provided by financing activities in the
same period of 2006. The decrease of the cash provided by financing
activities was mainly attributable to repayments of both short-term
and long-term loans of $3.3 and $0.7 million, respectively.
Business Outlook In recent years, the biopharmaceutical industry
and the plasma-based product market have outperformed the
pharmaceutical industry. China's plasma- based products market
remains underserved with limited availability of products, offering
substantial opportunities for China Biologic to grow its business.
The PRC government is limiting the number of companies in this
industry and is not expected to issue new licenses in the
foreseeable future. Furthermore, the import of foreign plasma based
products is severely restricted, creating a relatively closed
market for domestic suppliers. The overall effect of recent
government regulatory reform has been to reduce competition and
increase the barriers to entry, creating a favorable industry
structure for China Biologic. To achieve its objective to become a
first-class biopharmaceutical enterprise in China, the Company has
implemented the following strategies: (1) securing the supply of
plasma; (2) acquiring competitors and/or other biologic related
companies; (3) further strengthening its research and development
capabilities; and (4) increasing its marketing and distribution
network. "We are very pleased to be operating in a more regulated
market for plasma based products after recent reforms launched by
the government,' said Mr. Wong. "We are going to continue our
efforts to achieve greater market share and improve our product
mix." About China Biologic Products, Inc. China Biologic Products,
Inc., through its indirect majority-owned subsidiary Shandong
Taibang, is currently the only plasma-based biopharmaceutical
company approved by the government of Shandong Province, the second
largest province with a population of 93 million. The Company is
engaged primarily in research, manufacturing, and sale of
plasma-based biopharmaceutical products to hospitals and other
health care facilities in China. Plasma based Human Albumin is used
mainly to increase blood volume while Immunoglobulin is used for
disease prevention and treatment. Safe Harbor Statement This
release contains certain "forward-looking statements" relating to
the business of the Company and its subsidiary companies. These
forward looking statements are often identified by the use of
forward-looking terminology such as "believes, expects" or similar
expressions. Such forward looking statements involve known and
unknown risks and uncertainties that may cause actual results to be
materially different from those described herein as anticipated,
believed, estimated or expected. Investors should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release. The Company's actual results
could differ materially from those anticipated in these
forward-looking statements as a result of a variety of factors,
including those discussed in the Company's periodic reports that
are filed with the Securities and Exchange Commission and available
on its website (http://www.sec.gov/). All forward-looking
statements attributable to the Company or to persons acting on its
behalf are expressly qualified in their entirety by these factors
other than as required under the securities laws. The Company does
not assume a duty to update these forward-looking statements. -
FINANCIAL TABLES FOLLOW - CHINA BIOLOGIC PRODUCTS, INC. AND
SUBSIDIARIES AUDITED CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
2007 2006 REVENUES $ 32,398,669 $ 22,230,570 COST OF SALES
9,945,921 9,601,605 GROSS PROFIT 22,452,748 12,628,965 OPERATING
EXPENSES Selling expenses 4,434,721 1,783,302 General and
administrative expenses 4,651,434 4,065,903 Research and
development expenses 609,178 594,750 TOTAL OPERATING EXPENSES
9,695,333 6,443,955 INCOME FROM OPERATIONS 12,757,415 6,185,010
OTHER EXPENSES Interest income (47,731) (6,613) Interest expense
136,417 192,191 Other income (63,637) (30,430) Other expense
486,528 158,689 TOTAL OTHER EXPENSES 511,577 313,837 INCOME BEFORE
PROVISION FOR INCOME TAXES AND MINORITY INTEREST 12,245,838
5,871,173 PROVISION FOR INCOME TAXES 2,074,560 750,095 NET INCOME
BEFORE MINORITY INTEREST 10,171,278 5,121,078 LESS MINORITY
INTEREST 1,991,902 1,304,241 NET INCOME 8,179,376 3,816,837 FOREIGN
CURRENCY TRANSLATION GAIN 1,490,409 567,176 OTHER COMPREHENSIVE
INCOME $ 9,669,785 $ 4,384,013 BASIC EARNINGS PER SHARE Weighted
average number of shares 21,434,942 21,434,942 Earnings per share $
0.38 $ 0.18 DILUTED EARNINGS PER SHARE Weighted average number of
shares 21,861,014 21,434,942 Earnings per share $ 0.37 $ 0.18 CHINA
BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES AUDITED CONSOLIDATED
BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2006 A S S E T S 2007
2006 CURRENT ASSETS: Cash $ 5,010,033 $ 4,268,220 Accounts
receivable, net of allowance for doubtful accounts of $1,238,772
and $1,131,209 as of December 31, 2007 and 2006, respectively
316,869 3,775,387 Notes receivable 41,130 81,407 Other receivables
425,163 584,931 Other receivable- related party 290,307 --
Inventories 9,505,074 6,117,361 Prepayments and deferred expense
138,756 713,194 Total current assets 15,727,332 15,540,500 PLANT
AND EQUIPMENT, net 15,434,124 7,437,768 OTHER ASSETS:
Prepayments-non-current 711,459 778,364 Long term prepayment -
related party 516,456 -- Intangible assets, net 915,874 718,011
Total other assets 2,143,789 1,496,375 Total assets $ 33,305,245 $
24,474,643 L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q
U I T Y CURRENT LIABILITIES: Accounts payable $ 2,677,587 $
2,412,440 Short term loans - bank 685,500 2,564,000 Short term loan
- shareholder 722,674 675,761 Other payables and accrued
liabilities 1,200,068 1,874,973 Other payable - land use right
305,571 287,045 Dividend payable 506,626 476,597 Customer deposits
398,794 370,297 Taxes payable 384,788 138,203 Total current
liabilities 6,881,608 8,799,316 LONG TERM LIABILITIES -- 641,000
Total liabilities 6,881,608 9,440,316 COMITMENTS AND CONTINGENCIES
142,120 -- MINORITY INTEREST 3,885,892 2,308,487 SHAREHOLDERS'
EQUITY: Common stock, $0.0001 par value, 100,000,000 shares
authorized, 21,434,942 shares issued and outstanding at December
31, 2007 and 2006, respectively 2,143 2,143 Paid-in-capital
9,388,305 9,388,304 Statutory reserves 4,513,077 2,199,580 Retained
earnings 5,883,306 17,427 Accumulated other comprehensive income
2,608,794 1,118,385 Total shareholders' equity 22,395,625
12,725,840 Total liabilities and shareholders' equity $ 33,305,245
$ 24,474,643 CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES AUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER
31, 2007 AND 2006 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,179,376 $ 3,816,837 Adjustments to reconcile net
income to cash provided by operating activities: Minority Interest
1,991,902 1,304,241 Depreciation 777,007 404,003 Amortization
91,965 42,479 Loss on disposal of equipment 245,042 -- Allowance
for doubtful accounts 188,891 23,172 Change in operating assets and
liabilities: Accounts receivable 3,384,366 (1,483,514) Notes
receivable 44,109 (59,646) Other receivables 192,440 (75,750) Other
receivables - related party (278,809) -- Inventories (2,845,676)
(2,382,252) Prepayments and deferred expenses 599,238 (283,586)
Accounts payable 93,800 1,502,760 Other payables and accrued
liabilities (773,185) 515,245 Other payables -land use right
(1,346) -- Customer deposits 2,679 4,389 Taxes payable 227,604
(233,507) Contingent liability 136,491 -- Net cash provided by
operating activities 12,255,894 3,094,871 CASH FLOWS FROM INVESTING
ACTIVITIES: Additions to plant and equipment (8,213,289)
(2,648,482) Additions to intangible assets (234,120) (262,629)
Additions to non-current prepayment 116,151 (605,854) Advances on
building purchase to related party (496,001) -- Proceeds from
equipment disposal 11,455 -- Net cash used in investing activities
(8,815,804) (3,516,965) CASH FLOWS FINANCING ACTIVITIES: Restricted
cash -- 1,860,000 Proceeds from stock issuance -- 3,752,100
Payments on notes payable -- (1,883,550) Proceeds from short term
loan 1,316,700 2,511,400 Payments on short term loan (3,291,750)
(1,541,034) Payments on long term debt (658,350) (647,441)
Dividends paid to minority shareholders (488,878) -- Net cash (used
in) provided by financing activities (3,122,278) 4,051,475 EFFECTS
OF EXCHANGE RATE CHANGE IN CASH 424,001 31,463 INCREASE IN CASH
741,813 3,660,844 CASH, beginning of year 4,268,220 607,376 CASH,
end of year $ 5,010,033 $ 4,268,220 For more information, please
contact: Company Contact: Mr. Stanley Wong CEO China Biologic
Products, Inc. Tel: +86-538-620-2306 Email: Investor Relations
Contact: Mr. Crocker Coulson President CCG Elite Investor Relations
Tel: +1-646-213-1915 (NY office) Email: DATASOURCE: China Biologic
Products, Inc. CONTACT: Company Contact - Mr. Stanley Wong, CEO of
China Biologic Products, Inc., +86-538-620-2306, or ; or Investor
Relations Contact - Mr. Crocker Coulson, President of CCG Elite
Investor Relations, +1-646-213-1915 (NY office), or , or
Copyright