Aug 10, 2011: China Biologic Products(CBPO.NSDQ), one of the leading plasma-based biopharmaceutical companies in China, has reported that total sales in US dollars increased 1.9 percent in the second quarter, ending June 30, 2011, to $41.7 million from the second quarter 2010, with the benefit of 4.8 percent foreign exchange translation gain. Total sales denominated in RMB decreased 2.9 percent in the second quarter from the second quarter of last year.

Gross profit decreased 8.5 percent to $29.2 million in the second quarter 2011 from the same period in 2010. The gross profit margin was 70.0 percent in the second quarter 2011 compared with 77.9 percent in the second quarter 2010.

Income from operations decreased 24.3 percent to $17.2 million in the second quarter 2011 from the prior second quarter.

GAAP Net income attributable to China Biologic increased 28.3 percent to $16.6 million or $0.28 per diluted share in the second quarter 2011 from the second quarter 2010.

Excluding non-cash employee stock compensation, non-cash gain related to change in fair value of derivative liability, and interest on convertible notes, the non-GAAP adjusted net income attributable to China Biologic was $8.7 million or $0.33 per diluted share in the second quarter 2011, a 20.5 percent decrease from $11.0 million or $0.41 per diluted share in last year's second quarter.

Mr Chao Ming Zhao, chief executive officer of China Biologic, said, "We understand that investors have concerns about the unexpected closing of four of our plasma collection stations in Guizhou province that occurred on August 1, 2011, at the direction of the Guizhou Provincial government's newly imposed plan and policy. These stations accounted for about 34.1 percent of our total raw plasma volume collected in 2010."

"To mitigate the effects from the closing of the 4 plasma collection stations, we are working on alternative solutions and opportunities that include minimizing the write-off of already collected plasma from these 4 stations by performing all tests required by the 90-day quarantine rules, reallocating resources from the closed stations to maximize their utilization within the company, and exploring new regions for new plasma stations."

"In addition, we are adjusting our production plan and sales strategy to leverage the available resources to maximize profit as we respond to the changing market dynamics. For example, given the limited supply of raw plasma in the future, we will focus on supplying our products, which are critical and irreplaceable to health care, via direct sales to our best customers. We remain committed to accelerating our earnings growth in the future by focusing on our direct institutional sales, broadening our geographic reach, finding and creating new raw plasma sources, continuing to develop a strong new product pipeline, and considering possible prudent acquisitions, mergers and potential international collaborations."

"Our sales, in terms of RMB, decreased slightly in the second quarter, mainly due to weaker product pricing in a more competitive market and lower revenue from high-value hyper-immune products due to unavailability of specific vaccinated plasma raw material. Additionally, we unified the labels and packaging of the products from our two subsidiaries so that our Taibang brand becomes our primary brand. It took us much longer to relabel and repackage the products than we expected, which resulted in delays in shipping and revenue recognition for IVIG products."