China Pharma Holdings, Inc. (NYSE:CPHI)

Third Quarter 2019 Financial Results

• Revenue increased by 3.4% to $2.4 million in the third quarter 2019 from $2.3 million in the same period of 2018;
  
• Net loss was $0.7 million in the third quarter 2019 compared to $1.9 million in the same period of 2018. Loss per common share was $0.02 per basic and diluted share in the third quarter 2019, compared to $0.04 per basic and diluted share in the same period of 2018.

Ms. Zhilin Li, China Pharma's Chairman and CEO, commented, "We experienced negative effects on our sales from the strict implementation of the government policy of controlling the proportion of the spending on drugs to the patients' total expenditures in hospitals in recent quarters. Management endeavors to vigorously promote sales through active participation in recent provincial market openings to solicit new drug tender offers and allow China Pharma to expand its presence in these markets." Ms. Li continued, "In addition, we are experiencing sustained pressure from the more stringent requirements of drug registration standards, consistency evaluations, which has created a challenging environment in our industry during this period. We will continue actively adapting to the state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market, in order to optimize our development strategy. We will simultaneously actively implement the launch of our nutrition product."

Second Quarter 2019 Financial Results

• Revenue decreased  19.0% to $2.6 million in the second quarter 2019 from $3.2 million in the same period of 2018.
• Net loss was $0.8 million in the second quarter 2019 compared to $1.0 million in the same period of 2018.  Loss per common share was both $0.02 per basic and diluted share in the second quarter 2019 and 2018, respectively.

Ms. Zhilin Li, China Pharma's Chairman and CEO, commented, "We experienced negative impacts on our sales from the strict implementation of the government policy of controlling the proportion of the spending on drugs to the patients' total expenditures in hospitals. Management endeavors to vigorously promote sales through active participation in recent provincial market openings to solicit new drug tender offers and allow China Pharma to expand its presence in these markets." Ms. Li continued, "In addition, we are experiencing sustained pressure from the more stringent requirements of drug registration standards, consistency evaluations and challenging environment in our industry in this period. We will continue actively adapting to the state policy guidance and further evaluating market conditions for our current existing products, pipeline products, and competition in the market, in order to optimize our development strategy. Simultaneously, we will also actively implement the launch of our nutrition product."

First Quarter 2019 Financial Results

• Revenue decreased 19.0% to $2.9 million in the first quarter 2019 from $3.6 millionin the same period of 2018;
• Net loss was $0.4 million in the first quarter 2019 compared to $0.3 million in the same period of 2018. Loss per common share was both $0.01 per basic and diluted share in the first quarter 2019 and 2018, respectively.
  

In a statement from Ms. Zhilin Li, China Pharma's Chairman and CEO, "We experienced certain market fluctuations in the first quarter of 2019, which has negatively impacted our revenue in this period. Management will continue to vigorously promote sales through active participation in recent provincial market openings to solicit new drug tender offers and allow China Pharma to expand its presence in these markets." Ms. Li continued, "In addition, we continued experiencing sustained pressure from the more stringent requirements of drug registration standards, consistency evaluations, and the challenging environment in our industry in this period. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market, in order to optimize our development strategy."

Third Quarter 2018 Financial Results

• Revenue was $2.3 million for the three months ended September 30, 2018, which represented a decrease of  27.3% compared to $3.2 million for the three months ended September 30, 2017;
• Net loss was $1.9 million in the third quarter of 2018, compared to $2.2 million in the same period of 2017.  Loss per common share was $(0.04) per basic and diluted share in the third quarter of 2018, compared to $(0.05) per basic and diluted share in the same period of 2017.

In a statement from Ms. Zhilin Li, China Pharma's Chairman and CEO, "It is the Company's top priority to actively and steadily increase sales. We experienced certain market fluctuations in the third quarter of 2018, but through the continued implementation of sales promotions, our sales revenue in the first nine months of 2018 was comparable to the same period a year ago. Management will continue to vigorously promote sales through active participation in recent provincial market openings to receive new drug tender offers and through further penetration into the market." Ms. Li continued, "The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will continue to have a significant impact on the current performance and future development of Chinese pharmaceutical manufacturers, including us, and may gradually change business patterns of the industry. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market, in order to optimize our development strategy."

HAIKOU CITY, China, Nov. 13, 2018 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma," the "Company" or "We"), an NYSE American listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, announced today the launch of its health product Noni Enzyme ARARATO® to the market.

Noni, also known by its scientific name as Morinda citrifolia, is a fruit-bearing tree in the coffee family, Rubiaceae. Its native range extends across tropical islands of the South Pacific, and Hainan Island, China. The strong-smelling fruit has been used in traditional medicine, and in the consumer market, it has been introduced as a supplement in various forms, such as health products, skin products, and juices.

"Noni Enzyme is rich in Proxeronine and Proxeronase, which is a natural, healthy and nutrition-rich food supplement. Noni was approved by the Chinese Ministry of Health as a new resource food in 2010," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "Our product ARARATO® uses high quality noni fruit grown locally in Hainan Island as its raw material, and enjoys the quality assurance system environment back-up by our facility as a pharmaceutical manufacturer. We are committed to providing a high quality Noni enzyme product to the market."

The launch of ARARATO® represents a strategic development for our company to expand into the health product market. We believe that with the aging of the Chinese population, the growth of the middle class population, and the strengthening of  national health awareness, we are in a good position to explore health products - along with our core business of pharmaceutical products - to leverage use of our facilities and sales channels to meet market needs.

Second Quarter 2018 Financial Results

• Revenue increased8.8% to $3.2million in the second quarter 2018 from $3.0million in the same period of 2017;
• Net loss was $1.0 million in the second quarter of 2018 compared to $2.3 million in the same period of 2017. Loss per common share was $(0.02) per basic and diluted share in the second quarter of 2018 compared to$(0.05) per basic and diluted share in the same period of 2017.

In a statement from Ms. Zhilin Li, China Pharma's Chairman and CEO, "It is the Company's top priority to actively and steadily increase sales and it is encouraging to see increasing revenue in this quarter. Management will continue to vigorously promote sales through active participation in recent provincial market openings to receive new drug tender offers and through further penetration into the market."Ms. Li continued, "The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will continue to have a significant impact on the current performance and future development of Chinese pharmaceutical manufacturers, including us, and may gradually change business patterns of the industry. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."

First Quarter 2018 Financial Results

• Revenue increased 10.1% to $3.6 million in first quarter 2018 from $3.3 million in the same period of 2017.
• Net loss was $0.3 million in first quarter 2018 compared to $1.0 million in the same period of 2017. Loss per common share was $(0.01) per basic and diluted share in first quarter 2018 compared with $(0.02) per basic and diluted share in the same period of 2017.

"Actively and steadily increasing sales remains our top priority in recent quarters. It was encouraging to see increasing revenue in this quarter. Management will continue to vigorously promote sales through active participation in recent provincial market openings to receive new drug tender offers and through further penetration into the market," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will continue to have a significant impact on the current performance and future development of Chinese pharmaceutical manufacturers, including us, and may gradually change business patterns of the industry. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."

HAIKOU, China, April 3, 2018 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma," the "Company" or "We"), an NYSE American listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the fiscal year ended December 31, 2017.

Full Year Highlights

Revenue decreased 15.1% to $13.2 million in fiscal year 2017 from $15.6 million in fiscal year 2016;
Gross margin was 18.7% in fiscal year 2017, compared to 20.7% in fiscal 2016.
Impairment loss was $14.2 million in fiscal year 2017 compared to $4.0 million in 2016, which represented an increase of $10.2 million;
Loss from operations was $18.7 million in fiscal year 2017 compared to $8.2 million in 2016, which represented an increase of $10.5 million;
Net loss was $19.3 million in fiscal year 2017 compared to $9.2 million in 2016. Loss per common share was $(0.44) per basic and diluted share in fiscal 2017 compared with $(0.21) per basic and diluted share in fiscal year 2016.
"We tried to increase sales in 2017 but the speed of our sales recovery was not as fast as we expected. Nevertheless, increasing sales remains our top priority. Management will continue to vigorously promote sales through active participation in recent provincial market openings to receive new drug tender offers and through further research of the basic medical market," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will have a major impact on the future development of our industry and may change its business patterns. Under the requirements of the consistency evaluation policy, the company actively evaluated the technical difficulty, investment demand, time requirement, and investment return rate of all applicable marketed products and pipeline products, and recognized a significant impairment loss related to our intangible assets in 2017. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."

Full Year Results

Revenue decreased by 15.2% to $13.2 million for the year ended December 31, 2017, as compared to $15.6 million for the year ended December 31, 2016. This decrease was mainly due to the negative impact around Health-care insurance cost-control as well as policies for reducing the proportion of drug cost to total health-care spending.

Gross profit for the year ended December 31, 2017 was $2.5 million, compared to $3.2 million in 2016. Our gross profit margin in 2017 was 18.7% compared to 20.7% in 2016. This decline in our gross profit margin was mainly due to that our raw material prices have generally increased in recent quarters along with the improvement of industry standards and the strengthening of environmental protection requirements. In addition, adverse drug pricing control policies have negatively impacted our gross margins.

Our selling expenses for the year ended December 31, 2017 were $3.5 million, a decrease of $0.5 million compared to $4.0 million for the year ended December 31, 2016. Selling expenses accounted for 26.2% of the total revenue in 2017 compared to 25.9% in 2016. The increase was mainly the result of additional marketing, consulting and product promotional efforts in certain Chinese provinces. Because of adjustments in our sales practices resulting from healthcare reform policies, despite the overall decrease in sales, we require additional personnel and expenses to support our sales and the collection of accounts receivable.

Our general and administrative expenses for the year ended December 31, 2017 were $2.0 million, which represented an increase of $0.3 million compared to $2.3 million in 2016. General and administrative expenses accounted for 15.3% and 14.6% of our total revenues in 2017 and 2016, respectively.

Our bad debt expenses for the year ended December 31, 2017 was $1.4 million, which represented an increase of $0.3 million compared to $1.1 million in 2016. The increase in our bad debt expenses was mainly due to the change in the composition of aging of accounts receivables for the years ended December 31, 2017 compared to December 31, 2016.

Our impairments for the year ended December 31, 2017 were $14.2 million, compared to $4.0 million in 2016. It was mainly because of that as a pharmaceutical company, we have been focusing on the development and maintenance of our intangible assets, mainly in the form of medical formulas. Because of recently implemented government policies such as consistency evaluations, our management made certain assessments regarding the impairment of our intangible assets as of December 31, 2017 and December 31, 2016 respectively, and identified six and five formulas that would likely be unable to generate positive cash flow in the foreseeable future and therefore recognized impairment loss on them accordingly.

Net loss for year ended December 31, 2017 was $19.3 million, compared to net loss of $9.2 million for the year ended December 31, 2016. The decrease in net loss was mainly a result of the increase in impairment loss and bad debt expenses.

Third Quarter 2017 Financial Results

• Revenues were $3.2 million and $3.1 million for the three months ended September 30, 2017 and 2016 respectively.
• Net loss was $2.2 million in third quarter 2017 compared to $1.7 million in the same period of 2016. Loss per common share was $(0.05) per basic and diluted share in third quarter 2017 compared with $(0.04) per basic and diluted share in the same period of 2016.

"Our performance in generating revenue in the third quarter of 2017 was similar to the same period last year and we increased gross margin slightly due to better cost control." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "Nevertheless, increasing sales remains our top priority. Management will continue to vigorously promote sales through active participation in recent provincial market openings to receive new drug tender offers and through further research of the basic medical market."Finally, she stated, "The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will have a major impact on the future development of our industry and may change its business patterns. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."

HAIKOU, China, Sept. 12, 2017 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE American: CPHI) (the "Company") today announced receipt of notification (the "Deficiency Letter") from the NYSE AMERICAN LLC ("NYSE American") that the Company is not in compliance with certain NYSE American continued listing standards or the Listing Standards. The Deficiency Letter indicated that the Company's securities have been selling for a low price per share for a substantial period of time and, most recently, the average price of the Company's common stock had been below $0.20 on a 30-day average as of September 5, 2017. Pursuant to Section 1003(f)(v) of the NYSE American Company Guide, the NYSE American staff determined that the Company's continued listing is predicated on it effecting a reverse stock split of its common stock or otherwise demonstrating sustained price improvement within a reasonable period of time, which the staff determined to be until March 6, 2018. The Company intends to regain compliance with the Listing Standards by undertaking a measure or measures that are in the best interests of the Company and its shareholders.

The Company's common stock will continue to be listed on the NYSE American while it attempts to regain compliance with the Listing Standards, subject to the Company's compliance with other continued listing requirements. The NYSE American notification does not affect the Company's business operations or its reporting obligations under the Securities and Exchange Commission regulations and rules and does not conflict with or cause an event of default under any of the Company's material agreements.

Second Quarter 2017 Financial Results

• Revenue decreased 17.7% to $2.9 million in second quarter 2017 from $3.5 million in the same period of 2016;
• Net loss was $2.3 million in second quarter 2017 compared to $2.5 million in the same period of 2016. Loss per common share was $(0.05) per basic and diluted share in second quarter 2017 compared with $(0.06) per basic and diluted share in the same period of 2016.

"We experienced a slight revenue decrease in the second quarter of 2017 compared to the same period last year, which was primarily due to the current status of Chinese health care reform. Recent reforms require health care institutions to strictly control 'the proportion of drug sales to total revenue', in an effort to prevent hospitals from subsidizing medical services with inflated prescription drug prices. This background led to a significant decrease of drug purchases from health care institutions and impacted our drug sales in this period," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "Nevertheless, increasing sales remains our top priority. Management will continue to vigorously promote sales by actively participating in the recent provincial market openings to receive new drug tender offers and by further exploring the basic medical market. The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will have a major impact on the future development of our industry and may change its business patterns. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."

First Quarter 2017 Financial Results

• Revenue decreased 9.8% to $3.3 million in first quarter 2017 from $3.6 million in the same period of 2016.
• Net loss was $1.0 million in first quarter 2017 compared to $1.6 million in the same period of 2016. Loss per common share was $(0.02) per basic and diluted share in first quarter 2017 compared with $(0.04) per basic and diluted share in the same period of 2016.

"We experienced a slight revenue decrease in the first quarter of 2017 compared to the same period last year, which was mainly due to a more significant impact from an earlier Spring Festival holiday in 2017. However, we believed that our overall financial performance has improved, taking into consideration the increased gross profit margin and decreased net loss," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "Nevertheless, increasing sales remains our top priority. Management will continue to vigorously promote sales by actively participating in the recent opening of the new provincial drug tender offer and further exploring basic medical market. We continue to believe that demand for pharmaceutical products is huge and steady in China. The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will have a major impact on the future development of our industry and may change its business patterns. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."

HAIKOU CITY, China, March 31, 2017 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma,"  the "Company" or "We"), an NYSE MKT listed corporation with its fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the year ended December 31, 2016.

Full Year Highlights

• Revenue decreased 23.5% to $15.6 million in fiscal year 2016 from $20.4 million in fiscal year 2015.
• Net loss was $9.2 million in fiscal year 2016 compared to $15.4 million in 2015.  Loss per common share was $(0.21) per basic and diluted share in fiscal 2016 compared with $(0.35) per basic and diluted share in fiscal year 2015.

"We completed construction of our manufacturing facilities and received new GMP certificates for our dried powder and liquid injectable product lines produced at our new manufacturing facility in 2014; and completed upgrading and received new GMP certificates for our tablet and capsule product lines and for the cephalosporin product lines at our old factories in 2015. Solid manufacturing facility like this put us in a very good position to secure the foundation for steady business growth in the future. However, the missed provincial biddings back in 2014 still negatively impacted our market shares previously secured in those areas, and dragged our sales in 2016. In addition, the rectification on pharmaceutical distributors initiated by Chinese CFDA in middle 2016 also negatively impacted our sales because that the distributors' time and efforts were focused on passing CFDA inspection, which delayed their ordinary promotion efforts and purchase and distribution activities." said Ms. Zhilin Li, China Pharma's Chairman and CEO.  Ms Li continued, "Nevertheless, to increase our sales remains our top priority. Management will continue to vigorously promote sales by actively participating in the recent opening of the new provincial drug tender and participation in drug promotion activities like exhibitions. And we continue to believe that demand for pharmaceutical products is huge and steady in China. The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will have major impact on the future development of our industry and may change its business patterns. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."

Third Quarter 2016 Financial Results

• Revenue was $3.1 million in the third quarter of 2016, which represented a decrease of 30.2% compared to $4.5 million in the same period of 2015;
• Net loss was $1.7 million in the third quarter of 2016 compared to net income of $2.9 million in the same period of 2015. Loss per common share was $0.04 per basic and diluted share in the third quarter of 2016 compared with income per common share of $0.07 per basic and diluted share in the same period of 2015.

"The China Food and Drug Administration ('CFDA') issued 'Notice on Rectification Against Illegal Operation on Drug Logistic & Distribution' on May 3, 2016. As it had become the top priority for all pharmaceutical distributors to take measures to comply with this government policy, their time and efforts had been arranged around the inspection from CFDA, which delayed their ordinary promoting practices, purchase and distribution activities. Those significant negative impact upon distributors had continued in the three months ended September 30, 2016. which also impacted the sales performance in the third quarter of upstream suppliers like us." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "With the implementation of Consistency Evaluation on Quality and Efficacy of Generic Drugs, as well as the CFDA rectification, we continued to feel the pressure from macro-environment on our industry. In addition, the government's healthcare-price-controls also maintained continuous pressure upon our sales. Although we believe that the pharmaceutical industry is still facing a lot of challenges, with the continuous improvement of the national pharmaceutical management system and pharmaceutical companies to enhance their own strength, as well as China's huge pharmaceutical consumer market, the pharmaceutical industry still has bright prospects for development."

Second Quarter 2016 Financial Results

Revenue was $3.5 million in the second quarter of 2016, which represented a decrease of 37.6% compared to $5.7 million in the same period of 2015.

Net loss was $2.5 million in the second quarter of 2016 compared to net income of $1.1 million in the same period of 2015. Loss per common share was $(0.06) per basic and diluted share in the second quarter of 2016 compared with income per common share of $0.03 per basic and diluted share in the same period of 2015.

"The China Food and Drug Administration ('CFDA') issued "Notice on Rectification Against Illegal Operation on Drug Logistic & Distribution" on May 3, 2016. As it had become the top priority for all pharmaceutical distributors, to take measures to comply with this government policy, their time and efforts had been arranged around the inspection from CFDA, which delayed their ordinary promoting practices, purchase and distribution activities, and further negatively impacted the sales performance of our company during the second quarter of 2016." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, " With the implementation of Consistency Evaluation on Quality and Efficacy of Generic Drugs, as well as the CFDA Rectification, we continued to feel the pressure from macro-environment in our industry. However, we still believe that our current operations and financial position will allow us to secure the foundation for steady business growth in the future."

First Quarter 2016 Financial Results

• Revenue was $3.6 million in first quarter 2016, which represented a decrease of 36.1% compared to $5.7 million in the same period 2015;
• Net loss was $1.6 million in first quarter 2016 compared to $4.1 million in the same period 2015. Loss per common share was $(0.04) per basic and diluted share in first quarter 2016 compared with $(0.09) per basic and diluted share in the same period 2015.

"In the first quarter 2016, there are a few important governement policies issued or implemented, such as the "Opinions on Carrying out Consistency Evaluation on Quality and Efficacy of Generic Drugs". 'Consistency Evaluation' requires currently marketed generic products to prove consistency in terms of quality, therapeutic effect, and substitutability during clinical trials with the original drug, which could enhance development of the pharmaceutical industry, ensure drug safety and effectiveness, promote the upgrading and restructuring of the pharmaceutical industry, and improve international competitiveness." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms Li continued, "Nevertheless, we continued concentrating on enhancing our fundamentals. Although our sales in this quarter did not immediantly reflect our efforts to regain the market share due to certain background of our business as well as the pressure from  macro-environment of our industry, we continue to believe that our current operations and financial position will allow us to secure the foundation for steady business growth in the future."

HAIKOU, China, March 31, 2016 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma,"  the "Company" or "We"), an NYSE MKT listed corporation with its fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the year ended December 31, 2015.

Full Year Highlights

Revenue decreased 8.1% to $20.4 million in fiscal year 2015 from $22.1 million in fiscal year 2014;
Gross margin was 7.2% in fiscal year 2015, compared to 12.1% in fiscal 2014. Without the effect of inventory obsolescence, management estimates that our gross profit would have been approximately 22.5% in fiscal year 2015 and 22.2% in fiscal year 2014;
Loss from operations was $14.3 million in fiscal year 2015 compared to $38.8 million in 2014, a decrease of $24.5 million;
Net loss was $15.4 million in fiscal year 2015 compared to $39.6 million in 2014. Loss per common share was $(0.35) per basic and diluted share in fiscal 2015 compared with $(0.91) per basic and diluted share in fiscal year 2014.
"China's healthcare reform was deepened in 2015. Under the industrial reform and modification background guided by the government policies, we actively completed the new GMP upgrading for the majority of our current production facility, and aggressively promoted our sales to regain our original market shares. Due to the fact that we only received new GMP certificate for the injectable production lines at our new manufacturing facility in November 2014, we missed drug biddings in several provinces prior to November 2014. Those missed biddings negatively impacted our market shares previously secured in those provinces, and dragged our sales in 2015." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms Li continued, " Nevertheless, we continued concentrating on enhancing our fundamentals. In January and December 2015, we completed the upgrading and received new GMP certificates for the tablet and capsule production lines, and cephalosporin production lines at our old factories, respectively. The upgrading of these oral solution production lines was completed before the deadline, which positioned us to better meet market demand. Although there was no immediate reversal of sales trends in 2015 due to the special characteristics of the pharmaceutical industry, we strongly believe that our current operations and financial position will allow us to secure the foundation for steady business growth in the future."

Full Year Results

Revenues for the year ended December 31, 2015 were $20.4 million, a decrease of 8.1% from revenues of $22.1 million for the year ended December 31, 2014. This decrease was primarily due to the missed biddings in certain provinces back in 2014 despite our efforts in promoting sales to regain our market shares during 2015.

We had decreases in the sales estimates between the time when raw materials were purchased and the time when the sales performance is realized for certain products. We assessed the fair value of our raw material and determined that certain inventory was slow moving or obsolete. Based on the developed estimates as of December 31, 2015 and 2014, we recognized an additional inventory obsolescence expense of $3.1 million and $2.3 million for the years ended December 31, 2015 and 2014, respectively.

Gross profit for the year ended December 31, 2015 was $1.5 million, compared to $2.7 million in 2014. Our gross profit margin in 2015 was 7.2% compared to 12.1% in 2014. Without the effect of inventory obsolescence, management estimates that our gross profit would have been approximately 22.5% in 2015 and 22.2% in 2014.

Selling, general and administrative expenses in 2015 were $6.2 million, or 30.4% of sales, compared to $5.1 million, or 22.9% of sales, in 2014. The increase was mainly due to additional marketing, consulting and product promotional efforts in certain PRC provinces. For the year ended December 31, 2015, the Company's research and development expense was $1.0 million, compared to $2.8 million in 2014. The change in research and development expenses was mainly due to the costs related to testing of the new production lines in 2014. As a result, the expenses related to such activities were higher in 2014.

For the year ended December 31, 2015, the Company's bad debt expense was $10.1 million, compared to a bad debt expense of $31.4 million in 2014. In the restatement of the annual report for the year ended December 31, 2014 (the "2014 Restatement"), we reviewed our policy for bad debt allowance for accounts receivable and therefore significantly increased the bad debt expense in 2014. During 2015, we also recognized bad debt expense of $4.2 million related to advances to suppliers based on an evaluation of the realizability of the payment.

Operating loss was $14.3 million in 2015 compared to operating loss of $38.8 million in 2014. The main reason for the decrease in loss was lower bad debt expenses in 2015.

For the years ended December 31, 2015 and 2014, our income tax rate was 15%. Income tax expenses were $0.06 million and $0.08 million for the years ended December 31, 2015 and 2014, respectively. We renewed our "National High-Tech Enterprise" status from the PRC government in the third quarter of 2013. With this designation, for the years ending December 31, 2014, 2015 and 2016, we enjoy a preferential tax rate of 15% which is notably lower than the statutory income tax rate of 25%.

Net loss for the year 2015 was $15.4 million, or $(0.35) per basic and diluted share, compared to net loss of $39.6 million, or $(0.91) per basic and diluted share for the year 2014. The decrease in net loss was mainly due to the decrease in bad debt expense.

Financial Condition

As of December 31, 2015, the Company had cash and cash equivalents of $6.2 million compared to $5.3 million as of December 31, 2014. Year-over-year, working capital decreased to $12.2 million in 2015 from $27.7 million in 2014 and the current ratio was 2.0 times in 2015, decreased from 3.0 times in 2014.

Our accounts receivable balance decreased to $5.9 million as of December 31, 2015 from $13.9 million as of December 31, 2014. The decrease was mainly due to bad debt expense of $7.4 million in 2015. Our gross receivables and allowance reserve decreased due to the bad debt write-off of $21.3 million in 2015.

For the year ended December 31, 2015, cash flow from operating activities was $3.4 million, as compared to $6.2 million in 2014.

Pipeline Update

In order to support our existing products package under the unfavorable economic environment, we have remained focused on pipeline development. We have experienced delays in obtaining approval for the products in our pipeline due to revisions and enhancements in the approval criteria and processes issued by China Food and Drug Administration (the "CFDA") which result in additional supplemental materials and trials, higher cost, and longer approval time for certain applications. In March 2016, the PRC State Council issued the "Opinions on Carrying out Consistency Evaluation on Quality and Efficacy of Generic Drugs" which requires all chemical generic pipeline products to carry out Consistency Evaluation before final registration approval and therefore further prolongs the registration process for our pipeline products. 

As of December 31, 2015, China Pharma had various pipeline drugs in different stages of active development.  Some of these are highlighted below:

Antibiotic Combination - We are currently in Phase II of the clinical trial, due to the higher regulatory requests for clinical works.
Rosuvastatin - Rosuvastatin is a generic form of Crestor, a drug for the treatment of high blood cholesterol levels. Clinical trials for this generic drug were completed in the fourth quarter of 2010, and are supplementing Consistency Evaluation pursuant to the Opinions.
Heart Disease Drug - We developed an oral solution for the treatment of coronary heart disease in our new product pipeline. This product comes with a patented Traditional Chinese Medicine (TCM) formula. We have completed Phase III clinical trials and are currently collecting and summarizing trial data.
Alzheimer's disease drug - We developed a drug for the treatment of Alzheimer's disease and are supplementing Consistency Evaluation pursuant to the Opinions.
Digestive Diseases drug - We developed two drugs for the treatment of digestive diseases and has applied to CFDA for Production Approval, currently waiting for CFDA Technical Review.
Antibiotic for Kids - We developed an oral solution antibiotic for the kids and are supplementing Consistency Evaluation pursuant to the Opinions.

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

(b) On December 8, 2015, China Pharma Holdings, Inc. (the “Company”) was advised by its independent registered accounting firm, Arshak Davtyan, Inc. (the “Auditor”), that during a regular Public Company Accounting Oversight Board (“PCAOB”) inspection of the Auditor, the PCAOB issued certain comments that certain audit deficiencies were identified in the Company’s Annual Report on Form 10-K (the “Original 10-K”) for the year ended December 31, 2014, the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2015 (“Q1 2015 10-Q”), June 30, 2015 (“Q2 2015 10-Q”) and September 30, 2015 (“Q3 2015 10-Q”).

The Audit Committee of the Board of Directors and the executive management have discussed the subject matter with the Auditor and concluded that the financial statements and/or the related audit report contained in the Original 10-K, Q1 2015 10-Q, Q2 2015 10-Q and Q3 2015 10-Q should no longer be relied upon. Specifically, the issues are as below: (1) the Company had not properly evaluated whether collectability of revenue was reasonably assured for sales to customers with significantly aged receivable balances and, therefore, whether the revenue had been appropriately recognized; and (2) the Company had not properly evaluated the reasonableness of the allowance for doubtful accounts. Consequently, the Company intends to reassess the collectability of revenue and hence the revenue recognition process as well as the detailed review process of calculating the allowances for doubtful accounts, and make proper amendments to the referenced financial statements. The Company endeavors to file amended financial statements covering these periods as soon as practicable.

Management is assessing what changes may be necessary in the evaluation of the Company’s internal control over financial reporting and its disclosure controls and procedures and will not reach a final conclusion with respect to these matters until the completion of the above filings.

(c) The Company has provided a copy of the foregoing Item 4.02(b) disclosures to the Auditor and requested that the Auditor furnish it with a letter addressed to the Securities and Exchange Commission stating whether the Auditor agrees with the above statements. A copy of the Auditor’s letter, dated December 11, 2015, is filed as Exhibit 16.1 to this Form 8-K.

Third Quarter 2015 Financial Results

• Revenue decreased 19.5% to $4.8 million in the third quarter of 2015 from $5.6 million in the third quarter of 2014.
• Net loss was $4.1 million in the third quarter of 2015 compared to $6.3 million in the third quarter of 2014.  Loss per common share was $0.10 per basic and diluted share in the third quarter of 2015 compared with $0.15 per basic and diluted share in the same period of 2014.

"Our cost and expenses have experienced certain increase in this quarter due to the new GMP standards for quality control improvement, which lead to an increase in our production costs and the increased sales efforts to recover our market shares." said Ms.Zhilin Li, China Pharma's Chairman and CEO.  Ms. Li continued, "Although the financial performance in this quarter did not immediately reflect the improvement of our production ability, through  continuous efforts, we are very confident on  recovering and expanding market. The CNY 9.6 million (approximately USD 1.6 million) government subsidies we received in July 2015 also reflects the recognition from the government on the fundamentals of our business. In addition, we are currently upgrading the granule and cephalosporin production lines in our old factories, and expect to receive new GMP certificates for the two production lines by the end of this year. "

Second Quarter 2015 Financial Results

Revenue decreased 7.4% to $5.7 million in the second quarter of 2015 from $6.1 million in the second quarter of 2014.

• Net loss was $4.1 million in the second quarter of 2015 compared to $8.6 million in the second quarter of 2014. Loss per common share was $0.09 per basic and diluted share in the second quarter of 2015 compared with $0.20 per basic and diluted share in the same period of 2014.

"Our cost and expenses have experienced certain increase in this quarter due to the new GMP standards for quality control improvement, which lead to an increase in our production costs and the increased sales efforts to recover market shares." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "Although the financial performance in this quarter did not immediately reflect the material change of our production ability, through continuing efforts, we are very confident on recovering and expanding market. And the CNY 9.6 million (approximately USD 1.6 million) government subsidies we received in July 2015 also reflects the recognition from government on the fundamentals of our business. In addition, we also plan to upgrade the cephalosporin, and granule production line in our old factories by the end of this year. "

HAIKOU, China, July 31, 2015 /PRNewswire/ -- China Pharma Holdings, Inc. ("China Pharma") (NYSE MKT: CPHI), an NYSE MKT listed corporation with its fully-integrated specialty pharmaceuticals subsidiary based in China, today announced that its wholly-owned subsidiary, Hainan Helpson Medical & Biotechnology Co., Ltd.,(Helpson) has received CNY 9.6 million (approximately USD 1.6 million) government subsidies.

This is a subsidy program provided by the Hainan Industry & Information Technology Department and the Hainan Provincial Department of Finance, that was initiated in 2014. It's aim is to sponsor technological and industrial upgrades in Hainan province. 14 projects were ultimately selected, and Helpson's new GMP upgrading program received CNY9.6 million.

Ms. Zhilin Li, China Pharma's Chairman and CEO, stated: "This government subsidy reflects a recognition of the fundamentals of our business. It also shows the confidence and encouragement from the government in our future development. Our company is running healthily, and the newly completed GMP facility has been in full operation."

First Quarter 2015 Financial Results

• Revenue decreased 20% to $5.7 million in the first quarter of 2015 from $7.1 million in the first quarter of 2014.
• Net loss was $8.0 million in the first quarter of 2015 compared to $2.4 million in the first quarter of 2014. Loss per common share was $0.18 per basic and diluted share in the first quarter of 2015 compared with $0.05 per basic and diluted share in the same period of 2014.

"We have experienced some market-loss in the first quarter of 2015 due to the production-suspension of our injectable product lines in 2014. We continued controlling our marketing by limiting our credit sales and executed a prudent marketing strategy, specifically by screening our existing and potential distributors and hospital customers based on their payment speed in order to gradually improve our trade turnover, especially in terms of the collection of our accounts receivable. This strategy has temporarily impacted our sales in the current period by limiting our credit sales." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms Li continued, "We received new GMP certificates for the new injectable production lines in our new factory and initiated production on those lines in November 2014. In January 2015 we also received new GMP certificates for the tablet and capsule production lines in our old factories. We plan to upgrade the dry powder injectable production line, granule production line, and cephalosporin production line in our old factories in 2015."

 

HAIKOU CITY, China, March 31, 2015 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma" or the "Company"), an NYSE MKT listed corporation with its fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the year ended December 31, 2014.

Full Year Highlights

• Revenue decreased 24% to $24.9 million in fiscal year 2014 from $32.8 million in fiscal year 2013;
• Gross margin was 21.9% in fiscal year 2014, compared to gross loss margin of (1.5)% in fiscal 2013. Without the effect of inventory obsolescence, management estimates that our gross profit would have been approximately 30.9% in fiscal year 2014 and 28.7% in fiscal year 2013;
• Loss from operations was $25.3 million in fiscal year 2014 compared to $18.6 million in 2013, an increase of $6.7 million;
• Net loss was $26.0 million in fiscal year 2014 compared to $20.0 million in 2013. Loss per common share was $(0.60) per basic and diluted share in fiscal 2014 compared with $(0.46) per basic and diluted share in fiscal year 2013.

"We have experienced tough challenges and made remarkable achievements in 2014: we completed the construction of a 20,000 square meters new factory, installed with four (4) sterilization production lines (two liquid injectables and two dry powder injectables production lines) after nearly two years of construction. In November 2014, we obtained new GMP certificate issued by CFDA, and commenced the manufacturing at our dry powder injectables and liquid injectables production lines; We also sustained the loss brought by once-in-forty-year 16 grade super typhoon." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "During the period from January 1, 2014 to November 3, 2014, we suspended two production lines as they did not then meet the GMP upgrading deadline. In this production-suspended period, we limited our credit sales and executed a prudent marketing strategy by screening our existing and potential distributors and hospital customers based on the speed of their payment in order to gradually improve our trade turnover, especially the collection of our accounts receivable. This strategy has temporarily impacted our sales in the current period by limiting our credit sales."

Third Quarter 2014 Financial Results.

• Revenue for the three months ended September 30, 2014 was $5.5 million, a decrease of 31% from $8.1 million for the three months ended September 30, 2013.
• Loss per share share  Basic and Diluted was $(0.15) vs. last years same quarter of $(0.05)

In November 2014, the CFDA completed its process of the GMP certification for our new facility and issued the GMP certificate to enable us to commence manufacturing our liquid injectable and dry powder injectable product lines. We have commenced the operation of the two product lines as of the date of this report.

In July 2014, a typhoon caused considerable damage to our manufacturing facilities and inventory. Part of the warehouse was flooded; some damage was caused to our new facility while the water and electricity supply was suspended for several days causing a brief halt to our production activities. We have taken emergency measures to restore and recover post-typhoon. The Company's losses from natural disaster were approximately $2.3 million (RMB14.2 million) for the nine months ended September 30, 2014. The Company received insurance compensation of $0.01 million as only the new plant building was insured and the damage to it was minor. The old plant was restored to operational mode at the end of July.

Second Quarter 2014 Financial Results

• Revenue was $6.1 million in the second quarter of 2014, which represented a decrease of 24% from $8.0 million in the second quarter of 2013.
• Loss per common share was $0.20 per basic and diluted share in the second quarter of 2014 compared with $0.10 in the second quarter of 2013.

"We have submitted the application for a new GMP certificate at the end of June 2014. We believe that the GMP upgrading will be successful and expect the new GMP certificate to be issued in approximately three to six months from our submission of the application," said Ms. Zhilin Li, China Pharma's Chairman and CEO.  Ms. Li continued, "The national CFDA staff was originally scheduled for an on-site-review of our new facility and production lines in late July of 2014. The review is a mandatory and major step in order for us to receive the new GMP certification.  However, due to a once-in-forty-year 16 grade super typhoon Rammasun hittingHaikou on July 18, 2014, the on-site-review was postponed and the typhoon caused considerable damage to our manufacturing facilities and inventory. We have taken emergency measures to restore and recover post-typhoon to be ready for the rescheduled on-site-review in mid-August."

First Quarter 2014 Financial Results

• Revenue was $7.1 million in the first quarter of 2014, which represented a decrease of 14% from $8.2 million in the first quarter of 2013.
• Net loss was $2.4 million in the first quarter of 2014 compared to $2.8 million in the first quarter of 2013. Loss per common share was $0.05 per basic and diluted share in the first quarter of 2014 compared with $0.06 per basic and diluted share in the first quarter of 2013.

"We have maintained a conservative stance in our general sales and credit policies in the first quarter 2014 in order to ensure the capital requirements for new GMP upgrading requirements, and to control and improve the condition of our accounts receivable," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "Construction of the main building for our new GMP facility has been basically completed, and two new sterilization production lines have been installed, and are undergoing testing and commissioning. We intend to submit the application for a new GMP certificate in June 2014. We believe that the GMP upgrading will be successful and expect the new GMP certificate to be issued in approximately three to six months from our submission of the application. As of January 1, 2014, we suspended production on our two existing lines due to the failure to meet the GMP upgrading deadline. We intend to upgrade these lines after production commences on the lines in our new facility."

CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
		For the Years
		Ended December 31,
		2013				2012
Revenue		$	32,806,678			$	54,507,049
Cost of revenue			23,405,886				38,660,814
Inventory obsolescence			9,881,711				1,769,984
Gross (loss) profit			(480,919	)			14,076,251
Operating expenses:
Selling expenses			3,284,905				3,535,214
General and administrative expenses			2,404,338				2,874,644
Research and development expenses			1,683,244				438,662
Bad debt expense			10,752,991				871,612
Impairment of intangible assets			-				593,095
Total operating expenses			18,125,478				8,313,227
Government subsidy income			-				141,987
(Loss) income from operations			(18,606,397	)			5,905,011
Other income (expense):
Interest income			8,457				4,944
Interest expense			(348,696	)			(308,375	)
Net other expense			(340,239	)			(303,431	)
(Loss) income before income taxes			(18,946,636	)			5,601,580
Income tax expense			(1,061,413	)			(983,921	)
Net (loss) income			(20,008,049	)			4,617,659
Other comprehensive income - foreign
currency translation adjustment			4,435,923				1,274,091
Comprehensive (loss) income		$	(15,572,126	)		$	5,891,750
(Loss) earnings per share:
Basic		$	(0.46	)		$	0.11
Diluted		$	(0.46	)		$	0.11

Management Discussion and Analysis

Results of Operations for the Fiscal Year Ended December 31, 2013

China provides a unique opportunity to its pharmaceutical industry; however, real challenges remain: from compulsory new GMP upgrading requirements and rising pricing pressure to extended regulatory review time for new medical production applications. Each of these challenges impacted our performance negatively in 2013, causing us to experience a significant decrease in our financial results.

Net loss for the year ended December 31, 2013 was $20.0 million, compared to net income of $4.6 million for the year ended December 31, 2012.  Our net loss for the year ended December 31, 2013 was mainly due to a significant decrease in revenue, an increase in inventory obsolescence and an increase in bad debt expense.

Revenue

Revenue decreased by 40% to $32.8 million for the year ended December 31, 2013, as compared to $54.5 million for the year ended December 31, 2012. This decrease primarily resulted from decreases in sales of our CNS Cerebral & Cardio Vascular products andour Anti-Viro/Infectious & Respiratory products.

Although it did not affect our sales during 2013, we suspended production of our dry powder injectable and liquid injectable products at our two old production lines as of January 1, 2014 due to the failure to meet the new GMP upgrading deadline. In anticipation that this shutdown will affect our sales in 2014, we have gradually increased inventory levels of certain products in advance in order to support the sales demand for these products. We plan to start the upgrading of these two production lines once our new GMP facility starts operations.

The most significant revenue decreasein terms of dollar amount was in our “CNS Cerebral & Cardio Vascular” product category, which generated $7.2 million in sales revenue in 2013 compared to $15.2 million a year ago, a decrease of $8.0 million. The decrease was mainly due to the CFDA notice for Buflomedil. In March, 2013 the CFDA issued a nationwide notice for the cessation of the production, sale and use of Buflomedil effective immediately. Consequently, the Company terminated the production and sale of this product.

Sales of the “Anti-Viro/Infection & Respiratory” category decreased by $6.3 million to $18.2 million in 2013 compared to $24.5 million in 2012, which was mainly due to the decrease in sales of Roxithromycin and Clarithromycin, two antibiotics, which were affected primarily by market demand volatility. Our “Digestive Diseases” category generated $2.9 million of sales in 2013, compared to $7.0 million in the previous year, or a decrease of $4.1 million.  Our “Other” product category sales fell to $4.5 million from $7.8 million, a decrease of $3.3 million.

In the year ended December 31, 2013, revenue breakdown by product category showed some changes. Sales of the “Anti-Viro & Respiratory” products category represented 55% of total sales in the year ended on December 31, 2013, compared to 45% in 2012. The “CNS, Cerebral & Cardio Vascular” category represented 22% of total revenue in 2013 and 28% in 2012. The “Digestive Diseases” category represented 9% of total revenue in 2013 compared to 13% in 2012.  The “Other” category represented 14% and 14% of revenues in 2013 and 2012, respectively.

Net Income (Loss)

Net Loss for year ended December 31, 2013 was $20.0 million, a decrease of $24.6 million, from net income of $4.6 million in the year ended December 31, 2012.  The decrease in net income was mainly due to the decrease in revenue, increase in inventory obsolescence, and increase in bad debt expense.

For the year ended December 31, 2013, loss per basic and diluted common share was $(0.46), compared to earnings per basic and diluted share of $0.11 for the year ended December 31, 2012.

The number of basic and diluted weighted-average outstanding shares used to calculate (loss) earnings per share was 43,579,557 for both 2013 and 2012.

Third Quarter 2013 Financial Results

• Revenue decreased 33% to $8.1 million in the third quarter of 2013 from $12.2 million in the third quarter of 2012.
•  Earnings (loss) per common share was ($0.05) per basic and diluted share in the third quarter of 2013 compared with $0.03 per share in the same period last year.

"We feel excited about the launching of Candesartan, the long-awaited front-line drug therapy for the treatment of hypertension in November, 2013. We expect this product to bring positive impact on our revenue and margin through organized marketing and our existing sales network. " Ms. Zhilin Li, China Pharma's Chairman and CEO continued. "The successful renewal of National HT Status, which entitles us to a preferential tax rate of 15% for 2014, 2015 and 2016, requires strict scrutiny from the provincial government; and again evidenced our solid fundamentals and healthy operation. We will continue focusing on our business development and new GMP project construction, and believe that this will support the fair evaluation of our shareholders' interest in the future."

Second Quarter Financial Results

• Revenue decreased 45% to $8.0 million in the second quarter of 2013 from $14.6 million in the second quarter of 2012.
• Gross profit was $2.2 million in the second quarter of 2013, a decrease of approximately $2.0 millioncompared to $4.1 million gross profit in the second quarter of 2012.
• Net loss was $4.5 million in the second quarter of 2013 compared to $1.8 million net income in the second quarter of 2012, a decrease of $6.2 million. Earnings (loss) per common share was ($0.10) per basic and diluted share in the second quarter of 2013 compared with $0.04 per share in the same period last year.

"In the second quarter of 2013, we continued to execute our prudent marketing strategy to a more stringent screening of existing and potential distributors and hospital customers in terms of speed of payment in order to gradually improve our trade pattern, especially in terms of the collection of our accounts receivable. This strategy temporarily impacts our sales in the current period." Ms. Zhilin Li, China Pharma's Chairman and CEO continued, "We feel glad that we entered an eight-year construction loan facility with a bank on June 21, 2013. The total loan facility amount is RMB 80,000,000 (approximately $13 million), and the advance is being used to fund construction of our new GMP upgrading project. We already completed the overall architectural structure of our new GMP facility; and are progressing according to our plan to continue to construct the new facility and ancillary projects. With the support from bank loan, we are more confident that the new-GMP upgrading will be accomplished in good quality."

First Quarter 2013 Financial Results

• Revenue decreased 49% to $8.2 million in the first quarter of 2013 from $16.1 million in the first quarter of 2012.
• Gross loss was $1.6 million in the first quarter of 2013, a decrease of $6.9 million compared to $5.3 milliongross profit in the first quarter of 2012; management estimated that without the effect of inventory obsolescence, gross profit would have been $2.1 million in the first quarter of 2013.
• Net loss was $2.8 million in the first quarter of 2013 compared to $2.8 million net income in the first quarter of 2012, a decrease of $5.6 million. Earnings (loss) per common share was ($0.06) per basic and diluted share in the first quarter of 2013 compared with $0.06 per share in the same period last year.

"The economic and pharmaceutical challenges and uncertainties had negatively impacted our business in the first quarter of 2013. In addition, due to the capital expenditure pressure from the GMP upgrade project, we have continued a tighten marketing strategy to control credit expansion in the market." Ms. Zhilin Li, China Pharma's Chairman and CEO continued, "Per the mandatory requirements of new GMP requirements, the upgrading of our dried power injectable line and liquid injectable line must be completed by the end of 2013. We have adjusted our general sales and credit policies to a conservative stance since the beginning of 2012 in order to ensure the capital requirements for new GMP upgrading requirements are met, and control and improve the growing accounts receivable. The construction relative to certain required facilities and equipment is in full swing."

Second Quarter 2012 Highlights

• Revenue was $14.6 million for the second quarter of 2012, representing a decrease of 26% compared to$19.6 million for the same period in 2011. For the first six months of 2012, revenue was $30.7 million, representing a decrease of 19% from $37.7 million for the same period in 2011.
• Gross profit was $4.1 million for the second quarter of 2012, representing a decrease of 43% compared to $7.3 million for the same period in 2011. For the first six months of 2012, gross profit was $9.4 million, representing a decrease of 33% from $14.2 million for the same period in 2011.
• Net income was $1.8 million, or $0.04 per basic and diluted share for the second quarter of 2012, representing a decrease of 65% compared to $5.1 million for the prior year period, or $0.12 per basic and diluted share. For the first six months of 2012, net income was $4.6 million, representing a decrease of 55% from $10.2 million for the same period in 2011.

"This year we expect to see many new Healthcare Reform policy implementations, most of which are centered around the theme of price control. With respect to the second quarter, new government reform policies as well as the general uncertain atmosphere of the industry continued negatively impacting our short-term sales volume. Besides that, we are also experiencing pricing pressure on most of our products." Ms. Zhilin Li, China Pharma's Chairman and CEO continued, "In addition, like the other Chinese pharmaceutical manufacturers, our Company is required to upgrade our facility to the new GMP standards. This round of upgrading is a challenge for all players, and also means survival of the fittest. The new GMP standards significantly raised the GMP standards inChina. Existing drug manufacturers like us, depending on the risks of the products we manufacture, were given a grace period of up to three to five years to comply with the GMP standards. We are under the pressure of man power, material resources and timing to complete this upgrading."

First Quarter 2012 Highlights

• Revenue was $16.1 million, compared to $18.1 million in the prior year period;
• Gross profit was $5.3 million, compared to $6.9 million in the prior year period;
• Operating income was $3.4 million, compared to $5.3 million in the prior year period;
• Net income was $2.8 million, or $0.06 per basic and diluted share, compared to $5.3 million in the prior year period, or $0.12 per basic and diluted share;

"This year we expect to see many new Healthcare Reform policy implementations, most of which are centered around the theme of price control. At the same time we are seeing cost of materials (such as raw chemical materials, APIs, packaging materials as well as logistic costs) rising fast. The Chinese pharmaceutical industry is therefore facing tremendous operating pressure due to falling top line and rising cost of goods sold." Ms. Zhilin Li, China Pharma's Chairman and CEO continued, "With respect to the first quarter, new government pricing policies as well as the general uncertain atmosphere of the industry negatively impacted our short-term results. But we expect gross margin and revenue to benefit from new product launches in the months and quarters ahead."

Full Year 2011 Results

• Revenue increased 9% to $81.2 million in fiscal year 2011 from $74.4 million in fiscal year 2010.
• Income from operations was $22.0 million in fiscal year 2011 compared to $24.7 million in 2010, a decrease of $2.7 million, or 11%.
• Net income was $19.3 million in fiscal year 2011 compared to $23.4 million in 2010, a decrease of $4.1 million, or 18%. Earnings per common share was 44 cents per basic and diluted share in fiscal 2011 compared with 54 cent per share, a decrease of 18%.
• Gross profit margin was 36% in fiscal year 2011, a decrease from 41% in fiscal 2010.

Fourth Quarter Breakdown

• Revenue for fouth quarter 2011 decreased to $22.5 million from $24 in prior year quarter
• Net income for fourth quarter 2011 decreased to $5.9 million from $6.6 in prior year quarter
• EPS for the fourth quarter 2011 decreased to $0.13 from $0.15 in prior year quarter

"In 2011 we registered a moderate top line growth in a very challenging year for the pharmaceutical industry in China. Once again our diversified product portfolio demonstrated its robustness in a difficult environment," said Ms. Zhilin Li, China Pharma's Chairman and CEO. "The healthcare reform has produced encouraging results in improving the standards of living for people in China. The changes produced by the reform, however, have created pricing pressures on nearly all pharmaceutical products across the industry, and we expect this environment to continue for some time to come. Going forward, we expect the launches of new products such as Candesartan, our new hypertension drug, and Rosuvastatin, our generic version of Crestor, to enhance our profitability and growth opportunities. Commercializing exciting new drugs like our antibiotic combination drug, along with first-to-market generic medicines, is an important part of China Pharma's growth and profitability strategy."

Third Quarter 2011 Results

• Revenues for the quarter ended September 30, 2011 were $21.0 million, up 12% from revenues of $18.7 million for the quarter ended September 30, 2010
• Net income for the third quarter of 2011 was $3.3 million, or $0.08 per basic and diluted share, compared to $5.9 million, or $0.14 per basic and diluted share, in the third quarter of 2010.

"In the third quarter of 2011 we achieved solid sales growth primarily due to strong performances by our Anti-Viro Infection & Respiratory and our Digestive product categories. We continue to face pricing pressures across many of our products during the quarter, but we expect gross margin and revenue to benefit from new product launches in the months and quarters ahead," said Ms. Zhilin Li, China Pharma's Chairman and CEO. "In addition to the expected launch of new products such as Candesartan and Rosuvastatin, we continue to advance our novel cephalosporin-based combination antibiotic through Phase II clinical trials. Commercializing exciting new drugs like this, along with first-to-market generic medicines, is an important part of our strategy to enhance China Pharma's growth and profitability."

 

Rodman and Renshaw on CPHI                     7/26/2011

Terminating Coverage

TERMINATION OF COVERAGE Effective immediately, we are terminating coverage of China Pharma Holdings, Inc. to better distribute resources throughout our coverage universe. Our last rating for China Pharma Holdings was Market Outperform / Speculative Risk rating, and should no longer be viewed as a recommendation to buy the stock. China Pharma Holdings had approximately $3.8 MM in cash and cash equivalents at the end of 1Q11.

China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets generic and branded pharmaceutical products for both western and traditional Chinese medicines in China. The company has a diverse portfolio of 20 products focusing on the treatment of a variety of indications associated with antiviral/infection & respiratory diseases, CNS, cerebral and cardiovascular illnesses, as well as digestive system disorders. Sales of Tiopronin (launched in 3Q09) for hepatitis B treatment has maintained steady growth. A second drug, Omeprazole, was recently launched in 4Q09 for the treatment of gastroesophageal reflux disease (GERD). For 1Q11, omeprazole and tiopronin were among the top selling drugs. Of note, existing products generated over $18.1 MM in revenues during 1Q11.

China Pharma Holdings’ pipeline of products strategically focuses on reformulations of known and marketed drugs,generic versions of off-patent multi-billion dollar blockbuster drugs, and new chemical entities. The company’s new drug development program includes Rosuvastatin, a generic form of Crestor to treat hyperlipidemia; Candesartan to treat hypertension, a disease affecting 120 MM people in China, as well as a novel combination of an antibiotic to treat resistant bacterial infections. Importantly, China Pharma Holdings has eight scalable GMP production lines that are inline with western standards of Current Good Manufacturing Practice (cGMP). In addition, China Pharma Holdings possesses a strong sales and distribution network covering 30 administrative regions with 16 sales offices, approximately 680 proxy agents, and approximately 1,250 distributors focusing on hospital end-users.

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Member FINRA.
Member SIPC.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member SIPC.
Member FINRA.

First Quarter Results:

• Revenues for the quarter ended March 31, 2011 were $18.1 million, up 20% from revenues of $15.1 million for the quarter ended March 31, 2010
• adjusted non-GAAP net income in the first quarter of 2011 was $4.4 million, or $0.10 per diluted share, compared to $4.3 million, or $0.10 per diluted share, in the first quarter of 2010.

"In the first quarter of 2011 we achieved solid sales growth primarily due to strong performances by our Digestive Diseases and Anti-Viro product categories.  We continue to face moderate pricing pressure across several of our product categories during the quarter, but we expect gross margin and revenue to benefit from anticipated launches of Candesartan and Rosuvastatin in the seasonally strong second half of the year," said Ms. Zhilin Li, China Pharma's Chairman and CEO.  "In addition to the expected launch of these two higher margin products later in 2011, we continue to advance our novel cephalosporin-based combination antibiotic through Phase II clinical trials. Commercializing exciting new drugs like this, along with first-to-market generic medicines, is an important part of our strategy to enhance China Pharma's growth and profitability."  

Based on our current operating plan, management believes that our cash provided by operations plus the proceeds from our existing bank loans will be sufficient to meet our working capital needs and our anticipated capital expenditures, including expenditures for new formula acquisitions, for the next twelve months.

Full Year Results:

• Revenue increased 21% to $74.4 million in fiscal year 2010 from $61.7 million in fiscal year 2009.
• Net income rose 30% to $23.4 million in fiscal year 2010 from $18.0 million in fiscal year 2009, with earnings per share rising $0.11 to $0.54 in fiscal year 2010 from $0.43 in fiscal year 2009.
• Excluding adjustments for derivative gains/losses and a one-time bad debt estimate in third quarter 2009, net income climbed 23% from $17.7 million in fiscal year 2009 to $21.8 million in fiscal year 2010*, with earnings per share rising from $0.42 in fiscal year 2009 to $0.50 in fiscal year 2010

"In 2010 we registered robust revenue growth, with increased sales across all product categories, while making meaningful progress in our research and development program," said Ms. Zhilin Li, China Pharma's Chairman and CEO.  "Among key pipeline milestones achieved this year, we completed clinical trials of Candesartan, our new hypertension drug, and Rosuvastatin, our generic version of Crestor.  We expect to launch these two products during 2011 and believe that they can generate higher than average gross margin compared to our current portfolio.  In 2010 we also entered Phase II clinical trials of our novel cephalosporin-based combination antibiotic. Commercializing exciting new drugs like this, along with first-to-market generic medicines, is an important part of our strategy to enhance China Pharma's growth and profitability."  

"In 2011, we anticipate adding new higher-margin revenue streams to our upcoming new products, which should help offset pockets of margin pressure coming from higher raw material costs and more competitive pricing due to government reform policies.   Overall we are very optimistic that we have the right mix of products and pipeline opportunities to position China Pharma to benefit from China's unprecedented $124 billion healthcare reform program," said Ms. Li.  "We believe our success in 2011 and beyond will be defined by our high-quality manufacturing facilities and promising pipeline, strong distribution relationships, and commercialization expertise."

GeoTeam Note: 2010 vs. 2009 Adjusted EPS for the quarter was $0.15 vs. $0.12.

Rodman & Renshaw on CPHI                                                       12/06/2010

Rosuvastatin Clinical Trials Completed This morning, China Pharma Holdings reported completion of clinical trials for rosuvastatin (generic Crestor). According to the results, rosuvastatin demonstrated better efficacy on lowering LDL in comparison to control groups treated with atorvastatin (generic version of Lipitor). Rosuvastatin (10 mg dose) has lowered LDL levels by 45% and 82% of total subjects have reached target LDL levels. Management is actively preparing for production approval from the SFDA. In our opinion, rosuvastatin may contribute to sales in 2011. Drugs for the treatment of hyperlipidemia in China were estimated to have generated $1.3 BN in sales in 2009. Included in the National Insurance Catalog with limited number of approval licenses, rosuvastatin from China Pharma Holdings could reach $15 MM in peak sales in five years following approval, in our opinion. Given the large patient population in China, our estimates may prove to be overly conservative.

Newly Launched Omeprazole Becomes Driving Force China Pharma Holdings launched omeprazole in 4Q09 for the treatment of gastroesophageal reflux disease (GERD). For 3Q10, omeprazole generated $1 MM in revenues, an 11% increase in comparison to sales in 2Q10. In our opinion, sales of omeprazole could become a driving force for the company’s growth, and is expected to reach $10 MM in annual sales by 2015.

Robust Growth of >20% Expected for 2010 For 2010, China Pharma Holdings has a diverse portfolio of 20 marketed products with the potential to generate a total of $73 MM in revenues, according to our projections. If the company can maintain >40% gross margins, and >25% net margins, we project net income for 2010 of approximately $22 MM or $0.50 per share. In addition, given the announced $124 BN healthcare reform budget, we believe the potential demand for pharmaceutical products in China could increase by approximately 6-fold in the coming years.

Pipeline to Power the Future China Pharma Holdings has a robust product pipeline that consists of 9 products, including generic Atacan for hypertension (expected launch in 1Q11), generic Crestor for hyperlipidemia (expected launch in 2011), as well as a novel antibiotic combination to fight bacterial resistant strains (expected launch in 2012). In our opinion, the approval and successful marketing of these products could provide substantial upside to our revenue projection of $159 MM by 2015.

Investment Opinion We are reiterating our Market Outperform / Speculative Risk rating and a 12-month target price of $6. Our target price is derived based on a discounted cash flow analysis through 2015 using a 17% discount rate, and projecting a 7% growth rate thereafter for the terminal value. In our opinion, the company’s future revenues will be driven by approximately 24 products addressing a variety of markets including antiviral/infection, CNS and cerebral/cardio vascular and digestive systems. According to our projections, which take into account four new compounds to be introduced over the next 24 months, China Pharma Holdings’ sales have the potential to grow at a compounded annual growth rate (CAGR) of 17% from 2009 – 2015, with upside based on the potential for pipeline drugs to exceed expectations.


Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodnan & Renshaw on CPHI

High-Tech Enterprise Status Provides Favorable Tax Rate - Benefits to the Bottom Line 

National High-Tech Enterprise Granted On November 22, 2010, China Pharma Holdings reported that the company received the “National High-Tech Enterprise” designation for its wholly owned subsidiary Hainan Helpson Medical & Biotechnology from the Chinese government. With this designation, the company is expected to receive a favorable statutory tax rate of 15% in 2011-2013. Previously, the company was expected to receive a 24% statutory tax rate for 2011, and a 25% rate for 2012-2015. In our opinion, the revised tax rate has the potential to improve the bottom line financial performance for the company. According to our estimates, the effective tax rate is expected to be 22% given that the Chinese government does not allow tax benefits on expenses related to US-listing, such as auditing and Sarbanes Oxley. Based on today’s announcement, we have lowered our effective tax rate from 24%-25% to 22% for the years 2011-2013, and we are maintaining our effective tax rate of 25% for 2014-2015. As a result, we are increasing our EPS estimates to $0.57, $0.67, and $0.77 from $0.56, $0.65, and $0.74 in 2011, 2012, and 2013, respectively. Upside potential to our estimates does exist if expenses related to the US listing are lower than anticipated.

Newly Launched Omeprazole Becomes Driving Force China Pharma Holdings launched omeprazole in 4Q09 for the treatment of gastroesophageal reflux disease (GERD). For 3Q10, omeprazole generated $1 MM in revenues, an 11% increase in comparison to sales in 2Q10. In our opinion, sales of omeprazole could become a driving force for the company’s growth, and is expected to reach $10 MM in annual sales by 2015.

Robust Growth of >20% Expected for 2010 For 2010, China Pharma Holdings has a diverse portfolio of 20 marketed products with the potential to generate a total of $73 MM in revenues, according to our projections. If the company can maintain >40% gross margins, and >25% net margins, we project net income for 2010 of approximately $22 MM or $0.50 per share. In addition, given the announced $124 BN healthcare reform budget, we believe the potential demand for pharmaceutical products in China could increase by approximately 6-fold in the coming years.

Pipeline to Power the Future China Pharma Holdings has a robust product pipeline that consists of 9 products, including generic Atacan for hypertension (expected launch in 1Q11), generic Crestor for hyperlipidemia (expected launch in 2011), as well as a novel antibiotic combination to fight bacterial resistant strains (expected launch in 2012). In our opinion, the approval and successful marketing of these products could provide substantial upside to our revenue projection of $159 MM by 2015.

Investment Opinion We are reiterating our Market Outperform / Speculative Risk rating and a 12-month target price of $6. Our target price is derived based on a discounted cash flow analysis through 2015 using a 17% discount rate, and projecting a 7% growth rate thereafter for the terminal value. In our opinion, the company’s future revenues will be driven by approximately 24 products addressing a variety of markets including antiviral/infection, CNS and cerebral/cardio vascular and digestive systems. According to our projections, which take into account four new compounds to be introduced over the next 24 months, China Pharma Holdings’ sales have the potential to grow at a compounded annual growth rate (CAGR) of 17% from 2009 – 2015, with upside based on the potential for pipeline drugs to exceed expectations.


Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Our net income for the three months ended September 30, 2010 decreased by $1.68 million, or approximately 23%, to $5.5 million from $7.2 million for the three months ended September 30, 2009. Net income for the three-month period ended September 30, 2009 included the positive effect of a one-time $2.8 million adjustment of our bad debt allowance. Without the effect of this one-time adjustment, management estimates that the net income for the third quarter of 2009 would have been $4.26 million. On this more comparable basis, our net income for the third quarter of 2010 would have been 29% higher than the same period a year ago. The non-GAAP measures of the operating results of the comparable periods in 2009, excluding the approximate impact of the one-time bad debt estimate change, are described below and are reconciled to the corresponding GAAP measures in the following table.

China Pharma Holdings, Inc.
Reconciliation of Non-GAAP Adjusted Net Income and Basic and Diluted EPS
(Unaudited, $ in thousand except share and per share data)
		For the Three Months Ended September 30,																For the Nine Months Ended September 30,
		2010								2009								2010								2009
		Net income				Basic and Diluted EPS				Net income				Basic and Diluted EPS				Net income				Basic and Diluted EPS				Net income				Basic and Diluted EPS
Adjusted net income and basic and diluted EPS, excluding approximate after-tax impact of one-time bad debt estimate change (Non-GAAP)		$	5,485			$	0.13			$	4,263			$	0.10			$	15,056			$	0.35			$	12,569			$	0.30
Approximate after-tax impact of one-time bad debt estimate change (a)			-				-				2,900				0.07				-				-				2,558				0.06
Net income and basic and diluted EPS as reported (GAAP)		$	5,485			$	0.13			$	7,163			$	0.17			$	15,056			$	0.35			$	15,127			$	0.36

Based on our current operating plan, management believes that our cash provided by operations plus the proceeds from our existing bank loans will be sufficient to meet our working capital needs and our anticipated capital expenditures, including expenditures for new formula acquisitions, for the next 12 months. However, if events or circumstances occur and we do not meet our operating plan as expected, we may be required to seek additional capital and/or to reduce certain discretionary spending, which could have a material adverse effect on our ability to achieve our business objectives. Notwithstanding the foregoing, we may seek additional financing for expansion purposes, which may include debt and/or equity financing. There can be no assurance that any additional financing will be available on acceptable terms, if at all. Any equity financing may result in dilution to existing stockholders and any debt financing may include restrictive covenants.