China Pharma Holdings, Inc. Announces Record Second Quarter 2007 Results

HAIKOU CITY, Hainan Province, China, Aug. 14 /Xinhua-PRNewswire-FirstCall/ -- China Pharma Holdings, Inc. ("China Pharma") (OTC Bulletin Board: CPHI), a specialty bio-pharmaceutical company that develops, manufactures and markets Western and Chinese medicines, today announced its financial results for the second quarter 2007 ended June 30, 2007.

Second Quarter 2007 Highlights

-- Revenue increased 115.57% year-over-year to record high $8.57 million

-- Net income was $3.33 million, up 81.71% year-over-year

-- Sales of PusenOK, hepatocyte growth-promoting factor, cefaclor and

neoandrographolade increased 221.81%, 473.14%, 244.82% and 340.11%,

year-over-year, respectively

-- EPS was $0.09, up 80% year-over-year

First Half Year 2007 Highlights

-- Revenue increased 81.46% year-over-year to record high $15.80 million

-- Net income was $5.70 million, up 67.57% year-over-year

-- EPS was $0.15, up 58.18% year-over-year

Second Quarter 2007 Results

China Pharma's revenue in the second quarter of 2007 was $8.57 million, up 115.57% compared to $3.98 million in the second quarter of 2006. The sales of China Pharma's long-standing products were again record high, of which cefaclor increased 244.82% and neoandrographolade increased 340.11%, compared to the second quarter of 2006. Sales of new products have been growing fast as well, among which PusenOK increased 221.81% and hepatocyte growth-promoting factor increased 473.14% on a year-over-year basis. Granisetron hydrochloride which was launched in the middle of the second quarter is experiencing encouraging sales. Gross profit increased 108.4% to $3.90 million from $1.87 million in the second quarter of 2006. The growth of gross profit benefits from the diversified product portfolio of China Pharma and the high growth of revenue. Net income was $3.33 million, up 81.71% as compared to the same period a year ago. Fully diluted earnings per share were $0.09, an 80% increase from the $0.05 in the second quarter of 2006.

"We are happy to report record high revenue and net income for the second quarter 2007. This was a very successful quarter for China Pharma, both in terms of financial performance and execution of our key business strategies. Our increased market penetration for our existing portfolio and the wide acceptance of our newly launched products including hepatocyte

growth-promoting factor, Ozagrel sodium and Granisetron hydrochloride have contributed to the strong growth of our revenue," commented Ms. Zhilin Li, President and CEO of China Pharma. "Our strong performance is the result of building an extensive and diversified portfolio of therapeutics which allows us not to depend on any one product for revenue growth."

Selling expenses were 326,000 US dollars for the quarter, or 3.8% of revenue, compared to 82,000 US dollars, or 2% of revenue, in the same quarter last year. China Pharma has 16 sales offices and 550 proxy agents throughout China. During the second quarter of 2007, China Pharma strengthened its marketing force, expanding and deepening its nationwide sales networks all over 29 provinces, sovereignties and autonomous regions as well as enrolling more salespeople on its payroll, which shall give a clear indication to the increase of selling expenses for the quarter.

General and administrative (G&A) expenses were 203,000 US dollars, or 2.3% of revenue, in the second quarter of 2007, compared to 436,000 US dollars, or 11% of revenue, in the same period a year ago. The decrease of G&A expense is due to two factors, one is that China Pharma has cut down expenses for entertainment, travels and office overheads, and the other is that the Company had accrued sufficient allowance for doubtful accounts in the first quarter of 2007, therefore, no more allowance for doubtful accounts was required for the second quarter. It is typical in China that the collection cycle of pharmaceutics industry is usually longer. But the truth is that China Pharma eventually collected all its trade accounts receivable in its history, never suffering losses from bad accounts at all.

Income from operations was $3.37 million in the second quarter of 2007, a 149.6% increase from $1.35 million in the same period of 2006. The increase of income from operations was a reflection of the growth of sales of China Pharma. Thanks to the increasing acceptance of its products and continuous penetration into the market, China Pharma has been maintaining steady growth of sales.

Financial Condition

As of June 30, 2007, China Pharma had $2.44 million in cash and cash equivalents, which was a 1,151% increase from $195,000 on June 30, 2006, and a 272% increase from $656,000 by the end of 2006. Total liabilities were $8.19 million and working capital was $28.33 million. Days sales outstanding was 174. And shareholders' equity stood at $31 million.

Business Outlook

China Pharma has solid research and development cooperation with leading institutions in China, and has developed a diversified portfolio of therapeutics with strong potential. Its marketing channels are under continuous expansion and the size of its sales force is ever growing. China Pharma's existing product portfolio has record high sales, and sales of its new products are growing dramatically. For this reason, the Company's revenue can be expected to grow continuously. And the China State Food and Drug Administration (SFDA) issued on July 11, 2007 a new regulation for registering new drugs, which is expected to quickly resume normal procedures at SFDA for approving new drugs. This will speed up the process for China Pharma to bring new drugs to the market. Moreover, the People's Republic of China (PRC) has committed to expand its rural cooperative medical system (CMS) to cover more rural areas in the country, and will spend $1.3 billion in this program on an annual basis. CMS is currently covering about 51% rural areas, and by 2010, the whole country will be covered by this program. China Pharma expects to greatly benefit from the CMS program.

Conference Call

China Pharma will host a conference call on Tuesday August 14 at 11:00 am EST to discuss second quarter 2007 results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (866) 831-6270. International callers should dial (617) 213-8858. The conference passcode is 67882959.

If you are unable to participate in the call at this time, a replay will be available on Tuesday, August 14th at 1:00 pm EST, through Tuesday August 21st at 1:00 pm EST. To access the replay, dial (888) 286-8010. International callers should dial (617) 801-6888. The conference passcode is 88502129.

The conference will be broadcast live over the Internet and can be accessed by all interested parties at China Pharma's website at http://www.chinapharmaholdings.com . To listen to the call please go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. develops, manufactures, and markets generic and brand bio-pharmaceutical products in China that treat a wide range of conditions, including infections, hepatitis, vascular, CNS and other prevailing diseases. Helpson Bio-pharmaceutical Co., Ltd (Helpson), a specialty bio-pharmaceutical company headquartered in Haikou City, Hainan province in China, is a wholly owned subsidiary of China Pharma Holdings. For more information on the Company please go to http://www.chinapharmaholdings.com .

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by China Pharma on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand, increased competition, failure to obtain or maintain intellectual property protection, downturns in the Chinese economy, uncompetitive levels of research and development, failure to obtain regulatory approvals, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.

CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

June 30, December 31,

2007 2006

ASSETS

Current Assets:

Cash and cash equivalents $2,436,105 $656,441

Trade accounts receivable, less

allowance for doubtful

accounts of $2,548,926 and

$1,562,494, respectively 16,538,297 12,101,979

Other receivables, less allowance for

doubtful accounts of $54,427

and $27,517, respectively 706,632 355,554

Deferred offering costs -- 59,390

Advances to suppliers 4,421,107 2,255,877

Inventory 12,391,586 10,277,887

Total Current Assets 36,493,727 25,707,128

Non-current Assets:

Property and equipment, net of

accumulated depreciation of

$713,323 and $619,649, respectively 2,629,785 2,725,173

Intangible assets, net of accumulated

amortization of $202,600

and $135,656, respectively 53,224 65,344

Deferred tax assets 17,159 16,736

Total Non-current Assets 2,700,168 2,807,253

TOTAL ASSETS $39,193,895 $28,514,381

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Trade accounts payable $835,347 $477,291

Accrued expenses 165,386 104,216

Accrued taxes payable 168,897 167,419

Other payables 113,827 185,096

Advances from customers 179,625 141,871

Accounts payable -related parties -- 22,650

Short-term notes payable 6,698,773 6,533,649

Total Current Liabilities 8,161,855 7,632,192

Research and development commitments 32,788 31,980

Total Liabilities 8,194,643 7,664,172

Stockholders' Equity:

Common stock, $0.001 par value,

60,000,000 shares authorized,

37,228,938 and 34,723,056

shares issued and outstanding;

respectively 37,229 34,723

Additional paid-in capital 11,559,656 7,764,979

Foreign currency translation

adjustment 1,315,554 663,871

Retained earnings 18,086,813 12,386,636

Total Stockholders' Equity 30,999,252 20,850,209

TOTAL LIABILITIES AND STOCKHOLDERS'

EQUITY $39,193,895 $28,514,381

CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

and COMPREHENSIVE INCOME

(unaudited)

For the three months For the six months

ended June 30, ended June 30,

2007 2006 2007 2006

Revenue $8,570,256 $3,975,569 $15,804,024 $8,709,334

Cost of revenue 4,670,685 2,105,082 8,605,524 4,631,549

Gross profit 3,899,571 1,870,487 7,198,500 4,077,785

Operating expenses:

Selling expenses 326,147 82,133 474,030 170,161

General and

administrative 203,447 436,340 1,583,523 680,321

Research and development 4,477 -- 840,881 --

Total operating expenses 534,071 518,473 2,898,434 850,482

Income from operations 3,365,500 1,352,014 4,300,066 3,227,303

Non-operating income

(expenses):

Interest income 11,633 87 25,408 182

Interest expense (58,942) (24,103) (115,841) (47,898)

Other income 7,937 120,803 1,490,544 120,461

Bad debt recovery -- 627,861 -- 626,580

Total non-operating

income (expense) (39,372) 724,648 1,400,111 699,325

Income before taxes 3,326,128 2,076,662 5,700,177 3,926,628

Income tax expense -- (246,200) -- (525,022)

Net income $3,326,128 $1,830,462 $5,700,177 $3,401,606

Comprehensive income --

foreign currency

translation adjustments 216,416 62,557 651,683 221,558

Comprehensive income $3,542,544 $1,893,019 $6,351,860 $3,623,164

Basic and diluted

earnings per common

share $0.09 $0.05 $0.15 $0.10

Weighted-average common

shares outstanding 37,228,938 34,723,056 36,785,909 34,723,056

CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

For the six For the six

months ended months ended

June 30, June 30,

2007 2006

Cash Flows from Operating Activities:

Net income $5,700,177 $3,401,606

Depreciation and amortization 201,540 193,065

Changes in assets and liabilities:

Trade accounts receivable (4,074,259) (3,348,145)

Other receivables (337,438) (97,112)

Advances to suppliers (2,079,529) 161,868

Inventory (1,828,719) (945,068)

Deferred tax assets -- 24,387

Deferred offering costs 60,062 --

Trade accounts payable 341,285 526,675

Accrued expenses 57,740 84,810

Accrued taxes payable (2,715) (122,285)

Other payables (75,127) --

Advances from customers 33,704 17,670

Net Cash Used in Operating Activities (2,003,279) (102,529)

Cash Flows from Investing Activities:

Purchase of property and equipment (25,931) (144,790)

Purchase of intangible assets -- (2,477)

Net Cash (Used) by Investing

Activities (25,931) (147,267)

Cash Flows from Financing Activities:

Proceeds from sale of common stock

and warrants 3,797,183 --

Proceeds from short term notes

payable -- 31,653

Net Cash Proceeds from Financing

Activities 3,797,183 31,653

Effect of Exchange Rate Changes on

Cash 11,691 (47,853)

Net Change in Cash 1,779,664 (265,996)

Cash and Cash Equivalents at

Beginning of Period 656,441 461,220

Cash and Cash Equivalents at End of

Period $2,436,105 $195,224

For more information, please contact:

Sophia Yu

China Pharma Holdings, Inc

Tel: +86-898-6681-1730

Email: hps@chinapharmaholdings.com