China Pharma Holdings, Inc. Announces First Quarter 2008 Financial Results

-- Quarterly Revenues Increase 62% to $11.7 million

-- Quarterly Net Income Increases 76.5% to $4.2 million with EPS of $0.11

NEW YORK and HAIKOU, Hainan, China, May 2 /Xinhua-PRNewswire-FirstCall/ -- China Pharma Holdings, Inc. (“China Pharma”) (OTC Bulletin Board: CPHI) which develops, manufactures, and markets generic and branded bio-pharmaceutical products in China, today announced its financial results for the first quarter of 2008.

First Quarter 2008 Highlights

-- Revenue increased 62%, to $11.7 million versus Q1 2007.

-- Net income was $4.2 million, up 76.5% versus Q1 2007.

-- Our existing products continue to generate strong sales during the

first quarter of 2008. Sales of Pusen OK have increased by $1 million,

Buflomedil Hydrochloride increased 198%, Gastrodin increased 70%, and

Cefaclor has increased 64% versus Q1 2007.

-- EPS was $0.11, up 57.1% versus Q1 2007.

Revenues for the first quarter of 2008 increased approximately 62% to $11.7 million, from $7.2 million in the first quarter of 2007. The significant increase in revenues was due to expanded production of the China Pharma’s product portfolio supported by enhanced marketing efforts. The Company believes that this extraordinary growth should provide investors with confidence in China Pharma’s ability to execute on their strategic marketing plan going forward. Therefore, the Company is reiterating that its 2008 full-year revenue growth is expected to exceed 40%.

Gross profit grew 76% to $5.8 million from $3.3 million in the first quarter of 2007. Gross margins were 49.6% compared to 45.6% recorded during the first quarter of 2008 and 2007 respectively. The growth of gross profit and the improved margins were primarily due to the substantial increase in revenues and the decrease in overall production expenses in the first quarter of 2008.

Operating expenses for the three months ended March 31, 2008 decreased 20.7% to $1.2 million compared to the same period in 2007. Selling expenses for the period increased to approximately $0.34 million from 0.15 million in the first quarter of 2007, which is due to the Company’s investment in overall marketing. General and administrative expenses were $0.82 million in the three months ended March 31, 2008, a decrease of $0.49 million, or 37.5% compared to the first quarter of 2007, with the improvement emanating from the collection of bad debt reserves written-off in 2007, which reinforces China Pharma’s ability to collect customer receivables

Operating income for the first quarter of 2008 totalled $4.7 million, a 152.2% increase, compared to $1.8 million for the same period in 2007. Net income was $4.2 million, representing an increase of 76.5% from $2.4 million reported in the same year ago period. Fully diluted earnings per share were $0.11, a 57.1% increase from $0.07 in the first quarter of 2007.

"We are pleased to report another quarter of strong revenue and net income growth. The success of our increased marketing efforts and diversified portfolio focusing on therapeutics targeting high mortality and high incidence diseases enabled us to achieve a 62% increase in revenues for the first quarter of 2008," commented Ms. Zhilin Li, President and CEO of China Pharma, "Our ability to prudently manage expenses while collecting on 2007 bad debt reserves contributed to the decrease in operating expenses and resulted in a higher operating margin. We anticipate this trend will continue during 2008 as we aim to maintain or improve margins and profitability going forward.”

Balance Sheet and Cash Flow Discussion

The Company had Stockholders’ equity of $45.7 million, representing a book value of approximately $1.23 per diluted share as of March 31, 2008. With the significant increase in revenues, trade accounts receivable grew approximately 33.6%. The Company’s outstanding receivables over 12 months old decreased from 19.3% of total A/R at March 31, 2007, to 7.9% at March 31, 2008. Net cash flow from operating activities was $1.5 million in the three months ended March 31, 2008, compared to negative $2.2 million during the same time in the prior year. The improvement in operating cash flow was primarily due to the increase of net income and collection of older trade accounts receivables.

Ms. Li concluded, "In the first quarter of 2008, our acceleration in organic growth from our existing core products and new products launched after 2006 demonstrates the success of our dual growth strategy. China Pharma continues to focus on developing and marketing improved generic products for high incidence and high mortality diseases particular to the China market. With the rapidly growing economy and the Chinese Government’s commitment to expand its rural cooperative medical system (CMS) by spending $1.3 billion to increase coverage from 51% to 100% in rural areas, we are well positioned in the Chinese pharmaceutical industry to continue to grow our revenue and net income throughout 2008 and beyond.”

Conference Call

China Pharma will host a conference call on Tuesday, May 6 at 10:00 am EDT to discuss first quarter 2008 results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (800) 591-6942 International callers should dial (617) 614-4909. The conference pass code is 32765641.

If you are unable to participate in the call at this time, a replay will be available on Tuesday, May 6, at 12:00 pm EDT, through Tuesday, May 13. To access the replay, dial (888) 286-8010. International callers should dial (617) 801-6888. The conference pass code is 89227480.

This conference call will be broadcast live over the Internet and can be accessed by copying and pasting this link into your web browser: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=145098&eventID=1837069. A replay of the call will also be available on China Pharma’s website http://www.chinapharmaholdings.com for 90 days.

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, cardiovascular and CNS diseases, and other prevailing diseases. Helpson Bio-pharmaceutical Co., Ltd (Helpson), a specialty pharmaceutical company headquartered in Haikou City, Hainan province in China, is a wholly owned subsidiary of China Pharma Holdings. For more information about China Pharma Holdings, Inc., please visit http://www.chinapharmaholdings.com .

Safe Harbor Statement:

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

For more information, please contact:

China Pharma Holdings, Inc.

Sophia Yu

Tel: +86-898-6681-1730

Email: hps@chinapharmaholdings.com

HC International, Inc.

Alan Sheinwald

Tel: +1-914-669-0222

Email: Alan.sheinwald@hcinternational.net

-- FINANCIAL TABLES FOLLOW --

CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

March 31, December 31,

2008 2007

(Restated)

ASSETS

Current Assets:

Cash and cash equivalents $682,017 $1,830,335

Trade accounts receivable, less

allowance for doubtful accounts

of $3,019,930 and $2,440,852,

respectively 24,804,992 18,572,976

Other receivables, less allowance

for doubtful accounts of $64,230

and $43,908, respectively 476,749 413,596

Advances to suppliers 1,568,111 2,757,320

Inventory 14,810,192 14,448,771

Total Current Assets 42,342,061 38,022,998

Non-current Assets:

Property and equipment, net of

accumulated depreciation of

$1,150,987 and $1,003,802,

respectively 2,636,030 2,625,216

Intangible assets, net of accumulated

amortization of $291,809 and $221,715,

respectively 2,515,356 2,063,252

Advances for purchase of intangible

assets 2,801,633 807,345

Deferred tax assets 195,303 187,509

Total Non-current Assets 8,148,322 5,683,322

TOTAL ASSETS $50,490,383 $43,706,320

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Trade accounts payable $590,722 $297,299

Accrued expenses 265,008 261,301

Accrued taxes payable 1,078,850 311,009

Other payables 42,521 86,161

Advances from customers 359,646 261,583

Short-term notes payable 2,420,894 2,693,428

Total Current Liabilities 4,757,641 3,910,781

Research and development commitments 35,601 34,181

Total Liabilities 4,793,242 3,944,962

Stockholders’ Equity:

Common stock, $0.001 par value,

60,000,000 shares authorized,

37,278,938 shares issued and

outstanding 37,279 37,279

Additional paid-in capital 11,678,606 11,678,606

Foreign currency translation adjustment 4,584,546 2,839,304

Retained earnings 29,396,710 25,206,169

Total Stockholders’ Equity 45,697,141 39,761,358

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $50,490,383 $43,706,320

CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(unaudited)

For the three months

ended March 31,

2008 2007

Revenue $11,717,045 $7,233,768

Cost of revenue 5,909,768 3,934,849

Gross profit 5,807,277 3,298,919

Operating expenses:

Selling expenses 337,792 147,883

General and administrative 815,793 1,306,086

Total operating expenses 1,153,585 1,453,969

Income from operations 4,653,692 1,844,950

Non-operating income (expenses):

Interest income

-- 13,775

Interest expense (45,273) (56,899)

Other income -- 572,213

Total non-operating income (expense) (45,273) 529,089

Income before taxes 4,608,419 2,374,039

Income tax expense 417,878 --

Net income $4,190,541 $2,374,039

Comprehensive income - foreign currency

translation adjustments 1,745,242 216,416

Comprehensive income $5,935,783 $2,590,455

Basic and Diluted Earnings Per Share $0.11 $0.07

Basic and Diluted Weighted Average

Shares Outstanding 37,278,938 36,337,958

CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

For the three months

ended March 31,

2008 2007

(Restated)

Cash Flows from Operating Activities:

Net income $4,190,541 $2,374,039

Depreciation and amortization 162,779 100,063

Gain on sale of intangibles -- (569,398)

Changes in assets and

liabilities:

Trade accounts receivable (5,343,190) (1,728,236)

Other receivables (44,977) (739,783)

Advances to suppliers 1,275,939 (1,095,219)

Inventory 234,072 (1,092,813)

Deferred offering costs -- 59,743

Trade accounts payable 275,053 247,713

Accrued expenses (7,001) 27,960

Accrued taxes payable 738,767 78,756

Other payables (46,030) 88,814

Advances from customers 85,325 6,571

Net Cash from Operating Activities 1,521,278 (2,241,790)

Cash Flows from Investing Activities:

Purchase of property and equipment (6,994) (2,360)

Proceeds from the sale of intangibles -- 38,453

Purchase of intangible assets (418,079) --

Advances for purchase of

intangible assets (1,918,791) 836,404

Net Cash from Investing Activities (2,343,864) 872,497

Cash Flows from Financing Activities:

Proceeds from sale of common stock

and warrants -- 3,797,183

Payments of short term notes payable (376,271) --

Related party payables/receivables -- (138,860)

Net Cash from Financing Activities (376,271) 3,658,323

Effect of Exchange Rate Changes on Cash 50,539 5,247

Net Change in Cash (1,148,318) 2,294,277

Cash and Cash Equivalents at Beginning

of Period 1,830,335 656,441

Cash and Cash Equivalents at End of

Period $682,017 $2,950,718

Supplemental Cash Flow Disclosure:

Cash paid for interest $83,515 $56,899

Cash paid for income taxes -- --