Advertisement
"This acquisition will transform our Company to become the largestnon-state-owned producer of plasma-based biopharmaceutical products in China,in terms of market share and production capacity," said Mr. Chao Ming Zhao,CEO of China Biologic Products. "We expect that this transaction will allowus to increase our supply of plasma by almost doubling our collection quantity,expand our product portfolio and achieve our geographic expansion plans.After the closing of our acquisition, our combined production of plasma-basedproducts is expected to reach approximately 450 tons per year and ourfacilities will have a combined capacity to produce 1100 tons per year. Moreimportantly, we expect to achieve significant synergies and economies of scalethrough consolidation of our sales and administrative teams, increasedbargaining power with suppliers and more efficient utilization of resourcessuch as sharing our technological know-how."
Advertisement
Currently, China Biologic is the only approved manufacturer ofplasma-based biopharmaceuticals in Shandong Province, which has a populationof 93 million. China Biologic currently produces about 200 tons ofplasma-based products per year and has 700 tons of annual production capacity.China Biologic had revenues of $32.4 million and net income of $8.2 million in2007. Qianfeng is one of the largest plasma-based biopharmaceutical companiesin China and the only operating manufacturer in Guizhou Province, which has apopulation of 39 million. Qianfeng produces about 250 tons of products peryear with annual production capacity of 400 tons. China Biologic believesthat Qianfeng currently has approximately 9.5% market share in China, ascompared to the Company's 6.1%, which would result in a combined market shareof approximately 15.6%. The top 6 largest plasma-based biopharmaceuticalcompanies in China including Qianfeng have a total market share ofapproximately 50%.
Qianfeng is in compliance with Good Manufacturing Practices ("GMP")standards, and has been approved by the PRC's State Food and DrugAdministration ("SFDA") to produce six types of plasma-based productsincluding Human Albumin, Human Immunoglobulin, Human IntravenousImmunoglobulin, Human Hepatitis B Immunoglobulin, Human Tetanus Immunoglobulinand Human Rabies Immune Globulin.
Qianfeng owns 7 plasma collection stations in Guizhou Province, of which 6are currently in operation and collecting approximately 250 tons of plasmasupply per year. Upon completion of the acquisition, China Biologic plans tore-open the additional plasma collection station in 2009. China Biologicintends to employ more advanced collection techniques at these stations,improving the Company's yields and generating additional plasma supply. ChinaBiologic chose to target Guizhou Province, which has historically produced thehighest volumes of plasma collection in China, due to a higher proportion ofits population willing to engage in the collection process. Guizhou Provincehas a total of 19 plasma collection stations in operation, collectingapproximately 1200 tons of plasma supply every year.
"The strict regulatory environment has limited the number of plasma-basedproducers in the industry and rising demand for improved healthcare hascreated a shortage of plasma-based products," Mr. Zhao further commented."Therefore, through the acquisition of Qianfeng, we expect that we willincrease our market share in China and enhance our competitiveness."
The Company will acquire the 90% interest in Dalin for approximately $28.5million, to be paid in four installments. The Company ended the June quarterwith approximately $8.8 million of cash and no debt. Management believes aportion of the acquisition price will be paid for via an anticipated bank loan.
About China Biologic Products, Inc.
Through its indirect majority-owned subsidiary Shandong Taibang BiologicalProducts Co. Ltd. ("Shandong Taibang"), China Biologic Products, Inc., aDelaware corporation (the "Company"), is principally engaged in the research,development, production and manufacturing and sale of plasma-basedbiopharmaceutical products to hospitals and other health care facilities inChina. The Company's human albumin products are mainly used to increase bloodvolume and its immunoglobulin products are used for the treatment andprevention of diseases.
Safe Harbor Statement
This release may contain certain "forward-looking statements" relating tothe business of China Biologic Products, Inc. and its subsidiary companies.All statements, other than statements of historical fact included herein are"forward-looking statements," including statements regarding: the significanceof the acquisition of Chongqing Dalin Biologic Technologies Co., Ltd. and itssubsidiary Qianfeng Biological Products Co. Ltd. on the Company's ability toincrease its overall production capacity, revenues and market share; theability of the Company to achieve its commercial objectives; the businessstrategy, plans and objectives of the Company and its subsidiaries; and anyother statements of non-historical information. These forward-lookingstatements are often identified by the use of forward-looking terminology suchas "believes," "expects" or similar expressions, involve known and unknownrisks and uncertainties. Although the Company believes that the expectationsreflected in these forward-looking statements are reasonable, they do involveassumptions, risks and uncertainties, and these expectations may prove to beincorrect. Investors should not place undue reliance on these forward-lookingstatements, which speak only as of the date of this press release. TheCompany's actual results could differ materially from those anticipated inthese forward-looking statements as a result of a variety of factors,including those discussed in the Company's periodic reports that are filedwith the Securities and Exchange Commission and available on its website(http://www.sec.gov). All forward-looking statements attributable to theCompany or persons acting on its behalf are expressly qualified in theirentirety by these factors. Other than as required under the securities laws,the Company does not assume a duty to update these forward-looking statements.Expected benefits of the acquisition include: -- Increased plasma collection to almost double current levels and significant increase in production capacity -- Significant increase in commercial scale and expansion into Guizhou Province -- Opportunity for synergies through leveraging China Biologic's existing sales and administrative infrastructure, as well as consolidating research and development efforts -- Opportunity to increase prices for Qianfeng's product line through China Biologic's strong brand name and higher value product positioning -- Use of Qianfeng's technological know-how to achieve higher yields per unit of plasma input and raise overall efficiencies
SOURCE China Biologic Products, Inc.
