China Biologic Products Amends Agreement to Acquire 90% Controlling Interest in Chongqing Dalin Biologic Technologies Co., Ltd.

Friday, December 19, 2008 General News
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TAIAN CITY, China, Dec. 18 China BiologicProducts, Inc. (OTC Bulletin Board: CBPO) ("China Biologic" or the "Company"),one of the leading plasma-based pharmaceutical companies in the People'sRepublic of China ("PRC"), today announced that on December 12, 2008, theCompany further amended its agreement (the "Dalin Agreement") relating to theacquisition (the "Dalin Acquisition") of a 90% controlling interest inChongqing Dalin Biologic Technologies Co., Ltd. ("Dalin") . Dalin owns 54% ofthe equity interests in Qianfeng Biological Products Co., Ltd. ("Qianfeng"),one of the largest plasma-based biopharmaceutical companies in China, locatedin Guiyang, Guizhou Province.

The acquisition will transform the Company into the largestnon-state-owned producer of plasma-based biopharmaceutical products in China,in terms of market share and production capacity. Qianfeng is one of thelargest plasma-based biopharmaceutical companies in China and the onlyoperating manufacturer in Guizhou Province, which has a population of 39million. Qianfeng produces about 250 tons of products per year with annualproduction capacity of 400 tons. Qianfeng also owns 7 plasma collectionstations in Guizhou, of which 6 are currently in operation. China Biologicbelieves that Qianfeng currently has an approximately 9.5% market share inChina, as compared to the Company's 6.1%, which would result in a combinedmarket share of approximately 15.6%. The top 6 largest plasma-basedbiopharmaceutical companies in China, including Qianfeng, have a total marketshare of approximately 50%.

As part of its due diligence investigation into Dalin and Qianfeng, theCompany discovered that the indirect interest in Qianfeng that would beacquired under the Dalin Agreement may be diluted. The local Administrationof Industry and Commerce ("AIC") records show Dalin as a 54% shareholder ofQianfeng. However, Qianfeng issued shares to certain investors pursuant to acapital increase agreement, dated May 2007. Qianfeng received theconsideration for those shares, but the increase in registered capital andissuance of shares has not yet been registered with AIC due to a lawsuit thatwas brought by a dissenting shareholder who claims to have a right of firstrefusal with respect to the new share issuance. If the capital increase isregistered, Dalin will own about 43.3% in Qianfeng upon completion of theDalin Acquisition. The lawsuit brought by the dissenting shareholder wasdecided against the dissenting shareholder, who has indicated that he wouldappeal. Therefore, Dalin's interests in Qianfeng could be diluted to as lowas 41.3% as the result of the issuance of additional equity to the dissentingstockholder, if the dissenting shareholder appeals and prevails. Even if theindirect equity interest that China Biologic obtains through the proposedDalin Acquisition is diluted down to 41.3%, China Biologic would be able toretain control over Qianfeng as a result of proposed agreements regardingChina Biologic's ability to appoint four board members to Qianfeng's board.The Company expects that this dispute will not impact its ability to completethe acquisition.

"We are pleased to be moving forward with this very strategicacquisition," said Mr. Chao Ming Zhao, CEO of China Biologic Products. "Wehave explored the implications of Dalin's potentially lower ownership inQianfeng, and we believe that by controlling the majority of the Qianfeng'sBoard of Directors, we will be able to achieve the desired operationalsynergies. We made the second installment payment out of cash on hand, and wehave secured a bank loan to provide working capital in the interim, as weexplore sources of more permanent capital for the final installment due March31, 2009."

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( ). 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.Material changes to the Dalin Agreement are as follows: 1) As a result of delays in the completion of the Company's due diligence investigation of Dalin and Qianfeng, Dalin's portion of the net income generated by Qianfeng for the period of October 1, 2008 to December 31, 2008 will be retained by the individual selling shareholders of Dalin. Previously, those funds would have been retained by Dalin, 90% of which would have benefited China Biologic, who will become the parent company of Dalin upon the consummation of the Dalin Acquisition. 2) The amendment to the Dalin Agreement extends the deadline for the payment of the third installment of the purchase price to March 31, 2009, from the previously agreed upon date of December 31, 2008. 3) The amendment to the Dalin Agreement requires the Company to pay the second installment in the amount of RMB 83 million within three business days of the signing of the amendment and receipt of payment instruction from Dalin instead of within ten business days of the completion of the Company's due diligence investigation into Dalin and Qianfeng. The Company has made this payment according to the terms of this amendment. 4) For tax and administrative purposes, the Company's subsidiary, Logic Holding (Hong Kong) Limited, will now be the legal acquirer of the 90% interest in Dalin, rather than the Company's other wholly-owned BVI subsidiary, Logic Express Limited. 5) Qianfeng will maintain a seven member board of directors of which four will be designated by China Biologic. 6) Logic Express agreed to pledge its 82.76% ownership interest in its subsidiary Shandong Taibang Biological Products Co. Ltd. as collateral security for its obligation to pay the third installment.

SOURCE China Biologic Products, Inc.

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