China Pharmaceuticals, Inc. Announces Results for First Quarter 2011

XI'AN, China--(BUSINESS WIRE)--China Pharmaceuticals, Inc. (OTCBB: CFMI) ("China Pharmaceuticals, Inc." or the "Company"), one of China's leading manufacturers and distributors of prescription and over-the-counter pharmaceuticals, today announced its financial results for the three months ended March 31, 2011. The Company's quarterly report on Form 10-Q was filed with the United States Securities and Exchange Commission on May 20, 2011.

“We continue to be very pleased with our operating results. We are confident that our exceptionally strong working capital position will provide us with the flexibility to both continue our current organic growth as well as capitalize on potential acquisition opportunities that may be available in 2011”

The Company recorded $7,687,217 in total revenue and net income of $2,888,013 for the quarter ended March 31, 2011, representing increases of 9% and 86.6%, respectively, as compared to the same quarter in 2010. “We continue to be very pleased with our operating results. We are confident that our exceptionally strong working capital position will provide us with the flexibility to both continue our current organic growth as well as capitalize on potential acquisition opportunities that may be available in 2011,” stated Mr. Guozhu Wang, Chairman and Chief Executive Officer of China Pharmaceuticals, Inc.

First Quarter ended March 31, 2011 highlights versus quarter ended March 31, 2010:

• Total revenue for the quarter was $7,687,217, an increase of 9%
• Net income was $2,888,013, an increase of 86.6%
• Net Working Capital increased to $24,059,944, a 17% increase from December 31, 2010
• Shareholders' Equity grew to $45,642,087

Sales and Operations

Total revenue for the first quarter ended March 31, 2011 increased by 9% to $7,687,217 from $7,053,199 for the first quarter ended March 31, 2010. Cost of goods sold for the first quarter ended March 31, 2011 increased by 19% to $3,367,530 from $2,820,178 for the first quarter ended March 31, 2010. Gross profit for the first quarter ended March 31, 2011 increased by 2% to $4,319,687, as compared to $4,233,021 for the first quarter ended March 31, 2010. Operating income for the first quarter ended March 31, 2011 increased by 57.8% to $3,344,322 from $2,118,935 for the first quarter ended March 31, 2010. Net income for the first quarter ended March 31, 2011 increased to $2,888,013, an 86.6% increase as compared to net income of $1,547,876 for the first quarter ended March 31, 2010.

Financial Condition

As of March 31, 2011, the Company had $9,509,111 in cash as compared to $4,729,149 at the end of December 31, 2010, an increase of 100%. Net cash provided by operating activities was $4,712,966 for the three months ended March 31, 2011, an increase of $3,371,905 or 251% from $1,341,061 cash provided for the same period of 2010. Working capital improved to $24,059,944, an increase of 17% from $20,556,811 as of December 31, 2010. Long-term debt remains at Nil. Shareholders' equity as of March 31, 2011 rose to $45,642,087 as compared to $42,532,875 at the end of December 31, 2010, representing a 7.3% increase.

About China Pharmaceuticals, Inc.

China Pharmaceuticals, Inc. has its headquarters in the industrial city of Xi’an, Shaanxi Province, China. The Company identifies, discovers, develops, manufactures and distributes both prescription and over-the-counter, including both conventional and traditional Chinese Medicines, pharmaceutical products for the treatment of some of the most common ailments and diseases. The Company currently manufactures 85 pharmaceutical products in the form of capsules, oral solutions, tablets, granules, syrups, medicinal teas, tincture and solutions for injection. The Company has a trained marketing team and maintains sales offices or agents in approximately 30 provinces throughout China. The sales network covers approximately 146 cities and is staffed by approximately 168 sales representatives with an average per representative of a decade of pharmaceuticals sales experience. The Company operates 2 modern hi-tech manufacturing facilities, with 486 full-time, salaried employees, based in Hanzhong and the Xi’an Jinghe Industrial Zone, both in Shaanxi Province. Additional information about the Company is available at www.chinapharmaceuticalsinc.com

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the company's ability to raise additional capital to finance the company's activities; the effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the share exchange; the future trading of the common stock of the company; the ability of the company to operate as a public company; the period of time for which its current liquidity will enable the company to fund its operations; the company's ability to protect its proprietary information; general economic and business conditions; the volatility of the company's operating results and financial condition; the company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the company's filings with the Securities and Exchange Commission and available on its website at http://www.sec.gov. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.