BioPharm second quarter 2010 revenues rise 26%

BioPharm Asia, Inc. (OTCBB: BFAR), a producer, distributor and retailer of medical products in China, today announced its financial results for the second quarter ended June 30, 2010.

Second Quarter 2010 Financial Highlights:

• Revenues in the second quarter of 2010 rose to $25.2 million, an increase of $5.2 million, or 26%, over last year's comparable period revenue of $19.9 million.
• Gross profit was $8.2 million, an increase of $2.3 million or 38.1%, as compared to the $5.9 million for the same period in 2009.
• Net income increased to $4.3 million, compared to $2.7 million in the second quarter of 2009.
• Fully diluted earnings per share for the quarter increased to $0.09 from $0.05 a year earlier.

Second Quarter 2010 BioPharm Asia Financial Results

The Company's revenue increase of $5.2 million during the second quarter of 2010 over the comparable 2009 period resulted largely from the $5.9 million of increased revenue from the Company's Retail segment, currently consisting of 360 retail drug stores. This was slightly offset by a decrease of approximately $1 million in our Distribution segment as more of its products were distributed to the Company's retail stores, whereas a year ago nearly all were distributed to stores owned by third parties.

The revenue for six months ended June 30, 2010 was $57.3 million, an increase of $14.7 million from the comparable 2009 period. This increase was primarily due to the Company's Retail segment, which recorded $15 million of increased revenue, and approximately $4.6 million of increased revenue from the Drug manufacturing segment. That was partially offset by a decrease of approximately $4 million in Distribution, reflecting the product realignment mentioned above.

Gross profit for three months ended June 30, 2010 was $8.2 million, up 38.1% from $5.9 million in the second quarter of 2009. Gross margin as a percentage of revenue performed well, increasing to 32.6% for the second quarter 2010 from 29.8% for the same period in 2009. This increase was primarily due to the increased mix of revenue from the Retail segment, which has a higher gross profit margin than our other businesses.

Operating expenses for the second quarter of 2010 totaled $2.7 million, up from $2.0 million in the same period in 2009. For the six months ended June 30, 2010, operating expense was $6.4 million, a $2.7 million increase from $4 million in the last year's six month results. This increase resulted primarily from additional expenses related to the retail drug stores, reflecting the cost structure associated with retailing.

Taxes in the second quarter reflect a tax temporary incentive to assist retailers and resulted in a decreased effective rate of 20%.

As a result of the improved revenue, gross margin and lower tax rate, net income for the second quarter 2010 was $4.3 million, or $0.09 per share, up 56.9% from $2.7 million or $0.05 per share in the same period in 2009. For the six months ended June 30, 2010, the net income increased 53.7% to $9.1 million, or $0.18 per share from $5.9 million, or $0.12 per share in the comparable 2009 period.

BioPharm's newly appointed Chief Executive Officer, Mr. Shengqun Li, said, "I am glad to report that BioPharm Asia has continued its outstanding results in the second quarter of 2010. We look forward to seeing further strong performance, especially from our distribution and retail segments, for the upcoming quarters. Moreover, the Company plans to continue its expansion plans in various areas, including in the health care provider industry. BioPharm Asia is well positioned to benefit from China's rapid growth and an increasing focus on health care and healthy living."

As of June 30, 2010, the Company's cash, and cash equivalents were $15.3 million as compared to $11.1 million as of December 31, 2009.