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Biostar Pharmaceuticals, Inc. Announces 2012 Third Quarter Financial Results

 Biostar Pharmaceuticals, Inc. Announces 2012 Third Quarter Financial Results

2012 Third Quarter Net Sales Increase by 22% vs. 2012 Second Quarter

Net Sales to Continue to Gradually Recover in the Coming Months

PR Newswire

XIANYANG, China, Nov. 19, 2012

XIANYANG, China, Nov. 19, 2012 /PRNewswire/ -- Biostar Pharmaceuticals, Inc.
(NASDAQ GM: BSPM) ("Biostar" or "the Company"), a PRC-based manufacturer and
marketer of pharmaceutical and health supplement products in China for a
variety of diseases and conditions, today announced its financial results for
the third quarter and nine months ended September 30, 2012. Biostar's
overall results continued to be affected by the temporary PRC government
imposed suspension of gel capsule sales earlier this year.

Third Quarter 2012 vs. Third Quarter 2011^*

  oNet sales decreased to $10.0 million from $24.8 million;
  oGross margin decreased to 52.6% as compared to 69.9%;
  oLoss from operations was $5.8 million, as compared to income from
    operations of $5.9 million; and,
  oThe net loss was $5.9 million, or $0.63 per diluted share, as compared to
    net income of $4.5 million, or $0.47 per diluted share.

Nine Months 2012 vs. Nine Months 2011^*

  oNet sales decreased to $34.0 million from $66.0 million;
  oGross margin decreased to 60.7% as compared to 71.1%;
  oLoss from operations was $14.8 million, as compared to income from
    operations of $15.6 million; and,
  oThe net loss was $13.3 million, or $1.41 per diluted share, as compared to
    net income of $11.3 million, or $1.22 per diluted share.

*Per share amounts for both periods reflect the reverse split effective April
3, 2012.

Net Sales by Product/Facility

                             Xin Aoxing product                                            Hospital products
$ in millions                ^(1)                 All other Xianyang   Weinan Facility     ^(3)
                                                  Facility products
For the nine month period    (at Xianyang         ^(1)                 products ^(2)       (at Xianyang
ended 9/30                   Facility)                                                     Facility)
                             2012  2011  %change 2012  2011  %change 2012  2011 %change 2012 2011 %change
NetSales $16.3 $44.5 (63.4%)  $11.1 $21.5 (48.2%)  $5.3  -    100%     $1.3 -    100%
% of Total Net Sales         47.9% 67.5%          32.8% 32.5%          15.5% -             3.8% -

(1) Biostar's products are manufactured at two facilities: Xianyang and
Weinan. Xin Aoxing, the Company's flagship product, is manufactured at the
Xianyang facility.
(2) There were no sales reported in the third quarter and nine months of 2011
because the Weinan facility was acquired in October 2011.
(3) Products manufactured at the Xianyang facility and exclusively sold to
Xijing Hospital, as per an agreement signed in September 2012.

Ronghua Wang, Biostar's Chief Executive Officer and Chairman commented,
"Although as expected, our 2012 third quarter overall results were below those
of the 2011 third quarter, our business has shown signs of recovery and net
sales for the current quarter increased by approximately $1.8 million, or 22%
as compared to the 2012 second quarter.

"Following a temporary industry-wide suspension of gel capsules sales earlier
this year by the State Food and Drug Administration (SFDA), on July 30, 2012,
we received the "green-light" approval from Xianyang SFDA authorities to
restart sales of gel capsule products. In anticipation of the receipt of the
approval, our management team met to design, develop and implement a plan to
accelerate the recovery of our business. As a result, we: 

  oRamped up production by adding a second shift;
  oInitiated an aggressive advertising campaign to rebuild consumer and
    physician confidence in our products and established incentives for the
    sales force in all distribution offices nationwide;
  oIn early September, we added a new dimension to our sales model by
    establishing a Business-to-Customer (B2C) call center, which is currently
    operational; and,
  oIncreased efforts to complete several experimental tests for Xijing
    Hospital, which resulted in the signing of two one-year contracts valued
    at approximately $3.6 million and $3.0 million, respectively, to
    manufacture a total of eight drugs specifically for the needs of Xijing
    Hospital."

Mr. Wang continued, "Net sales for the 2012 third quarter and nine month
periods of our flagship gel capsule product Xin Aoxing substantially decreased
as did net sales for all other gel capsule products. However, that was
partially offset by:

1.Net sales of approximately $1.3 million in 2012 third quarter resulting
    from shipments to Xijing Hospital.
2.Net sales from our Weinan facility which accounted for approximately $2.0
    million or 19.7% and approximately $5.3 million or 15.5% of sales for the
    2012 third quarter and nine month period, respectively. The Weinan
    facility was acquired during the fourth quarter of 2011 hence there were
    no sales recorded in the 2011 periods.

"Gross margin for the 2012 third quarter and nine month periods declined
mainly due to substantially lower net sales for Xin Aoxing, which historically
has been our highest margin product. Also our gross margin for both periods
was negatively affected by lower selling prices due to fierce competition and
by the PRC government's essential drug list price control policy.

"As a percentage of net sales, 2012 third quarter selling expenses and
general expenses increased to approximately 60% and 26%, respectively as
compared to approximately 42% and 4%, respectively, in the same period of
2011, mainly due to lower sales. Similarly, selling expenses and general
expenses as percentage of net sales for the 2012 nine month period, increased
as compared to the same period of 2011. R&D expenses for the 2012 third
quarter and nine months accounted for 8% and 7% of total net sales,
respectively. Of note, in 2012 we reclassified long-term deposits into
current assets and amortized R&D quarterly; we did not incur quarterly R&D
expenses in 2011, as R&D expense was recorded as a long-term deposit at
December 31, 2011. Additionally, in the 2012 third quarter, we paid the
local government a one-time, non-appealable administrative penalty of
approximately $1.6 million related to the gel capsule incident."

Biostar's CFO, Zack Pan noted, "Our balance sheet remains strong. Total
current assets at September 30, 2012 were $48.6 million vs. total current
liabilities of $4.2 million for a 12:1 current ratio. We continue to fund our
business from our free cash flow. As of September 30, 2012, we had cash and
cash equivalents of approximately $12.1 million compared with approximately
$17 million at 2011 year-end."

Mr. Wang concluded, "Despite the temporary setback, our business remains
solid. We are confident that as a result of our efforts, our sales will
continue to gradually recover in the coming months. Based on net sales
recorded for the month of October and first half of November, and we expect
2012 fourth quarter sales to be significantly higher than 2012 third quarter."

Conference Call

Biostar's Chairman and CEO, Ronghua Wang and CFO, Zack Pan will host a
conference call on Monday, November 19, 2012 at 9:30 am ET / 10:30 pm China
time to discuss these results as well as recent corporate developments.

Live conference call details

Interested parties may participate in the call by dialing (480) 629-9712.
Please call in 10 minutes before the conference is scheduled to begin and ask
for the Biostar call or use pass code 4576907. After opening remarks, there
will be a question and answer period. Questions may be asked during the live
call, or alternatively, you may e-mail questions in advance to
lcati@equityny.com.

Webcast

The conference call will also be broadcast live over the Internet. To listen
to the webcast, please go to http://public.viavid.com/index.php?id=102669 or
visit Biostar's website http://www.biostarpharmaceuticals.com and then to the
Event Calendar page where the conference call is posted. Please go to the
website at least 15 minutes early to register, and download and install any
necessary audio software. If you are unable to listen live, the conference
call will be archived and can be accessed for approximately 90 days. We
suggest listeners use Microsoft Internet Explorer as their web browser.

Replay

A replay will be available until 11:59 pm E.T. on November 26, 2012. To
listen, please call (858) 384-5517 and use pass code 4576907.

About Biostar Pharmaceuticals, Inc.

Biostar Pharmaceuticals, Inc., through its wholly owned subsidiary and
controlled affiliate in China, develops, manufactures and markets
pharmaceutical and health supplement products for a variety of diseases and
conditions. The Company's most popular product is its Xin Aoxing Oleanolic
Acid Capsule, an over-the-counter ("OTC") medicine for chronic hepatitis B, a
disease affecting approximately 10% of the Chinese population. For more
information please visit: http://www.biostarpharmaceuticals.com.

Safe Harbor relating to the Forward-Looking Statements

Certain statements in this release concerning our future growth prospects are
forward-looking statements, within the meaning of Section 27A of the U.S.
Securities Act of 1933, as amended, and Section 21E of the U.S. Securities
Exchange Act of 1934, as amended, which involve a number of risks and
uncertainties that could cause actual results to differ materially from those
in such forward-looking statements. The company uses words and phrases such as
"guidance," "forecasted," "projects," "is expected," "remain confident,"
"will" and similar expressions to identify forward-looking statements in this
press release, including forward-looking statements. Undue reliance should not
be placed on forward-looking information. Forward-looking information is based
on current expectations, estimates and projections that involve a number of
risks, which could cause actual results to vary and in some instances to
differ materially from those anticipated by Biostar and described in the
forward-looking information contained in this news release. The risks and
uncertainties relating to these statements include, but are not limited to,
risks and uncertainties regarding the Company's ability to recover its sales
following the SFDA investigation in the 3^rd quarter of 2012 and for the year
ended, the Company's ability to integrate the recently acquired Shaanxi Weinan
product lines into the Company's current product line and current operations,
the state of consumer confidence and market demand or the Company's products,
success of our investments, risks and uncertainties regarding fluctuations in
earnings, our ability to sustain our previous levels of profitability
including on account of our ability to manage growth, intense competition,
wage increases in China, our ability to attract and retain highly skilled
professionals, time and cost overruns on fixed-price, fixed-time frame
contracts, client concentration, our ability to successfully complete and
integrate potential acquisitions, withdrawal of governmental fiscal
incentives, political instability and regional conflicts and legal
restrictions on raising capital or acquiring companies outside China.
Additional risks that could affect our future operating results are more fully
described in our United States Securities and Exchange Commission filings
including our most recent Annual Report on Form 10-K for the year ended
December 31, 2011, and other subsequent filings. These filings are available
at www.sec.gov. We may, from time to time, make additional written and oral
forward-looking statements, including statements contained in our filings with
the Securities and Exchange Commission and our reports to shareholders. We do
not undertake to update any forward-looking statements that may be made from
time to time by or on our behalf. 

For more information contact:
BioStar Pharmaceuticals, Inc. The Equity Group, Inc.
Zack Pan, CFO                 Lena Cati
Tel: 405-996-8829             Tel: 212 836-9611
Email: zpan@aoxing-group.com  Email: lcati@equityny.com

~FINANCIAL TABLES FOLLOW~



BIOSTAR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


                                                             Three Months Ended            Nine Months Ended
                                                             September 30,                 September 30,
                                                             2012            2011          2012             2011
Sales, net                                                   $ 9,969,375     $ 24,779,420  $ 34,028,164     $ 65,980,481
Costofsales   4,729,894       7,465,966     13,379,287       19,352,264
Gross profit                                                   5,239,481       17,313,454    20,648,877       46,628,217
Operating expenses:
Selling expenses                                            6,009,227       10,391,335    18,498,671       26,908,239
General and administrative expenses                         2,640,240       983,778       5,124,789        4,103,154
Credits for negative publicity                              -               -             7,904,513        -
Administrative penalty                                      1,596,174       -             1,596,174        -
Research and development expenses                           789,702         -             2,370,605        -
Total operating expenses                            11,035,343      11,375,113    35,494,752       31,011,393
(Loss) Income from operations                                  (5,795,862)     5,938,341     (14,845,875)     15,616,824
Other income (expense)
 Interest income                                              55,642          127,423       247,342          271,737
 Interest expense                                             (1,059)         (2,984)       (33,193)         (10,371)
 Other income                                                 152             273           598              821
Total other income (expenses)                                  54,735          124,712       214,747          262,187
(Loss) Income before income taxes                              (5,741,127)     6,063,053     (14,631,128)     15,879,011
Income tax expenses (benefits)                                 198,508         1,599,316     (1,376,356)      4,539,127
Net (loss) income                                              (5,939,635)     4,463,737     (13,254,772)     11,339,884
Other comprehensive income
Foreign currency translation adjustment                       (117,289)       640,119       180,992          1,733,586
Total comprehensive (loss) income                            $ (6,056,924)   $ 5,103,856   $ (13,073,780)   $ 13,073,470
(Loss) Earnings per share, on net income
 Basic                                                      $ (0.63)        $ 0.47        $ (1.41)         $ 1.22
 Diluted                                                    $ (0.63)        $ 0.47        $ (1.41)         $ 1.22
Weighted average number of common
stock outstanding
 Basic                                                        9,490,506       9,398,876     9,430,532        9,264,104
 Diluted                                                      9,490,506       9,398,876     9,430,532        9,264,104





BIOSTAR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                                    September30,   December 31,
                                                                                    2012            2011
                                                                                    (Unaudited)
ASSETS
Current Assets
 Cash and cash equivalents                                                         $  12,119,565   $ 16,971,789
 Accounts receivable                                                                  28,815,263     35,033,650
 Inventories                                                                          985,274        1,373,459
 Tax prepaid                                                                          451,121        -
 Prepaid expenses and other receivables                                               5,390,773      7,129,911
 Prepaid research and development expenses                                            789,390        -
 Total Current Assets                                                              48,551,386     60,508,809
Deposits                                                                               -              3,148,466
Deferred tax assets                                                                    3,328,228      1,617,688
Property and equipment, net                                                            7,038,982      7,379,982
Intangible assets, net                                                                 9,390,806      10,406,931
 Total Assets                                                                   $  68,309,402   $ 83,061,876
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts and other payables                                                         $  3,644,084    $ 3,334,418
Short-term bank loans                                                                  -              787,116
Value-added tax payable                                                                451,088        895,487
Income tax payable                                                                     92,677         1,643,155
 Total Current Liabilities                                                         4,187,849      6,660,176
Commitmentandcontingencies
Stockholders' Equity
 Common stock, $0.001 par value, 100,000,000 shares authorized,
 9,993,549 and 9,400,216 shares issued and outstanding as of                      9,993          9,400
 September 30, 2012 and December 31, 2011*
 Additional paid-in capital                                                           23,238,700     22,445,660
 Statutory reserve                                                                    6,490,600      6,490,600
 Retained earnings                                                                    30,219,062     43,473,834
 Accumulated other comprehensive income                                               4,163,198      3,982,206
 Total Stockholders' Equity                                                        64,121,553     76,401,700
 Total Liabilities and Stockholders' Equity                                     $  68,309,402   $ 83,061,876
*Number of shares issued and outstanding retroactively reflects reverse stock split effective on April 3, 2012



SOURCE Biostar Pharmaceuticals, Inc.

Website: http://www.biostarpharmaceuticals.com
 
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