Monday, January 10, 2011 - Before Market Open

New Green Baron “Stock Alert”

Bohai Pharmaceuticals Group, Inc.

(BB: BOPH - $1.65 per share)

www.BohaiPharma.com

Common Shares Outstanding: 16,977,221

Market Cap: $28 Million

52-Week High: $2.48 on Sept. 23, 2010

52-Week Low: .80 on Aug. 17, 2010

Average Price: $1.98 (50-day) $2.05 (200-day)

Average Volume: 17,200 (50-day) 17,121 (200-day)

Recent Book Value of $3.28 per share, Earnings Estimates of .50 for 2011 and Growth Forecasts at Over 20% All Point to Tremendous Value of BOPH

Bohai Pharmaceuticals Board Adopts Resolution to Apply for Listing on Senior U.S. Exchange

News Issued After Close Friday, January 7 on BOPH:

Murphy Analytics Releases Updated Research Report on Bohai Pharmaceuticals - New Report Outlines Recent Positive Developments and Raises 12-Month Price Target to $7.50

Click Here for Six-Month Chart on BOPH

    Overview Video of BOPH

It is rare that The Green Baron Report uncovers a stock that trades at such a low price to earnings multiple and still enjoys high growth numbers.  By every measure we calculate, today’s Green Baron selection could be the most undervalued stock we have ever seen.  Most of the stocks we follow have strong earnings potential that will not be seen for years, but this stock has it NOW!

The Green Baron Report has selected Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH) as our newest Green Baron “Stock Alert”, and we strongly suggest members accumulate the stock as close to our profile price as possible.  Results compiled from the most recent trade prior to dissemination of this report to the subsequent high will be closely monitored at www.thegreenbaron.com and through email updates to members.  We have very aggressive price projections for Bohai Pharmaceuticals Group and believe the stock has huge upside potential based on several positive fundamental factors.

TRADER’S NOTES:  BOPH is a fully registered and reporting company traded on the OTCBB and OTCQB.  The Company intends to list on the NASDAQ or AMEX when it meets all applicable listing requirements.  BOPH went public last year and traded between $2.05 and $2.45 from mid September through mid-December 2010.  Friday’s closing price of $1.65 is the lowest close since August of 2010 when Bohai was just starting to officially trade as a public company.  BOPH is represented by numerous market makers that maintain a tight and orderly spread.

Bohai currently produces 15 traditional Chinese medicines (knows as TCM) pharmaceutical products, all derived from herbal and organic sources, including both prescription and non-prescription over-the-counter (OTC) medicines. These medicines address a number of areas of health and wellness, including respiration, rheumatism, digestion, cardiovascular/heart health, cerebrovascular/brain health, gynecology, injury healing, general health supplements, flu, antiviral applications and antibiotics. In addition to the 15 medicines currently in production, Bohai holds the rights to produce 14 other herb-based pharmaceutical formulations and may commence manufacturing and distribution of these additional products when business conditions are advantageous.

Bohai’s strategy is to leverage the protected status of a number of its pharmaceutical products that grant Bohai exclusive or near-exclusive manufacturing and distribution rights in China to aggressively increase market penetration throughout the world’s most populous nation. By utilizing its distribution platform, which includes approximately 300 sales representatives in 20 offices throughout China, and by utilizing mass media and other marketing methods to build awareness of its brand, Bohai will seek to grow its revenues and earnings.

The Green Baron Report has identified the following reasons why we believe Bohai Pharmaceuticals Group is now significantly undervalued:

·     Earnings – The most recent quarterly results announced in November 2010 showed net revenues of $17.0 million, an increase of 22% from $14.0 million in 2009, gross profit of $13.6 million compared to $11.7 million in 2009 and net income of $3.0 million, an increase of 59% from $1.9 million in 2009.  Fully diluted EPS was .15 for that quarter.  If BOPH earned just .60 per share over this year, BOPH would be trading at under three times earnings based on Friday’s close.

·     New Research Report Forecast $7.50 Price Target – An updated research report from Murphy Analytics released on Friday, January 7 after the close raised its 12-month price target from $6.45 to $7.50 due to a variety of developments.  If this realistic price target is met in 12 months, investors would enjoy a return of over 350% in one year based on Friday’s closing price of $1.65.

·     Product Portfolio - BOPH currently sells 15 products and has the rights to produce 28 additional medicines sold by prescription (Rx) and over-the-counter (OTC).  As evidenced by significant revenue growth, BOPH products are differentiated by the focus on quality, purity and effectiveness.  Coupled with a robust sales network and strong advertising presence, this focus on production quality provides BOPH products with real brand presence.

·     Growth – BOPH estimates that only 10% of 11,000 Grade AA Hospitals currently use BOPH products.  Also, Bohai announced December 14, 2010 that it would acquire 14 State Food and Drug Approved (SFDA) traditional Chinese medicines.  Bohai's 14 newly acquired medicines are in addition to the 29 traditional Chinese medicine products that the Company is authorized to produce, of which 15 are currently in production. 

·     Little to No Negative Impact from Government Price Cap Policy - In December 2010, in an attempt to keep the prices of certain medicines affordable to China’s 900 million strong rural population, the PRC government enacted certain pricing caps targeted in part at foreign generic medicines. Of the 15 products currently manufactured by BOPH, only one medicine, accounting for approximately 1% of total revenue, is affected by these caps. 

·     Chinese Government Health Insurance – The Chinese government has “promised universal access to basic health insurance, introduction of an essential drug system, improved primary health care facilities, equitable access to basic public health services and pilot reform of state-run hospitals.”  They hope to have 90% coverage by 2011 and target its 900 million rural Chinese. 

·     Huge Opportunity - The government projects its expansion will cost $124 billion over three years. With the PRC government paying for up to 90% of the certain pharmaceutical products and 100% of products on the Essential Drug List, there will be a significant increase in the size of the overall market opportunity for BOPH.

The Green Baron Report believes BOPH will begin to trade at a normal industry P/E of 15 times earnings over the next year.  As more quarterly reports are issued, it should confirm to both retail and institutional investors that Bohai is a tremendous growth story with a low valuation to its peers.  The Company’s next quarterly report is expected in February, and we believe BOPH stock could be at least double the current price when these results are announced.  We completely agree with analyst Patrick Murphy’s 12-month price target of $7.50 for BOPH, and believe members should grab whatever you can near our profile price.

About Bohai Pharmaceuticals Group, Inc.

Based in the city of Yantai, Shandong Province, China, Bohai Pharmaceuticals Group, Inc. is engaged in the production, manufacturing and distribution of herbal pharmaceuticals based on Traditional Chinese Medicine in China. Bohai's medicines address common health problems such as rheumatoid arthritis, viral infections, gynecological diseases, cardio vascular issues and respiratory diseases.  Bohai's products are sold either by prescription through hospitals or over-the-counter through local pharmacies and retail drug store chains. Bohai has approximately 600 employees, including approximately 300 sales representatives, operating from 20 offices throughout China. Bohai's lead products, Tongbi Capsules and Tablets and Lung Nourishing Cream, are eligible for reimbursement under China's National Medical Insurance Program.

Bohai’s Products

Bohai’s medicines are intended to address rheumatoid arthritis, viral infections, gynecological diseases, cardiovascular issues and respiratory diseases.  The Company obtained Drug Approval Numbers for 29 varieties of traditional Chinese herbal medicines in 2004 and currently produces 15 varieties of approved traditional Chinese herbal medicines in seven delivery systems: tablets, granules, capsules, syrup, concentrated powder, tincture and medicinal wine.  Of these 15 products 7 are prescription drugs and 8 are over-the-counter, or OTC, products.  In a significant development, on December 1, 2009, Bohai’s lead products, Tongbi Capsules and Tablets and Lung Nourishing Cream, became eligible for reimbursement under China’s National Medical Insurance Program.

Operations and Facilities

Although TCM is thousands of years old, Bohai believes that its product manufacturing and procedures are the most modern and up-to-date available. Bohai’s operations are conducted in the city of Yantai in Shandong Province in a state-of-the-art 18,000 square-meter facility that meets or exceeds the latest Good Manufacturing and Quality Management Practice standards, referred to as “GMP” in China.

In March 2009, Bohai completed a GMP review which included examination of 225 items including development technology, production, quality assurance, quality control, material handling and engineering.  As a result of that review, the Company was re-certified for a new five-year period.  Bohai’s advanced and mechanized facilities utilize controlled, clean-room procedures with sophisticated water filtration and materials processing systems.  In annual operations, Bohai process 800 tons of herbal plants to extract, isolate and purify the compounds used in its medicines and health supplements. The manufacturing staff consists of approximately 200 production employees and approximately 20 quality control inspectors as of June 2010.

In total, Bohai has approximately 600 employees, including approximately 300 sales representatives, operating from 20 offices throughout China as of June 2010.  These employees are trained in all details of each product and are encouraged to develop strong ties with physicians, hospitals and pharmacies in their local areas.  More than 50% of our workforce is engaged in sales and distribution activities.

Recent Key Press Releases

Friday, January 7, 2011 - Murphy Analytics Releases Updated Research Report on Bohai Pharmaceuticals - New Report Outlines Recent Positive Developments and Raises 12-Month Price Target to $7.50 - YANTAI, China--(BUSINESS WIRE)-- Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH), a China-based pharmaceutical company engaged in the production, manufacturing and distribution of Traditional Chinese Medicine (TCM) in China, today announced the release of an in-depth research update by Patrick Murphy, CFA, principal of fee-based, independent research firm Murphy Analytics.

As part of his detailed analysis of the company, Mr. Murphy raises his 12-month price target on Bohai Pharmaceuticals to $7.50 per share.

“Through our recently expanded TCM portfolio and proactive sales initiatives, Bohai is addressing the demand of China’s rising middle class and elderly populations for pharmaceuticals and healthcare products, including TCM,” said Mr. Hongwei Qu, President and Chief Executive Officer of Bohai Pharmaceuticals. “This research report update provides investors with an in-depth analysis of Bohai’s particular strengths in the TCM market in China and delivers a comprehensive overview of our revenue and earnings potential as we seek to drive growth in 2011.”

In his updated report, Mr. Murphy states, “BOPH is delivering recurring revenue and earnings growth in the rapidly expanding TCM segment of the emerging Chinese healthcare market. The Company benefits from key protection status for its core products and very positive preliminary results on the launching of 5 new products, which bring the total number of manufactured medicines to 15 prescription and over the counter products. The Company has a strategy to capitalize on growth opportunities in urban and rural markets and seems to be well positioned to monetize these opportunities.”

The report details the significant growth projected in China’s pharmaceutical market, which benefits from a growing elderly population, a PRC government that is increasing government healthcare spending to $125 billion by 2011, and direct health care subsidies for urban and rural residents that cover up to 90% of the cost for certain pharmaceuticals and 100% of Essential Drug List products.

“Whether analyzing the trends in the general Chinese healthcare market, or solely within the segment known as Traditional Chinese Medicine (TCM), the near and long term trends seem highly favorable, with significant continued growth expected for the foreseeable future,” adds Mr. Murphy. “Based on the market opportunity before the Company and the results delivered to date, Murphy Analytics is raising the price target on BOPH from $6.45 to $7.50.”

The complete report is available in Acrobat format, free of charge: http://www.murphyanalytics.com/uploads/BOPH_Update

Tuesday, December 14, 2010 - Bohai Pharmaceuticals to Acquire 14 SFDA Approved Traditional Chinese Medicines - YANTAI, China (PRNewswire) - Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH), a China-based pharmaceutical company engaged in the production, manufacturing and distribution of Traditional Chinese Medicine (TCM), has entered into a binding agreement with Shandong Daxin Microbiology Pharmaceutical Industry Co., Ltd. to acquire the rights to 14 approved TCM medicines that were previously issued to Daxin by the Shandong Branch of the State Food and Drug Administration of China ("SFDA").  The aggregate purchase price is approximately $7,200,000 (CNY 48 million), of which approximately $3,000,000 (CNY 20 million) will be paid within 15 days from the execution of the agreement.  The remaining balance will be paid on or before January 31, 2011.

The product acquisitions expand Bohai's delivery platforms to include two new categories: powder and pellet formulations.  The Chinese government's Essential Drug List (EDL) for TCM, which was established in 2009 as part of China's healthcare reform, has the most product categories in these two areas.  Among the 14 medicines being acquired by Bohai, four are currently included on the EDL and an additional five medicines are included in the National Drug Reimbursement List (NRDL).  Additionally, 3 of the 14 are prescription medicines and 11 will be available for sale Over-the-Counter.  Inclusion on either the EDL or NRDL allows for up to 100% insurance coverage by the Chinese government.

"Bohai is excited to significantly expand our potential product offerings with the acquisition of these 14 products, which we believe offer great value to our shareholders," said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals Group. "The ongoing national health insurance reform promises to drive tremendous growth in the Chinese markets, particularly with respect to TCM and in rural areas, where over 900 million people reside.  Patient purchased drugs from the EDL will receive 100% government coverage, so ensuring Bohai expands patient options for medicines on this list will be a key component of our growth strategy.  Importantly, these new products will leverage our existing 300 person sales-force and help us gain additional TCM market-share in China."

Bohai's 14 newly acquired medicines are in addition to the 29 traditional Chinese medicine products that the Company is authorized to produce, of which 15 are currently in production. 

Friday, November 19, 2011 – Bohai Pharmaceuticals Announces Availability of Fiscal Q1 2011 Earnings Call Transcript - Bohai Pharmaceuticals Group, Inc., a China-based pharmaceutical company engaged in the production, manufacturing and distribution of Traditional Chinese Medicine (TCM) in China, today announced the availability of the transcript for its fiscal first quarter ended September 30, 2010 earnings conference call, held on November 15th.

During the conference call, Gene Hsiao, Bohai’s Chief Financial Officer, stated:

“As we move into the second and third quarters of Bohai’s 2011 fiscal year, we expect to increase marketing and advertising for our growing portfolio of TCM medicines. Although we will be monitoring the growth potential of the five new products we introduced in April and May of this year, we will continue to place a particular focus on our key revenue generating products: Lung Nourishing Cream, Tongbi Capsules and Tongbi Tablets. Not only are these products reimbursable through insurance in China, two of them are sheltered from competition in some way. Tongbi Capsules are a ‘protected’ medicine in China, meaning Bohai is the only manufacturer permitted to sell the product, and Lung Nourishing Cream was recently awarded a patent in June lasting 20 years.”

Throughout the conference call Bohai’s management team provided additional color on the Company’s growing portfolio of TCM products, its enhanced awareness initiatives for US investors and, most notably, full details surrounding its record revenue and earnings numbers for the fiscal first quarter ended September 30, 2010, which include:

·     Net Revenues of $17.0 million, an increase of 22% from $14.0 million in 2009

·     Gross profit of $13.6 million, compared to $11.7 million in 2009

·     Net income of $3.0 million, an increase of 57% from $1.9 million in 2009

·     Fully diluted EPS of $0.15 for fiscal Q1 2011

·     Basic EPS of $0.18 for fiscal Q1 2011, exceeding performance for Q1 2009

Interested parties are encouraged to read a transcript of the conference call, available here:

http://www.trilogy-capital.com/autoir/boph_autoir.html

Wednesday, November 17, 2010 - Bohai Pharmaceuticals Board Adopts Resolution to Apply for Listing on Senior U.S. Exchange - Bohai Committed to a NASDAQ or AMEX Listing When Listing Requirements Are Met - Bohai Pharmaceuticals Group, Inc. today announced that its Board of Directors has adopted a resolution to seek a listing on a senior U.S. stock exchange when the company meets all applicable listing requirements.

“While Bohai has continued to execute on its business plan in China, we are simultaneously taking necessary steps to increase our visibility in the U.S. capital markets, in part by positioning the company to qualify for listing on a more senior exchange,” said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals. “Our board’s action represents both an important validation of our commitment to creating a well known company with strong corporate governance and an important step towards achieving these key goals.”

Mr. Qu continued, “Graduating to a senior U.S. exchange is a high priority for Bohai given the progress we have made growing our business in China’s TCM industry. The board and our management team are confident that a senior listing will be of tremendous benefit to existing and potential shareholders alike. Not only would we expect a senior exchange listing to allow us to attract additional investors and increase liquidity, we would also expect such a listing to make Bohai available to a broader segment of the institutional community as we strive to improve our revenue, earnings, and, ultimately, shareholder value.”

Friday, November 12, 2010 - Bohai Pharmaceuticals Reports Record Financial Results for Fiscal First Quarter Ended September 30, 2010

YANTAI, China--(BUSINESS WIRE)-- Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH), a China-based pharmaceutical company engaged in the production, manufacturing and distribution of Traditional Chinese Medicine (TCM) in China, today reported record financial results for its first quarter of fiscal 2011 ended September 30, 2010.

Summary of Fiscal First Quarter Ended September 30, 2010 Financial Results:

·     Net Revenues of $17.0 million, an increase of 22% from $14.0 million in 2009

·     Gross profit of $13.6 million, compared to $11.7 million in 2009

·     Net income of $3.0 million, an increase of 57% from $1.9 million in 2009

·     Fully diluted EPS of $0.15 for fiscal Q1 2011

·     Basic EPS of $0.18 for fiscal Q1 2011, exceeding performance for Q1 2009

“Improving upon our past financial achievements, Bohai is excited to announce its record results for the first quarter of fiscal 2011,” said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals Group. “During the quarter, we recognized double digit top line growth by focusing our strong marketing efforts on our lead products while at the same time continuing the roll out of our five new TCM products. We were also able to cut administrative costs, allowing us to boost net income by 57% compared to the same period last year. We look forward to making further progress with our sales initiatives as we continue to take advantage of the Chinese government’s growing support of the TCM industry through the implementation of its new healthcare policies.”

As a key driver of Bohai’s growth, the company’s three lead TCM products (Tongbi Capsules and Tablets and Lung Nourishing Cream) are eligible for reimbursement under China’s national medical insurance program enacted in 2009. Bohai believes that this provides a distinct advantage to the company’s business strategy, which places a particular marketing focus on these lead products going forward. Among other features, this new government plan seeks to extend national medical insurance coverage to China’s rural areas, with a target population in excess of 900 million potential healthcare consumers. The plan also seeks to promote the use of TCM products. Bohai currently produces 15 TCM products in China and is authorized to produce an additional 14 products.

Sales in the first quarter were generated mainly from Bohai’s lead products, Lung Nourishing Cream, Tongbi Capsules and Tongbi Tablets, which together represented over 70% of Bohai’s total net revenues. However, progress has been made on the five products that Bohai introduced in April and May of 2010. Although the new product sales only represented less than 5% of total net revenues in the first quarter, the net revenues for the five new products in the quarter ended September 30, 2010 increased by 160% compared to the quarter ended June 30, 2010.

Mr. Qu added, “We anticipate our overall net revenues will continue to increase due to the national medical and health plan initiated by Chinese government in 2009, which is expected to eventually cover individual health insurance over 90% of China’s population by 2011. As these policies continue to be implemented, we believe endorsements for Traditional Chinese Medicine, along with its coverage and reimbursement from hospitals and medical centers throughout China, will be a major driver of growth for Bohai as we seek to increase revenues, earnings and ultimately shareholder value.”

Highlights for the Fiscal 2011 First Quarter:

·     Net revenue was $17.0 million along with net income of $3.0 million, resulting in basic EPS of $0.18 in the first quarter of fiscal 2011 ended September 30, 2010.

·     Further implementation of a proactive marketing strategy in the quarter significantly increased revenue on all of the TCM products Bohai currently sells.

·     In 2009, the PRC government began the implementation of a new national medical and health plan. Among other features, this new plan seeks to extend national medical insurance coverage to China’s rural areas, with a target population in excess of 900 million, and to promote the use of TCM products.

·     Sales in the fiscal first quarter were generated mainly from Bohai’s lead products, Lung Nourishing Cream, Tongbi Capsules and Tongbi Tablets, which together represented over 70% of total net revenues.

·     Bohai introduced five products in April and May of this year, increasing its total TCM offering from 10 to 15 products. Net revenues for these five new products constituted 5% of total period sales but increased 160% from the prior quarter ended June 30, 2010.

·     Net income margin increased to 18% compared to 14% from the same quarter last year, while selling, general and administrative expenses decreased 8% to $8.6 million due to cost reduction in advertisement and other operating expenses.

·     Cash flow from operating activities for the period ended September 30, 2010 was $2.8 million.

·     A cash payment of $4.7 million was made towards the purchase of prepaid land use rights from the Shandong provincial government that Bohai anticipates utilizing for future factory expansion. An additional $2.3 million is due by March 31, 2011.

·     Throughout the remainder of fiscal 2011, Bohai expects to increase marketing and advertising for its growing portfolio of TCM medicines.

In China, Traditional Chinese Medicine is not an alternative form of therapy but is used in the state-run hospitals alongside modern medicine. For its practitioners and advocates, TCM is a complete medical system that is used to treat disease in all its forms. TCM is also believed to promote long term wellness and vigor and many modern-day drugs have been developed from herbal sources.

Bohai’s growth has been made possible through the company’s focused strategy, which emphasizes quality products and aggressive sales and marketing efforts and also leverages the “protected” manufacturing status and national insurance coverage for certain of its pharmaceutical products. Currently, Bohai has nearly 600 employees, including approximately 300 that are engaged in sales and distribution in 20 locations throughout China. Utilizing this distribution platform, and combined with mass media and other marketing methods to build awareness of its brand, Bohai will seek to grow its revenues and earnings in the remainder of 2011 and beyond.

Green Baron Conclusion

Bohai Pharmaceuticals Group is positioned for continued strong growth through its existing and recently purchased portfolio of State Food and Drug Approved traditional Chinese medicines.  BOPH products are differentiated by their focus on quality, purity and effectiveness.  This focus on production quality provides BOPH products with real brand presence, and we expect the launch of newly acquire medicines will enjoy that same success.

Management has adopted a resolution to seek a listing on a senior U.S. stock exchange when the company meets all applicable listing requirements.  This listing would likely allow Bohai to attract additional investors and increase liquidity.  Since this is a priority to management, we believe investors in BOPH now will enjoy significant price improvement as the Company gets closer to achieving this goal.

Currently priced at less than three times forecasted earnings per share, BOPH is the lowest P/E stock we have ever profiled.  The updated research report from Murphy Analytics believes BOPH should trade at 15 times fully diluted earnings of .50 that would put the stock at $7.50 per share in 12 months.  Based on Friday’s close of $1.65, this would be a move of over 350% in one year.  We urge members to act quickly on BOPH, particularly while the price remains below $2.00 per share. 

Contacts:

Bohai Pharmaceuticals Group, Inc.

Gene Hsiao, Chief Financial Officer

(856)499-4475

Investor Relations:

The Trout Group

Danielle Spangler

(646)378-2924

or

Trilogy Capital Partners – Asia

Darren Minton, President

Toll-free: (800)592-6067

info@trilogy-capital.com