Business Overview & Recent Developments

China Pharma Holding Inc. (“China Pharma”) is a Nevada holding company, but all of its operations are conducted in China through its wholly-owned subsidiary, Hainan Helpson Medical & Biotechnology Co., Ltd (“Helpson”). Helpson is engaged in the development, manufacture, and marketing of pharmaceutical products for human use in China.

Key recent developments include:

• China’s consistency evaluation of generic drugs is ongoing, and Helpson has prioritized this process. However, the industry has faced challenges due to changing policies and market trends.
• Helpson’s flagship product, Candesartan tablets, passed the generic drug consistency evaluation in 2023.
• Helpson has taken a cautious approach to consistency evaluation projects due to the impact of China’s Centralized Procurement (CP) program, which has significantly reduced drug prices.
• Helpson has expanded into the comprehensive healthcare industry, launching products like Noni enzyme supplements and personal protective equipment like masks.
• In 2024, Helpson began serving as a Contract Manufacturing Organization (CMO), undertaking R&D and commercial production for a client’s project.

Results of Operations for the Fiscal Year ended December 31, 2024

Revenue

• Revenue was $4.5 million, a decrease of $2.5 million from 2023, mainly due to more drugs being included in national CP while Helpson’s products did not qualify.
• The largest revenue declines were in the Digestive Diseases (-82%), Anti-Viral/Infection & Respiratory (-23%), and Other (-75%) categories.
• The CNS Cerebral & Cardio Vascular category represented 30% of total revenue in 2024, up from 23% in 2023.
• Helpson generated $53,338 (1% of revenue) from its new CMO business.

Cost of Revenue, Gross Loss, and Loss Margin

• Cost of revenue was $6.5 million, or 143.8% of revenue, compared to 104.0% in 2023.
• Gross loss was $2.0 million, with a gross loss margin of 43.8%, up from 4.0% in 2023.
• The higher loss was due to increased idle equipment costs and inventory impairments.

Expenses

• Selling expenses decreased to $0.53 million (11.7% of revenue) from $0.78 million (11.1% of revenue) as the company reduced promotional spending.
• G&A expenses increased to $1.78 million (39.4% of revenue) from $1.47 million (20.9% of revenue) due to amortization of purchased patent technology.
• R&D expenses increased to $0.28 million (6.3% of revenue) from $0.24 million (3.4% of revenue), focused on consistency evaluations.
• Bad debt expense was $5,702, compared to a $15,757 reversal in 2023.

Net Loss

• Operating loss was $4.59 million, up from $2.75 million in 2023.
• Net loss was $4.74 million ($0.27 per share), compared to $3.08 million ($0.91 per share) in 2023.

Liquidity and Capital Resources

• Cash and cash equivalents were $0.63 million as of December 31, 2024, down from $1.42 million in 2023.
• The company obtained additional lines of credit but continues to face substantial doubt about its ability to continue as a going concern.
• Cash flow used in operations was $0.47 million, an improvement from $0.70 million in 2023.
• Investing activities used $0.29 million, mainly for medicine formula development.
• Financing activities provided $0.03 million.

Overall, China Pharma faced significant challenges in 2024, with declining revenues, rising costs, and growing net losses. The company’s reliance on the Chinese market and its struggles to adapt to regulatory changes have put its long-term viability in question. Successful execution of its CMO and comprehensive healthcare initiatives will be crucial for the company’s future.