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American Oriental Bioengineering, Inc. Completes Acquisition of 50-Year-Old, Highly-Respected State Owned Pharmaceutical Company

HONG KONG, Sept. 9 /PRNewswire-FirstCall/ -- America Oriental Bioengineering Inc., (OTC Bulletin Board: AOBO - News), a rapidly growing Chinese company which produces and distributes a broad range of pharmaceutical and nutraceutical products, today announced the successful completion of its acquisition of Heilongjiang Songhuajiang Pharmaceutical Limited ("HSPL"), a Chinese state-owned pharmaceutical company.

The company entered into a letter of intent on or about May 26, 2004. With a total purchase price of $7.2 million in cash, AOBO acquired 100% equity ownership of HSPL. The purchase price includes all manufacturing assets, facilities, equipment, land and land use rights, raw material, inventories, intellectual properties and technical talents. The unaudited total revenue for HSPL in 2003 amounted to approximately $4.2 million and unaudited total net profit amounted to approximately $550,000. AOBO expects the acquisition to add approximately $10 million -- $12 million in revenue in year 2005 and approximately $12 million in net assets. The cash acquisition is not anticipated to cause any dilution to AOBO shareholders.

The newly acquired HPSL has nearly 500 employees and has a focus on R&D. HPSL is also certified with Good Manufacturing Practices Certification (GMP). AOBO and HSPL management will quickly work together to merge the operations and look at all cost centers for duplications and redundancies.

HSPL has been in operation for more than 50 years and is mainly engaged in pharmaceutical production. The company is also among 10 of 140 large-scale, state-owned enterprises that are on the privatization list of Heilongjiang Provincial Government. HSPL has played and will continue to play an important role in the Chinese pharmaceutical industry, particularly with regard to its proprietary products such as Shuanghuanglian Lyophilized Powder Injection which has been in the market for 15 years. The product is an important antiviral medicine and has become one of the most highly regarded herbal products certified by the Government.

Mr. Tony (Shujun) Liu, Chief Executive Officer of AOBO, said, "The purchase of HSPL is the first step in our strategy of growth through selective acquisition with the goal of becoming one of the five largest pharmaceutical companies in China. HSPL will expand our reach and strengthen our position in the field. HSPL's flagship herbal product was one of the few effective treatments during the SARS outbreak last year. From a financial standpoint, this acquisition is expected to increase AOBO's net profit by approximately 50% in year 2005. Given the complementary nature of our businesses, we anticipate a seamless integration of operations. Besides, the acquisition will be a valuable experience for future expansion."

Mr. Liu concluded, "We believe that the successful acquisition of HSPL helps to improve the asset base and financial performance of AOBO in year 2004 and beyond. We have put great effort into the acquisition of HSPL and will definitely benefit in terms of operations, revenue and net profits. The purchase of HSPL will also serve as a model for future merger and acquisition strategies."

About American Oriental Bioengineering, Inc.

American Oriental Bioengineering, Inc. (OTC Bulletin Board: AOBO - News) is a leading Chinese biotechnology company that uses proprietary processes for producing soybean protein peptide more efficiently than traditional extracting techniques. These techniques are used to manufacture and formulate supplemental and medicinal products. Soybean peptides are used widely in general food, health food products and medicines, among other applications. AOBO also produces Cease-Enuresis Soft Gel, the only Chinese FDA-approved first grade, prescription medicine that is specially formulated to help alleviate bed-wetting and incontinence. The Company is a leading producer of products in both the nutriceuticals and pharmaceuticals areas in China. For more information, visit

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks defined in this document and in statements filed from time to time with the Securities and Exchange Commission. All readers are encouraged to review the 8-K to be filed in connection with the acquisition discussed above, which outlines risk factors including debt obligations, deal terms and other relevant items. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the companies, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the companies disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

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