Sinovac Reports Unaudited Second Quarter 2010 Financial Results - Conference call scheduled for Monday

Reports Unaudited Second Quarter 2010 Financial Results

Conference call scheduled for Monday, August 16, 2010 at 8:00 AM EDT

August 16, 2010 Sinovac Biotech Ltd. (NASDAQ: SVA), a

leading China-based vaccine manufacturer, announced today its unaudited

financial results for the three-month and six-month periods ended June 30,

Financial Highlights

Second quarter sales increased 131% to $10.3 million on a sequential

quarter basis and decreased by 49% year-over-year

Sales for the six-month period declined 45% to $14.7 million, compared

to same period last year

Net income attributable to shareholders for the second quarter was $1.0

million, with net income per diluted share of $0.02

Net income attributable to shareholders for the six-month period was

$738,000, with net income per diluted share of $0.01

Cash and cash equivalents at June 30, 2010 was $94.6 million

In May 2010, Sinovac was selected by the Beijing Centers for Diseases

Control and Prevention (Beijing CDC) to supply the Company s hepatitis A

vaccine, Healive, to the Beijing Expanded Program of Immunization (EPI). Based

on the comprehensive score following the Beijing CDC s evaluation of potential

suppliers, Sinovac was selected as one of the two suppliers and was allocated a

greater share of the total purchase order. The total ordered quantity allocated

to Sinovac was approximately 477,000 doses.

In June 2010, Sinovac participated at the 2010 Shanghai CPHI Exhibition.

At the exhibition, Sinovac showcased its commercialized products, including its

Healive, Anflu, Panflu and Panflu.1 vaccines. The Company met with several

prospective distribution partners aimed at commercializing Sinovac s vaccines

in targeted international markets.

In August 2010, Sinovac received the GMP Inspection Report from the

Government of Nepal s Ministry of Health and Population. The report stated that Sinovac s production facilities

are qualified for registering its hepatitis A vaccine, Healive, for importation

to Nepal. The favorable inspection

report represents a key step towards obtaining the product registration

certificate from the Nepalese Government.

It is anticipated that Sinovac will be granted the product registration

certificate later this year.

Mr. Weidong Yin, Chairman, President and CEO of

Sinovac, commented, The Shanxi vaccine incident continues to impact the public s

confidence in vaccine safety as it has significantly affected demand across the

private pay market. Although we cannot alter the market environment, we are

effectively adjusting our marketing and sales strategies to address the market situation

and to enhance our capabilities. We increased the size of our sales force to

further expand domestic market penetration and to improve the effectiveness of our

promotion strategies. We are beginning

to see results as evidenced by the 131% increase in sales in second quarter as

compared to the first quarter. We will

continue to refine and implement our marketing and sales strategies to improve

competencies and increase our market share.

Mr. Yin continued, The 2010 seasonal flu season commenced

in the third quarter. Our first batch of Anflu has been released by the

National Institute for the Control of Pharmaceutical and Biological Products (NICPBP)

and launched into the market. Our sales team has already started the promotion

activities in several areas. Although a level of uncertainty surrounds the

seasonal flu vaccine market, we remain confident about our ability to advance

the development of flu vaccine market in China.

Our capacity expansion project for flu vaccine is progressing well. Currently the flu production facilities are

under design in compliance with WHO GMP standards and the equipments are being

selected, which means we are moving forward to meet

our target of completing the capacity expansion for flu vaccines by the end of

2011. We are simultaneously evaluating

the construction plan of production facilities for our current pipeline products,

such as the EV71 vaccine, at the Changping facility. We are pleased with the

progress that is being made at our Dalian joint venture as the formal business

license has been obtained. The application to conduct clinical trials for the

proprietary mumps vaccine developed by Sinovac Dalian was submitted to the SFDA

in April and the production lines are being upgraded. In order to enhance the

market competency of our products and to facilitate entry into international

market, the production lines at two facilities are being designed and

constructed according to the WHO GMP standards.

This year the SFDA continues to work

closely with the World Health Organization (WHO) to improve manufacturing

across China in accordance with GMP standards. In July 2010, Sinovac was

selected as one of the five companies at which the WHO experts conducted the

training for China s SFDA GMP site inspectors. Although the Chinese vaccine

market has been significantly affected by unfounded media reports, we believe

that the public appeal to improve the vaccine quality standards represents a

significant market opportunity for companies, such as Sinovac, that supply high

quality vaccine products.

Yin concluded, We appreciate the continued support and understanding of our

investors. We are continuing to refine

our domestic and international sales strategies, expand our manufacturing

capacity, and advance our vaccine development pipeline to build long-term value

for our shareholders.

Financial Review for Second

Quarter Ended June 30, 2010

2010 results included the consolidation of the financial results from the

30%-owned joint venture, Sinovac Dalian, following its formation in January

second quarter of 2010 were $10.3 million, up 131% from $4.4 million in the

first quarter of 2010 and down 49% from $20.0 million for the second quarter of

2009. The second quarter 2010 sales were

impacted in part by the continuing weakness in the private pay market following

the unfounded media reports about vaccine safety in China s Shanxi province and

by vaccine purchases from the Ministry of Health (MOH) that has not recurred.

In the second quarter of 2009, the Company sold 2.08 million doses of Healive

to MOH as part of the response in connection with a flood relief effort.

sales breakdown by product was as follows.

Panflu.1 (H1N1) vaccine represented 15.5% of total sales for the three months

ended June 30, 2010. The H1N1 vaccine was sold to the Chinese government in

accordance with the government purchase program.

for the second quarter of 2010 was $8.5 million, with a gross margin of 82.7%,