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

Reports Unaudited Third Quarter 2010 Financial Results

Conference call scheduled for Monday, November 15, 2010 at 8:00 AM EST

Beijing November 15,

2010 Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical

products in China, announced today its unaudited financial results

for the three-month and nine-month periods ended September 30, 2010.

In October 2010, Sinovac was selected by the Beijing Centers for

Disease Control and Prevention (Beijing CDC) as one of the five manufacturers

to supply seasonal influenza vaccine in conjunction with a vaccination campaign

to provide up to a total of 2.8 million doses for free to the elderly and

school age children. Based on the first contract with the Beijing CDC, Sinovac

supplied 375,000 doses of its seasonal influenza vaccine, Anflu , valued at RMB 8.8 million, or approximately $1.3 million.

In October, the Company s wholly owned subsidiary Sinovac Biotech (Hong

Kong) Ltd. received the Certificate of Drug/Product Registration from the Hong Kong Department of

Health for its seasonal influenza vaccine Anflu .

Dr. Weidong Yin,Chairman, President and CEO of

Sinovac, commented, We are continuing to face a challenging domestic market

for vaccine sales as demand has declined subsequent to the unfounded media

reports in the Shanxi province that have a lingering impact on patient

confidence in vaccine safety. We are

ramping up our sales and marketing initiatives to leverage opportunities across

our limited commercialized product portfolio.

To address the situation, our in-house research and development team is

advancing our clinical vaccine pipeline.

Our growth plan is based on maximizing our strengths in research,

production and quality management, while pursuing international collaboration

Dr. Yin continued, One of our long term

growth strategies is to invest in research and development of new

vaccines. Our eleven R&D programs are

advancing on schedule. We are waiting for approval to commence clinical trials for

the EV71 vaccine. The preclinical studies

for the pneumococcal conjugated vaccine are nearing completion and the clinical

trial application is on track to be filed with the SFDA before the end of 2010.

The approval application for our animal rabies vaccine is progressing per our

timetable and the production license is expected to be granted in 2011.

Dr. Yin concluded, In terms of capacity

expansion, we have completed the conceptual design, with the assistance of a

European professional engineering firm, at our Changping facility, which was purchased

earlier this year. We will build a filing and packaging line to WHO standards on

this site that is expected to be operational by early 2012.

Mr. Jacob Ho, Acting Chief Financial Officer,

stated, In the third quarter, our sales team commenced the promotion campaign

for our seasonal flu vaccine Anflu.

Based on preliminary data, our seasonal flu sales are expected to be in

line with our revised full year sales guidance.

We are optimistic about ability to deliver long term growth as we deploy

our financial and operational resources to expand our manufacturing capacity

and advance the development of our pipeline vaccines.

Financial Review for Third

Quarter Ended September 30, 2010

2010 results included the consolidation of the financial results from the

30%-owned joint venture, Sinovac Dalian, following its formation in January 2010.

third quarter of 2010 were $9.6 million, down 7% from $10.3 million in the

second quarter of 2010 and down 55% from $21.2 million for the third quarter of

2009. Excluding one-time sales to the

Ministry of Health and Beijing Center for Disease Control, adjusted sales for

the third quarter 2009 were $18.3 million, which yielded a 47.8% decline in

quarterly sales when comparing 2010 to 2009.

The third quarter 2010 sales were impacted in part by the continuing

weakness in the vaccine market in China following the unfounded media reports

about vaccine safety in China s Shanxi province and by a large-scale measles

campaign conducted in September 2010 that delayed administration of

routine vaccinations.

sales breakdown by product was as follows.

Panflu.1 (H1N1) vaccine represented 1.7% of total sales for the three months

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

in accordance with the government purchase program.

for the third quarter of 2010 was $6.5 million, with a gross margin of 68.3%,

compared to $17.5 million and a gross margin of 82.7% for the same period of

2009. The gross margin for the third quarter

of 2010 decreased due to the product mix consisting of a greater portion of

seasonal flu vaccine that has a lower gross margin compared to the hepatitis A vaccine.

After deducting depreciation of land use rights and amortization of licenses

and permits from gross profit, the adjusted gross margin was 67.2% and 82.2%

for the third quarter of 2010 and 2009, respectively.

general and administrative expenses for the third quarter of 2010 were $4.4

million, compared to $3.5 million in the same period of 2009. SG&A expenses

as a percentage of third quarter 2010 sales were 46.2%, compared to 16.6%

during the third quarter of the prior year. The

higher SG&A expenses as a percentage of revenue resulted from the

additional G&A expenses associated with the 30%-owned joint venture, partly

offsetting the lower selling costs associated with the third quarter 2010

and development expenses for the third quarter 2010 were $2.5 million, compared

to $1.4 million in the same period of 2009. The increased R&D expenses in

the third quarter of 2010 were primarily related to the continued development

of EV71 vaccine, pneumococcal conjugated vaccine, rabies vaccines for human and

animals, along with the mumps vaccine, which is currently under development at

of property, plant and equipment and amortization of license and permits for

the third quarter of 2010 were $334,000, compared to $180,000 for the same

period of last year. The increase

compared to 2009 was primarily attributable to the Sinovac Dalian assets

operating expenses for the third quarter of 2010 were $7.3 million, compared to

$5.1 million in the comparative period in 2009.

loss for the three months ended September 30, 2010 was $737,000, compared

to net income of $12.4 million for the same period of the prior year. The lower operating income in the third

quarter of 2010 was primarily attributable to the lower sales, increased administrative

expenses from Sinovac Dalian, and higher R&D expenses.

the third quarter of 2010 included $156,000 of interest and financing expenses,

$555,000 of interest and other income and $199,000 of income tax expense. Net