China Yongxin Pharmaceuticals Projects Higher Net Income and EPS on Reduced Revenue for Full-Year 2009

CHANGCHUN, China and LOS ANGELES, Dec. 31 /PRNewswire-Asia/ — China
Yongxin Pharmaceuticals, Inc. (OTC Bulletin Board: CYXN; “China Yongxin
Pharmaceuticals” or the “Company”), a leading manufacturer, distributor and
retailer of Chinese traditional medicines, pharmaceutical products, natural
health products, health food, cosmetics, and medical equipment in Northeastern
China, today announced its projected financial results for the year ending
December 31, 2009.

Revenues for the full-year 2009 are projected to be $46.1 million, a 22%
decrease from $59.1 million for 2008. The decrease in total revenue is due to
the transition of the Company’s sales strategy, which, because of the
uncertain direction of the National Medical Policy, has been refocused from
the wholesale sector to the retail and medical facilities sector. While a
broader product portfolio and expanded marketing activities increased 2009
revenues from the Company’s retail drug stores by approximately 30% over the
prior year, it was not sufficient to completely offset the decrease in the
Company’s wholesale business, resulting in comparably lower total net revenue.

For 2009, net income is projected to be approximately $5.4 million, a 35%
increase over the $4.1 million for 2008. The increase primarily is related to
higher margin retail and medical facilities sales.

The Company expects to report that diluted earnings per share increased to
$0.16 for 2009 compared to $0.13 for 2008, based on 34.4 million and 31.2
million shares respectively. Provision for income tax in 2009 is $2.7 million
compared to $1 million in 2008.

Mr. Yongxin Liu, Chairman and Chief Executive Officer of China Yongxin,
commented that during 2009, the Company’s wholesale business was impacted by
customers waiting for specifics on the new healthcare reform plan. “However,
on August 18th, the Chinese government issued China’s Essential Drug List (EDL)
which included over 300 commonly used pharmaceuticals that will be subsidized
by the government to provide easier access to all citizens. We are pleased
that China Yongxin is a retailer or distributor of 295 of the products on that
list. We are further encouraged by the increasing momentum toward healthcare
reform and the government’s efforts to boost domestic spending. During 2009,
we also added 12 high margin pharmaceutical products with exclusive
distribution rights in Jilin province and we expect this to drive market share
gains and growth during the coming year,” Mr. Liu said.

The cost of goods sold for the year is projected to be approximately $31.3
million, a significant reduction compared to $47.2 million in the prior year.
This would represent an improvement in the Company’s 2009 gross profit to
$15.2 million and gross margin to 32.6%, compared to $11.9 million in gross
profit and a gross margin of 20.1% for 2008. The projected increase in gross
margins primarily was due to higher margin retail and medical facilities sales.

Operating expenses for 2009 are projected to be approximately $6.8 million,
compared to $6.1 million in 2008. Selling expenses for the year are projected
to decrease slightly from the prior year to $3.4 million. The Company
prudently managed utilities usage, transportation costs and sales people to
effectively reduce selling expense and maintain gross profit. General and
administrative expenses for 2009 are projected to increase approximately 30.8%
to $3.4 million, compared to $2.6 million in 2008. The majority of the
increase is related to litigation expenses and consulting service expenses.

Income from operations projected for 2009 is approximately $8.3 million, a
43% increase from the $5.8 million for 2008. Operating margins are expected to
be 18% and 9.8% for 2009 and 2008, respectively.

Business Development

On March 9, China Yongxin formally launched its Electronic Diagnosis
System, of which 20 systems have been installed so far in Yongxin chain
drugstores located in Changchun, Jilin. The System enables our customers to
remotely receive medical diagnosis and conveniently purchase prescription
drugs at that store. The Company is always working to improve the level of
service it offers and leverage its large and growing base of “Member”
customers who are entitled to discounts, rebates and special offers. This
strategy, in addition to selling a broader array of higher margin health,
beauty and cosmetic products has increased customer retention and improved
revenue and profitability in this business segment.

Since the beginning of 2009, China Yongxin has signed 12 exclusive
distribution agreements for Jilin province with several well known
pharmaceutical manufacturers including Tianjin Smith Kline & French
Laboratones Ltd. As of June 30, China Yongxin has approximately 216 drugs with
exclusive distribution rights in Jilin province. This portfolio is a key
component of its long-term growth strategy to leverage the large distribution
center and channels established to drive incremental future revenue growth.
These agreements are typically one year in duration and are renewable.

China Yongxin recently secured loans from local banks and rural credit
unions totaling $2.9 million, with terms ranging from 1 to 3 years, renewable
after the initial terms. Loan proceeds will be used to provide working capital
for the Company’s distribution segment as it capitalizes on new organic growth
opportunities supported by the government’s new healthcare initiative.

Mr. Liu further commented, “With enhanced government support, specifically
the commencement of China’s $126 billion health care reform plan focused on
providing a broader spectrum of healthcare services and pharmaceutical
products to all Chinese residents, we are confident that our modernized
logistics center and distribution channels, the broad customer base of our
chain drugstores, our extensive product portfolio, and committed management
team will enable us to resume our growth momentum and capitalize on a
long-term, secular growth opportunity,” Mr. Liu concluded.

About China Yongxin Pharmaceuticals, Inc.

China Yongxin Pharmaceuticals, Inc. was founded in 1993 as the Changchun
Yongxin Dirui Medical Co., Ltd. (Yongxin), is a manufacturer, retailer and
distributor of Chinese traditional medicines, pharmaceutical preparations,
natural health products, health food, cosmetics, and medical equipment in
Northeastern China. It began retail operations in 2004, and in 2005, it
gained franchise rights from one of the world’s largest drug chains for
China’s Jilin Province. By the end of 2007, the Company had become one of the
fastest growing drug retailers in China through its retail chain of 93 drug
outlets as well as wholesale distribution and manufacturing operations in
Northeastern China. For more information about China Yongxin Pharmaceuticals,
please visit http://www.yongxinchina.com .

Forward Looking Statements

This news release contains certain “forward-looking statements.”
Forward-looking statements are based on current expectations and assumptions
and are inherently subject to risks and uncertainties, some of which cannot be
predicted or quantified, and many of which are beyond the Company’s control.
The forward-looking statements are also identified through the use of words
“believe,” enable,” “may,” “will,” “could,” “intends,” “estimate,”
“anticipate,” “plan,” “predict” “probable,” “potential,” “possible,” “should,”
“continue,” “project”, “expect” and other words of similar meaning. Actual
results could differ materially from these forward-looking statements as a
result of a number of risk factors detailed in the Company’s periodic reports
filed with the SEC. Given these risks and uncertainties, investors are
cautioned not to place undue reliance on such forward-looking statements and
no assurances can be given that such statements will be achieved. China
Yongxin Pharmaceutical Inc. does not assume any duty to publicly update or
revise the material contained herein.

    For more information, please contact:

    For the Company:
     Mr. Sam Liu, COO
     China Yongxin Pharmaceuticals, Inc.
     Tel:    +1-626-581-9098
     Email:  info@yongxinchina.com

    Investors:
     Mr. Matthew Hayden, HC International
     Tel:    +1-561-245-5155
     Email:  matt.hayden@hcinternational.net
     Web: http://www.hcinternational.net

SOURCE China Yongxin Pharmaceuticals, Inc.