American Oriental Bioengineering (AOB)

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Grant Zeng

www.zacks.com

American Oriental Bioengineering Inc. (AOB), together with its wholly owned subsidiaries, is a pharmaceutical company which develops, manufactures and commercializes both plant-based pharmaceutical (PBP) and plant-based nutraceutical (PBN) products.

PBPs are Traditional Chinese Medicine (TCM) based on non-synthetic medicinal compounds that are extracted from leaves and roots of one or more plants. Each PBP has certain medicinal functions and proven efficacy in the treatment of at least one or more illnesses or symptoms of illnesses. The company's PBP products are approved by the Chinese State Food and Drug Administration (SFDA) and are being sold both as prescriptions and over-the-counter (OTC) medicine. PBNs, also frequently referred to as "dietary supplements" or "nutritional supplements", are prophylactic or preventive, in contrast to PBP products which are used to treat an illness or symptoms of an illness. PBNs represent a different approach to medicine as they are supplementary to nutrition taken from a normal diet and help improve health or wellness of the whole body. The PBN products are approved by local government agencies to be labeled as nutraceutical products.

AOB currently offers over 20 PBP and PBN products in China. Core PBP products include Shuanghuanlian Lyophilized Injection Powder, a leading anti-viral injection effective in treating respiratory diseases, Cease Enuresis Soft Gel and Patch, a prescription medicine specially formulated to help alleviate bed-wetting and incontinence and other over-the-counter drugs, such as Jinji Capsule to treat gynecological inflammations and pre-menstrual symptoms. Core PBN products include a line of health supplements including soybean peptide products and nutritional beverages. All of the company's core products enjoy branded market leadership in China in the segments in which they compete. Because of the significance of these brands to the business, AOB concentrates its sales and marketing efforts in promoting them in target markets.

Key product sales as percentage of total revenue

2004

2005

2006

Plant-based Pharmaceutical (PBP products)

    Shuanghuanglian lyophilized injection powder 

16%

30%

25%

    Cease-enuresis soft gel and patch  

21%

22%

23%

    Jinji Capsule               

-

-

19%

Plant-based Nutraceutical (PBN products)

    Soy peptide series             

36%

28%

25%

The company finished its reverse takeover in 2003 and its shares were listed in OTCBB since then until July 2005 when the company's shares were listed in American Stock Exchange. In December 2006, the company's common stock commenced trading on New York Stock Exchange under the ticker of AOB. Headquartered in Harbin, China, AOB employs about 1981 employees.

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