Welcome to the China Pharma Holdings first quarter earnings conference call. My name is Dan and I’ll be your operator for today. At this time, all participants are in listen only mode. We will conduct a question and answer session towards the end of this conference. If at any time during the call, you require assistance, please Star Zero and an operator will be happy to assist you. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Miss Leslie Richardson from CCG Elite. Please proceed. China Direct (ticker: CHND.OB) is a diversified management and consulting company. Our mission is to create a platform to empower medium sized Chinese entities to effectively compete in the global economy. As your direct link to China, our organization serves as a vehicle to allow investors to participate directly in the rapid growth of the Chinese economy. : Leslie Richardson : Good morning ladies and gentleman. My name is Leslie Richardson from CCG Elite Investor Relations, and I’d like to welcome you to China Pharma Holdings’ first quarter 2007 conference call. Joining us today from China, are China Pharma’s President and CEO, Miss Zhilin Li, the company’s Chief Financial Officer, Mr. Xinhua Wu, and Crocker Coulson, President of CCG Elite. Crocker will present the prepared remarks for Miss Li, and Michelle Fang is also joining us from CCG Elite’s Hong Kong office, and will provide translation for the question and answer period following the prepared remarks for the quarter. I’d like to remind our listeners that in this call management’s prepared remarks contain forward looking statements which are subject to risk and uncertainties, and management may make additional forward looking statements in response to your question. Therefore, the company claims the protection of…

Ladies and Gentlemen, if you wish to ask a question please press Star One. If your question has been answered, or you wish to withdraw your question, press Star Two. Questions will be taken in the order received. The first question comes from the line of Mike McKarsky from China Pharma. Please proceed. Mike McKarsky – China Pharma: Yes guys, I have a question for your regarding your guidance. Does your guidance include, I guess my question is going back, you had 30% income guidance, but that was before you sold those two products and had to gain for this quarter. Does your guidance for the remainder of the year include any additional (inaudible) of those products in the pipeline?

[Translated] Mike, hello, yes we will say that we will feel very confident to offer our fully return net income increase of this year, and it will be 100% of our own organic growth which is the sales on drugs. Mike McKarsky – China Pharma: So the 30% is net of any gains?

[Translated] No we didn't include this element. Mike McKarsky – China Pharma: You did not?

[Translated] No. Mike McKarsky – China Pharma: And the other question I had for, as Mr. Crocker mentioned the selling of G&A looks like it was off significantly year-over-year, and that was due to write off of uncollectible expenses. Do you anticipate that to be the case going forward?

[Translated] Mike, yeah your understanding is right. We have 50% of accounts receivable that is basically one year. So we have 50% to back that, so that's the main reason for the G&A increase. Mike McKarsky – China Pharma: OK. Crocker Coulson: And Mike, let me just say real quickly, that they evaluate their bad debts at the beginning of the fiscal year, so this is something that they look at once a year closely, and that's how they anticipate the write offs going forward, although we can't say specifically each quarter how much is going to be written off. Mike McKarsky – China Pharma: OK, but it sounds like the future quarters may not have as great an impact.

[Translated] Exactly. Mike McKarsky – China Pharma: Thank you. Mr. Xinhua Wu : [Translated] You're welcome.

Your next question comes from the line of Jim Feld of Feld Corporation. Jim, please precede sir. Jim Feld – Feld Corporation : Yes, I have a number of questions, and maybe the first two could just be a little more clarification of the previous ones. The bad debts were 14% of sales for the first quarter. What percent of sales do you think they will be going forward?

[Translated] OK, so we think that going forward the bad debts expenses versus the sales…we will try and control it within 10%. Jim Feld – Feld Corporation : Now do you have net income of 2006 of $9.15 million?

[Translated] (Stumbles) that's the net income, right. Sorry, so again, what's your question? Jim Feld – Feld Corporation : The 30% increase, I guess the question is does that come from 30% above $9.15 million, so we could look for $11.9 million for this year.

[Translated] We think that the number your bring out probably is not $9.11 million, but you're absolutely right that the basics is based on the net income of 2006 and the 30% increase will rise from that number. Jim Feld – Feld Corporation : And what is the net income for 2006?

[Translated] It’s $8.6 million. Jim Feld – Feld Corporation : And how many shares do you estimate you’ll have at the end of this year?

[Translated] We think it will remain at the same level, which is $37.2 million. Jim Feld – Feld Corporation : Last question, you mentioned that the 4th quarter is the strongest quarter. How are the other quarters ranked normally, from strongest to weakest?

[Translated] We think the ranking should be Q4, Q1, Q2 and Q3. Basically in Q2 and Q3 the sales are roughly the same.

Peter Siris from Guerilla Capital. Please proceed. Peter Siris - Guerilla Capital: First I’d like to thank Ms. Zhilin Li for taking me around their wonderful facility in Haiko. I want to ask about the SFDA. I wonder if Ms. Li can talk about the process it’s going through now and where she thinks it’ll end up in the next year. My understanding is that in tightening up the regulations, the government will get rid of a lot of smaller companies. This is a short term negative, but it should be a long term positive. Am I figuring that correctly?

[Translated] As you mentioned, we do view with all the policies and programs of the SFDA, that they are leading the whole industry towards a more positive and standardized trend. As one of the leading players in the industry, we do feel that. So from our point of view it is definitely positive to the overall industry. It will stabilize the pharmaceutical industry while (inaudible) the competitive barriers. For a pharmaceutical company like us it will provide better conditions and it is even harder for any new players to get into the industry. At the same time, we think that the atmosphere will have even stricter conditions to approve any new drugs. So it will be an opportunity for us. There a lot of issues in this industry, which will provide more space for a company like us. Peter Siris - Guerilla Capital: So with the government increasing health care expenditures by 70-80% this year and with the new rules, does that say that next year and into the future, the growth rate should be faster than 30%?

[Translated] While we take it positively for the overall policy and trend, because there’s a lot of different effects to bring the results and we are still in the process of getting the results, so we think it’s premature to forecast any growth for our company at this moment. But what we can be share is that with this positive trend, we will keep on making more efforts in our own development, and try to maximize the return for the shareholders.

Last question. When does Mr. Wu say that the market will, that a lot of these bad companies will be shaken out, and the profitability of the overall market will improve? Xinhua Wu : [Translated] Peter, as you know, the pharmaceutical industry is a very big and fragmented industry. So we think, from the point of view of the government, they will take the initiative, step by step, to standardize the overall industry. It will not be an overnight dream; it will definitely take time. And for us, as an industry player, we cannot see that any time line or time schedule for the overall process. But we think that we see the commitment and the dedication of the government policy, as well as our own efforts and experience in this industry, that we are sure that we will continue to have successful, as well as sustainable improved profitability.

Great, Thank you very much. Xinhua Wu : [Translated] You're welcome. Operator : Your next question comes from the line of Boyd Hines, private investor. Please precede sir. Boyd Hines – Private Investor : Hi, good morning. I also have some questions about the regulatory environment right now in China. It seems that you have not been directly impacted by the price cuts that the SFDA has passed. But I'm wondering, has that affected you in any other way, from raising prices? Are you very conscious of government intervention, and are you concerned that they could come in and cut prices on the drugs that you're currently offering? Xinhua Wu : [Translated] OK, in this industry normally, the regulatory department has quite a big control of the pricing of the drugs, so in a way that they have the decision-making for the pricing. But you're absolutely right that for the current regulation, they don't have any impact on the drugs of China Pharma, which means that China Pharma can still enjoy a relatively high price compared to other peers. Boyd Hines – Private Investor : I see. And have you been able to increase prices at all in the last year? Xinhua Wu : [Translated] No, we didn't increase any ASP on drugs. Once again, it is more last (inaudible) controlled by the government. Boyd Hines – Private Investor : OK, let me ask you a question about your bad debt expense. Can you give us a little more color, a little more detail on where that was generated from? Was it a hospital? Was it a reseller? Where was the problem this quarter? Xinhua Wu : [Translated] Most of them are from the hospitals. Boyd Hines – Private Investor : OK, and are you still selling products to the…

At this time there are no further question in the queue.

OK, thank you guys for attending our conference call this morning and we look forward to answering any of your questions. If you want, you can contact either Crocker or myself.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.