China Biologic Products, Inc.
Annual Report 2016

Plain-text annual report

Creating Miracles in Life 2016 Annual Report China Biologic Products, Inc. A leading fully integrated plasma-based biopharmaceutical company in China 1 2016 Annual Report Our Mission Grow as a world-class biopharmaceutical company focused on saving lives Core Values Quality / Growth / Innovation / Promise / Focus / Passion / Responsibility Table of Contents 3 A profile of China Biologic 4-5 China’s Plasma Protein Market 6-7 Financial Highlights 8-9 Business Highlights 10-13 Chairman’s Letter 14-15 Our Products 16-17 Research & Development 18 Marketing activities 19-20 Corporate Social Responsibility 21-23 Board of Directors 24 Corporate Information 25-223 Annual Report (From 10-K) 2 Annual Report 2016 A Profile of China Biologic China Biologic Products, Inc. (NASDAQ: CBPO) is a leading fully integrated plasma- based biopharmaceutical company in China, with the aim of creating miracles in life. 3 We are principally engaged in the integrated process of research, development, manufacture and sales of human plasma-based biopharmaceutical products in China. Our products are used as critical therapies during medical emergencies and for the prevention and treatment of life-threatening diseases and immune- deficiency related diseases. Backed by robust research and development capabilities, we aim to capture substantially all of the value along the plasma products value chain, and to develop our technology to enhance lives and create value for more patients. We have expanded our product portfolio to include eight categories of plasma-based products as well as other biopharmaceutical products, and we continue to make progress on our new products in our pipeline. Now headquartered in Beijing, we manufacture our products through our one wholly-owned facility in Guizhou Province, one majority-owned facility in Shandong Province, and one minority-owned facility in Shaanxi Province. Our well-managed and strategically located plasma collection stations under these facilities secure the raw material to manufacture these products. Our strong sales team helps us promote and sell these products through efficient and effective channels. We are one of the first plasma companies in China to penetrate into the end-user market. Directly serving about 600 hospitals and clinics, we maintain close contact with patients and hospitals to truly understand their needs. After years of dedicated efforts, we have grown into one of the top three domestic plasma product suppliers in China. Our common stock has been listed on NASDAQ since 2009. 2016 Annual Report China’s Plasma Protein Market Significant unmet clinical demand provides sustainable and profitable growth, driven by aging population and various diseases. China’s plasma proteins market was estimated at approximately $2.5 billion (15.3 billion RMB) in 2015, with annual compound growth rate of 22% between 2006 and 2015. It is the second largest plasma product market in the world behind the U.S. Albumin is the largest product with an increase of approximately 14% in 2015 over prior year. IVIG is still in early stage of development and its sales grew faster at approximately 21% during 2015 driven by expanded indications and physician education. These two products represented 91% of market in 2015. China Plasma Fractions Market Size (without Recombinant Products) China Plasma Products Structure (By 2015 Product Sales, without Recombinant Products) 3.0 2.5 2.0 1.5 1.0 0.5 - 2.5 1.7 $billion 0.8 0.4 2006 2009 2012 2015 FVIII 1.5% Others 1.0% Hyper- immune 6.5% IVIG 27.2% Albumin 63.8% China plasma products’ per capita penetration is a fraction of that of the US. FVIII is a life saving and a lifelong treatment for hemophilia A patients and has significant growth opportunity in China. 1. Based on 2015 per capita usage (kilogram per MM inhabitant) in U.S. divided by 2015 per capita usage in China. 2. Based on 2015 per capita usage (international units per capita) in U.S. divided by 2015 per capita usage in China, excluding recombinant products . 3. Excluding recombinant products. 2015 Plasma Products Per Capita Usage Per Capita Usage in U.S. / Per Capita Usage in China (x) 20.0 10.0 0.0 14.0x(2) 7.7x(3) IVIG 671 Factor VIII 36 2.5x(1) Albumin 1,574 Source: The Marketing Research Bureau, Inc. and company estimates 2015 Market Size in China ($ MM) Source: The Marketing Research Bureau, Inc. and company estimates 4 Annual Report 20165 2016 Annual Report Financial Highlights 34.6% IVIG 39.2% Human albumin Sales Breakdown By Products 2016 11.8% Hyper-immunoglobulin 9.4% Placenta Polypeptide 5.0% Others Human albumin and IVIG products have long been our two largest sales contributors, and our market share for these two products rank among the top three domestic suppliers in China as measured by total production volume. Additionally, several other new products launched in recent years, such as Factor VIII and PCC, also experienced fast growth in sales and market share. Our Market Share for Some Products CBPO 6.5% CBPO 14.7% Other domestic players Other domestic player 1 Others Foreign Player E Foreign Player D Foreign Player C Others Human Albumin Other domestic player 2 Foreign Player A IVIG Other Player 1 Foreign Player B Other Player 2 CBPO 32.2% Other player 3 CBPO 21.8% Tetanus IG Factor VIII Other player 2 Other Player 2 Other Player 1 Other player 1 We are one of top 3 domestic players in each of China albumin, IVIG and factor VIII markets. In 2016, we are the largest player in China tetanus immunoglobulin market. Source: Company estimates on 2016 production volume based on the public release of government batch approval data. 6 Annual Report 2016Total Revenue and Non-GAAP Net Income/EPS ($ In Millions) Total Sales CAGR = 16.6% Non-GAAP Net Income CAGR = 27.5% 1.79 2.12 184.8 203.4 3.68 296.5 2.89 243.3 4.52 341.2 ($) 5.00 4.00 3.00 2.00 1.00 48.0 59.0 75.6 100.1 126.8 2012 2013 2014 2015 2016 Total Revenue Non-GAAP Net Income Non-GAAP EPS 350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0 Our Market Share for Some Products Operating Cash flow and Operating Income ($ In Millions) 180 160 140 120 100 80 60 40 20 0 111.2 109.4 86.9 93.5 71.1 74.5 74.3 143.9 132.6 123.3 2012 2013 2014 2015 2016 Operating Cash Flow Operating Income 7 2016 Annual Report Business Highlights February 2016 March 2016 April 2016 June 2016 July 2016 August 2016 September 2016 Shandong Taibang’s newly- built plasma collection station in Xinglong County of Chengde City, Hebei Province received the operating permit and commenced commercial plasma collection immediately. Guizhou Taibang received approval from the CFDA to commence clinical trials of a new Human Coagulation Factor VIII. Shandong Taibang obtained approval from the CFDA to begin human clinical trials on its Human Coagulation Factor IX (“FIX”) product. China Biologic increased its equity interest in Guizhou Taibang from 81.81% as of December 31, 2015 to 85.27% following a series of capital injections. Guizhou Taibang paid the first installment of RMB90 million (approximately US$13.5 million) of the consideration to such former minority shareholders. The two former noncontrolling interest holders of Guizhou Taibang, holding a combined 15.3% equity interest, entered into an agreement with China Biologic to withdraw all of their capital contribution in Guizhou Taibang for an aggregate consideration of RMB415.0 million (approximately US$62.6 million). China Biologic helped one of its largest stockholder to complete an offering of 4.26 million shares of China's Biologic's common stock. China Biologic helped one of its largest stockholder to complete an offering of 2.78 million shares of China's Biologic's common stock. Plasma Collection R&D Huitian obtained the GMP certificate from the China Food and Drug Administration (the "CFDA") for its new plasma production facility in Xi’an, Shaanxi Province, and commenced commercial production thereafter. Manufaturing Facility Further Acquisition in Subsidary Capital Market 8 Annual Report 2016New Fractionation Facility in Shandong Province Scheduled to be opened at the end of 2017 Expand fractionation capacity in Shandong to a minimum of 1,200 metric tons October 2016 November 2016 December 2016 Shandong Taibang received two approvals from the relevant authorities to build a new plasma collection station in Ju County of Rizhao City and a new branch collection facility in Feicheng County of Tai’an City, both in Shandong Province. Shandong Taibang obtained approval from the CFDA to begin human clinical trials on its Human Antithrombin III (“ATIII”) product. Shandong Taibang obtained approval from the CFDA to begin human clinical trials on its Human Cytomegalovirus Immunoglobulin (pH4) For Intravenous Injection (“CMV IVIG”) product. Looking for- ward to 2017 Shandong Taibang’s new plasma collection station in Daming County of Chengde City, Hebei Province is under construction and is expected to commence commercial plasma collection in 2017. Shandong Taibang’s pipeline product Fibrinogen is expected to get GMP certificate and begin commercial launch in the second half of 2017. Shandong Taibang’s new manufacturing facility is under construction and expected to start operation at the end of 2017. Guizhou Taibang completed the capital withdrawal of its two former minority shareholders by paying the remaining balance of the consideration pursuant to the agreement. Guizhou Taibang completed the registration with the local administration of industry and commerce in connection with the capital withdrawal by two former minority shareholders. As part of the capital withdrawal plan, such minority shareholders also withdrew their existing lawsuits involving Guizhou Taibang. 9 2016 Annual Report Chairman’s Letter Dear Shareholders, We are pleased to achieve another year of strong financial performance in 2016 as we capitalized on market growth opportunities and met our upwardly revised revenue and profit growth estimates for the year 2016. Attributable to continuously increased plasma supply and production volume, modest product price increases, optimization of our product portfolio mix, and continued penetration into our key markets, we achieved 22.8% revenue growth in RMB terms over the prior year. When factoring in approximately 8 percentage points of RMB depreciation in 2016, revenue growth in USD terms increased 15.1%. We achieved greater levels of non-GAAP adjusted net income growth due to the greater financial contribution from our Guizhou Taibang subsidiary as our equity interest increased and from a stronger- than-expected minority interest contribution from our Xi’an Huitian facility. Consequently, our full year non-GAAP adjusted net income increased 35.1% in RMB terms and 26.7% in USD terms. 10 China’s plasma product market continued to grow in 2016 while we strengthened our geographic footprint and continued to execute our strategy to cultivate the market, resulting in a consistent supply volume increase and market share gains in our main sales regions and among hospital customers. China Biologic remains one of China’s largest domestic plasma suppliers achieving higher growth than the overall industry. While the combined sales volume for our IVIG and hyper-immune products in 2016 remained comparable with the prior year due to abnormally higher production levels during 2015, we continued to allocate more production capacity to hyper-immune products including tetanus immunoglobulin. Even as IVIG volume growth curtailed slightly, we were proud to continue to manage strong sales penetration both directly to more than 100 AAA regional hospitals and through distributors to AAA hospitals in tier one cities. Additionally, we were also pleased to experience a continued revenue ramp up with our Factor VIII and PCC products which together accounted for approximately 5% of our total revenue in 2016 from 3.4% in 2015. In 2016, we actively hosted or participated in approximately one hundred medical conferences, seminars or business training programs to communicate our new products to the medical community, and maintained active communication and collaboration with patients through social media tools such as Wechat. This helped to serve the needs of coagulation-deficient patients and also served as a foundation for the promotion of new future products. After the removal of retail price ceilings by the government in June 2015, our product pricings were largely restricted by the regional government tenders, while the pro-market- driven pricing mechanism provided us greater opportunities to achieve premium pricing for products in significantly short supply. Tetanus immunoglobulin’s prices continued to rise in 2016 due to limited supply, and China Annual Report 2016Biologic continued to generate higher margin by allocating greater production capacity to tetanus immunoglobulin at the expense of IVIG production volume. By the end of 2016, our tetanus immunoglobulin captured the largest market share in China. For our main plasma products like albumin and IVIG, the prices have been restricted more widely by the provincial tenderings that are still slowly progressing in most provinces, but they also experienced modest increases in the past year. In 2016, the Chinese government continued its efforts on healthcare reform and started to implement several new policies and regulations which are expected to have a greater impact on our non-plasma placenta polypeptide products than our plasma products. During the year, we experienced challenges in certain geographic regions where regional governments put placenta polypeptide on a complementary therapy list, which could result in limited usage of such products. Additionally, the ‘two invoice’ policy system in the pharma supply chain, designed to limit the number of distributors between pharmaceutical manufacturers and hospitals with the aim of stabilizing drug prices and enhancing transparency, had been implemented in a few select regions and is expected to expand more broadly to other regions as the central government released national guidance beginning in 2017. Further, the initiative to implement a ‘zero- mark-up’ policy of drug sales by hospitals could impact our accounts receivable days as well as hospital procurement volume. We welcome these coming changes and believe that, although they present challenges, they will also provide us the opportunities for revenue and profit growth. For example, the implementation of the two-invoice policy might benefit the sales of our placenta polypeptide products by eliminating the multiple layers of distributors and allowing us to better control the end customers. Our operations team is actively preparing for the anticipated regulatory changes, closely monitoring the implementation of such new regulations for 2017 and will make appropriate and timely adjustments to our sales model. We are pleased with the government’s recent published update to the national reimbursed drug list, known as the NDRL. We believe the update will greatly improve future access and affordability of China Biologic’s core products including IVIG, albumin and certain coagulation products with expanding indications included. While most of these products remain in the “B category” of the NDRL, which means that various provincial governments will update their respective provincial reimbursement drugs list prior to July 31st, 2017 and begin implementation later on that year, we expect the expanded insurance reimbursement will further enhance demand for our core products and fuel our growth over the long term. Our focus on raw material plasma growth continues to be essential for our production and sales volume development. For the fifth consecutive year, China Biologic achieved double-digit growth in plasma collection volume. Just before the 2017 Chinese New Year, we were very pleased to obtain the approvals from relevant authorities to build a new plasma collection station and a new branch collection facility in the Shandong province. We received the operating permit for our Xinglong plasma collection station in Hebei Province in June 2016 and the other station in Hebei is under construction and expected to be operational in 2017. In December 2016, a new guideline regarding the development of plasma collection stations in China was released by the relevant authorities, which includes granting more licenses for new plasma collection stations preferably to larger companies that can improve plasma quality and safety controls. We believe this guideline represents stricter regulation requirements for opening new plasma collection station and will potentially favor large players like China Biologic. As a supplement to our own collected plasma, the outsourced plasma supplied by our collaboration partner in 2016 was more than the contractual volume. This plasma is expected to significantly improve the utilization rate at our Guizhou Taibang facility and substantially increase its finished products available to the market in 2017. Including this outsourced plasma, our total annual plasma collection volume surpassed 1,000 metric tonnes in 2016, a new milestone for the company, which also positions us for sustainable growth in the years ahead. Over the last year, we made excellent progress on our production facility upgrades. The construction of our new fractionation facility in Shandong is ahead of schedule and the facility is expected to commence commercial operation at the end of this year, The Xinglong plasma collection station that commenced operation in June 2016 in Hebei Province, and the new stations that are under construction. 11 2016 Annual Report transition of our Shandong facilities. Our team will make every effort to ensure a smooth transition to the new facility in Shandong and that core customer demand will be met during the transition period. We also acknowledge certain challenges resulting from recent government healthcare reform initiatives including a quicker-than-expected implementation time frame of the ‘two invoice’ policy, possible zero-mark-up policy for drug procurement among certain hospital customers, potential public tendering delays in various local markets and from other new government pharmaceutical regulations. We aim to make appropriate and timely adjustments to our sales model according to central or regional regulations and changes in market conditions, and we will continue our expansion plan to further cultivate the market. We will maintain our focus on plasma collection growth from both existing collection stations and new stations. Our R&D efforts will be centered on ensuring successful registration of near-to-mature products, developing new products and improving the production yield of existing products. Finally, I would like to express my gratitude to the entire China Biologic Products team for its dedication and achievements over the past year. I also would like to thank you, our stockholders, for your continued support and commitment to our company. With your support, we can accomplish a great deal in the years to come. Sincerely, Mr. David Gao Chairman, CEO & President, China Biologic Products, Inc. doubling Shandong facility’s production capacity once completed. Our operations team is actively collaborating to shorten the transition period and working diligently to stock sufficient inventory to ensure adequate product supply prior to the shutdown of the old facility. Our Xi’an Huitian Blood Products facility, in which we have minority interest, resumed operation in 2016 and made a more significant contribution to our business this past year than originally forecast. In addition to our many operational achievements in 2016, we were also pleased to fully acquire 100% equity interest in Guizhou Taibang after a series of capital injections and the final capital withdrawal by minority shareholders. This enables China Biologic to fully capture the high growth potential and receive the full benefits and earnings accretion of products produced at this facility. Following the minority shareholders’ withdrawal, our past lawsuits with these former shareholders were also resolved. There were notable accomplishments on the R&D front over the past year. We obtained clinical trial approvals for three new products - Human Coagulation Factor IX, Human Antithrombin III and Human Cytomegalovirus Immunoglobulin (pH4) for Intravenous Injection (“CMV IVIG”), all of which are new to market in China. Our long- awaited fibrinogen product has completed most of the required procedures according to new CFDA regulations in July 2015 for all pharmaceuticals in the registration application, and also completed the CFDA’s on-site inspection for the production facility. If the CFDA finishes its inspection of our clinical trial data at participatory hospitals over the next few months, we expect to launch this product to the market in the second half of 2017. We believe these new products will further improve our plasma fractionation utilization and contribute to our long-term financial growth. As we focus on executing our business plan, we remain committed to our shareholders. We successfully completed two follow-on offerings in March and June 2016, which added new institutional investors to our shareholder base, improved our ownership structure and increased our stock liquidity. Looking ahead, we expect 2017 to be another healthy year of growth for our business although there could be challenges related to production supply during the 12 Annual Report 201613 2016 Annual Report Our Products Human Albumin Mainly used in the treatment of shock caused by blood loss trauma or burn, raised intracranial pressure caused by hydrocephalus or trauma, oedema or ascites caused by hepatocirrhosis and nephropathy; prevention and treatment of low-density-lipoproteinemia and neonatal hyperbilirubinemia. Human Immunoglobulin for Intravenous Injection Mainly used in the treatment of primary immunoglobulin deficiency, such as X chain low immunoglobulin, familiar variable immune deficiency, immunoglobulin G secondary deficiency; secondary immunoglobulin deficiency, such as severe infection, newborn sepsis; and auto-immune deficiency diseases, such as Idiopathic thrombocytopenia purpura or kawasaki disease. Human Hepatitis B Immunoglobulin Mainly used in the prevention of measles and contagious hepatitis. When applied together with antibiotics, its curative effect on certain severe bacteria or virus infection may be improved. Human Tetanus Immunoglobulin Mainly used for the prevention and therapy of tetanus, and is particularly applied to patients who have allergic reactions to tetanus antitoxin. 14 Annual Report 2016Human Rabies Immunoglobulin Mainly for passive immunity from bites or claws by rabies or other infected animals. All patients suspected of being exposed to rabies will be treated with a combined dose of rabies vaccine and human rabies immunoglobulin. Human Immunoglobulin Mainly used in the treatment of primary immunoglobulin deficiency, such as X chain low immunoglobulin, familiar variable immune deficiency, immunoglobulin G secondary deficiency; secondary immunoglobulin deficiency, such as severe infection, newborn sepsis; and auto-immune deficiency diseases, such as Idiopathic thrombocytopenia purpura or kawasaki disease. Human Coagulation Factor VIII Mainly used for correcting the disorder of coagulation due to deficiency of Factor VIII, for prevention and control of bleeding in patients with hemophilia A or acquired Factor VIII deficiency, and for treatment of bleeding caused by operation on these patients. Human Prothrombin Concentrate Complex Mainly used for the treatment of congenital and acquired clotting factor II, VII, IX, X deficiency (single deficiency or combined deficiency), including: the clotting factor II, VII, IX, X deficiency, including Hemophilia B; excessive anticoagulant, and vitamin K deficiency; coagulation disorders and bleeding caused by liver disease when the patients need to correct blood coagulation dysfunction; a variety of issues caused by the prolonged prothrombin time when surgery cannot be performed due to a deficiency of clotting factor; treatment for the bleeding symptoms of Hemophilia A that has produced inhibitor of clotting factor VIII; reversing hemorrhage induced by coumarin anticoagulants. Placenta Polypeptide Mainly used in the treatment of cell immunity deficiency diseases, viral infection and leucopenia caused by various reasons, and assists in postoperative healing. 15 2016 Annual Report Research & Development Innovation focuses on: New products through internal R&D and partnership with international players Continual improvement in yield for existing products Enhancing product quality through new technologies Continual improvement in production methods Products Currently in Development Treatment / Use Status of Product Development Stage* Human fibrinogen Treatment for lack of fibrinogen and Completed on-site inspection by the CFDA. 4 increase human fibrinogen concentration. Commercial production expected in the second half of 2017. Immune Globulin Intravenous (Human), Treatment for original immunoglobulin Obtained approval for clinical trial by the CFDA. 3 Caprylate/Chromatography Purified deficiency, secondary immunological and 20 nm virus filtration deficiency, and auto-immune deficiency diseases. Human coagulation factor IX Prevention and control of bleeding in Obtained approval for clinical trial by the CFDA. 3 patients who suffer from hemophilia B. Human Antithrombin III (concentration) Treatment for (1) hereditary antithrombin Obtained approval for clinical trial by the CFDA. 3 III deficiency in connection with surgical or obstetrical procedures and (2) thromboembolism. Human Cytomegalovirus Immunoglobulin Prophylaxis and treatment of CMV infection, Obtained approval for clinical trial by the CFDA. 3 especially for the prevention of active virus replication for patients in immunosuppression, such as organ transplantation patients. Human Fibrin Sealant Adjunct to hemostasis on patients Completed the official virus inactivation 1 undergoing surgery in case that traditional by the PRC National Institutes for Food surgical techniques (such as suture, ligature and Drug Control. Completed the animal or cautery) are ineffective or impractical. experiments for safety and effectiveness. Note : Stage 4: Registration; Stage 3: Clinical trials; Stage 2: Clinical trial application; Stage 1: Pre-clinical research 16 Annual Report 2016 17 2016 Annual Report Marketing Activities I. Academic Events The development of China’s plasma product market is significantly behind that of other developed countries in terms of product structure and per capita usage of each plasma product. An important way to promote plasma market development and to improve cure rates is to raise hospital and patient awareness of plasma products. CBPO is one of the few companies to market plasma products in China. In 2016, China Biologic Product hosted, participated and supported over 100 events nationwide, including academic conferences, business training programs and patient education. Plasma products and programs promoted by CBPO in 2016 included: IVIG, Fact VIII and PCC, covering ER, ICU, cardiology, pediatrics, hematology and anesthesiol- II. New Media Promotion ogy departments. Through new media platforms like Wechat and Weibo, China Biologic introduced plasma products and diseases that can be cured though plasma therapy such as hemophilia. Meanwhile, CBPO also hosted some photo contests and solicited contributions to engage patients. Above: Entries in CBPO’s fruit carving contest Right: CBPO’s posts on Wechat platform 18 Annual Report 2016Corporate Social Responsibility 1. Public service activities for poverty alleviation In April 2016, CBPO initiated its ‘fused in blood, embraced in love’ project to help hemophilia patients in Jinan, the capital city of Shandong Province. The project is co-sponsored by local government agencies and charity organizations including the Shandong Poverty Alleviation Office. China Biologic Products will rely on the Shandong Health and Poverty Alleviation Fund and the Hemophilia Treatment Center of the Shandong Province Blood Center to donate 5 million yuan worth of medicine and rescue funds to unprivileged hemophilia patients within three years. The Project will target underprivileged hemophilia patients and help implement accurate measures to impoverished villages to improve the effectiveness of poverty alleviation, so that more hemophilia patients can receive standardized treatment and improve their quality of life. 2. China Biologic Staff participating in plasma donation CBPO employees also participated actively in plasma donations. This initiative was enthusiastically supported by all levels of corporate staff, from senior management to new hires, and even their families. Everyone proactively engaged in the plasma donation activity to show their support and care for hemophilia patients. 19 CBPO employees from senior management to new hires actively participated in plasma donations. 19 2016 Annual Report 3. China Biologic participating in “World Hemophilia Day: Walk for Love” to support and encourage hemophilia patients. The theme of World Hemophilia Day 2016 was “Treatment for all is the vision of all.” China Biologic’s staff participated in the “Walk for Love” activity and introduced knowledge of hemophilia, hoping to raise social awareness of hemophilia to gather greater support for hemophilia patients and their families. 20 Annual Report 2016Board of Directors Mr. David (Xiaoying) Gao Chairman, CEO & President Mr. Sean Shao Independent Director, Mr. Gao has been a member of our Board since October 6, 2011, our Chairman since March 30, 2012 and our CEO since May 10, 2012. From February 2004 until the company’s acquisition by Sanofi in February 2011, Mr. Gao served as the chief executive officer and director of BMP Sunstone Corporation (Nasdaq: BJGP). Following the acquisition, he served as a senior integration advisor for Sanofi from February to August 2011. From February 2002 through February 2004, Mr. Gao served as the chairman of BMP China’s board of directors. Mr. Gao served as the president and a director of Abacus Investments Ltd, a private wealth management company, from August 2003 until June 2004, and as chief executive officer of Abacus from July 2003 to June 2004. From 1989 to 2002, Mr. Gao held various executive positions at Motorola, Inc., including: a director and vice president of the Integrated Electronic System Sector, Asia-Pacific operation, from 1998 to 2002; a Member of Motorola Asia Pacific Management Board, Management Board of Motorola Japan Ltd., from 2000 to 2002; and Motorola China Management Board from 1996 to 2002. Mr. Gao holds a B.S. in Mechanical Engineering from the Beijing Institute of Technology, a M.S. in Mechanical Engineering from Hanover University, Germany, and an M.B.A. from The Massachusetts Institute of Technology. Chairman of Audit Committee and Compensation Committee Mr. Shao has been a member of our Board since July 24, 2008. In addition to his roles with us, Mr. Shao currently serves as independent director and chairman of the audit committee of: 21Vianet Group, Inc., a leading carrier-neutral internet data center services provider listed on NASDAQ since August 2015; Trina Solar Limited, an integrated solar-power products manufacturer and solar system developer listed on the NYSE since January 2015; Jumei International Holding Ltd., an e-commerce company listed on NYSE since May 2014; LightInTheBox Holdings Co. Ltd., an e-commerce company listed on NYSE since June 2013 and UTStarcom Holdings Corp., a provider of broadband equipment and solutions listed on NASDAQ since October 2012. He served as the chief financial officer of Trina Solar Limited from 2006 to 2008. In addition, Mr. Shao served from 2004 to 2006 as the chief financial officer of ChinaEdu Corporation, an educational service provider, and of Watchdata Technologies Ltd., a Chinese security software company. Prior to that, Mr. Shao worked at Deloitte Touche Tohmatsu CPA Ltd. for approximately a decade. Mr. Shao received his master’s degree in health care administration from the University of California at Los Angeles in 1988 and his bachelor’s degree in art from East China Normal University in 1982. Mr. Shao is a member of the American Institute of Certified Public Accountants. 21 2016 Annual Report Mr. David Hui Li Director Prof. Wenfang Liu Independent Director Mr. David Hui Li has been a member of our Board since November 4, 2013. Mr. David Li was an executive director and a managing director at Warburg Pincus Asia LLC (“Warburg Pincus”) from 2002 to January 2016. Prior to joining Warburg Pincus, Mr. Li served as an executive director in the investment banking division of Goldman Sachs from 2001 to 2002 and that of Morgan Stanley from 1994 to 2001. He is also a director of UCAR Inc. and China Advanced Gas Resources (Hong Kong) Limited. Mr. Li received a B.S. in economics from Renmin University of China and an M.B.A. from Yale University School of Management. Prof. Wenfang Liu has been a member of our Board since February 27, 2011. He has served as an independent director of Sinco Pharmaceuticals Holdings Limited, a Hong Kong listed pharmaceutical company from March 2016. From 2007 to 2011, Prof. Liu served as the chief consultant for Sichuan Yuanda Shuyang Pharmaceuticals. Prior to that, he served from 2000 to 2007, in various managerial positions including as the chief engineer and a director of Hualan Biological Engineering, and as a director of blood separating, from 2005 to 2006, at Chengdu Jiaying Medical Product Co. Ltd. Prior to that, Prof. Liu served, from 1998 to 1999, as the chief engineer of Guiyang Qianfeng Biological Products Co. Ltd., and from 1988 to 1998 as the vice chairman of the Institute of Blood Transfusion of Chinese Academy of Medical Sciences. Prof. Liu previously served as a member of the Sichuan CPPCC Standing Committee, the Chinese Society of Blood Transfusion and the China Medical Biotech Association. He holds a Bachelor’s Degree in Bio-Chemistry from the Chinese Academy of Sciences, Forest and Soil College and was a Ph.D. advisor from 1997 to 1998. Dr. Yungang Lu Independent Director Chairman of Governance Dr. Lu has been a member of our Board since March 19, 2012. Dr. Lu has served as a managing director of Seres Asset Man- agement Limited, an investment manager based in Hong Kong, since August 2009. Dr. Lu also serves as a director of the following listed companies: China Techfaith Wireless Communication Technology Ltd., a handheld device company in China, and China Cord Blood Corporation, a provider of cord blood storage services in China. From 2004 to July 2009, Dr. Lu was a Managing Director of APAC Capital Advisors Limited, a Hong Kong- based investment manager specializing in Greater China equities. Dr. Lu was a research analyst with Credit Suisse First Boston (Hong Kong), a financial services company, from 1998 to 2004, where his last position was the head of China Research. Before moving to Credit Suisse, he worked as an equity analyst focused on regional infrastructure at JP Morgan Securities Asia, a financial services company, in Hong Kong. Dr. Lu received a B.S. in Biology from Peking University, an M.S. in Biochemistry from Brigham Young University and a Ph.D. in Finance from the University of California, Los Angeles. 22 Annual Report 2016Mr. Zhijun Tong Independent Director Mr. Albert (Wai Keung) Yeung Independent Director Mr. Joseph Chow Independent Director Mr. Tong has been a member of our Board since April 20, 2012. He has served as the chairman of the board of directors of several corporations, including Spain Qifa Corporation Ltd. since 1996, Hong Kong Tong’s Group since 2007, Sunstone (Qingdao) Plant Oil Co., Ltd. since 2008, Sunstone (Qingdao) Food Co., Ltd. since 2009, Shengda (Zhangjiakou) Pharmaceutical Co., Ltd. since 2011 and Shengda (Qianxi) Chinese Medicine Cultivation Co., Ltd. since 2012. Mr. Tong has also served as a director and a vice president of Spain International Haisitan Group since 1993. From 2007 to 2011, he was the chairman of the board of directors and General Manager of Sunstone Pharmaceutical Co., Ltd, and also served as the president and a director of BMP Sunstone Corporation, a NASDAQ-listed pharmaceutical corporation. Mr. Yeung has been a member of our Board Mr. Chow has been a member of our since July 29, 2012. Mr. Yeung has been since Board since November 3, 2014. Mr. 2005 a partner of Albert Yeung & Associate Chow has over 20 years of experience in Consulting Company, a consulting company corporate finance, financial advisory and providing M&A, leadership and executive management and has held senior executive coaching services to senior managers and and managerial positions in various public chief executive officers. From August 2006 and private companies. Mr. Chow was to February 2011, Mr. Yeung also served as recently a managing director of Moelis and a director of BMP Sunstone Corporation, Company and was previously a managing a company listed on NASDAQ until the director at Goldman Sachs (Asia) LLP. Prior to company’s acquisition by Sanofi. From April that, he served as an independent financial 1, 2015, Mr. Yeung has been an independent consultant, as chief financial officer of Harbor director of PharmaMax Corporation. Since Networks Limited, and as chief financial September 6, 2015 Mr. Yeung has been officer of China Netcom (Holdings) Company an independent director of Beijing Promed Limited. Prior to that, Mr. Chow served as the Medical Technology Co. Ltd. Prior to director of strategic planning of Bombardier retirement, Mr. Yeung had spent more than Capital, Inc., as vice president of international 30 years in China’s pharmaceutical industry, operations of Citigroup and as the corporate holding various senior sales, marketing and auditor of GE Capital. Mr. Chow currently sits general management positions with major on the board as independent non-executive pharmaceutical corporations in Hong Kong director for China ZhongDi Dairy Holdings and mainland China, including Johnson & Company Limited, Intime Department Johnson, Xian-Janssen, Burroughs Wellcome, Store (Group) Co., Ltd. and CAR, Inc., Bristol Myers-Squibb and GlaxoSmithKline. respectively, which are companies listed on the Stock Exchange of Hong Kong. Mr. Chow obtained a Bachelor of Arts degree in political science from Nanjing Institute of International Relations and a Master of Business Administration degree from the University of Maryland at College Park. 23 2016 Annual Report Corporate Information Legal Counsel Davis Polk & Wardwell LLP Independent Auditor KPMG IR Agent ICR LLC Bill Zima, Partner China: 203-682-8200 U.S.: +1 646 405 5191 William.Zima@icrinc.com China Biologic Products, Inc. Room 1801, 19 Chaoyang Park Road Chaoyang District, Beijing 100125 People’s Republic of China China: +86 10 6598 3099 ir@chinabiologic.com Market Data Exchange: NASDAQ Ticker: CBPO Website www.chinabiologic.com Transfer Agent Securities Transfer Corporation 2591 Dallas Parkway, Suite #102, Frisco, Texas, 75034 Tel: 469-633-0101 24 Annual Report 2016  UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended: December 31, 2016 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____________ to _____________ Commission File No. 001-34566 CHINA BIOLOGIC PRODUCTS, INC.(Exact name of registrant as specified in its charter) Delaware75-2308816(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.) 18th Floor, Jialong International Building, 19 Chaoyang Park RoadChaoyang District, Beijing 100125People’s Republic of China(Address of principal executive offices) (+86) 10-6598-3111(Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Stock, par value $0.0001 per sharePreferred Share Purchase Rights NASDAQ Global Select MarketNASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Exchange Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x No ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files) Yes x No ¨ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer xAccelerated Filer ¨ Non-Accelerated Filer ¨(Do not check if a smaller reporting company)Smaller reporting company ¨ Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x The aggregate market value of common stock held by non-affiliates of the registrant, based upon the closing sale price on June 30, 2016 as reported on theNASDAQ Global Select Market, was approximately $2,162 million. There were a total of 27,184,780 shares of the registrant’s common stock outstanding as of February 23, 2017. DOCUMENTS INCORPORATED BY REFERENCESource: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Portions of the registrant’s Proxy Statement for its 2017 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the close ofthe registrant’s fiscal year are incorporated by reference into Part III of this annual report on Form 10-K. Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Annual Report on Form 10-KYear Ended December 31, 2016 TABLE OF CONTENTS PART I Item 1.Business3Item 1A.Risk Factors24Item 1B.Unresolved Staff Comments45Item 2.Properties45Item 3.Legal Proceedings46Item 4.Mine Safety Disclosures48 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities49Item 6.Selected Financial Data50Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations51Item 7A.Quantitative and Qualitative Disclosures about Market Risk66Item 8.Financial Statements and Supplementary Data68Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure68Item 9A.Controls and Procedures68Item 9B.Other Information71 PART III Item 10.Directors, Executive Officers and Corporate Governance77Item 11.Executive Compensation77Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters78Item 13.Certain Relationships and Related Transactions, and Director Independence78Item 14.Principal Accounting Fees and Services78 PART IV Item 15.Exhibits, Financial Statement Schedules78Item 16. Form 10-K Summary78 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Special Note Regarding Forward Looking Statements In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,”“plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include,among others, those concerning market and industry growth and demand and acceptance of new and existing products; expectations regarding governmentalapprovals of our new products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies andobjectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions,expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of futureperformance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results ofour company to differ materially from those expressed or implied by such forward-looking statements. Risks and uncertainties that could cause actual resultsto differ materially from those anticipated include risks related to, among others, our ability to overcome competition from local and internationalpharmaceutical enterprises; decrease in the availability, or increase in the cost, of plasma; failure to renew plasma collection permits for plasma collectionstations; failure to meet the GMP standard or other mandatory requirements for any of our facilities; failure to obtain PRC governmental approval to increaseretail prices of certain of our biopharmaceutical products; loss of key members of our senior management; and unexpected changes in the PRC government’sregulation of the biopharmaceutical industry in China, or changes in China’s economic situation and legal environment. Additional disclosures regardingfactors that could cause our results and performance to differ from results or performance anticipated by this report are discussed in Item 1A “Risk Factors.” Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attemptto advise interested parties of the risks and factors that may affect our business, prospects, financial condition and results of operations. The forward-lookingstatements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions oramendments to any forward-looking statements to reflect changes in our expectations or future events. Use of Terms Except as otherwise indicated by the context and for the purposes of this report only, references in this report to: ·“China Biologic,” “we,” “us,” “our company,” or “our” are to China Biologic Products, Inc., a Delaware corporation, and, unless the context requiresotherwise, its direct and indirect subsidiaries;·“China” or “PRC” are to the People’s Republic of China, excluding, for the purposes of this report only, Taiwan and the special administrativeregions of Hong Kong and Macau;·“CFDA” are to China Food and Drug Administration;·“Exchange Act” are to the Securities Exchange Act of 1934, as amended;·“GMP” are to good manufacturing practice;·“Guizhou Taibang” are to Guizhou Taibang Biological Products Co., Ltd., a PRC company indirectly wholly owned by us, formerly known asGuiyang Qianfeng Biological Products Co., Ltd.;·“Huitian” are to Xi’an Huitian Blood Products Co., Ltd., a PRC company in which we hold an indirect minority equity interest; 1 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·“NDRC” are to the PRC National Development and Reform Commission;·“NHFPC” are to the PRC National Health and Family Planning Commission, formerly known as the PRC Ministry of Health;·“RMB” are to the legal currency of China;·“PFDA” are to PRC provincial food and drug administration;·“SEC” are to the Securities and Exchange Commission;·“Securities Act” are to the Securities Act of 1933, as amended;·“Shandong Taibang” are to Shandong Taibang Biological Products Co., Ltd., a PRC company indirectly majority owned by us;·“Taibang Biological” are to Taibang Biological Ltd., a British Virgin Islands company wholly owned by us, formerly known as Logic Express, Ltd.;·“Taibang Holdings” are to Taibang Holdings (Hong Kong) Limited, a Hong Kong company indirectly wholly owned by us, formerly known asLogic Holdings (Hong Kong) Limited; and·“U.S. dollars” or “$” are to the legal currency of the United States. 2 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART I ITEM 1. BUSINESS. OVERVIEW We are a biopharmaceutical company principally engaged in the research, development, manufacturing and sales of human plasma-based biopharmaceuticalproducts, or plasma products, in China. We are among the top three producers of plasma products in China in terms of 2016 sales, based on our industryknowledge. We operate our business through a majority owned subsidiary, Shandong Taibang, a company based in Tai’an, Shandong Province and a whollyowned subsidiary, Guizhou Taibang, a company based in Guiyang, Guizhou Province. We also hold a minority equity interest in Huitian, a plasma productscompany based in Xi’an, Shaanxi Province. We have a strong product portfolio with over 20 different dosage forms of plasma products and other biopharmaceutical products across nine categories. Allof our products are prescription medicines administered in the form of injections. Our principal products are human albumin and immunoglobulin forintravenous injection, or IVIG. Albumin has been used for almost 50 years to treat critically ill patients by assisting the maintenance of adequate bloodvolume and pressure. IVIG is used for certain disease prevention and treatment by enhancing specific immunity. These products use human plasma as theirprincipal raw material. Sales of human albumin products represented approximately 39.2%, 37.6% and 39.3% of our total sales for 2016, 2015 and 2014,respectively. Sales of IVIG products represented approximately 34.6%, 42.2% and 40.4% of our total sales for 2016, 2015 and 2014, respectively. Our sales model focuses on direct sales to hospitals and inoculation centers and is complemented by distributor sales. In 2016, we generated sales of $341.2million, an increase of 15.1% from 2015, and recorded net income attributable to our company of $104.8 million, an increase of 17.8 % from 2015. In 2015,we generated sales of $296.5 million, an increase of 21.9% from 2014, and recorded net income attributable to our company of $89.0 million, an increase of25.5% from 2014. We operate and manage our business as one single segment. We do not account for the results of our operations on a geographic or other basis. Corporate History and Structure China Biologic Products, Inc. was originally incorporated on December 20, 1989 under the laws of the State of Texas as Shepherd Food Equipment, Inc. OnNovember 20, 2000, Shepherd Food Equipment, Inc. changed its corporate name to Shepherd Food Equipment, Inc. Acquisition Corp., or Shepherd.Shepherd is the survivor of a May 28, 2003 merger between Shepherd and GRC Holdings, Inc., or GRC, a Texas corporation. In the merger, the survivingcorporation adopted the articles of incorporation and bylaws of GRC and changed its corporate name to GRC Holdings, Inc. On January 10, 2007, a plan ofconversion became effective pursuant to which GRC was converted into a Delaware corporation and changed its name to China Biologic Products, Inc. OnJuly 19, 2006, we completed a reverse acquisition with Logic Express Ltd., or Logic Express, a British Virgin Islands company, as a result of which LogicExpress became our wholly owned subsidiary, the former shareholders of Logic Express became our then controlling stockholders, and Logic Express’smajority owned PRC subsidiary, Shandong Taibang, became our majority owned indirect subsidiary. Our common stock was initially quoted on the over-the-counter market maintained by Pink Sheets LLC. On February 29, 2008, our common stock wasapproved for quotation on the Over-The-Counter Bulletin Board under the trading symbol “CBPO.OB.” On November 25, 2009, our common stock wasapproved for listing on the NASDAQ Global Market under the symbol “CBPO” and subsequently approved for listing on the NASDAQ Global Select Marketon December 7, 2010. 3 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following chart reflects our current corporate structure as of the date of this report: (1)In April 2016, Guiyang Dalin Biologic Technologies Co., Ltd. increased its equity interest in Guizhou Taibang from 81.81% to 85.27% following aseries of capital injections. In November 2016, two former minority shareholders withdrew their respective capital contributions in Guizhou Taibang, andas a result, Guizhou Taibang became a wholly owned subsidiary of Guiyang Dalin Biologic Technologies Co., Ltd. See “Legal Proceedings — Disputewith Jie’an over Certain Capital Injection into Guizhou Taibang” for further details.(2)Pursuant to an investment entrustment agreement dated September 12, 2008, Shandong Taibang holds the 35.0% equity interest in Huitian as a nomineefor the benefit of Taibang Biological. For further details on the investment entrustment agreement, see our Current Report on Form 8-K filed with theSEC on October 16, 2008.(3)On September 3, 2016, the Company disposed of its 100% equity interest in Shandong Taibang Medical Company for a cash consideration of $128,654.The carrying value of net identifiable assets (including currency translation difference) amounted to $204,545 as at September 3, 2016, resulting in adisposal loss of $75,891. Corporate Information Our principal executive offices are located at 18th Floor, Jialong International Building, 19 Chaoyang Park Road, Chaoyang District, Beijing 100125,People’s Republic of China. Our corporate telephone number is (8610) 6598-3111 and our fax number is (8610) 6598-3222. We maintain a website athttp://www.chinabiologic.com that contains information about our company, but that information is not part of this report or incorporated by referenceherein. 4 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. INDUSTRY Overview We operate in the plasma industry in China. We derive certain industry-related data from reports and written analysis prepared by The Marketing ResearchBureau, Inc., or MRB, an independent research firm focused on blood and plasma industry data on a global level, including a China-specific report fromJanuary 2017. China is the second largest plasma products market in the world, after the United States. According to MRB, China’s plasma products market (excludingrecombinant products) grew from $0.80 billion in 2009 to $2.47 billion in 2015 in terms of sales revenue, representing a compound annual growth rate, orCAGR, of 20.7%. MRB expects that by 2018, China’s plasma-derived products market will reach over $3.3 billion, representing about a 35% increase from2015, assuming domestic plasma supply continues to grow at least 8% annually. Based on our industry knowledge, human albumin products dominatedChina’s plasma products market with a market share of 64.7% in terms of sales revenue in 2016, and IVIG products accounted for 25.2% of the market. Otherplasma products, including coagulation factors, accounted for the remaining 10.1% of the market in 2016. Compared to more developed countries, China has a lower per capita usage level of plasma products, and China’s plasma products market is significantlydifferent in terms of product composition and range. In more developed countries such as the United States, IVIG products account for a majority of plasmaproduct sales. This difference reflects the maturity levels of the plasma industries in these countries. According to MRB, plasma fractionation came intoexistence in the 1940s in the United States, whereas in China, plasma processing appeared in the 1960s or 1970s. Until the early 1970s, the U.S. plasmaproducts market was dominated by albumin products, as is the case in China’s market presently. The current low per capita consumption of IVIG products inChina is primarily attributable to a lack of awareness of the benefits of IVIG therapy, especially in medical conditions such as primary immune deficiency orchronic inflammatory demyelinating polyneuropathy, and lower per capita healthcare spending in China. China’s plasma products market is expected to beincreasingly driven by IVIG products in the future as IVIG therapy becomes more widespread as a result of the combined efforts of physician education andproduct promotion, among other factors. Based on our industry knowledge, China National Biotec Group, or CNBG, Hualan Biological Engineering Inc., or Hualan, and China Biologic, were the topthree plasma product manufacturers in terms of sales revenue in 2016. Overall Plasma Products Market Trends Compared to more developed countries, China’s plasma products market has distinctive characteristics and trends, including the following: High Entry Barriers. The PRC State Council has ceased issuing new plasma fractionation licenses since 2001, and there are approximately 30 licensedproducers of plasma products in China, of which only approximately 28 are currently in operation. Nearly all of these producers make albumin and IVIGproducts, but only five of them, including China Biologic, make factor VIII products. Furthermore, foreign investment in domestic producers of plasmaproducts is subject to stringent government approval process. As a result, existing China-based producers with large production capacities face limitedcompetition and are well positioned to gain more market share during the industry consolidation phase. 5 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Stringent regulation. China’s plasma products market is stringently regulated. Because of the public health crises of contaminated plasma productsexperienced by China over the past decade, China has implemented, and is expected to continue to maintain, stringent regulations for the plasma productsindustry in the foreseeable future. The opening of a new plasma collection station in China requires the approval by three levels of government authorities,namely the provincial, municipal and county level authorities, which is a time-consuming and difficult process. To be eligible to open a new collectionstation, a company must produce no fewer than six types of plasma products, which must include products in three mandatory categories, namely humanalbumin, immunoglobulin and coagulation factors. From 2010 to 2015, various local governments approved the opening of plasma collection stations bysmall companies that were not able to produce all the mandatory products. In response, in December 2016, the NHFPC and CFDA jointly released a newguideline on the regulation of plasma collection stations. The guideline aims to strengthen regulatory oversight for existing collection stations and approvalrequirements for new plasma collection stations, and to tighten safety control at the plasma collection stations to improve the quality of plasma collected.The guideline states that in considering the applications for the opening of new plasma collection stations, the relevant authorities should give priority tocompanies with strong research and development capabilities, high plasma utilization rate and good management practice. We believe this guideline willbenefit large plasma products manufacturers like China Biologic by reducing the chance for smaller manufacturers to open new plasma collection stations. Demand outstripping supply. Due to stringent regulations on the collection of raw plasma from human beings and a lack of plasma donation, China hasexperienced a shortage of plasma products since the 1980s. There are fewer than 220 plasma collection centers in China, compared to over 530 in the UnitedStates. The restriction on approving new collection centers in China, cultural barriers to plasma donation, concerns over plasma donation safety, and lowquantity per donation and long intervals between donations contribute to the supply shortage. According to the National Health and Family PlanningCommittee (NHFPC), the demand for raw plasma materials in China is estimated to be over 10,000 tons per annum. Total plasma collected in 2015 was 5600tonnes in China, in comparison with over 30,000 tonnes in the United States. As a result, the tendering prices for plasma products by various provincial andregional governments have been slightly increased or stabilized in contrast to price cuts for other drugs. Ban on imports. As a measure to prevent a range of viral risks, China strictly prohibits the import of plasma products, except for human albumin andrecombinant factor VIII products. In other market segments, such as IVIG, where import is prohibited, domestic producers are shielded from competition fromtheir multinational peers, and the demand for such products in China has been supplied entirely by domestically-sourced plasma only. Low consumption level and huge growth potential. While China’s plasma products market has experienced rapid growth in recent years, China’s per capitaconsumption of plasma products lags substantially behind more developed countries. The following chart sets forth the comparison of per capitaconsumptions of selected plasma products in China and the United States in 2015: 6 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Source: MRB(1)Based on 2015 per capita consumption (kilogram per million inhabitants) in the Unites States divided by 2015 per capita consumption in China.(2)Based on 2015 per capita consumption (international units per capita) in the Unites States divided by 2015 per capita consumption in China. Based on our industry knowledge, as a result of the growing number of patients seeking treatment of plasma products, an increasing awareness of healthbenefits of plasma products and the rising affordability of plasma products since the commencement of China’s healthcare reform, China’s plasma productsmarket is expected to continue to have substantial growth potential. Improved fractionation technologies. In the early years of plasma fractionation in China, technologies used were not as sophisticated as those in the UnitedStates, resulting in relatively low yields and a product portfolio limited to only two or three products (albumin, IVIG and hyper-immune globulin products).Technologies used by and yields from leading domestic manufacturers are, however, on par with international standards, and these manufacturers are wellpositioned to manufacture safer products and have higher production efficiency compared with other domestic companies. Increasing market concentration of top players. China’s current landscape of plasma products market is relatively fragmented. However, factors such asstringent regulations, tightened quality control and heavy capital expenditure requirements have contributed to increasing industry consolidation in recentyears. For instance, the CFDA issued new GMP requirements to re-certify all the fractionation plants by the end of 2013, which has resulted in the shutdownof smaller fractionation plants that were unable to upgrade their production lines by the deadline. China’s plasma industry has also witnessed multiple mergerand acquisition transactions in recent years. Market leaders with stable plasma supplies complemented by further collection expansion potentials, strongproduct portfolios and robust research and development capabilities are expected to be able to continue to solidify their positions and further gaindevelopment advantages. 7 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Albumin Market Trends According to MRB, human albumin products achieved sales revenue of $1.57 billion in 2015, accounting for 63.8% of China’s plasma products market(excluding recombinant factors) in 2015 and representing a CAGR of approximately 25.3% from 2009. The robust demand for albumin products in China continues to grow as a result of the high incidence of hypo-albuminemia from liver cirrhosis, cancer and incardiac surgeries. Unlike many other plasma products, albumin products may be imported from other countries due to the acute shortage of albumin productsfrom domestic manufacturers, and as a result, many multinational plasma product manufacturers are expected to continue to divert a large portion of theiralbumin products to China’s market in the future so long as the price in China remains competitive. Based on our industry knowledge, imported albuminproducts accounted for approximately 56.2% of China’s albumin products market in 2016. CNBG, Hualan, and China Biologic were the three largestdomestic albumin product manufacturers with a combined market share close to 19.9%, and China Biologic ranked the third with a market share ofapproximately 6.5%, in terms of sales revenue in 2016. IVIG Market Trends According to MRB, China’s IVIG products achieved sales revenue of $671.0 million in 2015, representing a CAGR of approximately 14.5% from 2009.Based on our industry knowledge, CNBG, Hualan, and China Biologic were the three largest domestic albumin product manufacturers with a combinedmarket share close to 48.5%, and China Biologic ranked the third with a market share of approximately 14.7%, in terms of sales revenue in 2016. In more developed countries, major applications of IVIG therapy are for chronic diseases such as primary immune deficiency and chronic inflammatorydemyelinating polyneuropathy, which require treatment for a number of years or even lifetime. In contrast, IVIG therapy is only used to treat acute diseasesand infections in China. The substantial growth in China’s IVIG products market in recent years was mainly due to increasing awareness by doctors of thebenefits of IVIG therapy. Compared with the markets in more developed countries, China’s IVIG products market is far from mature. In 2015, for instance, theper capita consumption of IVIG products in China was 15.0 grams per 1,000 inhabitants, as compared to over 200 grams per 1,000 inhabitants in the UnitedStates, according to MRB, and therefore there is tremendous growth potential as China’s IVIG per capita consumption draws closer to that of the UnitedStates. Developing this market requires significant efforts from IVIG manufacturers to educate physicians, the public and the health authorities on the benefitsof IVIG therapy for a number of medical conditions. In countries with higher per capita consumption of IVIG products, the efficacy of IVIG therapy in anumber of medical conditions has been promoted over the years by clinical trials, anecdotal reports, scientific articles, educational activities for physiciansand medical students, medical conferences and seminars, and promotional campaigns such as advertisements in medical journals. The role of a specializedsales force was also instrumental in the rapid acceptance of IVIG therapy in North America and Europe. In addition, patient organizations, which are largelysupported by IVIG manufacturers, have also become increasingly important in recent years, as they are able to draw physicians’ attention to antibodydeficiency tests. All of these factors may be replicated in China as a result of IVIG manufacturers’ educational and promotional efforts as well as economicdevelopment and healthcare spending growth in China. Factor VIII Market Trends According to MRB, China’s market size for plasma-derived factor VIII was $36.2 million in terms of sales revenue in 2015, representing a CAGR ofapproximately 22.7% from 2009. Based on our industry knowledge, only five domestic plasma product manufacturers offered plasma-derived factor VIII in2016. Hualan, Green Cross (China) Biological Products Co., Ltd., and China Biologic were the largest three domestic manufacturers of plasma-derived factorVIII with a combined market share close to 84.9%, and China Biologic ranked the third with a market share of approximately 21.8%, in terms of sales revenuein 2016. 8 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. There were over 15,000 registered hemophilia patients in China as of December 31, 2016, according to China Hemophilia Association, which underpins asignificant market demand for factor VIII products. Due to an acute shortage of plasma-derived coagulation factor concentrates available in China as a resultof limited coagulation factor manufacturers, recombinant factor VIII products have taken a growing role in hemophilia care in China. However, sincerecombinant products are approximately twice more expensive than plasma-derived factor VIII products and not covered by national health insurance for fullreimbursement in China, they are used only in the absence of suitable plasma-derived products. As an increasing number of China-based manufacturers,including China Biologic, commercially launched factor VIII products, the supply is expected to increase and lead to overall market growth. It is unlikely,however, that plasma-derived factor VIII will be able to fully meet the market demand if hemophilia care continues to improve in China. China’s market forfactor VIII products is expected to experience a continued shortage of plasma-derived factor VIII products in the foreseeable future. BUSINESS Our Competitive Strengths We believe that the following competitive strengths enable us to compete effectively in and capitalize on the growth of the plasma products market: Leading producer of plasma products in China with strong growth potential We are one of the top three producers of plasma products in terms of 2016 sales revenue based on our industry knowledge. In the albumin segment, whichaccounts for a majority of the plasma products market in China, we are the third largest domestic producer with a market share of approximately 6.5% in termsof 2016 sales revenue, based on our industry knowledge. In the IVIG segment, which is the second largest segment of the plasma products market in China,we are also the third largest producer overall in China with a market share of approximately 14.7% in terms of 2016 sales revenue, based on our industryknowledge. We have a strong product portfolio with over 20 different dosage forms of plasma products and other biopharmaceutical products across nine categories and arobust near-term product pipeline of seven products. We believe that we are one of the only four plasma products manufacturers in China with the productportfolio comprising at least eight categories of plasma products. Since different types of plasma products utilize different protein components of plasma,different types of plasma products can be produced from the same raw plasma supply with minimal incremental increase in raw material cost. Our broadproduct portfolio, supported by our strong research and development capabilities, therefore, provides us with the benefit of more comprehensive plasmautilization, which in turn contributes to higher profit margins. We believe that product safety and supply stability are the most critical considerations for hospitals and inoculation centers in making purchase decisions onplasma products. We implement stringent quality control measures throughout our production process, and have not historically experienced failure toreceive pre-sale approval or had a recall with respect to any of our plasma products. We currently have a manufacturing facility in Guizhou Province andexpect to launch a new manufacturing facility in Shandong Province by the end of 2017 to replace our old facility in Shandong Province, which together willreach a production capacity of 1,600 tonnes. As a leading producer of plasma products, we have been able to maintain a steady plasma supply volume andsales volume over the years. Our safety record and the stability of our supply, we believe, have strengthened our business relationship with existing customersand enhanced our ability to acquire new customers. 9 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. China’s plasma products market is, and will continue to be, subject to stringent government regulation. In recent years, however, PRC regulators have alsotaken initiatives to increase plasma collection volume by approving more new plasma collection stations and expanding plasma collection coverage forexisting plasma collection stations. We are well positioned to benefit from these favorable regulatory trends as we are able to meet the associated qualitycontrol and technology investment requirements. Stable and growing supply of plasma with strategically located collection stations Our ability to secure and expand our supply of plasma, a critical raw material for our operations, is one of our key strengths. Our plasma collection networkconsists of 14 captive plasma collection stations (including one branch collection facility). In addition, Huitian, a company in which we hold a minorityequity interest, operates three plasma collection stations. In 2016, we were among the top five plasma collectors in China in terms of collection volume withapproximately 12.4% of the total national supply, based on our industry knowledge. We operate nine plasma collection stations (including one branch collection facility) in Shandong Province, two in Guangxi Province, two in GuizhouProvince, and one in Hebei Province, covering 33 cities and counties with an aggregate population of approximately 42.6 million. Shandong Province hasone of the largest population, and Guangxi Province and Guizhou Province are among the least economically developed regions in China — both favorablecharacteristics underpinning a strong and stable plasma supply. Hebei Province is an underdeveloped province for plasma collection that providesconvenient and economic transportation to our manufacturing facilities in adjacent Shandong Province. We continue to seek innovative ways to identify and attract potential plasma donors. We regularly organize a variety of community events to deliver ourmessages that focus on the life-saving and other social contribution aspects of plasma donation. We also regularly review our donor compensation to ensurethat it remains competitive. In addition, we actively seek to expand the geographic coverage of our existing collection stations to gain access to additionaldonor populations. As a result of our collection efforts, our average plasma collection volume is greater than the national average by approximately 78.0% in2016 based on our industry knowledge. Our total plasma collection volume increased by approximately 16.9% from 2015 to 2016. In addition to increasing our collection volume at existing plasma collection stations, we also seek to build new plasma collection stations to expand ourdonor base. For example, in October 2014, we received regulatory approval to build two new plasma collection stations in Xinglong and Daming Counties,respectively, in Hebei Province. In June 2016, we received the operating permit for and commenced operations at our new plasma collection station inXinglong County. The Daming station is still under construction as of the date of this report and is expected to open in 2017. In December 2016, we receivedthe regulatory approvals to build a new plasma collection station in Ju County in Shandong Province and to build a branch collection facility in FeichengCounty to operate under our Ningyang plasma collection station in Shandong Province. 10 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Robust near-term product pipeline to capture full plasma value chain backed by strong research and development capabilities We currently have six new products under development, with one of them in registration stage and expected to be commercially launched in the second halfof 2017. We expect our expanding product portfolio to further increase our comprehensive plasma utilization, which will in turn lead to higher profitmargins. With our current and pipeline products, we believe that by 2018, our product offerings will be able to capture substantially all of the value along theplasma products value chain. Benefiting, in part, from our direct sales to hospitals and inoculation centers, our ability to bring new products to market reflects a research and developmentprocess that is demand-driven and highly responsive to physician feedback and the latest market trends in medicine. To complement our research anddevelopment efforts, we also work closely with a number of leading research institutes in China specializing in plasma products. As of December 31, 2016,we held 55 patents for plasma products. Leading position in China’s fast-growing IVIG products market We are the third largest producer of IVIG products in China in terms of 2016 sales revenue based on our industry knowledge. Our IVIG sales, accounting forapproximately 34.6% of our total sales, increased to $117.9 million in 2016 from $98.4 million in 2014, representing a CAGR of 9.5% between 2014 and2016. We attribute our rapid growth and leading position in the IVIG products market, in part, to our continued efforts to promote IVIG therapy to physiciansin tier one cities. Compared with markets in more developed countries, China’s IVIG products market is far from mature. In more developed countries, major applications ofIVIG therapy are for chronic diseases, which require treatment for a number of years or even lifetime, while in China, IVIG therapy is only used to treat acutediseases and infections. Also, the per capita consumption of IVIG products in China is significantly lower than that in the more developed countries, andtherefore there is significant growth potential as China’s IVIG consumption draws closer to that of the more developed countries as a result of growingawareness of IVIG therapy and favorable government reimbursement policies. For details of the IVIG products market comparison, see “Industry — IVIGMarket Trends.” As a leading player in China’s IVIG products market, we are uniquely positioned to benefit from the anticipated increase in demand from thepopularization of IVIG therapy. Flexible and effective sales and distribution model aimed to maximize penetration We have a flexible sales model that focuses on direct sales to hospitals and inoculation centers and is complemented by distributor sales. Under this salesmodel, our products reach 30 provinces, municipalities and autonomous regions in China. In 2016, 55.3% of our product sales were generated from direct sales, and in 2016, our direct sales network covered approximately 605 hospitals andinoculation centers. Our sales and marketing team, consisting of 114 employees as of December 31, 2016, is responsible for the sales and marketing efforts toour end customers and provide product educational programs and other sales support directly to doctors and nurses. These efforts are designed to ensureeffective and seamless communications with our end customers, particularly with respect to clinical education, which provides us with first-hand intelligenceon the latest industry trends and market demands and enables us to provide better after-sale services and support. For example, our sales and marketing teamactively promotes new IVIG indications that are widely accepted in more developed countries but less known among Chinese physicians. Our direct sales network is complemented by sales through distributors, which accounted for 38.9% of our plasma sales in 2016. We select our distributorsthrough a rigorous process, which focuses on market leadership in the covered region, the degree of control we have over to which hospitals our products aresold (i.e., larger and higher tiered hospitals are preferred), and the level of access we have to our customers (i.e., greater access enables us to better track thesales of our products). 11 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We believe that our flexible sales model of focusing on direct sales is cost-effective and has helped us to achieve strong financial performance. Our sellingexpenses as a percentage of sales were 3.4%, 3.4% and 4.4% in 2016, 2015 and 2014, respectively; and our operating margin was 42.1%, 44.7% and 45.7%during these periods, respectively. Experienced and committed management team We have an experienced, dedicated and visionary management team with an in-depth understanding of the pharmaceutical industry in China. Our Chairmanand Chief Executive Officer, Mr. David (Xiaoying) Gao, with more than 14 years of experience in the pharmaceutical industry, was instrumental in thedevelopment and implementation of our business strategy. Before joining our company, Mr. Gao was the chief executive officer of BMP SunstoneCorporation before that company was acquired by Sanofi. Our Chief Financial Officer, Ming Yang, has more than 19 years of financial management andaccounting experience. Mr. Guangli Pang and Mr. Gang Yang, the general manager of Shandong Taibang and Guizhou Taibang, respectively, have morethan 30 and 20 years of experience in the plasma products industry in China, respectively. Since our current senior management team was put in place in2012, we have been committed to improving corporate governance and enhancing shareholder value. We believe our management team, with their extensiveindustry background and strong management talent, provides a strong foundation for the execution of our growth strategy and achievement of our goals. Our Business Strategy Our mission is to become a first-class biopharmaceutical enterprise in China. To achieve this objective, we have implemented a business strategy with thefollowing key components: Securing the supply of plasma Due to the shortage of plasma, we plan to build new plasma collection stations in regions not covered by our existing collection network as well as to expandcollection territories of existing plasma collection stations in order to secure our plasma supply. We currently have a total of 14 plasma collection stations(including one branch collection facility) in operation, of which nine are in Shandong Province, two in Guangxi Province, two in Guizhou Province and onein Hebei Province. In October 2014, we received the regulatory approval to build two new plasma collection stations in Xinglong and Daming Counties,respectively, in Hebei Province. In June 2016, we received the operating permit for and commenced operations at our new plasma collection station inXinglong County. The Daming station is still under construction as of the date of this report and is expected to open in 2017. In December 2016, we receivedthe regulatory approvals to build a new plasma collection station in Ju County in Shandong Province and to build a branch collection facility in FeichengCounty to operate under our Ningyang plasma collection station in Shandong Province. Meanwhile, we are carrying out various promotional activities tostabilize and expand our donor base for our existing plasma collection stations. A majority of our plasma collection stations recorded increases in plasmacollection volume in 2016 as compared to 2015. Further strengthening of research and development capability We believe that, unlike other more developed countries such as the United States, China’s plasma products are at an early stage of development. There aremany other plasma products that are being used in the United States, which are not currently manufactured or used widely in China. We intend to strengthenour research and development capabilities through in-house development and partnership with leading international players to expand our product line toinclude plasma products that have higher margins and are technologically more advanced. We also intend to continue to improve the yield for our products.As a result of our research and development efforts, we currently have six products under development, with one of them in registration stage and expected tobe commercially launched in the second half of 2017. For further details of our pipeline products, see “— Our Research and Development Efforts” below. Webelieve that our increased focus on research and development will give us a competitive advantage in China over our competitors. 12 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Market development and network expansion Leveraging on the high quality and steady supply of our products, we intend to expand our geographic coverage in China to include markets where weenvision significant growth potential. In particular, we plan to further strengthen our direct sales by growing our sales and marketing team and expanding ourcoverage among hospitals and inoculation centers. We also plan to strengthen our relationships with major distributors in tier-one cities to deepen ourpenetration in those markets and to obtain higher market share. Organic growth complemented by acquisition of competitors and/or other biologic-related companies We have expanded organically by securing sufficient plasma supply and strengthening in-house development efforts. In addition to organic growth,acquisition is an important part of our expansion strategy. Although there are approximately 30 approved plasma-based biopharmaceutical manufacturers inthe market, we believe that there are approximately 28 manufactures currently in operation in China, only about half of which are competitive. We estimatethat the top five manufacturers in China accounted for more than 70.5% market share (excluding imports) in terms of sales revenue in 2016. Furthermore, webelieve that the regulatory authorities are considering further industry reform and those smaller, less competitive manufacturers will face possible revocationof their manufacturing permits by the regulators due to the compliance cost, making them potential targets for acquisition. If we are presented withappropriate opportunities, we may acquire additional companies, products or technologies in the biologic-related sectors (e.g., medical, pharmaceutical andbiopharmaceutical) to complement our current business operations. Our Products Our principal products are our approved human albumin and IVIG products. Human albumin is principally used to treat critically ill patients by replacing lostfluid and maintaining adequate blood volume and pressure. IVIG products are primarily used to enhance specific immunity, a defense mechanism by whichthe human body generates certain immunoglobulin, or antibodies, against invasion by potentially dangerous substances. In a situation where the humanbody cannot effectively react to these foreign substances, injection of IVIG products can provide sufficient antibodies to neutralize such substances. We arecurrently approved to produce over 20 different dosage forms of plasma products, which are listed in the table below. 13 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Approved Products(1)(2) Treatment/UseHuman albumin – 20%/10ml, 20%/25ml,20%/50ml, 10%/100ml, 10%/20ml, 10%/50ml,25%/50ml and 20%/50ml (10g, from factor IV) Shock caused by blood loss trauma or burn; raised intracranial pressure caused by hydrocephalus ortrauma; oedema or ascites caused by hepatocirrhosis and nephropathy; prevention and treatment of low-density-lipoproteinemia; and neonatal hyperbilirubinemia. Human immunoglobulin – 10%/3ml and10%/1.5ml Original immunoglobulin deficiency, such as X chain low immunoglobulin, familiar variable immunedeficiency, immunoglobulin G secondary deficiency; secondary immunoglobulin deficiency, such assevere infection, newborn sepsis; and auto-immune deficiency diseases, such as originalthrombocytopenia purpura or Kawasaki disease. IVIG – 5%/25ml, 5%/50ml, 5%/100ml and5%/200ml Same as above. Human hepatitis B immunoglobulin – 100 IU,200IU and 400IU Prevention of measles and contagious hepatitis. When applied together with antibiotics, its curativeeffect on certain severe bacteria or virus infection may be improved. Human rabies immunoglobulin – 100IU, 200IUand 500IU Mainly for passive immunity from bites or claws by rabies or other infected animals. All patientssuspected of being exposed to rabies are treated with a combined dose of rabies vaccine and humanrabies immunoglobulin. Human tetanus immunoglobulin – 250IU Mainly used for the prevention and therapy of tetanus. Particularly applied to patients who haveallergic reactions to tetanus antitoxin. (3) Placenta polypeptide – 4ml/vial Treatment for cell immunity deficiency diseases, viral infection and leucopenia caused by variousreasons, and assist in postoperative healing. Factor VIII – 200IU and 300IU Treatment for coagulopathies such as hemophilia A and increased concentration of coagulation factorVIII. Human prothrombin complex concentrate (orPCC) – 300IU Treatment for congenital and acquired clotting factor II, VII, IX, X deficiency, such as Hemophilia B,excessive anticoagulant, and vitamin K deficiency, etc. (1)“%” represents the degree of dosage concentration for the product and each product has its own dosage requirement. For example, human albumin20%/10ml means 2g of human albumin is contained in each 10ml packaging and human immunoglobulin 10%/3ml means 300mg of humanimmunoglobulin is contained in each 3ml packaging. Under PRC law, each variation in the packaging, dosage and concentration of medical productsrequires separate registration and approval by CFDA before it may be commercially available for sale. For example, among our human albumin products,only human albumin 20%/10ml, 20%/25ml, 20%/50ml, 10%/100ml, 10%/20ml, 10%/50ml, 25%/50ml and 20%/50ml (10g, from factor IV) products arecurrently approved and are commercially available. (2)“IU” means International Units. IU is a unit used to measure the activity of many vitamins, hormones, enzymes, and drugs. An IU is the amount of asubstance that has a certain biological effect. For each substance there is an international agreement on the biological effect that is expected for 1 IU. Inthe case of immunoglobulin, it means the number of effective units of antibodies in each package. (3)Tetanus antitoxin is a cheaper injection treatment for tetanus. However, it is not widely used because most people are allergic to it. Our approved human albumin, immunoglobulin (including IVIG), factor VIII and PCC products all use human plasma as the primary raw material. All of ourapproved products are prescription medicines administered in the form of injections. We have two product liability insurance policies covering Shandong Taibang’s and Guizhou Taibang’s products in the amount of RMB20 million(approximately $2.9 million) each. Since our establishment in 2002, we have been subject to four lawsuits filed by patients who were treated with ourproducts and received blood and/or plasma transfusions. See “Risk Factors — Risks Relating to Our Business — Product liability claims or product recallsinvolving our products could have a material adverse effect on our business” for further details. We do not expect these four claims to have a material adverseeffect on our company. 14 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Raw Materials Plasma from in-house collection Plasma is the principal raw material for our biopharmaceutical products. We currently operate 12 plasma collection stations (including one branch collectionfacility) through Shandong Taibang and two plasma collection stations through Guizhou Taibang. We plan to build new plasma collection stationsthroughout China as well as to expand collection territories of existing plasma collection stations. In October 2014, we received the regulatory approval tobuild two new plasma collection stations in Xinglong and Daming Counties, respectively, in Hebei Province. In June 2016, we received the operating permitfor and commenced operations at our new plasma collection station in Xinglong County. The new station in Daming County is under construction as of thedate of this report and is expected to open in 2017. In December 2016, we received the regulatory approvals to build a new plasma collection station in JuCounty in Shandong Province and to build a branch collection facility in Feicheng County to operate under our Ningyang plasma collection station inShandong Province. We believe that our plasma collection stations give us a stable source of plasma supply and control over product quality. Also, webelieve that we have enjoyed benefits of economies of scale, including sharing certain administration and management expenses across our several plasmacollection stations. A majority of our plasma collection stations recorded increases in plasma collection volume in 2016 as compared to 2015. Plasma sourced from Xinjiang Deyuan We purchased approximately 143 tonnes of source plasma and plasma pastes from Xinjiang Deyuan Bioengineering Co., Ltd., or Xinjiang Deyuan, for a totalconsideration of approximately RMB139 million (approximately US$20.0 million) in 2015. The final products made from such raw materials were fullyreleased into the market by the first half of 2016. We entered into a cooperation agreement with Xinjiang Deyuan and its controlling shareholder in August 2015, pursuant to which Xinjiang Deyuan agreedto sell to us no less than 500 tonnes of source plasma in batches from August 2015 to August 2018. As required and approved by the local regulator, allplasma used for production must be able to be traced to plasma collection stations, and therefore, we monitor the quality of the plasma collection process atXinjiang Deyuan. We purchased approximately 210.7 tonnes of source plasma from Xinjiang Deyuan in 2016, which was 17.8% more than the expectedvolume according to the agreement as of December 31, 2016. The final products made from this plasma began to be released to the market from the fourthquarter of 2016. Our transactions with Xinjiang Deyuan will provide us a significant volume of additional raw material over the contracted period and enableus to efficiently enhance our production capacity utilization and supply more plasma products to satisfy growing market demand. Other raw materials and packaging materials Other raw materials used in the production of our biopharmaceutical products include reagents and consumables such as filters and alcohol. The principalpackaging materials we use include glass bottles for our injection products as well as external packaging and printed instructions for our biopharmaceuticalproducts. We acquire our raw materials and packaging materials from our approved suppliers in China and overseas. We select our suppliers based on quality,consistency, price and delivery of the raw materials which they supply. Our five largest suppliers for other raw materials and packaging materials in the aggregate accounted for approximately 42.5%, 36.2% and 30.2% of our totalprocurement for the years ended December 31, 2016, 2015 and 2014, respectively. We have not experienced any shortage of supply or significant qualityissue with respect to any raw materials and packaging materials. Plasma Collection Our plasma collection stations purchase, collect, examine and deepfreeze plasma on behalf of Shandong Taibang and Guizhou Taibang and are subject toprovincial health bureau’s rules, regulations and specifications for quality, packaging and storage. Each station is only allowed to collect plasma fromhealthy donors within its respective districts and in accordance with a time table set by its respective parent company, Shandong Taibang or GuizhouTaibang. The plasma must be tested negative for HBsAb, HCV and HIV antibodies and the RPR test, contain ALT 25 units (ALT) and plasma protein 55g/l,and contain no virus pollution or visible erythrolysis, lipemia, macroscopic red blood cell or any other irregular finding. The plasma is packaged in 25 to 30separate 600g bags in each box and then stored at a temperature of -20°C or lower within limited time after collection to ensure that it will congeal within sixhours. Each bag is labeled with a computer-generated tracking code. Shandong Taibang and Guizhou Taibang are responsible for the overall technical andquality supervision of the plasma collection, packaging and storage at each plasma collection station. 15 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Sales, Marketing and Distribution Because all of our products are prescription drugs, we can only sell to hospitals and inoculation centers directly or through approved distributors. For 2016,2015 and 2014, direct sales to hospitals and inoculation centers represented approximately 61.1%, 59.0% and 65.4%, respectively, of our total plasmaproducts sales. Our five largest customers in the aggregate accounted for approximately 15.5%, 13.0% and 14.6% of our total sales for 2016, 2015 and 2014,respectively. Our largest customer accounted for approximately 5.4%, 4.0% and 4.2% of our total sales for 2016, 2015 and 2014, respectively. We select our distributors through a rigorous process, which focuses on market leadership in the covered region, the degree of control we have over to whichhospitals our products are sold (i.e. larger and higher tiered hospitals are preferred), and the level of access we have to our customers (i.e. greater accessenables us to better track the sales of our products). As part of our effort to ensure the quality of our distributors, we also conduct due diligence to verifywhether potential distributors have obtained necessary permits and licenses and facilities (such as cold storage) for the distribution of our biopharmaceuticalproducts and assess their financial condition. Certain of our regional distributors are appointed on an exclusive basis within a specified geographic territory.Our supply contracts set out the quantity and price of products to be supplied by us. For distributors, our contracts also contain guidelines for the sale anddistribution of our products, including restrictions on the geographical territory in which the products may be sold. We provide our distributors with trainingin relation to our products and on sales techniques. We generally require our distributors to pay in advance before we deliver products, with a few exceptionsfor a credit period of no longer than 60 days to major distributors in tier-one cities. For hospitals and clinics, we generally grant a credit period of no longerthan 90 days, with exceptions to certain high credit-worthy customers of up to six months. For 2016, 2015 and 2014, we had not incurred any significant baddebts from our customers. Our largest geographic market is Shandong Province, representing approximately 24.3%, 23.2% and 23.9% of our total sales for 2016, 2015 and 2014,respectively. Jiangsu Province is our second largest geographic market, representing 10.0%, 10.0% and 9.3% of our total sales for 2016, 2015 and 2014,respectively. In addition to Shandong Province and Guizhou Province, we also have sales presence in 28 other provinces, municipalities and autonomousregions. As of December 31, 2016, our marketing and after-sales services department consisted of 114 employees. We believe that due to the nature of our products, our competitiveness centers on product safety, steady supply, brand recognition, timely availability andpricing. As all of our products are prescription medicines, we are not allowed to advertise our products in the mass media. For 2016, 2015 and 2014, totalsales and marketing expenses amounted to approximately $11.7 million, $10.0 million and $10.7 million, respectively, representing approximately 3.4%,3.4% and 4.4%, respectively, of our total sales. 16 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our Research and Development Efforts Each of Shandong Taibang and Guizhou Taibang has its own research and development department. All of our research and development researchers holddegrees in medicine, pharmacy, biology, biochemistry or other relevant fields. Our research and development departments are responsible for thedevelopment and registration of our products. We also cooperate with a number of leading institutions in China specializing in plasma products to strengthenour research and development capacity. We employ a market driven approach to initiate research and development projects, including both product and production technique development. Webelieve that the key to our industry’s developments is the safety of products and maximizing the yield per unit volume of plasma. Our research anddevelopment efforts are focused on the following areas: ·broaden the breadth and depth of our portfolio of plasma products; ·enhance the yield per unit volume of plasma through new fractionation techniques; ·maximize manufacturing efficiency and safety; ·promote product safety through implementation of new technologies; and ·refine production technology for existing products. All the products we currently manufacture have been developed in-house. The following table outlines our research and development work in progress: Products Currently in Development Treatment/Use Status of Product Development Stage*Human fibrinogen Treatment for lack of fibrinogen and increasehuman fibrinogen concentration. Completed on-site inspection by the CFDA.Commercial production expected in thesecond half of 2017. 4 Immune Globulin Intravenous (Human),Caprylate/Chromatography Purified and 20nm virus filtration Treatment for original immunoglobulindeficiency; secondary immunoglobulindeficiency and auto-immune deficiencydiseases. Obtained approval for clinical trial by theCFDA. 3 Human Antithrombin III (concentration) Treatment for (1) hereditary antithrombin IIIdeficiency in connection with surgical orobstetrical procedures and (2)thromboembolism. Obtained approval for clinical trial by theCFDA. 3 Human coagulation factor IX Prevention and control of bleeding in patientswho suffer from hemophilia B. Obtained approval for clinical trial by theCFDA. 3 Human Cytomegalovirus Immunoglobulin Prophylaxis and treatment of CMV infection,especially for the prevention of active virusreplication for patients in immunosuppression,such as organ transplantation patients. Obtained approval for clinical trial by theCFDA 3 Human Fibrin Sealant Adjunct to hemostasis on patients undergoingsurgery in case that traditional surgicaltechniques (such as suture, ligature or cautery)are ineffective or impractical. Completed the official virus inactivation bythe PRC National Institutes for Food and DrugControl. Completed the animal experimentsfor safety and effectiveness. 1 *These stages refer to the stages in the regulatory approval process for our products described in “— Regulation.” 17 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For 2016, 2015 and 2014, total research and development expenses amounted to approximately $7.0 million, $6.0 million and $4.2 million, respectively,representing approximately 2.1%, 2.0% and 1.7%, respectively, of our total sales. Competition We face intense competition. There are both local and overseas pharmaceutical enterprises that engage in the manufacture and sale of potential substitutes orsimilar biopharmaceutical products as our products in China. These competitors may have more capital, better research and development resources, andstronger manufacturing and marketing capabilities than we do. In our industry, we compete based upon product quality, production cost, ability to produce adiverse range of products and logistical capabilities. Our profitability may be adversely affected if competition intensifies, competitors reduce prices, regulators promulgate or strengthen regulations that havethe effect of controlling the prices of our products, or competitors develop new products or product substitutes with comparable medicinal applications ortherapeutic effects that are more effective or less costly than ours. There are approximately 30 approved manufacturers of plasma products in China of which approximately 28 are currently in operation. Many of thesemanufacturers are essentially producing the same type of products that we produce, including human albumin and various types of immunoglobulin. Webelieve, however, that it is difficult for new manufacturers to enter into the industry due to current regulatory barrier. We believe that our major competitors inChina include CNBG, Hualan, Shanghai RAAS Blood Products Co., Ltd., Sichuan Yuanda Shuyang Pharmaceutical Co., Ltd., Shanxi Kangbao BiologicalProduct Co., Ltd., and Jiangxi Boya Bio Pharmaceutical Co., Ltd. In addition, we also face competition from imported products where allowed. China became a member of the World Trade Organization in December 2001and as a result imported biopharmaceutical products enjoy lower tariffs. Since 2009, China has experienced a substantial increase in volume of importedhuman albumin. If the import of human albumin continues to increase, we may face more fierce competition in the domestic human albumin market. Based on our industry knowledge, we are among the top three plasma products manufacturer in China in terms of 2016 sales revenue. To solidify our marketposition, we have expanded our product portfolio to include coagulation factor products, such as factor VIII and human prothrombin complex concentrate, orPCC. For factor VIII, we obtained the manufacturing approval certificate and the GMP certification for production facility from the CFDA in 2012. For PCC,we obtained the manufacturing approval certificate in July 2013 and the GMP certification for the production facility in March 2014. We will continue to meet challenges and secure our market position by enhancing our existing products, introducing new products to meet customer demand,delivering quality products to our customers in a timely manner and maintaining our established industry reputation. Our Intellectual Property We held 59 issued patents and 10 pending patent applications in China for certain manufacturing processes and packing designs as of December 31, 2016.We also had eight registered trademarks in China as of December 31, 2016. In addition, we had registered three domain names as of December 31, 2016, namely, www.chinabiologic.com, www.ctbb.com.cn and www.taibanggz.com. 18 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Regulation Set forth below is a summary of the major PRC regulations relating to our business. Due to the nature of our products, we are supervised by various levels of the NHFPC and/or CFDA. Such supervision includes the safety standards regulatingour raw material supplies (mainly plasma), our manufacturing process and our finished products. We are also subject to other PRC regulations, including those relating to taxation, foreign currency exchange and dividend distributions. Plasma collection Plasma collection stations are commonly used to collect plasma in China and substantially all plasma donations for commercialized plasma products aremade at plasma collection stations. Plasma donation means that donors give only plasma but not the other blood components such as platelets, red cells andinfection-fighting white cells. In China, current regulations only allow an individual donor to donate plasma in 14-day intervals, with a maximum quantity of580ml (or about 600 gram) per donation. The following are the general regulatory requirements to establish a plasma collection station in China: ·meet the overall plan in terms of the total number, distribution, and operational scale of plasma collection stations; ·have the required professional health care technicians to operate a station; ·have the facility and a hygienic environment to operate a station; ·have an identification system to identify donors; ·have the equipment to operate a station; and ·have the equipment and quality control technicians to ensure the quality of the plasma collected. Plasma collection stations were historically owned and managed by the PRC health authorities. In March 2006, the NHFPC and other eight centralgovernmental departments of the PRC State Council promulgated the Measures for the Reform of Blood Collection Stations whereby the ownership andmanagement of the plasma collection stations are required to be transferred to plasma-based biopharmaceutical companies while the regulatory supervisionand administrative control remain with the government. As a result, all plasma collection stations are now having direct supply relationship with their parentfractionation facilities. Set out below are some of the safety features at China’s plasma collection stations: ·Plasma collection stations can only source plasma from donors that are the local residents within the assigned districts approved by the provincialhealth authorities. ·Plasma collection stations must perform a health check on the donor. Once the donor passes the health check, a “donor permit” is issued to thedonor. The standards of the health check are established by the health authorities at the PRC State Council level. 19 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·The designing and printing of the “donor permit” is administrated by the provincial health authorities, autonomous region or municipalitygovernment, as the case maybe. The “donor permit” cannot be altered, copied or assigned. ·Before donors can donate plasma, the station must verify their identities and the validity of their “donor permits.” The donors must pass theverification procedures before they are given a health check and blood test. For those donors who have passed the verification, health check andblood test and whose plasma were donated according to prescribed procedures, the station will set up a record. ·Collected plasma which passes quality testing cannot be used to produce plasma products until its donor donates again after a 90-day quarantineperiod and the subsequently donated plasma passes quality testing as well. ·All plasma collection stations are subject to the regulations on the prevention of communicable diseases. They must strictly adhere to the sanitaryrequirements and reporting procedures in the event of an epidemic situation. The operation of plasma collection stations is subject to stringent regulations by the PRC government. We estimate that there were approximately 209plasma collection stations in operation in China as of December 31, 2016. Importation of plasma products According to current PRC regulations, except for human albumin and recombinant factor VIII products, all the plasma products are banned from importationinto China. Production of plasma products The manufacture and sale of plasma products are subject to stringent regulations by the PRC government. Under PRC law, each variation in the packaging,dosage and concentration of medical products requires separate registration and approval by the CFDA before it may be commercially available for sale. Forexample, among our human albumin products, only human albumin 20%/10ml, 20%/25ml, 20%/50ml, 10%/100ml, 10%/20ml, 10%/50ml, 25%/50ml and20%/50ml (10g, from factor IV) products have been approved and are commercially available. All references in this report to our manufacture and sale ofhuman albumin relate to our approved human albumin products. The table below illustrates the PRC approval process for the manufacture and sale of new medicines: Stage Activities1 Pre-clinical Research The pre-clinical research stage mainly involves the following steps: ·initiate the research project, study the project feasibility and develop a plan for testingand producing the new medicine; ·develop the scope and the techniques for testing the new medicine in the laboratory; ·develop laboratory-scale manufacturing process for the new medicine; ·develop the manufacturing process for the new medicine on an expanded basis in theworkshop; and ·develop the virus inactivation process/techniques, engage qualified institution to assessthe virus inactivation process/techniques, and report the related documents to the relatedgovernment authority for re-assessment. 20 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2 Clinical trial application The clinical trial application stage mainly involves the following steps: ·submit required sample products and documents to The PFDA. The PFDA will perform anon-site examination on the documents and equipment, and then transfer all the requiredmaterials to the CFDA, who will further review the documents and test the sampleproducts; ·submit a draft clinical trial program to the CFDA for the application of the clinical trial;and ·obtain approval of the clinical trial. 3 Clinical trials Clinical trials range from Phase I to IV: ·Phase I: preliminary trial of clinical pharmacology and human safety evaluation studies.The primary objective is to observe the pharmacokinetics and the tolerance level of thehuman body to the new medicine as a basis for ascertaining the appropriate deliverymethods or dosage. ·Phase II: preliminary exploration on the therapeutic efficacy. The purpose is to assesspreliminarily the efficacy and safety of the new medicine on patients and to provide thebasis for designing dosage tests in phase III. ·Phase III: confirm the therapeutic efficacy. The objective is to further verify the efficacyand safety of the new medicine on patients, to evaluate the benefits and risks and finallyto provide sufficient experimental evidence to support the registration application of thenew medicine. ·Phase VI: application research conducted after the launch of a new medicine. Theobjective is to observe the efficacy and adverse reaction of the new medicine underextensive use, to perform an evaluation of the benefits and risks of the application amongordinary or special group of patients, and to ascertain and optimize the appropriatedosage and formula for application. 4 Registration The registration stage mainly involves the following steps: ·submit documents related to pre-clinical and clinical trials to the PFDA, which willperform on-site inspection on the clinical trials and then transfer the related documents tothe CFDA for further review; ·receive on-site inspection by the CFDA on three consecutive sample productions at theproduction facilities; ·obtain the manufacturing approval certificate following the public notification period;and ·obtain the GMP certificate following the public notification period. 5 Production and approval for sale The production and approval for sale stage mainly involves the following steps: ·produce the approved products in qualified facilities with requisite GMP certificates; ·submit documentation and samples of mass production products to the CFDA forinspection; and ·obtain qualification certificate to mass production products for sale on a batch-by-batchbasis. New GMP standard All of our production facilities are required to obtain GMP certificates for their pharmaceutical production activities. In February 2011, the CFDA enacted thenew GMP standard, which has significantly increased standards for quality control, documentation, and overall manufacturing processes of blood products,vaccines, injections and other sterile pharmaceutical products. The new GMP standard requires us to, among others, maintain and operate a comprehensiveand effective product quality control system throughout the production process. In addition, it imposes higher standards for our production facilities. Thenew GMP standard became applicable to all of our production facilities at the end of 2013. Following the upgrades on our production facilities, we obtainedthe renewed GMP certificate for Shandong Taibang and Guizhou Taibang in June 2013 and March 2014, respectively. Huitian obtained the GMP certificatefrom the CFDA for its new plasma production facility in February 2016 and commenced commercial production thereafter. 21 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Pricing Prior to June 1, 2015, retail prices of certain pharmaceutical products were subject to various price-related regulations. According to the “Regulations onControlling Blood Products” promulgated by the PRC State Council in 1996, regional offices of the Pricing Bureau and the NHFPC had the authority toregulate retail prices for controlled plasma products. Effective on June 1, 2015, the NDRC removed the retail price ceilings for all drug products (except foranesthetics and category I antipsychotics) in China. See “Risk Factors—Risks Relating to Our Business— We do not have discretion to increase the prices ofcertain of our products, which are subject to the regional government tendering mechanism.” After the pricing ceiling was removed, the pricing of pharmaceutical products are mainly subject to the provincial tendering mechanism. In 2016, 31provinces/regions/municipalities in China initiated a new round of tenders with different tender rules, including the followings trends: 1) a combination ofEssential Drug List (“EDL”) tenders and non-EDL tenders; 2) a dynamic pricing system across different provinces; 3) volume-based procurement; 4) differenttender mechanisms based on product types; 5) various implementation timelines; 6) group purchase organization (“GPO”) in certain regions. For our plasmaproducts, tetanus immunoglobulin, Factor VIII and PCC are included on the life-saving EDL in most Chinese provinces, for which drug procurement wasprioritized and the hospitals are allowed to directly purchase drugs from manufacturers through an on-line procurement process. For products like albuminand IVIG, most provinces adopted regular tendering process that requires manufacturers to compete with other suppliers in both quality and price. To date,most provinces have not completed the tendering. We expect that most of the provinces, which accounted for the majority of our product sales, will finishtheir tenders in the first half of 2017. Even after the official tendering, there might be post-tender negotiations. Tenders across different provinces with on-lineprice disclosure will help narrow the differences in tenders among different provinces and make the practice more uniform across the country, which willincrease the price pressure since provinces intend to benchmark to the lowest nationwide prices. In addition, retail prices of pharmaceutical products fully or partially covered under the national insurance system are also affected by the reimbursementceilings set out in the National Drug Reimbursement List, or the NDRL, which may be adjusted by the NDRC from time to time. The new edition of NDRLwas launched on February 21, 2017. The hospitals as participants of the national insurance program are pressured not to sell the products to patients at pricessubstantially exceeding such reimbursement ceilings. This in turn puts pressure on the manufacturers’ pricing of the relevant products. Seven of our principalproducts (namely human albumin, IVIG, human rabies immunoglobulin, human tetanus immunoglobulin, factor VIII, PCC and human immunoglobulin) areincluded in the NDRL. Two other principal products (namely placenta polypeptide and human hepatitis B immunoglobulin), although not included in theNDRL, are also subject to tender and drug reimburse list in certain provinces. 22 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Taxation On March 16, 2007, the National People’s Congress of China passed the Enterprise Income Tax Law, or the EIT Law, and on November 28, 2007, the PRCState Council passed its implementation rules, which became effective on January 1, 2008. The EIT Law and its implementation rules impose a unified EIT of25.0% on all domestic-invested enterprises and foreign investment enterprises, or FIEs, unless they qualify under certain limited exceptions. In addition to the changes to the tax structure, under the EIT Law, an enterprise established outside of China with “de facto management bodies” withinChina is considered a resident enterprise and will normally be subject to an EIT of 25.0% on its global income. The implementation rules define the term “defacto management bodies” as “an establishment that exercises, in substance, overall management and control over, among others, the production, business,recruitment and accounting aspects of a Chinese enterprise.” If the PRC tax authorities subsequently determine that we should be classified as a residententerprise, then our global income will be subject to PRC income tax of 25%. For detailed discussion of PRC tax issues related to resident enterprise status,see “Risk Factors—Risks Relating to Doing Business in China—Under the Enterprise Income Tax Law, we may be classified as a “resident enterprise” ofChina. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders.” The EIT Law confirmed that qualified high and new technology enterprises may enjoy a preferential income tax rate of 15%, instead of the uniform enterpriseincome tax rate of 25%. The PRC Ministry of Science and Technology, the PRC Ministry of Finance and the State Administration of Taxation, or SAT,jointly promulgated the Measures for Determination of High and New Technology Enterprise on August 14, 2008 to provide the detailed rules for theexamination of qualifications and approval of certificates for high and new technology enterprises. Each high and new technology enterprise certificate isvalid for three years. Shandong Taibang was recognized by Shandong provincial government as a high and new technology enterprise in 2008 and renewedthe certificate in 2011, as a result of which Shandong Taibang was entitled to enjoy a preferential income tax rate of 15.0% until the end of 2013. In October2014, Shandong Taibang renewed the high and new technology enterprise certificate, which entitled it to enjoy a preferential income tax rate of 15.0% for aperiod of three years from 2014 to 2016. Shandong Taibang will apply for a renewal for an additional three years from 2017 to 2019 upon the expiration ofsuch certificate. According to Notice on Issues Concerning Relevant Tax Policies in Deepening the Implementation of the Western Development Strategy jointlypromulgated by the PRC Ministry of Finance, the PRC General Administration of Customs and SAT on July 27, 2011, enterprises located in the westernregion of China which have at least 70.0% of their income from the businesses falling within the Category of Encouraged Industries in western region ofChina may enjoy a preferential income tax of 15.0% within the period from January 1, 2011 to December 31, 2020. Guizhou Taibang, being a qualifiedenterprise located in the western region of China, enjoys a preferential income tax rate of 15.0% effective from January 1, 2011 to December 31, 2020. Foreign currency exchange The principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules (1996), as amended (2008). Underthese rules, RMB is freely convertible for current account items, such as trade and service-related foreign exchange transactions, but not for capital accountitems, such as direct investment, loan or investment in securities outside China unless the prior approval of, and/or registration with, the State Administrationof Foreign Exchange, or SAFE, or its local counterparts (as the case may be) is obtained. 23 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Pursuant to the Foreign Currency Administration Rules, FIEs in China may purchase foreign currency without the approval of SAFE for trade and service-related foreign exchange transactions by providing commercial documents evidencing these transactions. They may also retain foreign exchange (subject toa cap approved by SAFE) to satisfy foreign exchange liabilities or to pay dividends. In addition, if a foreign company acquires a company in China, theacquired company will also become an FIE. However, the relevant PRC government authorities may limit or eliminate the ability of FIEs to purchase andretain foreign currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities outside China arestill subject to limitations and require approvals from, and/or registration with, SAFE. Dividend distributions Under applicable PRC regulations, FIEs in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRCaccounting standards and regulations. In addition, an FIE in China is required to set aside at least 10% of its after-tax profit based on PRC accountingstandards each year to its general reserves until the accumulative amount of such reserves reach 50% of its registered capital. These reserves are notdistributable as cash dividends. The board of directors of an FIE also has the discretion to allocate a portion of its after-tax profits to staff welfare and bonusfunds, which may not be distributed to equity owners except in the event of liquidation. In addition, under the EIT law, the Notice of the State Administration of Taxation on Negotiated Reduction of Dividends and Interest Rates, promulgated onJanuary 29, 2008, the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation andPrevention of Fiscal Evasion, or the Double Taxation Treaty, which became effective on December 8, 2006, and the Notice of the State Administration ofTaxation Regarding Interpretation and Recognition of Beneficial Owners under Tax Treaties, which became effective on October 27, 2009, dividends fromour PRC subsidiary, Taibang Biotech (Shandong) Co., Ltd., paid to us through our Hong Kong subsidiary, Taibang Holdings, may be subject to awithholding tax at a rate of 10%, or at a rate of 5% if Taibang Holdings is considered a “beneficial owner” that is generally engaged in substantial businessactivities in Hong Kong and entitled to treaty benefits under the Double Taxation Treaty. Our Employees As of December 31, 2016, we employed 1,799 full-time employees, of which 48 were seconded to us by Shandong Institute of Biological Products, or theShandong Institute. We believe we are in material compliance with all applicable labor and safety laws and regulations in China. We participate in various employee benefitplans that are organized by municipal and provincial governments, including retirement, medical, unemployment, work injury and maternity benefit plansfor our managerial and key employees. In addition, we provide short term insurance plans for certain employees while on duty to cover work relatedaccidents. We believe that we maintain a satisfactory working relationship with our employees and we have not experienced any significant labor disputes orany difficulties in recruiting staff for our operations. ITEM 1A. RISK FACTORS. An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the otherinformation included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition orresults of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Youshould read the section entitled “Special Note Regarding Forward Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report. 24 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. RISKS RELATING TO OUR BUSINESS The biopharmaceutical industry in China is strictly regulated and changes in such regulations, including banning or limiting plasma products, may have amaterial adverse effect on our operations, revenues and profitability. The biopharmaceutical industry in China is strictly regulated by the government. The regulatory regime regulates the process of administrative approval ofmedicine and its production, and includes laws and regulations such as the PRC Pharmaceutical Law, the Implementation Rules on the PRC PharmaceuticalLaw and the Regulations on the Administration of Blood Products. These laws and regulations require entities producing plasma products to comply strictlywith certain hygienic standards and specifications promulgated by the government. In the event that a plasma product is discovered to be not compliant withthe government’s hygienic standards and specifications, the health department may revoke its approval of such plasma product, or otherwise limit the use ofsuch plasma product. Changes in these laws and regulations, including banning or limiting plasma products, could have a material adverse effect on ouroperations, revenues and profitability. If the biopharmaceutical products we sell are found to be contaminated, our operation, revenues and profitability would be severely and adversely affectedand we may be subject to civil and criminal liabilities. The principal raw material of our existing and planned biopharmaceutical products is human source plasma, which, due to its unique nature, is subject torisks of contaminations and blood-borne diseases. In addition, current technology cannot eliminate entirely the risk of biological hazards inherent in plasmathat are not currently known or for which screens are not currently commercially available, which could result in a widespread epidemic due to bloodinfusion. If any of our human donors is infected with diseases, then the plasma from such donor may be infected. Although we pre-screen all donors in orderto ensure that they are not infected with HIV and hepatitis C and have not contracted liver disease, screening tests may fail to identify and exclude from oursupply the plasma from infected donors due to technical limitation and human errors. In addition, we purchase source plasma and plasma pastes fromXinjiang Deyuan. Although we perform screening tests on the purchased plasma before putting it into production, we may fail to identify contaminatedplasma from Xinjiang Deyuan due to the technical limitation and/or human errors. If any contaminated plasma is not appropriately screened out, our entireplasma supply for the relevant plasma collection station may become contaminated. If the plasma from our collection or purchased from Xinjiang Deyuan iscontaminated and we sell biopharmaceutical products made from such plasma, we could be subject to civil liability from suits brought by consumers. Further,we may lose our registration and have criminal liability if we are found by the government to have been criminally negligent. If this occurs, our business,prospects, results of operations and financial condition will be materially and adversely affected. If our supply of quality plasma is interrupted, our results of operations and profitability will be adversely affected. In addition, if we experience anyshortage of raw materials in the future, we may be unable to proceed with our long-term business plan and we may be forced to curtail or cease ouroperations or further business expansion. The production of plasma products relies on the supply of plasma of suitable quality. For 2016, 2015 and 2014, the cost of plasma we used for productionaccounted for approximately 81.5%, 82.3% and 80.1%, respectively, of total production cost. The supply and market prices of plasma may be adverselyaffected by factors such as heightened or new regulatory restrictions, higher living standards or outbreaks of diseases, any of which would affect our costs ofproduction. We may not be able to pass on any resulting increase in costs to our customers and therefore any substantial fluctuation in supply or marketprices of plasma may adversely affect our results of operations and profitability. 25 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our production volume, capacity utilization and future expansion are affected by a contraction in the supply of raw materials, especially plasma. In additionto the plasma collected from our own plasma collection stations, we also outsource plasma from Xinjiang Deyuan pursuant to a cooperation agreemententered into in August 2015. Under this cooperation agreement, Xinjiang Deyuan agreed to sell to us no less than 500 tonnes of source plasma in batchesover the next three years. We cannot assure you, however, that Xinjiang Deyuan will always deliver the source plasma on schedule or such plasma will alwayspass our quality inspection. If we experience any shortage of plasma supply or fail to secure sufficient plasma supply for our production, we may not be ableto fully utilize our production capacity or proceed with our expansion plans. We may not be able to carry on our business if we lose any of the required permits and licenses. We and Huitian are required to obtain from various PRC governmental authorities certain permits and licenses, including permits for pharmaceuticalmanufacturing and GMP certificates for each of our plants, as well as pharmaceutical distribution permits. Each of the production facilities operated by us and Huitian is required to obtain a GMP certificate for its pharmaceutical production activities. In February2011, the CFDA enacted the new GMP standard, which has significantly increased standards for quality control, documentation, and overall manufacturingprocesses that applied to each of the production facilities operated by us and Huitian as of December 31, 2013. In order for us to meet the new GMP standard,we have upgraded the related production facilities of Shandong Taibang and Guizhou Taibang, which obtained the renewed GMP certificates and resumedcommercial production of plasma products in June 2013 and March 2014, respectively. Huitian suspended its production in late 2013 and obtained the GMPcertification for its new plasma production facility in Xi’an in February 2016 and commenced commercial production thereafter. We have also obtained permits and licenses and GMP certificates required for the manufacturing and sales of our products. Our permits and licenses aresubject to periodic renewal and/or reassessment by the relevant PRC governmental authorities, and the compliance standards may be subject to change fromtime to time. We intend to apply for the renewal of such permits and licenses when required by applicable laws and regulations. However, we cannotguarantee that we may renew such permits and licenses in a timely manner, or at all. If we are unable to renew our permits and licenses or fail an inspectionwhich would impair our permits and licenses, our business, prospects, financial condition and results of operations may be materially and adversely affected. In addition, any changes in compliance standards, or any new laws or regulations that may prohibit or restrict our business activities or increase ourcompliance costs may adversely affect our operations and profitability. For example, we expect our on-going compliance cost to increase under the new GMPstandard as compared to the previous standard. As a result, our business and financial condition may be materially and adversely affected. 26 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We may fail to obtain, maintain or renew required licenses and permits for our plasma collection stations. In addition, if we fail to adequately monitor ourplasma collection stations, follow proper procedures or comply with safety requirements, we may be subject to sanctions by the government, civil andcriminal liability. We currently operate 12 plasma collection stations (including one branch collection facility) through Shandong Taibang and two plasma collection stationsthrough Guizhou Taibang. Huitian, a company in which we hold a minority interest, operates three plasma collection stations in Shaanxi Province. To enablegrowth in our sales, we are seeking opportunities to build more plasma collection stations. In October 2014, we received the regulatory approval to build twonew plasma collection stations in Xinglong and Daming Counties, respectively, in Hebei Province. In June 2016, we received the operating permit for andcommenced operations at our new plasma collection station in Xinglong County. In September 2015, we received the regulatory approval to build a newbranch collection facility to operate under our Ningyang plasma collection station in Shandong Province. We obtained the operating permit for this newbranch collection facility in October 2015 and commenced plasma collection thereafter. In December 2016, we received the regulatory approvals to build anew plasma collection station in Ju County in Shandong Province and to build a branch collection facility in Feicheng County to operate under ourNingyang plasma collection station in Shandong Province. The operation of plasma collection stations, however, is highly regulated and we cannot assureyou that we will be able to obtain, maintain and renew the required licenses and permits for existing and new plasma collection stations in desirable locationsor in a timely manner, if at all. For example, we have experienced difficulties and delays in obtaining and/or renewing the business licenses and collectionpermits for a new plasma collection station in Pubei, Guangxi Province and five existing plasma collection stations we acquired in Guizhou Province. Whilewe monitor our plasma intake procedures through frequent unscheduled inspections of our stations, there remain risks that our plasma collection stations mayfail to comply with hygiene and procedural requirements for plasma screening, collection, storage and tracking. If we fail to comply with any of theserequirements, we may lose our plasma collection permits or incur criminal liability if we are found by the government to have been criminally negligent. Inthe case of plasma contamination, we may also be subject to civil liability from suits brought by consumers of our biopharmaceutical products. In addition,failure to comply with hygiene and procedural requirements may cause harm to donors, who may contract diseases from other donors, among other things.Any such incident may subject us to government sanctions, civil or criminal liabilities. If any of these events were to occur, our business, reputation andprospects would be materially and adversely affected. Our operations, sales, profit and cash flow will be adversely affected if our plasma products fail to pass inspection in a timely manner. The PRC government inspects each batch of our plasma products before we can ship it to our customers. The CFDA has quality standards which require theregulators to assess, among other things, the appearance, packing capacity, thermal stability, pH value, protein content and purity of the product. We muststrictly comply with relevant rules and regulations throughout the lifecycle of each product including plasma collection, delivery, production andpackaging. Government regulators typically take more than a month to inspect one batch of plasma products. The process begins when the regulatorrandomly selects samples of our products and delivers them to the PRC National Institute for the Control of Pharmaceutical and Biological Products, orNICBPB, for testing, and the process ends when the products are given final approval by NICBPB. In the event that the regulators delay the approval of orreject our products or change the requirements such that we are unable to comply, our operations, sales, profit and cash flow will be adversely affected. Current or worsening economic conditions may adversely affect our business and financial condition. We currently generate sufficient operating cash flows which provide us with significant working capital. However, any uncertainty arising out of economicconditions may affect our ability to manage normal relationships with our customers, suppliers and creditors and adversely affect our results of operations,cash flows and financial condition, or those of our customers, suppliers and creditors. Current or worsening economic conditions may adversely affect theability of our customers to pay for our products, and curtail their spending on healthcare generally. This could result in a decrease in the demand for ourproducts, declining cash flows, longer sales cycles, slower adoption of new technologies and increased price competition. These conditions may alsoadversely affect certain of our suppliers, which could cause a disruption in our production capacities. Such reductions and disruptions could have a materialadverse effect on our business operations. 27 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our inability to successfully research and develop new biopharmaceutical products could have an adverse effect on our future growth. We believe that the successful development of biopharmaceutical products can be affected by many factors. Products that appear to be promising in the earlyphases of research and development may fail to be commercialized for various reasons, including the failure to obtain the necessary regulatory approvals. Inaddition, the research and development cycle for any new medicine is a relatively lengthy process. In our experience, the process of conducting research andvarious tests on new products before obtaining a new medicine certificate from the CFDA and subsequent procedures may take approximately three to fiveyears. We cannot assure you that our future research and development projects will be successful or that they will be completed within the anticipated timeframe or budget. Also, we cannot guarantee that we will receive the necessary approvals from relevant authorities for the production of our newly developedproducts. Even if such products could be successfully commercialized, we cannot assure you that they will be accepted by the market as anticipated. As mandated by a CFDA notice promulgated on July 22, 2015, all pharmaceutical enterprises that are in the process of registration application are required toinspect the data from the clinical trials and report the inspection results to the CFDA and to withdraw the registration application should any deficiencysurface from such inspection. Since July 22, 2015, 1,622 manufacturing certificates have been included in the self-inspection list, among which 67% submitted the data, 20% withdrew,and 12% asked to waive the clinical trials. The three typical reasons for application withdrawals include: ·insufficiency of application documents; ·quality issue uncovered from trial data; ·voluntary withdrawal to improve the quality of clinical trial data. We withdrew the registration application for human hepatitis B immunoglobulin (pH4) for intravenous injection as a result of our self-inspection inDecember 2015 with the aim to improve the quality of clinical trial data. Given the uncovered quality issues and rising costs for clinical trials, certain small drug manufacturers may face increased difficulty in submitting newregistration applications, which could accelerate the CFDA’s overall review process. We cannot assure you, however, that our registration applications willbenefit from this new CFDA practice. Our new product launches might be delayed or aborted due to our withdrawal in December 2015 and any forced orvoluntary withdrawal of our other products in the process of registration application in the future should quality issues be uncovered from the inspection ofthe relevant clinical trial data. Such delay or abortion could have a material adverse effect on our results of operations, financial condition and prospects. 28 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We do not have discretion to increase the prices of certain of our products, which are subject to the regional government tendering mechanism. Prices of certain pharmaceutical products were subject to various price-related regulations. Effective on June 1, 2015, the NDRC removed the retail priceceilings for all drug products (except for anesthetics and category I antipsychotics) in China. Even after the NDRC removed the price ceiling, our pricing isstill subject to provincial and local tendering mechanisms where we compete with other manufacturers in the price of plasma products. In 2016, 31provinces/regions/municipalities in China initiated a new round of tenders. For our plasma products, tetanus immunoglobulin, Factor VIII and PCC areincluded on the life-saving EDL in most Chinese provinces, for which drug procurement was prioritized and the hospitals are allowed to directly purchasedrugs from manufacturers through an on-line procurement process. For products like albumin and IVIG, most provinces adopted regular tendering processthat requires manufacturers to compete with other suppliers in both quality and price. To date, most provinces have not completed the tendering. We expectthat most of the provinces, which accounted for the majority of our product sales, will finish their tenders in the first half of 2017. Even after the officialtendering, there might be post-tender negotiations. Tenders across different provinces with on-line price disclosure will help narrow the differences in tendersamong different provinces and make the practice more uniform across the country, which will increase the price pressure since provinces intend to benchmarkto the lowest nationwide prices. In addition, retail prices of pharmaceutical products fully or partially covered under the national insurance system are also affected by the reimbursementceilings set out in the NDRL, which may be adjusted by the NDRC from time to time. The new edition of NDRL was launched on February 21, 2017. Thehospitals as participants of the national insurance program are pressured not to sell the products to patients at prices substantially exceeding suchreimbursement ceilings. This in turn puts pressure on the manufacturers’ pricing of the relevant products. Seven of our principal products (namely humanalbumin, IVIG, human rabies immunoglobulin, human tetanus immunoglobulin, factor VIII, PCC and human immunoglobulin) are included in the NDRL andare affected by the reimbursement ceilings. Two other principal products (namely placenta polypeptide and human hepatitis B immunoglobulin), althoughnot included in the NDRL, are also subject to tender price ceilings in certain PRC provinces. See “Business — Regulation” for further details. Because of the tender process and the reimbursement ceilings for certain of our products, we do not have discretion to increase the prices we charge ourcustomers and distributors for such products above certain levels. We may not be able to increase our prices even if the cost of manufacturing our productsincreases as a result of increases in the cost of raw materials or other costs, and, our revenue and profitability would be adversely affected. If the margin of anyof these products becomes prohibitively low, we may stop manufacturing such product, which may further adversely affect our revenue and profitability. Our ability to increase the prices of our products is limited by general market conditions and intense competition. Our pricing practices may also be affected by the general market conditions and intense competition. To the extent the demand for our products declines orcompetition intensifies, we may decide to respond by reducing our prices in order to capture the declining market demand and maintain the competitivenessof our products. See also “—We are subject to intense competition and may encounter increased competition from both local and overseas pharmaceuticalenterprises if PRC regulators relax the approval process for plasma products or international trade restrictions. A change in our competitive environmentcould adversely affect our profitability and prospects” below. If the margin of any of our products becomes prohibitively low, we may stop manufacturingsuch product, which may further adversely affect our revenue and profitability. 29 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If reimbursement or other payment for our current or future products is reduced or modified in the PRC, including through the implementation ofgovernment-sponsored healthcare reform or other similar actions, cost containment measures, or changes to policies with respect to pricing, then ourbusiness could suffer. Sales of our products depend, in part, on the extent to which the costs of our products are paid by public payers. These public payers mainly consist of localgovernments which reimburse the medicines covered by the NIC. The local governments update the NIC on a regularly basis and may remove certainmedicines from the NIC. These public payers may also reduce the reimbursement amounts for certain medicines under the NIC. These measures by localgovernments may limit, reduce or eliminate payments for our products and adversely affect both pricing flexibility and demand for our products. Legislation and regulations affecting reimbursement for our products may change at any time and in ways that may be adverse to us. We cannot predict theimpact of these pressures and initiatives, or any negative effects of any additional regulations that may affect our business. Some of our owned or leased properties have title defects or non-compliance, which could adversely affect our business operations. Some of our owned or leased properties have title defects or non-compliance. For example, we use properties built on collectively owned rural land for one ofour plasma collection stations. We are also in the process of obtaining the property ownership certificate for another one of our plasma collection stations.Although such title defects and non-compliance have not adversely affected our business operations, we cannot assure you that we will be able to rectify suchdefects and non-compliance in a timely manner or at reasonable costs, if at all. For example, under PRC laws, collectively owned rural land may not be usedfor commercial purposes and we may be required to vacate and seek other space to house our collection facilities. For the collection station built oncollectively owned rural land, under the lease agreement for the collectively owned rural land among us, the local government and the economic collectivewhich owns the land, the economic collective is required to assist us in securing legal rights to use such land. If the economic collective fails to perform itsobligations under the lease agreement, or the lease agreement is deemed to be void, voidable or otherwise unenforceable, or if ownership disputes or claimsregarding the land otherwise arise, we may be required to relocate our collection station. Any disputes or claims relating to our owned or leased properties orland or any efforts in securing alternative sites and properties could divert our resources and management’s attention from our regular business operations. Inaddition, we may not be able to secure alternative sites and properties, if required, in a timely manner or at reasonable costs, which could adversely affect ourbusiness operations. Our financial position and operations may be materially and adversely affected if our product liability insurance does not sufficiently cover our liabilities. Under current PRC laws, manufacturers and vendors of defective products in China may incur liability for loss and injury caused by such products. Pursuantto the General Principles of the Civil Law of the PRC, or the PRC Civil Law, which became effective in 1987, a defective product that causes propertydamage or physical injury to any person may subject the manufacturer or vendor of such product to civil liability. The Product Quality Law of the PRC, or the Product Quality Law, was enacted in 1993 and revised in 2000. The Product Quality Law was enacted to protectthe rights and interests of end-users and consumers and to strengthen the supervision and control of the quality of products. Under the Product Quality Law,manufacturers who produce defective products may be subject to fines and production suspension, and in severe cases, be subject to criminal liability andmay have their business licenses revoked. 30 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The PRC Law on the Protection of the Rights and Interests of Consumers, or the Consumers’ Rights Law, was enacted in 1993 to further protect the legalrights and interests of consumers in connection with the purchase or use of goods and services. All businesses, including our business, must observe andcomply with the Consumers’ Rights Law. The Tort Liability Law of the PRC was enacted in December 2009, which imposes liability on manufacturers for damages caused by defects in their products.If the defects are caused by third parties such as transporters or storekeepers, manufactures may be entitled to claim for indemnification or contribution fromsuch third parties for making compensation to the consumers. We maintain two product liability insurance policies for sales in China for Shandong Taibang and Guizhou Taibang’s products in the amount of $2.9 million(RMB20 million) each. If our products are found to be defective and our insurance coverage is insufficient to cover a successful claim against us, ourfinancial position and operations may be materially and adversely affected. Product liability claims or product recalls involving our products could have a material adverse effect on our business. Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, distribution and sale of plasma products. Plasma is abiological substance that is capable of transmitting viruses and pathogens, whether known or unknown. Therefore, our plasma and plasma products, if notproperly collected, tested, pathogen-inactivated, processed, stored or transported, could cause serious disease and possibly death to patients. Further, there areviral and other infections of plasma which may escape detection using current testing methods and which are not susceptible to inactivation methods. Anyinfection of disease by persons using our products could result in claims against us. Since our establishment in 2002, we have been subject to four lawsuitsfiled by patients who were treated with our products and received blood and/or plasma transfusions. In three of these cases, we were ordered to contribute aportion of the compensation for the patients even though the courts did not find that our products were defective or caused the patients’ illness. The requiredcontribution by us was immaterial in these three cases. The fourth case is pending in an ongoing litigation, which we are vigorously defending. We cannotassure you that there will be no future claims against us or that we will always succeed in defending against such claims. Furthermore, the presence of a defectin a product could require us to carry out a recall of such product. A product liability claim, regardless of merit or eventual outcome, or a product recall could result in substantial financial losses, civil and criminal liabilities,administrative sanctions, revocation of business and product permits and licenses, negative reputational repercussions and an inability to retain customers. Ifour products are found to be defective and our insurance coverage is insufficient to cover a successful claim against us, our financial position and operationsmay be materially and adversely affected. We are subject to intense competition and may encounter increased competition from both local and overseas pharmaceutical enterprises if PRCregulators relax the approval process for plasma products or international trade restrictions. A change in our competitive environment could adverselyaffect our profitability and prospects. We face intense competition from local and foreign entities that manufacture and sell products that compete with ours in China. These competitors may havemore capital, better research and development resources, expanded manufacturing and marketing capabilities and more experience than we do. The plasma-based biopharmaceutical manufacturing industry in China is highly regulated, and although we believe that compliance with the regulatory requirementspose a competitive barrier to enter into the Chinese market, over time, however, there may be new entrants. If the government relaxes these restrictions andallows more competitors to enter into the market, these competitors may have more capital, better research and development resources, more manufacturingand marketing capability and experience than us. Our operating results and financial condition may be adversely affected if competition intensifies,competitors reduce prices to gain market share, or competitors develop new products having comparable medicinal applications or therapeutic effects whichare more effective or less costly than ours. 31 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In addition, we also face competition from imported products. Since 2009, there has been a substantial increase in volume of imported human albumin inChina, which competes in domestic human albumin market. In addition, we compete with foreign biopharmaceutical manufacturers that set up productionfacilities in China and compete directly with us. The increased supply of both domestic and foreign biopharmaceutical products in China may result in lowersales or lower prices for our products. We cannot assure you that we will remain competitive or that our profitability and prospects will not be adverselyaffected. We depend heavily on key personnel, and turnover of key employees and senior management could harm our business. Our success, to a certain extent, is attributable to the expertise and experience of our senior management and key research and technical personnel who carryout key functions in our operation. If we lose the service of any of our senior management or key research or technical personnel or fail to attract additionalpersonnel with suitable experience and qualification, our business operations and research capability may be adversely affected. We have a secondment agreement with the Shandong Institute, which is expected to terminate upon its future privatization, for certain of our employees. Ifthe secondment agreement is breached or terminated, it could have an adverse effect on our operations and on our financial results. Shandong Institute provided us with 48 of our employees, including certain key management personnel, out of our total of approximately 1,799 employeesas of December 31, 2016, pursuant to a secondment agreement dated October 28, 2002, between Shandong Taibang and the Shandong Institute. Pursuant tothe secondment agreement, we are responsible for the salaries of these employees, as well as for their social benefits such as insurance. Our secondmentagreement with the Shandong Institute will expire on the earlier of October 2032 or the privatization of the Shandong Institute, which was originallyscheduled to occur before the end of 2008. However, the privatization of the Shandong Institute has been delayed indefinitely due to delay by the ShandongDepartment of Health in implementing the privatization plan. Upon expiration or termination of the secondment agreement, we plan to hire the secondedemployees directly. However, we cannot assure you that all of the employees will accept our employment offers at that time. Guangli Pang, ShandongTaibang’s chief executive officer is employed through the secondment agreement. Although none of our seconded employees have indicated that they do notplan to continue working for us after the privatization, if the secondment agreement is terminated or expires and we are unable to hire those employees ortheir replacements on time, our operations, as well as our financial results, may be materially and adversely affected. Future acquisitions may have an adverse effect on our ability to manage our business. Selective acquisitions form part of our strategy to further expand our business. If we are presented with appropriate opportunities, we may acquire additionalcompanies, products or technologies. Future acquisitions and the subsequent integration of new companies into ours would require significant attention fromour management. The diversion of our management’s attention and any difficulties encountered in any integration process could have an adverse effect onour ability to manage our business. Future acquisitions would expose us to potential risks, including risks associated with the integration of new operations,technologies and personnel, unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, the inability togenerate sufficient revenue to offset the costs and expenses of acquisitions, and potential loss of, or harm to, relationships with employees, customers andsuppliers as a result. 32 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We may lose our competitive advantage and our operations may suffer if we fail to prevent the loss or misappropriation of, or disputes over, ourintellectual property or proprietary information. We regard our intellectual property, particularly our patents and trade secrets, to be of considerable value and importance to our business and our success. Werely on a combination of patent, trademark and trade secret laws, as well as confidentiality agreements to protect our intellectual property rights. Failure toprotect our intellectual property rights could harm our brands and our reputation, and adversely affect our ability to compete effectively. Further, enforcing ordefending our intellectual property rights, including our patents and trade secrets, could result in the expenditure of significant financial and managerialresources. As of December 31, 2016, we held 59 issued patents and had 10 pending patent applications in China for certain manufacturing processes and packagingdesigns. We may not be able to successfully obtain the approval of the PRC authorities for our patent applications. As of December 31, 2016, we also hadeight trademarks registered in China. While we are not aware of any infringement on our intellectual property and we have not been notified by any third party that we are infringing on theirintellectual property, our ability to compete successfully and to achieve future revenue growth will depend, in significant part, on our ability to protect ourproprietary technologies and operate without infringing upon the intellectual property rights of others. Policing unauthorized use of proprietary technologiesis difficult and expensive. The steps we have taken may not be adequate to prevent unauthorized use of our intellectual property rights. The legal regime in China for the protection of intellectual property rights is still at its early stage of development. Despite many laws and regulationspromulgated and other efforts made by China over the years to tighten up its regulation and protection of intellectual property rights, private parties may notenjoy intellectual property rights in China to the same extent as they would in many more developed countries, including the United States, and theenforcement of such laws and regulations in China has not achieved the levels reached in those countries. The administrative agencies and the court systemin China are not well-equipped to deal with violations or handle the nuances and complexities between compliant technological innovation andnoncompliant infringement. We also rely on confidentiality agreements with our management and employees to protect our confidential proprietary information. However, the protectionof our intellectual property may be compromised as a result of: ·departure of any of our management members or employees in possession of our confidential proprietary information; ·breach by such departing management member or employee of his or her confidentiality and non-disclosure undertaking to us; ·infringement by others of our proprietary information and intellectual property rights; or ·refusal by relevant regulatory authorities to approve our patent or trademark applications. 33 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Any of these events or occurrences may have a material adverse effect on our operations. We cannot assure you that the steps taken by us to protect our intellectual property rights will be adequate or that third parties will not infringe ormisappropriate our patents, trademarks, confidential proprietary information or similar proprietary rights. Litigation may be necessary to enforce ourintellectual property rights and the outcome of any such litigation may not be in our favor. Given the relative unpredictability of China’s legal system andpotential difficulties enforcing a court judgment in China, we cannot guarantee that we would be able to halt any unauthorized use of our intellectualproperty through litigation in a timely manner. Furthermore, we cannot assure you that other parties will not assert infringement claims against us, and we may have to pursue litigation against other partiesto assert our rights. Any such claim or litigation could be costly and we may lack the resources required to defend against such claims. If we are unsuccessfulin defending against such infringement claims, we may be required to pay damages, modify our products or suspend the production and sale of such products.We cannot guarantee that we will be able to modify our products on commercially reasonable terms. Finally, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on ourability to market or sell our brands, and profitably exploit our products. A disruption in the supply of utilities, fire or other calamity at our manufacturing plant would disrupt production of our products and adversely affect ourbusiness. Our products are manufactured at our production facilities located in Tai’an, Shandong Province and Guiyang, Guizhou Province in China. While we havenot in the past experienced any calamities which disrupted production, any disruption in the supply of utilities, in particular, electricity or power supply, orany outbreak of fire, flood or other calamity resulting in significant damage at our facilities would severely affect our production and have a material adverseeffect on our business, financial condition and results of operations. We maintain insurance policies covering losses with respect to damages to our properties and products. We do not have insurance coverage for inventories ofraw materials or business interruption. We cannot assure you that our insurance would be sufficient to cover all of our potential losses. If we do not maintain strong financial controls, investor confidence in us may decline and our stock price may decline as a result. As required by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring every public company to include a management report onsuch company’s internal control over financial reporting in its annual report, which must also contain management’s assessment of the effectiveness of ourcompany’s internal control over financial reporting. In addition, the independent registered public accounting firm auditing the financial statements mustalso attest to the operating effectiveness of our company’s internal controls. 34 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. A report of our management and attestation by our independent registered public accounting firm is included in our annual report on Form 10-K for the yearended December 31, 2016. Our management has concluded that our internal controls over financial reporting as of December 31, 2016 were effective. Wehave in the past discovered, and may in the future discover, material weakness in our internal controls. For example, we identified material weaknesses relatedto review controls on the accounting for income taxes and derivative instrument valuation as described under Item 9A of our annual report on Form 10-K foryear ended December 31, 2010, which were subsequently remediated in 2011 as described under Item 9A of our annual report on Form 10-K for the yearended December 31, 2011. However, we cannot guarantee that these remedies will continue to be effective. Failure to achieve and maintain an effectiveinternal control environment could result in us not being able to accurately report our financial results, prevent or detect fraud or provide timely and reliablefinancial and other information pursuant to the reporting obligations we have as a public company, which could have a material adverse effect on ourbusiness, financial condition and results of operations. This could reduce investors’ confidence in our reported financial information, which in turn couldresult in lawsuits being filed against us by our stockholders, otherwise harm our reputation or negatively affect the trading price of our common stock. RISKS RELATING TO DOING BUSINESS IN CHINA Changes in China’s political or economic situation could harm us and our operating results. Economic reforms adopted by the PRC government have had a positive effect on the economic development of the country. The reformed economicinfrastructure and legal systems, however, may be subject to abrupt adjustments by the government. These adjustments, especially in the following areas,could either benefit or damage our operations and profitability: ·Level of government involvement in the economy; ·Control of foreign exchange; ·Methods of allocating resources; ·International trade restrictions; and ·International conflict. The PRC economy differs from the economies of most member countries of the Organization for Economic Cooperation and Development, or the OECD, inmany ways. For example, state-owned enterprises still constitute a large portion of China’s economy, and weak corporate governance and the lack of aflexible currency exchange policy still prevail in China. As a result of these differences, we may not develop in the same way or at the same rate as might beexpected if the PRC economy was similar to those of the OECD member countries. Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us. We conduct substantially all of our business through our operating subsidiaries in China. Our operating subsidiaries are generally subject to laws andregulations applicable to foreign investments in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based onwritten statutes, and prior court decisions may be cited for reference but have limited precedential value. Since 1979, a series of new PRC laws andregulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since the PRC legal systemcontinues to evolve rapidly, the interpretations of many laws, regulations, and rules are not always uniform, and enforcement of these laws, regulations, andrules involve uncertainties, which may limit legal protections available to you and us. In addition, any litigation in China may be protracted and result insubstantial costs and diversion of resources and management attention. 35 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. You may have difficulty enforcing judgments against us. Most of our assets are located outside of the United States and most of our current operations are conducted in China. In addition, most of our directors andofficers are nationals and residents of countries other than the United States and substantially all the assets of these persons are located outside the UnitedStates. As a result, it may be difficult for you to effect service of process within the United States upon our PRC operations and these persons. It may also bedifficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors. There is also uncertainty as to whether the PRC courts would recognize or enforce judgments of U.S. courts. Our counsel as to PRC law has advised us thatalthough recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law, recognition and enforcement of a foreignjudgment by PRC courts depend on treaties or reciprocity between China and the country where the judgment is made. China does not have any treaties orother arrangements with the United States that provide for the reciprocal recognition and enforcement of U.S. judgments. In addition, according to the PRCCivil Procedures Law, PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basicprinciples of PRC law or national sovereignty, security, or the public interest. So it is uncertain whether a PRC court would enforce a judgment rendered by acourt in the United States. The PRC government exerts substantial influence over the manner in which we must conduct our business activities. The PRC government has exercised and continues to exercise substantial control over virtually every sector of the PRC economy through regulation andstate ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and exporttariffs, environmental regulations, land use rights, property, and other matters. We believe that our operations in China are in material compliance with allapplicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricterregulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with suchregulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrallyplanned economy and any regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions inChina or particular regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures. Restrictions on currency exchange may limit our ability to receive and use our sales effectively. Substantially all of our sales are settled in RMB, and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB tofund any future business activities outside China or other payments in U.S. dollars. Although the PRC government introduced regulations in 1996 to allowgreater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents at those banks in China authorized to conductforeign exchange business. In addition, conversion of RMB for capital account items, including direct investments and loans, is subject to governmentalapproval and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the PRCregulatory authorities will not impose more stringent restrictions on the convertibility of the RMB. 36 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Fluctuations in exchange rates could adversely affect our business and the value of our securities. The value of our common stock will be indirectly affected by the foreign exchange rate between the U.S. dollar and RMB and between those currencies andother currencies in which our sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect ourfinancial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in theexchange rate will also affect the relative value of any dividends we issue that will be exchanged into U.S. dollars, as well as earnings from, and the value of,any U.S. dollar-denominated investments we make in the future. Since July 2005, RMB has no longer been pegged to U.S. dollars. Although the People’s Bank of China regularly intervenes in the foreign exchange marketto prevent significant short-term fluctuations in the exchange rate, RMB may appreciate or depreciate significantly in value against U.S. dollars in themedium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessenintervention in the foreign exchange market. Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedgingtransactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we maynot be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange controlregulations that restrict our ability to convert RMB into foreign currencies. Currently, some of our raw materials and major equipment are imported. In the event that the U.S. dollars appreciate against RMB, our costs will increase. Ifwe cannot pass the resulting cost increases on to our customers, our profitability and operating results will suffer. In addition, if our sales to internationalcustomers grow, we will be increasingly subject to the risk of foreign currency depreciation. Restrictions under PRC law on our PRC subsidiaries’ ability to make dividends and other distributions could materially and adversely affect our ability togrow, make investments or acquisitions, pay dividends to you and otherwise fund and conduct our business. Substantially all of our profits are earned by our PRC subsidiaries. However, PRC regulations restrict the ability of our PRC subsidiaries to make dividendsand other payments to their offshore parent companies. PRC legal restrictions permit payments of dividends by our PRC subsidiaries only out of theiraccumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries are also required underPRC laws and regulations to allocate at least 10.0% of their annual after-tax profits determined in accordance with PRC generally accepted accountingprinciples to a statutory general reserve fund until the amounts in such fund reaches 50.0% of their registered capital. Allocations to these statutory reservefunds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability ofour PRC subsidiaries to transfer funds to us could materially limit our ability to grow, make investments or acquisitions that could be beneficial to ourbusiness, pay dividends and otherwise fund and conduct our business. Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRCresident stockholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, limit the ability of ourPRC subsidiaries to distribute profits to us or otherwise materially adversely affect us. Pursuant to the Circular on Relevant Issues concerning Foreign Exchange Administration of Overseas Investment and Financing and Return InvestmentsConducted by Domestic Residents through Overseas Special Purpose Vehicle, or Circular 37, which was promulgated by SAFE, and became effective on July4, 2014, (1) a PRC resident must register with the local SAFE branch before he or she contributes assets or equity interests in an overseas special purposevehicle, or an Overseas SPV, that is directly established or controlled by the PRC resident for the purpose of conducting investment or financing; and (2)following the initial registration, the PRC resident is also required to register with the local SAFE branch for any major change, in respect of the OverseasSPV, including, among other things, a change in the Overseas SPV’s PRC resident shareholder, name of the Overseas SPV, term of operation, or any increaseor reduction of the Overseas SPV’s registered capital, share transfer or swap, and merger or division. 37 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We have requested the beneficial holders of our stock who are PRC residents to register with the relevant branch of SAFE in connection with their equityinterests in us and our acquisitions of equity interests in our PRC subsidiaries pursuant to Circular 37 or the predecessor regulation of Circular 37, namely theNotice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via OverseasSpecial Purpose Vehicles, as the case may be. Because of uncertainty over how Circular 37 will be interpreted and implemented, and how or whether SAFEwill apply it to us, we cannot predict how it will affect our business operations or future strategies. For example, the ability of our present and prospectivePRC subsidiaries to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subjectto compliance with Circular 37 by our PRC resident beneficial holders. In addition, such PRC residents may not always be able to complete the necessary registration procedures required by Circular 37. We also have little controlover either our present or prospective direct or indirect stockholders or the outcome of such registration procedures. Failure of our present or future PRCresident beneficial holders to comply with Circular 37 could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas orcross-border investment activities, limit the ability of our PRC subsidiaries to make distributions or pay dividends or affect our ownership structure, whichcould adversely affect our business and prospects. We may be unable to complete a business combination transaction efficiently or on favorable terms due to complicated merger and acquisitionregulations. In August 2006, six PRC regulatory agencies, including the China Securities Regulatory Commission, or CSRC, promulgated the Regulation on Mergers andAcquisitions of Domestic Companies by Foreign Investors, or Circular 10, which became effective in September 2006 and was amended in June 2009. Thisregulation, among other things, governs the approval process by which a PRC company may participate in an acquisition of assets or equity interests.Depending on the structure of the transaction, Circular 10 requires the PRC parties to make a series of applications and supplemental applications to thegovernment agencies. In some instances, the application process may require the presentation of economic data concerning a transaction, includingappraisals of the target business and evaluations of the acquirer, which are designed to allow the government to assess the transaction. Government approvalswill have expiration dates by which a transaction must be completed and reported to the government agencies. Compliance with Circular 10 is likely to bemore time-consuming and expensive than in the past and the government can now exert more control over the combination of two businesses. Accordingly,due to Circular 10, our ability to engage in business combination transactions has become significantly more complicated, time consuming and expensive,and we may not be able to negotiate a transaction that is acceptable to our stockholders or sufficiently protect their interests in a transaction. Circular 10 allows PRC government agencies to assess the economic terms of a business combination transaction. Parties to a business combinationtransaction may have to submit to the PRC Ministry of Commerce, or MOFCOM, and other relevant government agencies an appraisal report, an evaluationreport and the acquisition agreement, all of which form part of the application for approval, depending on the structure of the transaction. The regulationsalso prohibit a transaction at an acquisition price obviously lower than the appraised value of the PRC business or assets and in certain transaction structures,require that consideration must be paid within defined periods, generally not in excess of a year. The regulation also limits our ability to negotiate variousterms of the acquisition, including aspects of the initial consideration, contingent consideration, holdback provisions, indemnification provisions andprovisions relating to the assumption and allocation of assets and liabilities. Transaction structures involving trusts, nominees and similar entities areprohibited. Therefore, such regulation may impede our ability to negotiate and complete a business combination transaction on financial terms that satisfyour investors and protect our stockholders’ economic interests. 38 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Under the Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable taxconsequences to us and our non-PRC stockholders. The Enterprise Income Tax Law, or the EIT Law, and its implementing rules became effective on January 1, 2008. Under the EIT Law, an enterpriseestablished outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in amanner similar to a PRC enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as “substantialand overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. On April 22, 2009, SAT issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment Controlled Enterprises IncorporatedOffshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice, further interpreting the application of the EIT Law and itsimplementation on non-PRC enterprise or group controlled by a PRC enterprise or a PRC enterprise group. Pursuant to the Notice, an enterprise incorporatedin an offshore jurisdiction and controlled by a PRC enterprise or group will be classified as a “non-domestically incorporated resident enterprise” if (1) itssenior management in charge of daily operations reside or perform their duties mainly in China; (2) its financial or personnel decisions are made or approvedby bodies or persons in China; (3) its substantial assets and properties, accounting books, corporate chops, board and shareholder minutes are kept in China;and (4) at least half of its directors with voting rights or senior management often resident in China. A resident enterprise would be subject to an enterpriseincome tax rate of 25.0% on its worldwide income and must pay a withholding tax at a rate of 10.0% when paying dividends to its non-PRC shareholders.However, it remains unclear as to whether the Notice is applicable to an offshore enterprise not controlled by a PRC enterprise or a PRC enterprise group. Norare detailed measures on imposition of tax from non-domestically incorporated resident enterprises are available. Therefore, it is unclear how the PRC taxauthorities will determine tax residency based on the facts of each case. We may be deemed to be a resident enterprise by PRC tax authorities. If the PRC tax authorities determine that we are a “resident enterprise” for PRCenterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of25.0% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as intereston financing proceeds and non-PRC source income would be subject to PRC enterprise income tax at a rate of 25.0%. Second, although under the EIT Lawand its implementing rules dividends paid to us from our PRC subsidiaries would qualify as “tax-exempt income,” we cannot guarantee that such dividendswill not be subject to a 10.0% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issuedguidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Inaddition, dividends paid by us to non-PRC shareholders may be subject to PRC withholding tax and gains on dispositions of our shares by non-PRCshareholders may be subject to PRC tax. In that case, the tax rate would be 10.0% in the case of non-PRC enterprise shareholder or 20.0% in the case of non-PRC individual shareholder. Finally, if we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the U.S. andChina, and our PRC tax may not be creditable against our U.S. tax. 39 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. SAT released a circular on December 15, 2009 that addresses the transfer of shares by nonresident companies, generally referred to as Circular 698. Circular698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest inChina. Circular 698 has the effect of taxing foreign companies on gains derived from the indirect sale of a PRC company. Where a foreign investor indirectlytransfers equity interests in a PRC resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country orjurisdiction that has an effective tax rate less than 12.5% or does not tax foreign income of its residents, the foreign investor must report this indirect transferto the tax authority in charge of that PRC resident enterprise. Using a “substance over form” principle, the PRC tax authority may disregard the existence ofthe overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of avoiding PRC tax. As a result, gains derivedfrom such indirect transfer may be subject to PRC withholding tax at a rate of up to 10.0%. SAT subsequently released public notices to clarify issues relating to Circular 698, including the Announcement on Several Issues concerning the EnterpriseIncome Tax on the Indirect Transfers of Properties by Non-resident Enterprises, or SAT Notice 7, which became effective on February 3, 2015. SAT Notice 7abolished the compulsive reporting obligations originally set out in Circular 698. Under SAT Notice 7, if a non-resident enterprise transfers its shares in anoverseas holding company, which directly or indirectly owns PRC taxable properties, including shares in a PRC company, via an arrangement withoutreasonable commercial purpose, such transfer shall be deemed as indirect transfer of the underlying PRC taxable properties. Accordingly, the transferee shallbe deemed as a withholding agent with the obligation to withhold and remit the enterprise income tax to the competent PRC tax authorities. Factors that maybe taken into consideration when determining whether there is a “reasonable commercial purpose” include, among other factors, the economic essence of thetransferred shares, the economic essence of the assets held by the overseas holding company, the taxability of the transaction in offshore jurisdictions, andeconomic essence and duration of the offshore structure. SAT Notice 7 also sets out safe harbors for the “reasonable commercial purpose” test. SAT Notice 7contains an exemption for transfers of shares of a holding company listed outside the PRC when the shares are acquired and sold in the public market. However, uncertainties exist on testing the reasonable commercial purpose. For example, the relevant authority has not yet promulgated any formalprovisions or formally declared or stated how to calculate the effective tax rates in foreign tax jurisdictions. As a result, we may become at risk of being taxedunder Circular 698 and the related SAT notices and we may be required to expend valuable resources to comply with Circular 698 and the related SATnotices or to establish that we should not be taxed under Circular 698 and the related SAT notices, which could have a material adverse effect on ourfinancial condition and results of operations. We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated theselaws could have a material adverse effect on our business. We are subject to the Foreign Corrupt Practice Act, or FCPA, and other U.S. laws that prohibit improper payments or offers of payments to foreigngovernments and their officials and political parties by U.S. persons and issuers as defined by the relevant statute, for the purpose of obtaining or retainingbusiness. We have operations, agreements with third parties, and make most of our sales in China. PRC anti-corruption laws also strictly prohibit bribery ofgovernment officials. Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents, ordistributors, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by ouremployees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents,or distributors may engage in conduct for which we might be held responsible. Particularly, most of the hospitals and inoculation centers in China are state-owned entities, whose employees may be recognized as foreign government officials for the purpose of FCPA. Therefore, any payments, expensive gifts orother benefits provided to an employee of the state-owned hospital or inoculation center may be deemed violation of FCPA. Violations of FCPA or PRC anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business,prospects, operating results and financial condition. In addition, the U.S. government may seek to hold us liable for successor liability under FCPA violationscommitted by companies in which we invest or that we acquire. 40 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If we become directly subject to the scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significantresources to investigate and resolve the matter which could harm our business operations, stock price and reputation and could result in a loss of yourinvestment in our stock, especially if such matter cannot be addressed and resolved favorably. In recent years, U.S. public companies that have substantially all of their operations in China, particularly companies like us which have completed the“reverse merger” transactions, have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatoryagencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities and mistakes, alack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases,allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S.-listed PRC-based companies hassharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits, SECenforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticismand negative publicity will have on us, our business and our stock price. If we become the subject of any unfavorable allegations, whether such allegationsare proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our company. This situation will becostly and time consuming and distract our management from growing our company. If such allegations are not proven to be groundless, our company andour business operations will be severely impacted and your investment in our stock could be rendered worthless. The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodiesin China. Accordingly, our public disclosure should be reviewed in light of the fact that no governmental agency that is located in China wheresubstantially all of our operations and business are located has conducted any due diligence on our operations or reviewed or cleared any of ourdisclosure. We are regulated by the SEC and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulationspromulgated by the SEC under the Securities Act and the Exchange Act. Unlike public reporting companies whose operations are located primarily in theUnited States, however, substantially all of our operations are located in China. Since substantially all of our operations and business takes place in China, itmay be more difficult for the Staff of the SEC to overcome the geographic and cultural obstacles that are present when reviewing our disclosure. These sameobstacles are not present for similar companies whose operations or business take place entirely or primarily in the United States. Furthermore, our SECreports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosurein our SEC reports and other filings are not subject to the review of the CSRC, a PRC regulator that is tasked with oversight of the capital markets in China.Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done anydue diligence on our company and with the understanding that none of our SEC reports, other filings or any of our other public pronouncements has beenreviewed or otherwise scrutinized by any local regulator. 41 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our independent registered public accounting firm may be temporarily suspended from practicing before the SEC if unable to continue to satisfy SECinvestigation requests in the future. If a delay in completion of our audit process occurs as a result, we could be unable to timely file certain reports withthe SEC, which may lead to the delisting of our stock. The vast majority of our sales are to customers in China, and we have all of our operations in China. Like many U.S. companies with significant operations inChina, our independent registered public accounting firm is located in China. On January 22, 2014, Judge Cameron Elliot, an SEC administrative law judge, issued an initial decision suspending the Chinese member firms of the “BigFour” accounting firms, including our independent registered public accounting firm, from practicing before the SEC for six months. In February 2014, theinitial decision was appealed. While under appeal and in February 2015, the Chinese member firms of “Big Four” accounting firms reached a settlement withthe SEC. As part of the settlement, each of the Chinese member firms of “Big Four” accounting firms agreed to settlement terms that include a censure,undertakings to make a payment to the SEC, procedures and undertakings as to future requests for documents by the SEC, and possible additionalproceedings and remedies should those undertakings not be adhered to. If the settlement terms are not adhered to, Chinese member firms of “Big four” accounting firms may be suspended from practicing before the SEC whichcould in turn delay the timely filing of our financial statements with the SEC. In addition, it could be difficult for us to timely identify and engage anotherqualified independent auditor to replace our independent registered public accounting firm. A delinquency in our filings with the SEC may result inNASDAQ initiating procedures, which could adversely harm our reputation and have other material adverse effects on our overall growth and prospects. Our independent registered public accounting firm’s audit documentation related to their audit reports included in our annual report is located in China.The PCAOB currently cannot inspect audit documentation located in China and, as such, you may be deprived of the benefits of such inspection. Our independent registered public accounting firm issued an audit opinion on the financial statements included in our annual reports filed with the SEC. Ourindependent registered public accounting firm’s audit documentation related to their audit reports included in our annual reports is located in China, andaudit procedures take place within China’s borders. As auditors of companies that are traded publicly in the United States and a firm registered with thePublic Company Accounting Oversight Board, or the PCAOB, our auditor is required by the laws of the United States to undergo regular inspections by thePCAOB. However, work papers located in China are not currently inspected by the PCAOB because the PCAOB is currently unable to conduct inspectionswithout the approval of the PRC authorities. Inspections of certain other firms that the PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and qualitycontrol procedures, which may be addressed as part of the inspection process to improve future audit quality. However, the PCAOB is currently unable toinspect an auditor’s audit work related to a company’s operations in China and where such documentation of the audit work is located in China. As a result,our investors may be deprived of the benefits of the PCAOB’s oversight of auditors that are located in China through such inspections. 42 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The inability of the PCAOB to conduct inspections of an auditor’s work papers in China makes it more difficult to evaluate the effectiveness of any of ourauditor’s audit procedures or quality control procedures that may be located in China as compared to auditors outside of China that are subject to PCAOBinspections. Investors may consequently lose confidence in our reported financial information and procedures and the quality of our financial statements. RISKS RELATING TO OUR STOCK The market price of our common stock is volatile, leading to the possibility of its value being depressed at a time when you want to sell your holdings. The market price of our common stock is volatile, and this volatility may continue. Numerous factors, many of which are beyond our control, may cause themarket price of our common stock to fluctuate significantly. These factors include, among others: ·our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations offinancial market analysts and investors; ·changes in financial estimates by us or by any securities analysts who might cover our stock; ·speculation about our business in the press or the investment community, including negative publicity and short seller reports that make allegationsagainst us, even if unfounded; ·significant developments relating to our relationships with our customers or suppliers; ·stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry; ·customer demand for our products; ·investor perceptions of our industry in general and our company in particular; ·the operating and stock performance of comparable companies; ·general economic conditions and trends; ·major catastrophic events; ·announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures; ·changes in accounting standards, policies, guidance, interpretation or principles; ·loss of external funding sources; ·sales of our common stock, including sales by our directors, officers or significant stockholders; ·additions or departures of key personnel; and ·investor perception of litigation, investigation or other legal proceedings involving us or certain of our individual stockholders or their familymembers. 43 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Securities class action litigation is often instituted against companies following periods of volatility in their stock price. This type of litigation could resultin substantial costs to us and divert our management’s attention and resources. Moreover, securities markets may from time to time experience significantprice and volume fluctuations for reasons unrelated to operating performance of particular companies. For example, in July 2008, the securities markets in theUnited States, China and other jurisdictions experienced the largest decline in share prices since September 2001. These market fluctuations may adverselyaffect the price of our common stock and other interests in our company at a time when you want to sell your interest in us. The provisions in our currently effective certificate of incorporation and bylaws and our preferred shares rights agreement might discourage, delay orprevent a change of control of our company or changes in our management and, therefore depress the trading price of the common stock. Upon stockholders’ approval on July 20, 2012, we have adopted amended and restated certificate of incorporation and bylaws, which contained provisionsthat are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raiderand to encourage prospective acquirers to negotiate with our board of directors, rather than to attempt a hostile takeover. These provisions include, among others: ·the right of our board of directors to issue preferred stock without stockholder approval; ·division of our board of directors into three classes with staggered terms; ·elimination of the right of our stockholders to act by written consent; ·prohibiting stockholders from calling a special meeting of the stockholders; ·rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; and ·requiring super majority stockholder vote to amend certain provisions of the amended and restated certificate of incorporation and bylaws. Approved on June 20, 2014, our currently-in-effect bylaws authorize our stockholders who hold 25.0% of our entire capital stock issued and outstanding andare entitled to vote to call a special meeting of the stockholders. On February 22, 2017, our board of directors adopted a preferred shares rights agreement between us and the Securities Transfer Corporation, as the rightsagent. This agreement provides, among other things, that when specified events occur, our stockholders will be entitled to purchase from us a fraction of ashare of series A participating preferred stock for each share of common stock they own. Such preferred stock purchase rights are triggered by the earlier tooccur of (1) 10 business days (or a later date determined by our board of directors before the rights are separated from our common stock) after the publicannouncement that a person or group has become an “acquiring person” by acquiring beneficial ownership of 15.0% or more of our outstanding commonstock or (2) 10 business days (or a later date determined by our board of directors before the rights are separated from our common stock) after a person orgroup begins a tender or exchange offer that, if completed, would result in that person or group becoming an acquiring person. The issuance of preferredstock pursuant to this preferred shares rights agreement would cause substantial dilution to a person or group that attempts to acquire us on terms notapproved by our board of directors. Our board of directors had previously adopted similar preferred shares rights agreements on November 19, 2012, whichexpired on November 20, 2014, and on January 8, 2015, which expired on January 8, 2017. 44 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We do not intend to pay dividends for the foreseeable future. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying anycash dividends on our common stock. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn aninvestment return, which may never occur. Investors seeking cash dividends should not purchase our common stock. Any determination to pay dividends inthe future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions,restrictions imposed by applicable law and other factors our board of directors deems relevant. Stock prices of companies with business operations primarily in China have fluctuated widely in recent years, and the trading prices of our common stockare likely to be volatile, which could result in substantial losses to investors. The trading prices of our common stock are likely to be volatile and could fluctuate widely in response to factors beyond our control. For example, if one ormore of the industry analysts or ratings agencies who cover us downgrades us or our common stock, or publishes unfavorable research about us, the price ofour common stock may decline. If one or more of these analysts or agencies cease to cover our company or fail to regularly publish reports on us, we couldlose visibility in the financial markets, which could cause the price of our common stock or trading volume to decline. In addition, the performance andfluctuation of the market prices of other China-based, U.S.-listed healthcare companies may affect the volatility in the price of and trading volume for ourcommon stock. In recent years, a number of PRC-based companies have listed their securities, or are in the process of preparing for listing their securities, onU.S. stock markets. Some of these companies have experienced significant volatility, including significant price declines following their initial publicofferings. The trading performances of the securities of these PRC-based companies’ securities at the time of or after their offerings may affect the overallinvestor sentiment towards PRC-based companies listed in the United States and consequently may affect the trading performance of our common stock.These broad market and industry factors may significantly affect the market price and volatility of our common stock, regardless of our actual operatingperformance. In addition to market and industry factors, the price and trading volume for our common stock may be highly volatile for specific business reasons. Any ofthese factors may result in large and sudden changes in the volume and price at which our common stock will trade. We cannot assure you that these factorswill not occur in the future again. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often institutedsecurities class action litigation against that company. If we were involved in a class action lawsuit, it could divert the attention of senior management, and, ifadversely determined, could have a material adverse effect on our business, financial condition and results of operations. ITEM 1B. UNRESOLVED STAFF COMMENTS. We have no outstanding or unresolved comments from the SEC staff. ITEM 2. PROPERTIES. Our company’s corporate offices are leased and located at 18th Floor, Jialong International Building, 19 Chaoyang Park Road, Chaoyang District, Beijing100125, the People’s Republic of China. 45 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Business Location Owned/LeasedManufacturing Facilities Taishan District, Tai’an City, Shandong Province, China Owned Gaoxin District, Tai’an City, Shandong Province, China Owned Huaxi District, Guiyang City, Guizhou Province, China Owned Plasma Collection Stations Qihe County, Shandong Province, China Leased Xiajin County, Shandong Province, China Owned Zhangqiu County, Shandong Province, China Owned Yanggu County, Shandong Province, China Owned Yishui County, Shandong Province, China Owned Huanjiang Maonan Autonomous County, Guangxi Zhuang AutonomousRegion, China Owned Fangchenggang City, Guangxi Zhuang Autonomous Region, China Owned Yuncheng County, Shandong Province, China Leased Ningyang County, Shandong Province, China Owned Cao County, Shandong Province, China Owned Xinglong County, Hebei Province, China Owned Zaozhuang City, Shandong Province, China Leased Huangping County, Guizhou Province, China Owned Puding County, Guizhou Province, China Owned Ziyun Miaozu Buyizu autonomous County, Guizhou Province, China Leased We believe that all of our properties have been adequately maintained, are generally in good condition, and are suitable and adequate for our business. ITEM 3. LEGAL PROCEEDINGS. From time to time, we may become involved in various lawsuits and legal proceedings arising in the ordinary course of business. However, litigation issubject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. Other than the legalproceedings set forth below, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on ourbusiness, financial condition or operating results. Dispute with Jie’an over Certain Capital Injection into Guizhou Taibang In May 2007, a 91% majority of Guizhou Taibang’s shareholders approved a plan to raise additional capital from qualified strategic investors through theissuance of an additional 20,000,000 shares of Guizhou Taibang. The plan required all existing Guizhou Taibang shareholders to waive their rights of firstrefusal to subscribe for the additional shares. The remaining 9% minority shareholder of Guizhou Taibang’s shares, Guizhou Jie’an Company, or Jie’an, didnot support the plan and did not waive its right of first refusal. In May 2007, Guizhou Taibang signed an Equity Purchase Agreement with certain allegedstrategic investors (who concealed their background), pursuant to which such investors agreed to invest an aggregate of RMB51.0 million (approximately$7.3 million) in exchange for 21.4% of Guizhou Taibang’s equity interests. Such Equity Purchase Agreement was not approved or ratified by over two-thirdssupermajority of Guizhou Taibang’s shareholders, which approval or ratification is required under the PRC Company Law. At the same time, as an existingshareholder, Jie’an also subscribed for 1,800,000 shares, representing its pro rata share of the 20,000,000 shares being offered. In total, Guizhou Taibangreceived RMB51.0 million (approximately $7.3 million) from the investors and RMB6.5 million (approximately $0.9 million) from Jie’an. 46 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In June 2007, Jie’an brought a lawsuit against Guizhou Taibang, alleging that it had a right to acquire the 18,200,000 shares offered to the investors underthe Equity Purchase Agreement. The trial court denied Jie’an’s request, and the PRC Supreme Court ultimately sustained the original ruling in May 2009 anddenied the rights of first refusal of Jie’an over the 18,200,000 shares. During the second quarter of 2010, Jie’an requested that Guizhou Taibang register its 1.8 million shares of additional capital injection with the localadministration of industry and commerce, or AIC. Guizhou Taibang’s board of directors withheld its required ratification of Jie’an’s request, pending theoutcome of the ongoing litigation. In March 2012, Jie’an brought another lawsuit against Guizhou Taibang for refusing to register the shares. In July 2013,the trial court dismissed the lawsuit for lack of jurisdiction. Jie’an did not appeal the dismissal. In December 2013, Jie’an brought a third lawsuit against Guizhou Taibang, requesting Guizhou Taibang to register 1.8 million shares under its name with thelocal AIC. In July 2014, the trial court denied Jie’an’s request to register such shares. Despite the denial of Jie’an’s share registration request, the trial court,however, in its ruling, ordered Guizhou Taibang to pay accumulated dividends of RMB13.8 million (approximately $2.0 million) associated with theseshares and the related interest expenses to Jie’an. Guizhou Taibang and Jie’an subsequently filed a cross-appeal. In December 2014, the appellate court ruledin favor of Jie’an supporting its request to register 1.8 million shares and ordered Guizhou Taibang to pay Jie’an its share of accumulated dividends ofRMB18.3 million (approximately $2.6 million) associated with these shares plus the related interest expenses to Jie’an. In the first half of 2015, GuizhouTaibang paid an aggregate of RMB22.6 million (approximately $3.3 million) to the trial court held in escrow pending further appeal of this case. In June2015, Guizhou Taibang appealed to the High Court of Guizhou, which overruled the decision of the appellate court and remanded the case to the trial courtfor retrial in September 2015. In August 2016, the trial court granted Jie’an’s petition to withdraw the lawsuit as Jie’an sought to withdraw its capitalcontribution in Guizhou Taibang pursuant to an agreement dated July 31, 2016. The funds held in escrow were credited to the consideration payable toJie’an for the capital withdrawal as described below. In November 2013, Guizhou Taibang held a shareholders meeting and the shareholders passed resolutions, or the November 2013 Resolutions, that, interalia, (1) determined that it was no longer necessary for Guizhou Taibang to obtain additional capital from investors; (2) rejected Jie’an’s request that Jie’ansubscribe for additional shares of Guizhou Taibang alone and one or more other shareholders reduce their shareholding in Guizhou Taibang; and (3)approved the issuance of a total of 20,000,000 new shares to all existing shareholders on a pro rata basis. Jie’an subsequently filed a fourth lawsuit againstGuizhou Taibang in December 2013, requesting that the court declare the November 2013 Resolutions void. Both the trial court and the appellate courtdenied Jie’an’s request. In March 2014, Guizhou Taibang held another shareholders meeting and the shareholders passed resolutions, or the March 2014 Resolutions, that, inter alia,re-calculated the ownership percentage in Guizhou Taibang based on the November 2013 Resolutions and the additional capital injections from existingshareholders. Guizhou Taibang subsequently updated the registration with the local AIC regarding the additional capital injections in August 2014. InSeptember 2014, Jie’an and Shenzhen Yigong Shengda Technology Co., Ltd., or Yigong Shengda, another minority shareholder of Guizhou Taibang, filed alawsuit against Guizhou Taibang, requesting that the court declare both the November 2013 Resolutions and the March 2014 Resolutions void and instructGuizhou Taibang to withdraw the AIC registration. In November 2014, the trial court suspended this case pending the final outcome of the third lawsuit filedby Jie’an. In October 2015, the trial court denied their request. In May 2016, the appellate court vacated the trial court’s decision to uphold GuizhouTaibang’s shareholders resolution, and remanded the case for retrial. In August 2016, the trial court granted the petitions by Jie’an and Yigong Shengda towithdraw the lawsuit as Jie’an and Yigong Shengda sought to withdraw their respective capital contributions in Guizhou Taibang pursuant to an agreementdated July 31, 2016. 47 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On July 31, 2016, Guiyang Dalin Biologic Technologies Co., Ltd., or Guiyang Dalin, Guizhou Taibang, Jie’an and Yigong Shengda entered into anagreement, pursuant to which Jie’an and Yigong Shengda agreed to withdraw their respective capital contributions in Guizhou Taibang for an aggregateconsideration of RMB415.0 million (approximately $59.8 million). In August 2016, Guizhou Taibang paid the first installment of RMB90.0 million(approximately $13.0 million) of the consideration to Jie’an and Yigong Shengda. Guizhou Taibang completed the AIC registration for the foregoing capitalwithdrawal in October 2016 and paid the balance of the consideration to Jie’an and Yigong Shengda in November 2016. As a result of the capital withdrawal,Guiyang Dalin has become the sole shareholder of Guizhou Taibang. Dispute with Certain Individual Investor over Certain Capital Injection into Guizhou Taibang In part due to the invalidity of the Equity Purchase Agreement with certain alleged strategic investors in May 2007, which was never approved or ratified byGuizhou Taibang’s shareholders, such investors’ equity ownership in Guizhou Taibang and the related increase in registered capital of Guizhou Taibanghave never been registered with the local AIC. In January 2010, one individual among such investors brought a lawsuit against Guizhou Taibang requestingto register his 14.35% ownership interest in Guizhou Taibang with the local AIC and seeking the distribution of his share of Guizhou Taibang’s dividendsdeclared since 2007. In October 2010, the trial court denied such individual investor’s right as shareholder of Guizhou Taibang and his entitlement to share the dividends, whichruling was reaffirmed after a re-trial by the same trial court in December 2012. After such ruling, Guizhou Taibang attempted to return the originally receivedfund of RMB34.2 million (approximately $4.9 million) to such investor by wiring the fund back to his bank account but was unable to do so due to theclosure of his bank account. Another investor, however, accepted the returned fund of RMB11.2 million (approximately $1.6 million) from Guizhou Taibangin November 2010. In 2013, the same individual investor appealed the case to the PRC Supreme Court, which also denied his claims for shareholder status inGuizhou Taibang and the related dividend distribution and accrued interest in September 2013. Such investor subsequently attempted to seek a re-trial bythe PRC Supreme Court, which request was denied by the PRC Supreme Court in January 2014. He then applied to the PRC Supreme Procuratorate to requestfor a review of the PRC Supreme Court’s decision and seek an appeal by the PRC Supreme Procuratorate to the PRC Supreme Court for an ultimate re-trial onhis behalf. In July 2015, the PRC Supreme Procuratorate rejected his request for review. As of December 31, 2016, Guizhou Taibang had maintained, on its balance sheet, payables to the investors of RMB34.2 million (approximately $4.9 million)as originally received funds from such individual investor in respect of the shares in dispute, RMB20.6 million (approximately $3.0 million) for the interestexpenses, and RMB0.3 million (approximately $0.1 million) for the 1% penalty imposed by the Equity Purchase Agreement for any breach in the event thatGuizhou Taibang is required to return the original investment amount to such investor. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 48 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES. Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol “CBPO.” The following table sets forth, for the periods indicated, the high and low closing prices of our common stock. These prices reflect inter-dealer prices, withoutretail mark-up, mark-down or commission, and may not represent actual transactions. Closing Prices(1) High Low USD USD 2016 1st Quarter 142.08 105.52 2nd Quarter 128.74 101.05 3rd Quarter 134.17 107.18 4th Quarter 125.43 107.52 2015 1st Quarter 95.51 64.98 2nd Quarter 120.85 92.69 3rd Quarter 123.83 82.62 4th Quarter 142.46 89.13 (1)The above table sets forth the range of high and low closing prices per share of our common stock as reported by www.quotemedia.com for the periodsindicated. Approximate Number of Holders of Our Common Stock As of February 17, 2017, there were 437 holders of record of our common stock. This number excludes the shares of our common stock owned bystockholders holding stock under nominee security position listings. Dividend Policy We have never declared dividends or paid cash dividends. Any future decisions regarding dividends will be made by our board of directors. We currentlyintend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in theforeseeable future. Our board of directors has complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, theform, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractualrestrictions and other factors that the board of directors may deem relevant. 49 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Recent Sales of Unregistered Securities We have not sold any equity securities during the 2016 fiscal year that were not previously disclosed in a quarterly report on Form 10-Q or a current report onForm 8-K that was filed during the 2016 fiscal year. ITEM 6. SELECTED FINANCIAL DATA. The selected consolidated statement of comprehensive income data for 2016, 2015 and 2014 and the selected balance sheet data as of December 31, 2016and 2015 are derived from our audited consolidated financial statements included elsewhere in this report. The selected consolidated financial data for 2013and 2012 and the selected balance sheet data as of December 31, 2014, 2013 and 2012 are derived from our audited consolidated financial statements notincluded in this report. 50 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following selected historical financial information should be read in conjunction with our consolidated financial statements and related notes and theinformation contained in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” For the Year Ended December 31, 2016 2015 2014 2013 2012 (U.S. dollars in thousands, except per share data) Revenues 341,169 296,458 243,252 203,357 184,813 Income From Operations 143,915 132,586 111,159 86,933 74,489 Net Income attributable to China Biologic Products,Inc. 104,780 89,043 70,917 54,602 45,222 Total Assets 604,958 551,466 446,847 403,781 311,047 Total Current Liabilities 73,441 71,655 120,682 63,439 47,719 Total Long Term Liabilities 10,380 12,849 50,904 36,373 5,909 Total Stockholders' equity attributable to ChinaBiologic Products, Inc. 462,200 382,343 212,087 237,692 195,470 Total Equity 521,137 466,962 275,262 303,970 257,419 Net Income Per Share Basic 3.79 3.40 2.85 2.05 1.73 Diluted 3.74 3.27 2.71 1.96 1.62 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following management’s discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the otherfinancial information appearing elsewhere in this report. In addition to historical information, the following discussion contains certain forward-lookinginformation. See “Special Note Regarding Forward Looking Statements” above for certain information concerning those forward looking statements. Ourfinancial statements are prepared in U.S. dollars and in accordance with United States generally accepted accounting principles. Overview We are a biopharmaceutical company principally engaged in the research, development, manufacturing and sales of plasma products in China. We have astrong product portfolio with over 20 different dosage forms of plasma products and other biopharmaceutical products across nine categories. Our principalproducts are human albumin and IVIG. These products use human plasma as their principal raw material. Sales of human albumin products representedapproximately 39.2%, 37.6% and 39.3% of our total sales for 2016, 2015 and 2014, respectively. Sales of IVIG products represented approximately 34.6%,42.2% and 40.4% of our total sales for 2016, 2015 and 2014, respectively. All of our products are prescription medicines administered in the form ofinjections. Our sales model focuses on direct sales to hospitals and inoculation centers and is complemented by distributor sales. In 2016, we generated sales of $341.2million, an increase of 15.1% from 2015, and recorded net income attributable to our company of $104.8 million, an increase of 17.8% from 2015. Recent Developments We received two approvals from the Shandong Provincial Health and Family Planning Commission on December 30, 2016 to build a new plasma collectionstation and a new branch collection facility, respectively, in Shandong Province. The new plasma collection station will be located in Ju County in RizhaoCity, while the new branch plasma collection facility will be located in Feicheng County in Tai’an City and operated under the Company’s Ningyang plasmacollection station, which was established in Tai’an City in July 2011. 51 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Financial Performance Highlights The following are some financial highlights for 2016: ·Sales: Sales increased by $44.7 million, or 15.1%, to $341.2 million for 2016 from $296.5 million for 2015. ·Gross Profit: Gross profit increased by $27.2 million, or 14.3%, to $217.2 million for 2016 from $190.0 million for 2015. As a percentage of sales,gross profit decreased from 64.1% in 2015 to 63.6% in 2016. ·Income from operations: Income from operations increased by $11.4 million, or 8.6%, to $144.0 million for 2016 from $132.6 million for 2015. ·Net income attributable to our company: Net income attributable to our company increased by $15.8 million, or 17.8%, to $104.8 million for 2016from $89.0 million for 2015. ·Fully diluted net income per share: Fully diluted net income per share was $3.74 for 2016, as compared to $3.27 for 2015. Principal Factors Affecting Our Financial Performance The following are key factors that affect our financial condition and results of operations and we believe them to be important to the understanding of ourbusiness: Raw material supply and prices The primary raw material used in the production of our albumin and immunoglobulin products is human plasma. The collection of human plasma in China isgenerally influenced by a number of factors such as government regulations, geographical locations of plasma collection stations, sanitary conditions ofplasma collection stations, living standards of the donors, and cultural and religious beliefs. If we experience any shortage of plasma supply, we may not beable to fully utilize our production capacity. We currently operate 12 plasma collection stations (including one branch collection facility) through ShandongTaibang and two plasma collection stations through Guizhou Taibang. These plasma collection stations provide us with a stable source of plasma supply. Prices of and demand for our products The demand for our products is largely affected by the general economic conditions in China because the prices of our products are still not affordable tomany patients. A significant improvement in the economic environment in China will likely improve consumer income which in turn would make ourproducts more affordable and consequently increase the demand for our products. We have been able to expand our product range and consumer base byintroducing new products required by customers. We believe that our technical expertise is important in introducing products that are in demand. Production capacity Our sales volume is limited by our annual production capacity. As we grow our business in the future, our ability to fulfill additional and larger orders willdepend on our ability to increase our production capacity. Our plan to expand our production capacity will depend on the availability of capital to meet ourneeds of expansion or upgrading of production lines, and the availability of stable plasma supply. To comply with applicable PRC laws and regulations, wehave maintained permits and licenses necessary for the current operations of our plasma collection stations and production plants, and are required to applyfor such permits and licenses to operate new plasma collection stations and production plants. As a result, our expansion plan also depends on our ability torenew existing permits and licenses and obtain new permits and licenses. 52 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Competition We face intense competition from local and foreign entities that manufacture and sell products that compete with ours in the PRC. These competitors mayhave more capital, better research and development resources, expanded manufacturing and marketing capabilities and more experience than we do. In ourindustry, we compete based upon product quality, production cost, ability to produce a diverse range of products and logistical capabilities. Our profitability may be adversely affected if competition intensifies, competitors reduce prices, PRC government requires us to reduce the prices of ourproducts, or competitors develop new products or product substitutes with comparable medicinal applications or therapeutic effects which are more effectiveor less costly than ours. See Item 1, “Business—Competition” for more information. Taxation China Biologic is subject to United States tax at gradual rates of up to 35.0%. No provision for income taxes in the United States has been made as ChinaBiologic has no U.S. taxable income. Taibang Biological was incorporated in the BVI, but is not subject to taxation in that jurisdiction. Taibang Holdings was incorporated in Hong Kong, and under the current laws of Hong Kong, is subject to a Profits Tax of 16.5% on profits arising in HongKong. However, no provision for Hong Kong Profits Tax has been made as Taibang Holdings has no taxable income. According to the PRC government policy, new or high technology companies may enjoy a preferential income tax rate of 15.0%, instead of 25.0% under theEIT Law. In October 2014, Shandong Taibang renewed its high and new technology enterprise qualification, which entitled it to enjoy a preferential incometax rate of 15.0% for a period of three years from 2014 to 2016. Shandong Taibang will apply for a renewal for an additional three years from 2017 to 2019upon the expiration of its high and new technology enterprise certificate. According to Notice on Issues Concerning Relevant Tax Policies in Deepening theImplementation of the Western Development Strategy jointly promulgated by the PRC Ministry of Finance, the PRC General Administration of Customs andSAT dated July 27, 2011, Guizhou Taibang, being a qualified enterprise located in the western region of China, enjoys a preferential income tax rate of15.0% effective from January 1, 2011 to December 31, 2020. All of our other PRC subsidiaries are subject to the statutory income tax rate of 25.0%. Results of Operations The following table sets forth a summary of our consolidated statements of comprehensive income for the periods indicated. Our historical results presentedbelow are not necessarily indicative of the results that may be expected for any other future period. 53 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For the Year Ended December 31, 2016 2015 2014 $ % of Total Sales $ % of Total Sales $ % of Total Sales (U.S. dollars in thousands, except percentage and per share data) SALES 341,169 100.0 296,458 100.0 243,252 100.0 COST OF SALES 124,034 36.4 106,483 35.9 80,026 32.9 GROSS MARGIN 217,135 63.6 189,975 64.1 163,226 67.1 OPERATING EXPENSES: Selling expenses 11,679 3.4 9,973 3.4 10,707 4.4 General and administrative expenses 54,519 16.0 41,392 14.0 32,130 13.2 Research and development expenses 7,022 2.1 6,024 2.0 4,162 1.7 Provision for other receivables in respect of anemployee housing development project - - - - 5,068 2.1 Total operating expenses 73,220 21.5 57,389 19.4 52,067 21.4 INCOME FROM OPERATIONS 143,915 42.1 132,586 44.7 111,159 45.7 OTHER INCOME (EXPENSES): Equity in income (loss) of equity method investee 2,519 0.7 (1,311) (0.4) 8,646 3.6 Interest income 7,816 2.3 5,551 1.9 6,645 2.7 Interest expense (254) - (1,727) (0.6) (3,698) (1.5)Loss from disposal of a subsidiary (76) - - - - - Total other income, net 10,005 3.0 2,513 0.9 11,593 4.8 EARNINGS BEFORE INCOME TAX EXPENSE 153,920 45.1 135,099 45.6 122,752 50.5 INCOME TAX EXPENSE 25,126 7.4 20,993 7.1 26,639 11.0 NET INCOME 128,794 37.7 114,106 38.5 96,113 39.5 Less: Net income attributable to non-controllinginterest 24,014 7.0 25,063 8.5 25,196 10.3 NET INCOME ATTRIBUTABLE TO COMPANY 104,780 30.7 89,043 30.0 70,917 29.2 NET INCOME PER SHARE OF COMMON STOCK BASIC 3.79 3.40 2.85 DILUTED 3.74 3.27 2.71 Comparison of years ended December 31, 2016 and 2015 Sales Our total sales increased by 15.1%, or $44.7 million, to $341.2 million for 2016, compared to $296.5 million for 2015. In RMB terms, which is a non-GAAPmeasure, our total sales increased by 22.8% for 2016 as compared to 2015. The increase in sales for 2016 was primarily attributable to the increase in the salesprice of human tetanus immunoglobulin products and the increase in the sales volume of human albumin products, placenta polypeptide and human tetanusimmunoglobulin products, partially offset by the decrease in the sales volume of IVIG products. 54 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following table summarizes the breakdown of sales by major types of products: For the Year Ended December 31, 2016 2015 Change $ % $ % Amount % (U.S. dollars in millions, except percentage) Human albumin 133.7 39.2 111.4 37.6 22.3 20.0 Immunoglobulin products: IVIG 117.9 34.6 125.1 42.2 (7.2) (5.8)Other immunoglobulin products 40.1 11.8 22.5 7.6 17.6 78.2 Placenta polypeptide 32.2 9.4 27.2 9.2 5.0 18.4 Others 17.3 5.0 10.3 3.4 7.0 68.0 Totals 341.2 100.0 296.5 100.0 44.7 15.1 For 2016 as compared to 2015: ·the average price for our approved human albumin products, which represented 39.2% of our total sales for 2016, increased by 1.5% in RMB terms(which is a non-GAAP measure) and decreased by 4.9% in USD terms; and ·the average price for our approved IVIG products, which represented 34.6% of our total sales for 2016, increased by 4.2% in RMB terms (which is anon-GAAP measure) and decreased by 2.3% in USD terms. The average sales price of our human albumin and IVIG products increased in RMB term for 2016 as compared to 2015, following the removal of the retailprice ceiling for drug products effective on June 1, 2015, owing to the increased market demand for human albumin and IVIG products. The sales volume of our products depends on market demand and our production volume. The production volume of our human albumin products and IVIGproducts depends primarily on the general plasma supply. The production volume of our hyper-immune products, which include human rabiesimmunoglobulin, human hepatitis B immunoglobulin and human tetanus immunoglobulin products, is subject to the availability of specific vaccinatedplasma and our production capacity. The supply of specific vaccinated plasma requires several months of lead time. Our production facility currently canonly accommodate the production of one type of hyper-immune products at any given time and we rotate the production of different types of hyper-immuneproducts from time to time in response to market demand. As such, the sales volume of any given type of hyper-immune products may vary significantly fromperiod to period. The sales volume of our human albumin products increased by 26.2% for 2016 as compared to 2015, which was primarily attributable to the increasedproduction volume at Shandong Taibang and Guizhou Taibang as a result of increased plasma supply volume. The sales volume of our IVIG productsdecreased by 3.6% for 2016 as compared to 2015, primarily due to the depletion of IVIG pastes we reserved from prior years that were processed and sold in2015 and the allocation of more production facilities to human tetanus immunoglobulin products with higher margin in 2016. The sales increase of other immunoglobulin products for 2016 as compared to 2015 was mainly attributable to the increase in both average sales price andsales volume of human tetanus immunoglobulin products. The sales volume of our human tetanus immunoglobulin increased by 41.9% for 2016 ascompared to 2015. The average sales price of human tetanus immunoglobulin products increased significantly for 2016 as compared to 2015 due to thesignificant market supply shortage following the removal of the retail price ceiling for drug products effective on June 1, 2015. The sales increase of placenta polypeptide products was generally in line with the sales volume increase for 2016 as compared to 2015. The sales volume ofplacenta polypeptide products increased by 22.6% for 2016 as compared to 2015, primarily because we increased our market penetration into more hospitalsthrough our improved sales capabilities. The sales increase of other products for 2016 as compared to 2015 was mainly due to the increase in sales volume of both factor VIII and PCC, sales of whichwe ramped up in 2016. 55 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Cost of sales & gross profit For the Year Ended December 31, Change 2016 2015 Amount % (U.S. dollars in millions, except percentage) Cost of sales $124.0 $106.5 $17.5 16.4 as a percentage of total sales 36.4% 35.9% 0.5 Gross Profit $217.2 $190.0 $27.2 14.3 Gross Margin 63.6% 64.1% (0.5) Our cost of sales was $124.0 million, or 36.4% of our sales, for 2016, as compared to $106.5 million, or 35.9% of our sales for 2015. Our gross profit was$217.1 million and $190.0 million for 2016 and 2015, respectively, representing gross margins of 63.6% and 64.1%, respectively. Our cost of sales and gross margin are affected by the product pricing, raw material costs, product mix, yields and manufactory efficiency. In an effort toincrease plasma collection volume and expand our donor base, we increased the nutrition fees paid to donors consistent with the industry practice. We expectthe nutrition fees to be paid to donors will continue to increase as a result of improving living standards in China. Consequently, future improvements onmargins will need to be derived from increases in product pricing, yields and manufacturing efficiency, as well as from optimizing the product mix. The increase of cost of sales was mainly due to the increases in the sales volume of human albumin products, placenta polypeptide products and humantetanus immunoglobulin products, which was partially offset by the decrease in the sales volume of IVIG products. The increase in cost of sales as apercentage of sales for 2016 as compared to 2015 was mainly due to the higher cost of plasma purchased from Xinjiang Deyuan, which was partially offset bythe increase in the average sales price of certain plasma products and a more profitable product mix. Operating expenses For the Year Ended December 31, Change 2016 2015 Amount % (U.S. dollars in millions, except percentage) Operating expenses $73.2 $57.4 $15.8 27.5 as a percentage of total sales 21.5% 19.4% 2.1 Our total operating expenses increased by $15.8 million, or 27.5%, to $73.2 million for 2016 from $57.4 million for 2015. As a percentage of total sales, totalexpenses increased by 2.1% to 21.5% for 2016 from 19.4% for 2015. The increase of the total operating expenses was primarily due to the combined effect ofthe increase of general and administrative expenses and selling expenses as discussed below. Selling expenses For the Year Ended December 31, Change 2016 2015 Amount % (U.S. dollars in millions, except percentage) Selling expenses $11.7 $10.0 $1.7 17.0 as a percentage of total sales 3.4% 3.4% - 56 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For 2016, our selling expenses increased by $1.7 million, or 17.0%, to $11.7 million from $10.0 million for 2015. As a percentage of total sales, our sellingexpenses for 2016 remained stable as compared to 2015. The increase of the selling expenses was in line with the sales growth in 2016 as compared to 2015. General and administrative expenses For the Year Ended December 31, Change 2016 2015 Amount % (U.S. dollars in millions, except percentage) General and administrative expenses $54.5 $41.4 $13.1 31.6%as a percentage of total sales 16.0% 14.0% 2.0 For 2016, our general and administrative expenses increased by $13.1 million, or 31.6%, to $54.5 million from $41.4 million for 2015. As a percentage oftotal sales, general and administrative expenses increased by 2.0% to 16.0% for 2016 from 14.0% for 2015. The increase in general and administrativeexpenses was mainly due to the increase of share-based compensation expenses of $12.3 million. Research and development expenses For the Year Ended December 31, Change 2016 2015 Amount % (U.S. dollars in millions, except percentage) Research and development expenses $7.0 $6.0 $1.0 16.7%as a percentage of total sales 2.1% 2.0% 0.1 For 2016, our research and development expenses increased by $1.0, or 16.7%, to $7.0 million from $6.0 million for 2015. In 2016 and 2015, we receivedgovernment grants totaling $0.8 million and $1.2 million, respectively, and recognized them as a reduction of research and development expenses.Excluding this impact, our non-GAAP research and development expenses increased by $0.6 million for 2016 from 2015. As a percentage of total sales, ournon-GAAP research and development expenses, excluding the impact of these recognized government grants, decreased by 0.1% to 2.3% for 2016 from 2.4%for 2015. Equity in (loss) income of equity method investee Our equity method investment represented our 35.0% equity interest in Huitian, our equity method investee. For 2016, our equity in income (loss) of equitymethod investee increased by $3.8 million to a gain of $2.5 million from a loss of $1.3 million for 2015. Huitian suspended its production and began toconstruct a new production facility to meet the new GMP standard in late 2013. Huitian incurred operation losses during the suspension period in 2015 as itdid not commence production at its new facility until February 2016. 57 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Income tax expense For the Year Ended December 31, Change 2016 2015 Amount % (U.S. dollars in millions, except percentage) Income tax expense $25.1 $21.0 $4.1 19.5 Effective income tax rate 16.3% 15.5% 0.8 Our provision for income taxes increased by $4.1 million, or 19.5%, to $25.1 million for 2016 from $21.0 million for 2015. Our effective income tax rateswere 16.3% and 15.5% for 2016 and 2015, respectively. The increase of effective income tax rate was mainly due to that on a percentage basis, greater losseswere generated by China Biologic in U.S. for 2016 as compared to 2015, most of which were provided valuation allowance. Comparison of years ended December 31, 2015 and 2014 Sales Our total sales increased by 21.9%, or $53.2 million, to $296.5 million for 2015, compared to $243.3 million for 2014, primarily due to increases in the salesvolumes of human albumin and IVIG. In RMB terms, which is a non-GAAP measure, our sales increased by 23.4% for 2015 as compared to 2014. Suchincrease of sales was mainly due to the increase in sales volume in major plasma products. The following table summarizes the breakdown of sales by major types of products: For the Year Ended December 31, 2015 2014 Change $ % $ % Amount % (U.S. dollars in millions, except percentage) Human albumin 111.4 37.6 95.6 39.3 15.8 16.5 Immunoglobulin products: IVIG 125.1 42.2 98.4 40.4 26.7 27.1 Other immunoglobulin products 22.5 7.6 19.7 8.1 2.8 14.2 Placenta polypeptide 27.2 9.2 24.0 9.9 3.2 13.3 Others 10.3 3.4 5.6 2.3 4.7 83.9 Totals 296.5 100.0 243.3 100.0 53.2 21.9 For 2015 as compared to 2014: ·the average price for our approved human albumin products, which represented 37.6% of our total sales, remained stable and, excluding the foreignexchange effect, their average price in RMB increased by approximately 1.3% (which is a non-GAAP measure); and ·the average price for our approved IVIG products, which represented 42.2% of our total sales, remained stable, and excluding the foreign exchangeeffect, their average price in RMB increased by approximately 1.2% (which is a non-GAAP measure). The average sales price of our human albumin and IVIG products increased in RMB term for 2015 as compared to 2014, as a result of the combined effects ofthe reduced value added tax, or VAT, rate, strong market demand and our sales effort to increase market shares in tier-one cities and new markets. The VATrate on sales of plasma products was reduced from 6.0% to 3.0%, effective on July 1, 2014. The reduction in the VAT rate had a positive impact on our salesprices as our sales are recognized as the invoiced price of the products sold minus VAT. All other factors being equal, the reduction in the VAT rate had theeffect of increasing our sales price of plasma products by 2.9%. Excluding this impact, the average sales price of our human albumin and IVIG products inRMB term would have remained stable in 2015 as compared to 2014. The average sales price of our human albumin and IVIG products increased slightly inRMB term in response to the strong market demand following the removal of the retail price ceilings for drug products, effective on June 1, 2015. Thisincrease was partially offset by our effort to increase the market share of our human albumin products and IVIG products in tier-one cities and new markets in2015, whereby we increased sales to distributors with lower invoiced prices compared to direct sales to hospitals and inoculation centers. 58 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The sales volume of our products depends on market demand and our production volume. The production volume of our human albumin products and IVIGproducts depends primarily on the general plasma supply. The production volume of our hyper-immune products, which include human rabiesimmunoglobulin, human hepatitis B immunoglobulin and human tetanus immunoglobulin products, is subject to the availability of specific vaccinatedplasma and our production capacity. The supply of specific vaccinated plasma requires several months of lead time. Our production facility currently canonly accommodate the production of one type of hyper-immune products at any given time and we rotate the production of different types of hyper-immuneproducts from time to time in response to market demand. As such, the sales volume of any given type of hyper-immune products may vary significantly fromperiod to period. The sales volume of our human albumin products increased by 16.6% for 2015 as compared to 2014, as a result of the increased production volume atShandong Taibang and Guizhou Taibang. The sales volume of our IVIG products increased by 27.0% for 2015 as compared to 2014, mainly due to theincreased sales through distributors in tier-one cities and new markets supported by the increased output following the production resumption at GuizhouTaibang in March 2014. Further, in anticipation of a favorable market environment and our increased sales capabilities in 2015, we reserved a large volumeof IVIG pastes from previous years to be processed and sold in early 2015, which also contributed to our increased sales volume in 2015. The sales increase of other immunoglobulin products for 2015 as compared to 2014 was mainly attributable to the increase in average sales price of humantetanus immunoglobulin products. The increase in average sales price of human tetanus immunoglobulin products was primarily due to the strong marketdemand coupled by the removal of the retail price ceiling for drug products effective on June 1, 2015. The sales increase of placenta polypeptide products was generally in line with the volume increase for 2015 as compared to 2014. The sales volume ofplacenta polypeptide products increased by 12.8% for 2015 as compared to 2014, primarily due to the ramp-up of the production capacities for placentapolypeptide at Guizhou Taibang after receiving the GMP certification for the upgraded production facilities in January 2014. The sales increase of other products for 2015 as compared to 2014 was mainly due to the increase in sales volume of both factor VIII and PCC. Cost of sales & gross profit For the Year Ended December 31, Change 2015 2014 Amount % (U.S. dollars in millions, except percentage) Cost of sales $106.5 $80.0 $26.5 33.1 as a percentage of total sales 35.9% 32.9% 3.0 Gross Profit $190.0 $163.2 $26.8 16.4 Gross Margin 64.1% 67.1% (3.0) 59 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our cost of sales was $106.5 million, or 35.9% of our sales, for 2015, as compared to $80.0 million, or 32.9% of our sales for 2014. Our gross profit was$190.0 million and $163.2 million for 2015 and 2014, respectively, representing gross margins of 64.1% and 67.1%, respectively. Excluding the sales of theproducts derived from raw plasma outsourced from Xinjiang Deyuan, whose cost is moderately higher than plasma from our own collection stations, our grossmargin would have been 65.4% for 2015. Our cost of sales and gross margin are affected by the volume and pricing of our finished products, raw materialcosts, production mix and yields, inventory impairments, production cycles and routine maintenance costs. The increase in cost of sales for 2015 as compared to 2014 was generally in line with the increases in sales volume and cost of plasma. In an effort to increaseplasma collection volume and expand our donor base, we increased the nutrition fees paid to donors consistent with the industry practice. We expect thenutrition fees to be paid to donors will continue to increase as a result of improving living standards in China. Consequently, future improvements onmargins will need to be derived from increases in product pricing, yields and manufacturing efficiency, as well as from optimizing the product mix. Theincrease in cost of sales as a percentage of sales for 2015 as compared to 2014 was mainly due to the increase in cost of plasma, which was partially offset bythe increase in the average sales price of major plasma products. Operating expenses For the Year Ended December 31, Change 2015 2014 Amount % (U.S. dollars in millions, except percentage) Operating expenses $57.4 $52.1 $5.3 10.2 as a percentage of total sales 19.4% 21.4% (2.0) Our total operating expenses increased by $5.3 million, or 10.2%, to $57.4 million for 2015 from $52.1 million for 2014. As a percentage of total sales, totalexpenses decreased by 2.0% to 19.4% for 2015 from 21.4% for 2014. The operating expenses for 2014 included a provision of $5.1 million for all thereceivables in respect of an employee housing development project at Shandong Taibang as discussed below. Excluding the effect of this provision, ouroperating expenses increased by $10.4 million, or 22.1%, for 2015 as compared to 2014, primarily due to the combined effect of the increase of the generaland administrative expenses and research and development expenses and the decrease of selling expenses as discussed below. Selling expenses For the Year Ended December 31, Change 2015 2014 Amount % (U.S. dollars in millions, except percentage) Selling expenses $10.0 $10.7 $(0.7) (6.5)as a percentage of total sales 3.4% 4.4% (1.0) For 2015, our selling expenses decreased by $0.7 million, or 6.5%, to $10.0 million from $10.7 million for 2014. As a percentage of total sales, our sellingexpenses for 2015 decreased by 1.0% to 3.4% from 4.4% for 2014. The decrease was mainly due to the decreased selling expense of placenta polypeptide for2015 as compared to 2014. We began to utilize internal resources instead of third-party service providers to promote sales of placenta polypeptide products,and did not renew a third-party engagement upon its expiration in May 2014. 60 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. General and administrative expenses For the Year Ended December 31, Change 2015 2014 Amount % (U.S. dollars in millions, except percentage) General and administrative expenses $41.4 $32.1 $9.3 29.0 as a percentage of total sales 14.0% 13.2% 0.8 For 2015, our general and administrative expenses increased by $9.3 million, or 29.0%, to $41.4 million from $32.1 million for 2014. As a percentage of totalsales, general and administrative expenses increased by 0.8% to 14.0% for 2015 from 13.2% for 2014. The increase in general and administrative expenseswas mainly due to the increase of share-based compensation expenses totaling $6.7 million. In addition, the disposal losses on assets increased by $2.7million for 2015 as compared to 2014. Research and development expenses For the Year Ended December 31, Change 2015 2014 Amount % (U.S. dollars in millions, except percentage) Research and development expenses $6.0 $4.2 $1.8 42.9 as a percentage of total sales 2.0% 1.7% 0.3 For 2015, our research and development expenses increased by $1.8, or 42.9%, to $6.0 million from $4.2 million for 2014. In 2015 and 2014, we receivedgovernment grants totaling $1.2 million and $2.1 million respectively and recognized them as a reduction of research and development expenses. Excludingthis impact, our non-GAAP research and development expenses increased by $0.9 million for 2015 from 2014. As a percentage of total sales, our non-GAAPresearch and development expenses, excluding the impact of the government grants, decreased by 0.2% to 2.4% for 2015 from 2.6% for 2014. The increase ofour research and development expenses was mainly due to the expenditures paid for certain clinical trial programs in 2015. Provision for other receivables in respect of an employee housing development project In 2014, we made a full provision of $5.1 million for all the receivables in respect of an employee housing development project at Shandong Taibangbecause it became probable that these receivables may not be recoverable after all legal means of collection were exhausted. Equity in (loss) income of equity method investee Our equity method investment represented our 35.0% equity interest in Huitian, our equity method investee. For 2015, our equity in (loss) income of equitymethod investee decreased by $9.9 million to a loss of $1.3 million from income of $8.6 million for 2014. Huitian suspended its production and began toconstruct a new production facility to meet the new GMP standard in late 2013. Huitian incurred operation losses during the suspension period in 2015 as itdid not commence production at its new facility until February 2016. In 2014, Huitian disposed of a subsidiary, recognizing a gain of RMB116.7 million(approximately $19.0 million). 61 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Income tax expense For the Year Ended December 31, Change 2015 2014 Amount % (U.S. dollars in millions, except percentage) Income tax expense $21.0 $26.6 $(5.6) (21.1)Effective income tax rate 15.5% 21.7% (6.2) Our provision for income taxes decreased by $5.6 million, or 21.1%, to $21.0 million for 2015 from $26.6 million for 2014. For 2014, we incurred thedividend withholding income tax of $8.9 million in respect of the dividends declared or to be declared by Shandong Taibang. With our plan to reinvestShandong Taibang’s earnings in its business operations, we no longer incurred dividend withholding income tax in respect of Shandong Taibang since 2015following an internal corporate restructuring. Excluding the impact of dividend withholding income tax, our effective income tax rates were 15.5% and 14.4% for 2015 and 2014, respectively. Thestatutory tax rate applicable to our major operating subsidiaries in the PRC for 2015 and 2014 was 15.0%. Foreign Currency Exchange Impact All of our consolidated revenues and consolidated costs of sales and majority of expenses, as well as all of our assets (except for certain cash balances) aredenominated in RMB, whereas our reporting currency is U.S. dollars. As a result, we are exposed to foreign exchange risk as our revenues and results ofoperations may be affected by fluctuations in the exchange rate between U.S. dollars and RMB. For details, see “Item 7A. Quantitative and QualitativeDisclosures about Market Risk— Foreign Exchange Risk.” Given that our operations are primarily in China, we evaluate certain key items of our financial results on a local currency basis (i.e., in RMB) in addition tothe reporting currency (i.e., in USD). The local currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currencyexchange rates. We believe providing local currency information on such key items enhances the understanding of our financial results and evaluation ofperformance in comparison to prior periods. We calculate changes in local currency percentages by comparing financial results denominated in RMB fromperiod to period. Liquidity and Capital Resources To date, we have financed our operations primarily through cash flows from operations, augmented by bank borrowings and equity contributions by ourstockholders. As of December 31, 2016, we had $183.8 million in cash and cash equivalents, primarily consisting of cash on hand and demand deposits. The following table sets forth a summary of our cash flows for the periods indicated: Cash Flow For the Year Ended December 31, 2016 2015 2014 (U.S. dollars in millions) Net cash provided by operating activities $123.3 $109.4 $93.5 Net cash used in investing activities (52.5) (89.8) (13.4)Net cash (used in) provided by financing activities (22.1) 51.6 (142.8)Effects of exchange rate change in cash (9.8) (7.1) (0.6)Net increase (decrease) in cash and cash equivalents 38.9 64.1 (63.3)Cash and cash equivalents at beginning of the year 144.9 80.8 144.1 Cash and cash equivalents at end of the year $183.8 $144.9 $80.8 62 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Operating activities Cash inflows from operating activities totaled $123.3 million in 2016, $109.4 million in 2015, and $93.5 million in 2014. Cash inflows increased by $13.9million in 2016 as compared to 2015 and increased by $15.9 million in 2015 as compared to 2014. Such increases in cash inflows from operations weremainly in line with the improvements in our results of operations in 2016 and 2015, partially offset by an increase in accounts receivable and inventoriesduring the relevant years. Accounts receivable Our average collection speed of accounts receivable slowed down slightly in 2016 as compared to 2015. The accounts receivable turnover days for plasmaproducts were 41 days, 34 days, and 31 days for 2016, 2015, and 2014, respectively. The increase in turnover days for 2016 was primarily due to theextended credit terms granted to certain qualified hospitals in 2016 for enhancing our business relationship with certain key customers. In 2015, we adjustedour sales strategy by granting extended credit terms to certain qualified distributors of human rabies immunoglobulin products to assist in their biddingefforts with provincial centers for disease control and prevention. In prior years, these distributors were required to make the payments in advance of ourproduct deliveries. Inventories Cash outflows for inventories increased in both 2016 and 2015. The increases in inventory for 2016, 2015 and 2014 were $40.1, $32.1 million and $13.4million, respectively. The increase of inventories in 2016 as compared to 2015 was mainly attributable to the increase in source plasma purchased fromXinjiang Deyuan as well as the increase of finished goods in preparation for Shandong Taibang’s facility transition. The increase of inventories in 2015 ascompared to 2014 was mainly attributable to the source plasma and plasma pastes purchased from Xinjiang Deyuan. Investing activities Cash outflows from investing activities for 2016 was $52.5 million, as compared to $89.8 million and $13.4 million for 2015 and 2014, respectively. In2016, we paid $51.0 million for the acquisition of property, plant and equipment, intangible assets and land use rights and provided loans of $12.3 million toXinjiang Deyuan, which was partially offset by a $10.3 million refund of deposits on land use rights from the local government. In 2015, we paid $52.3 million for the acquisition of property, plant and equipment, intangible assets and land use rights and provided a long-term loan of$40.7 million to Xinjiang Deyuan, which was partially offset by government grants of $2.5 million in connection with our purchase of property, plant andequipment. In 2014, we paid $21.9 million for the acquisition of property, plant and equipment, intangible assets and land use rights, which was partially offset by a $1.6million refund of deposits from the local government due to a decrease in the size of a land parcel purchased by Guizhou Taibang and proceeds of $6.6million from the maturity of a time deposit made in 2013. Financing activities Cash outflows from financing activities for 2016 totaled $22.1 million, as compared to cash inflows from financing activities totaled $51.6 million and cashoutflows from financing activities totaled $142.8 million for 2015 and 2014, respectively. 63 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Cash outflows from financing activities in 2016 mainly consisted of payment of $58.1 million to the former minority shareholders of Guizhou Taibang inconnection with their capital withdrawal from Guizhou Taibang (See Item 3 “Legal Proceedings”) and a dividend payment of $7.9 million by our subsidiaryto noncontrolling interest shareholder, partially offset by the maturity of a $37.8 million time deposit as a security for a bank loan that was fully repaid inJune 2015 and proceeds of $3.6 million from stock option exercised. Cash inflows from financing activities in 2015 mainly consisted of net proceeds of $80.6 million from a follow-on offering of our company’s common stockin June 2015, proceeds of $63.2 million from the maturity of deposits used as security for bank loans, proceeds of $15.8 million from a short-term bank loanand proceeds of $7.7 million from stock options exercised, partially offset by repayments of bank loans totaling $113.5 million and a dividend of $3.7million held in escrow by a trial court in connection with disputes with a minority shareholder of Guizhou Taibang. Cash outflows from financing activities in 2014 mainly consisted of a payment of $86.8 million for acquisition of noncontrolling interest in GuizhouTaibang, a dividend payment of $8.8 million by our subsidiaries to noncontrolling interest shareholders and a payment of $70.0 million for repurchase ofshares from an individual stockholder, partially offset by proceeds of $33.2 million from a follow-on offering of our company’s common stock. Management believes that our company has sufficient cash on hand and will continue to have positive cash inflow for its operations from the sale of itsproducts in the PRC market. Obligations under Material Contracts The following table sets forth our material contractual obligations as of December 31, 2016: Payments due by period Contractual Obligations Total Less thanone year One to three years Three to five years More thanfive years (U.S. dollars in millions) Operating lease commitment 1.1 0.4 0.6 - 0.1 Purchase commitment 44.7 25.4 19.3 - - Capital commitment 27.4 24.6 2.8 - - Total 73.2 50.4 22.7 - 0.1 Seasonality of our Sales Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, as a result of newmarket opportunities or new product introductions. Inflation Inflation does not materially affect our business or the results of our operations. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes infinancial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our investors. 64 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Critical Accounting Policies The preparation of financial statements in conformity with United States generally accepted accounting principles, or U.S. GAAP, requires our managementto make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and relateddisclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgmentsand estimates in the preparation of financial statements, including the following: Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and thereported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to suchestimates and assumptions include the useful lives of property, plant and equipment and intangibles with definite lives, the allowances for doubtful accounts,the fair value determinations of equity instruments and stock compensation awards, the realizability of deferred tax assets and inventories, the recoverabilityof intangible assets, land use rights, property, plant and equipment, equity method investment and loan receivable, and accruals for income tax uncertaintiesand other contingencies. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions. Allowance for doubtful accounts We maintain an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance,management considers historical losses, the customers’ financial condition, the amount of accounts receivable in dispute, the accounts receivable aging andcustomers’ payment patterns. We review our allowance for doubtful accounts monthly. Past due balances are reviewed individually for collectability.Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.We do not have any off-balance-sheet credit exposure related to our customers. We generally ask our distributors to pay in advance before we deliver products, with few exceptions for a credit period of no longer than 60 days. Forhospitals and clinics, depending on the relationship and the creditability, we generally grant a credit period of no longer than 90 days with exceptions tocustomers, which we believe are credit worthy, of up to six months. We have provided a bad debt allowance of $123,239, $34,902 and $6,211 respectivelyfor 2016, 2015 and 2014. Due to recovery of bad debt that we previously provided an allowance, the recoveries of bad debt provision was nil, nil and$30,673 for 2016, 2015 and 2014, respectively. Inventories Inventories are stated at the lower of cost or market. Adjustments are recorded to write down the carrying amount of any obsolete and excess inventory to itsestimated net realizable value based on historical and forecasted demand. We review the inventory periodically for possible obsolete goods and cost in excess of net realizable value to determine if any reserves are necessary.Provisions to write-down the carrying amount of obsolete inventory to its estimated net realizable value amounted to $256,862, $76,587 and $324,584 for2016, 2015 and 2014, respectively, and were recorded as cost of sales in the consolidated statements of comprehensive income. 65 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Long-lived assets Long-lived assets, such as property, plant and equipment, and purchased intangible asset subject to amortization, are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or assetgroup be tested for possible impairment, we first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value.If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extentthat the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quotedmarket values and third-party independent appraisals, as considered necessary. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Our operations are carried out in the PRC and we are subject to specific considerations and significant risks not typically associated with companies in NorthAmerica and Western Europe. Accordingly, our business, financial condition and results of operations may be influenced by the political, economic and legalenvironment in the PRC, and by the general state of the PRC economy. Our results may be adversely affected by changes in governmental policies withrespect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among otherthings. Interest Rate Risk We are exposed to interest rate risk primarily with respect to our bank loans. We have not used any derivative financial instruments to manage our interestrate risk exposure. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. However, our futureinterest expenses may increase due to changes in market interest rates. Management monitors the banks’ prime rates in conjunction with our cash requirements to determine the appropriate level of debt balances relative to othersources of funds. We have not entered into any hedging transactions in an effort to reduce our exposure to interest rate risk. Foreign Exchange Risk All of our consolidated revenues and consolidated costs and majority of expenses are denominated in RMB. All of our assets are denominated in RMB,except certain cash balances. However, our reporting currency is U.S. dollars. As a result, we are exposed to foreign exchange risk as our revenues and resultsof operations may be affected by fluctuations in the exchange rate between U.S. dollars and RMB. If RMB depreciates against the U.S. dollars, the value ofour RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. Assets and liabilities are translated at exchange ratesat the balance sheet dates and revenue and expenses are translated at the average exchange rates and shareholders’ equity is translated at historical exchangerates. Any resulting translation adjustments are not included in determining net income but are included in determining other comprehensive income, acomponent of stockholders’ equity. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk. 66 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. RMB is currently freely convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but notunder the “capital account,” which includes foreign direct investment. In addition, beginning in July 2005, China reformed its exchange rate regime bychanging to a managed floating exchange rate regime based on market supply and demand with reference to a basket of major foreign currencies. Under themanaged floating exchange rate regime, RMB is no longer pegged to U.S. dollars. The People’s Bank of China announces the closing prices of foreigncurrencies such as U.S. dollars traded against RMB in the inter-bank foreign exchange market after the closing of the market on each business day, and makessuch prices the central parity for trading against RMB on the following business day. On May 19, 2007, the People’s Bank of China announced a policy toexpand the maximum daily floating range of RMB trading prices against U.S. dollars in the inter-bank spot foreign exchange market from 0.3% to 0.5%. OnJune 19, 2010, the People’s Bank of China announced that it would proceed further with the reform of the RMB exchange rate regime to enhance theflexibility of the RMB exchange rate and that emphasis would be placed on reflecting market supply and demand with reference to a basket of major foreigncurrencies. On April 16, 2012, the People’s Bank of China announced a policy to expand the maximum daily floating range of RMB trading prices againstU.S. dollars in the inter-bank spot foreign exchange market from 0.5% to 1.0%. On March 17, 2014, the People’s Bank of China announced a policy to furtherexpand the maximum daily floating range of RMB trading prices against U.S. dollars in the inter-bank spot foreign exchange market to 2.0%. In the longterm, RMB may appreciate or depreciate more significantly in value against U.S. dollars or other foreign currencies, depending on the market supply anddemand with reference to a basket of major foreign currencies. On August 10, 2015, the People’s Bank of China announced that it had changed thecalculation method for RMB’s daily central parity exchange rate against U.S. dollars, which resulted in an approximately 2.0% depreciation of RMB on thatday. RMB continued to experience an approximately 9.6% depreciation against U.S. dollars throughout the remainder of 2015 and up to the date of thisreport. Account Balances We maintain cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the bankslocated in the United States, Hong Kong Deposit Protection Board insured limits for the banks located in Hong Kong, or China Deposit Insurance Schemeinsured limits for the banks located in the PRC. Total cash at banks, time deposits and restricted cash deposits as of December 31, 2016 and December 31,2015 amounted to $183.1 million and $182.3 million respectively, $2.7 million and $3.0 million of which are covered by insurance, respectively. We havenot experienced any losses in such accounts and we do not believe that we are exposed to any significant risks on our cash at banks and deposits. Inflation Inflationary factors such as increases in the cost of our sales and overhead costs may adversely affect our operating results. Although we do not believe thatinflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effecton our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net sales if the selling prices ofour products do not increase with these increased costs. Market for Human Albumin and IVIG Our two major products, human albumin and IVIG, accounted for 39.2% and 34.6% of the total sales for 2016, respectively. If the market demands for humanalbumin or IVIG cannot be sustained in the future or if there is substantial price decrease in either or both products, our operating results could be materiallyand adversely affected. 67 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Consolidated Financial Statements The full text of our audited consolidated financial statements as of December 31, 2016, 2015 and 2014 begins on page F-1 of this report. Quarterly Financial Results The following table sets forth certain unaudited financial information for each of the eight quarters ended December 31, 2016. The consolidated financialstatements for each of these quarters have been prepared on the same basis as the audited consolidated financial statements included in this annual report and,in the opinion of management, include all adjustments necessary for the fair presentation of the results of operations for these periods. This informationshould be read together with our audited consolidated financial statements and the related notes included elsewhere in this annual report. December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2016 2016 2016 2016 2015 2015 2015 2015 (U.S. dollars in thousands, except per share data) Sales $77,634 $86,526 $91,421 $85,588 $68,285 $78,751 $79,068 $70,354 Gross profit 46,772 58,879 59,939 51,545 41,263 50,806 52,013 45,893 Earnings before income taxexpense 27,530 42,552 44,498 39,340 23,531 35,931 40,366 35,271 Net income attributable toCompany 19,439 28,391 30,753 26,197 16,280 22,877 26,724 23,162 Basic earnings per share 0.69 1.02 1.12 0.96 0.60 0.86 1.05 0.91 Diluted earnings per share 0.69 1.01 1.10 0.94 0.59 0.82 0.99 0.87 Earnings per share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly net earnings per share will notnecessarily equal the total for the year. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information thatwould be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’srules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding required disclosure. As required by Rule 13a-15(b) promulgated under the Securities Exchange Act, our management, with the participation of our Chief Executive Officer andChief Financial Officer, evaluated the design and operating effectiveness as of December 31, 2016 of our disclosure controls and procedures, as defined inRule 13a-15(e) promulgated under the Securities Exchange Act. Based on this evaluation our Chief Executive Officer and Chief Financial Officer concludedthat, as of December 31, 2016, our disclosure controls and procedures were effective at the reasonable assurance level to enable our company to record,process, summarize and report information required under the SEC’s rules in a timely manner. 68 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Management’s Annual Report on Internal Control over Financial Reporting Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) refers to the process designed by, or under thesupervision of, our Chief Executive Officer, and effected by our board of directors, management and other personnel, to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles. Management is responsible for establishing and maintaining adequate internal control over financial reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. Management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2016. In making this evaluation, managementused the framework established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including the controlenvironment, risk assessment, control activities, information and communication, and monitoring activities. Based on our evaluation we determined that ourinternal control over financial reporting was effective as of December 31, 2016. Our internal control over financial reporting as of December 31, 2016 has been audited by our registered public accounting firm as stated in their reportwhich is included in Part II, Item 9A of this form 10-K. 69 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Report of Independent Registered Public Accounting Firm The Board of Directors and StockholdersChina Biologic Products, Inc.: We have audited China Biologic Products, Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in InternalControl – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). China BiologicProducts, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such otherprocedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. In our opinion, China Biologic Products, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016,based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof China Biologic Products, Inc. and subsidiaries as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive income,changes in equity and cash flows for each of the years in the three-year period ended December 31, 2016, and our report dated February 23, 2017 expressedan unqualified opinion on those consolidated financial statements. /s/ KPMG Huazhen LLP Beijing, ChinaFebruary 23, 2017 70 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(d) and 15d-15(f)) during the year endedDecember 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. Entry into a Material Definitive Agreement Given the timing of the event, the following information is included in this Form 10-K pursuant to Item 1.01 “Entry into a Material Definitive Agreement” ofForm 8-K in lieu of filing a Form 8-K. On February 22, 2017, our board of directors (the “Board”) authorized and declared a dividend distribution of one right (a “Right”) for each outstandingshare of the common stock, par value $0.0001 per share (the “Common Shares”), of the Company to stockholders of record at the close of business on March6, 2017 (the “Record Date”). The complete terms of the Rights are set forth in a Preferred Shares Rights Agreement (the “Rights Agreement”), dated as ofFebruary 22, 2017, between the Company and Securities Transfer Corporation, as rights agent. The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing asignificant penalty upon any person or group that acquires 15% or more of the Common Shares without the approval of the Board after February 22, 2017. Asa result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchangeoffer or other business combination involving the Company that is not approved by the Board. However, neither the Rights Agreement nor the Rights shouldinterfere with any merger, tender or exchange offer or other business combination approved by the Board. The Board had previously adopted similar preferredshares rights agreements on November 19, 2012, which expired on November 20, 2014, and on January 8, 2015, which expired on January 8, 2017. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of the Series A Participating Preferred Stock, par value$0.0001 per share (the “Preferred Shares”), of the Company at an exercise price of $550.00 per one one-thousandth of a Preferred Share, subject to adjustment(the “Exercise Price”). However, the Rights are not immediately exercisable and will become exercisable only upon the occurrence of certain events. Inparticular, after February 22, 2017: ·if a person or group acquires 15% or more of the Company’s Common Shares (including through derivatives), then the Rights will becomeexercisable and each Right will entitle its holder (except the acquiring person or group) to purchase, at the Exercise Price, a number of theCompany’s Common Shares having a then-current market value of twice the Exercise Price; ·if after a person or group acquires 15% or more of the Company’s Common Shares, the Company merges into another company, an acquiringentity merges into the Company or the Company sells or transfers more than 50% of its assets, cash flow or earning power, then each Right willentitle its holder (except the acquiring person or group) to purchase, for the Exercise Price, a number of shares of common stock of the personengaging in the transaction having a then-current market value of twice the Exercise Price; or 71 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·after a person or group acquires 15% or more of the Company’s Common Shares, the Board may, at its option, exchange the Rights (except forRights held by the acquiring person or group), in whole or in part, for Common Shares at an exchange ratio of one Common Share per Right(subject to adjustment). The following is a more detailed summary of the terms of the Rights Agreement. The summary does not purport to be complete and is qualified in its entiretyby reference to the Rights Agreement, a copy of which is attached as Exhibit 4.5 and incorporated herein by reference. Distribution and Transfer of Rights; Rights Certificates The Board has declared a dividend of one Right for each outstanding Common Share. Prior to the Distribution Date referred to below: ·the Rights will be evidenced by and trade with the certificates for the Common Shares (or, with respect to any uncertificated Common Sharesregistered in book entry form, by notation in book entry), together with a copy of this summary of Rights, and no separate rights certificateswill be distributed; ·new Common Shares certificates issued after the Record Date will contain a legend incorporating the Rights Agreement by reference (foruncertificated Common Shares registered in book entry form, this legend will be contained in a notation in book entry); and ·the surrender for transfer of any certificates for Common Shares (or the surrender for transfer of any uncertificated Common Shares registered inbook entry form) will also constitute the transfer of the Rights associated with such Common Shares. Rights will accompany any new Common Shares that are issued after the Record Date. Distribution Date Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Shares and become exercisable following (i) the10th business day (or such later date as may be determined by the Board) after the public announcement that an Acquiring Person has acquired beneficialownership of 15% or more of the Common Shares or (ii) the 10th business day (or such later date as may be determined by the Board) after a person or groupannounces a tender or exchange offer that would result in ownership by a person or group of 15% or more of the Common Shares. For purposes of the RightsAgreement, beneficial ownership is defined to include the ownership of derivative securities. 72 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. “Acquiring Person” means a person or group of affiliated or associated persons who has acquired beneficial ownership of 15% or more of the CommonShares; provided however, no person who, at the time of the adoption of the Rights Agreement, beneficially owns 15% or more of the Common Shares shallbe deemed to be an Acquiring Person (i.e. a stockholder’s existing ownership of the Common Shares will be grandfathered), unless and until such personacquires beneficial ownership of additional 2% or more of the Common Shares without the pre-approval of the Board. The date on which the Rights separate from the Common Shares and become exercisable is referred to as the “Distribution Date.” After the Distribution Date, the Company will mail Rights certificates to the Company’s stockholders as of the close of business on the Distribution Date andthe Rights will become transferable apart from the Common Shares. Thereafter, such Rights certificates alone will represent the Rights. Preferred Shares Purchasable Upon Exercise of Rights After the Distribution Date, each Right will entitle the holder to purchase, for the Exercise Price, one one-thousandth of a Preferred Share having economicand other terms similar to that of one Common Share. This portion of a Preferred Share is intended to give the stockholder approximately the same dividend,voting and liquidation rights as would one Common Share, and should approximate the value of one Common Share. More specifically, each one one-thousandth of a Preferred Share, if issued, will: ·not be redeemable; ·entitle holders to quarterly dividend payments of $0.001 per share, or an amount equal to the dividend paid on one Common Share, whicheveris greater; ·entitle holders upon liquidation either to receive $1 per share or an amount equal to the payment made on one Common Share, whichever isgreater; ·have the same voting power as one Common Share; and ·entitle holders to a per share payment equal to the payment made on one Common Share, if the Common Shares are exchanged via merger,consolidation or a similar transaction. Flip-In Trigger If an Acquiring Person obtains beneficial ownership of 15% or more of the Common Shares, then each Right will entitle the holder thereof to purchase, for theExercise Price, a number of Common Shares (or, in certain circumstances, cash, property or other securities of the Company) having a then-current marketvalue of twice the Exercise Price. However, the Rights are not exercisable following the occurrence of the foregoing event until such time as the Rights are nolonger redeemable by the Company, as further described below. 73 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Following the occurrence of an event set forth in preceding paragraph, all Rights that are or, under certain circumstances specified in the Rights Agreement,were beneficially owned by an Acquiring Person or certain of its transferees will be null and void. Flip-Over Trigger If, after an Acquiring Person obtains 15% or more of the Common Shares, (i) the Company merges into another entity, (ii) an acquiring entity merges into theCompany or (iii) the Company sells or transfers more than 50% of its assets, cash flow or earning power, then each Right (except for Rights that havepreviously been voided as set forth above) will entitle the holder thereof to purchase, for the Exercise Price, a number of shares of common stock of the personengaging in the transaction having a then-current market value of twice the Exercise Price. Exchange Provision At any time after the date on which an Acquiring Person beneficially owns 15% or more of the Common Shares, the Board may, at its option, exchange theRights (except for Rights that have previously been voided as set forth above), in whole or in part, for Common Shares at an exchange ratio of one CommonShare per Right (subject to adjustment). In certain circumstances, the Company may elect to exchange the Rights for cash or other securities of the Companyhaving a value approximately equal to one Common Share. Redemption of the Rights The Rights will be redeemable at the Company’s option for $0.001 per Right (payable in cash, Common Shares or other consideration deemed appropriate bythe Board) at any time on or prior to the 10th business day (or such later date as may be determined by the Board) after the public announcement that anAcquiring Person has acquired beneficial ownership of 15% or more of the Common Shares. Immediately upon the action of the Board ordering redemption,the Rights will terminate and the only right of the holders of the Rights will be to receive the $0.001 redemption price. The redemption price will be adjustedif the Company undertakes a stock dividend or a stock split. Expiration of the Rights The Rights expire on the earliest of (i) 5:00 p.m., New York City time, on the two year anniversary date of the date of the Rights Agreement (unless such dateis extended) or (ii) the redemption or exchange of the Rights as described above. 74 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Amendment of Terms of Rights Agreement and Rights The terms of the Rights and the Rights Agreement may be amended in any respect without the consent of the holders of the Rights on or prior to theDistribution Date. Thereafter, the terms of the Rights and the Rights Agreement may be amended without the consent of the holders of Rights in order to cureany ambiguities, to shorten or lengthen any time period pursuant to the Rights Agreement or to make changes that do not adversely affect the interests ofholders of the Rights. Voting Rights; Other Stockholder Rights The Rights will not have any voting rights. Until a Right is exercised, the holder thereof, as such, will have no separate rights as stockholder of the Company. Anti-Dilution Provisions The Board may adjust the Exercise Price, the number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occurfrom a stock dividend, a stock split or a reclassification of the Preferred Shares or Common Shares. With certain exceptions, no adjustments to the Exercise Price will be made until the cumulative adjustments amount to at least 1% of the Exercise Price. Nofractional Preferred Shares will be issued and, in lieu thereof, an adjustment in cash will be made based on the current market price of the Preferred Shares. Taxes The distribution of Rights should not be taxable for federal income tax purposes. However, following an event that renders the Rights exercisable or uponredemption of the Rights, stockholders may recognize taxable income. 75 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Disclosure pursuant to Section 13(r) of the Exchange Act Pursuant to Section 13(r) of the Securities Exchange Act of 1934, we may be required to disclose in our annual and quarterly reports to the Securities andExchange Commission (the “SEC”), whether we or any of our “affiliates” knowingly engaged in certain activities, transactions or dealings relating to Iran orwith certain individuals or entities targeted by US economic sanctions. Disclosure is generally required even where the activities, transactions or dealingswere conducted in compliance with applicable law. Because the SEC defines the term “affiliate” broadly, it includes any entity under common “control” withus (and the term “control” is also construed broadly by the SEC). The description of the activities below has been provided to us by Warburg Pincus LLC (“WP”), affiliates of which: (i) beneficially own more than 10% ofour outstanding common stock and/or are members of our board of directors, (ii) beneficially own more than 10% of the equity interests of, and have the rightto designate members of the board of directors of Santander Asset Management Investment Holdings Limited (“SAMIH”). SAMIH may therefore be deemedto be under common “control” with us; however, this statement is not meant to be an admission that common control exists. The disclosure below relates solely to activities conducted by SAMIH and its affiliates. The disclosure does not relate to any activities conducted by us or byWP and does not involve our or WP’s management. Neither we nor WP has had any involvement in or control over the disclosed activities, and neither we norWP has independently verified or participated in the preparation of the disclosure. Neither we nor WP is representing as to the accuracy or completeness ofthe disclosure nor do we or WP undertake any obligation to correct or update it. We understand that one or more SEC-reporting affiliates of SAMIH intends to disclose in its next annual or quarterly SEC report that: (a) Santander UK plc (“Santander UK”) holds two savings accounts and one current account for two customers resident in the United Kingdom (“UK”) whoare currently designated by the United States (“US”) under the Specially Designated Global Terrorist (“SDGT”) sanctions program. Revenues and profitsgenerated by Santander UK on these accounts in the year ended December 31, 2016 were negligible relative to the overall revenues and profits of BancoSantander SA. (b) Santander UK held a savings account for a customer resident in the UK who is currently designated by the US under the SDGT sanctions program. Thesavings account was closed on July 26, 2016. Revenue generated by Santander UK on this account in the year ended December 31, 2016 was negligiblerelative to the overall revenues and profits of Banco Santander SA. 76 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (c) Santander UK held a current account for a customer resident in the UK who is currently designated by the US under the SDGT sanctions program. Thecurrent account was closed on December 22, 2016. Revenue generated by Santander UK on this account in the year ended December 31, 2016 was negligiblerelative to the overall revenues and profits of Banco Santander SA. (d) Santander UK holds two frozen current accounts for two UK nationals who are designated by the US under the SDGT sanctions program. The accountsheld by each customer have been frozen since their designation and have remained frozen through the year ended December 31, 2016. The accounts are inarrears (£1,844.73 in debit combined) and are currently being managed by Santander UK Collections & Recoveries department. Revenues and profitsgenerated by Santander UK on these accounts in the year ended December 31, 2016 were negligible relative to the overall revenues and profits of BancoSantander SA. (e) During the year ended December 31, 2016, Santander UK had an OFAC match on a power of attorney account. A party listed on the account is currentlydesignated by the US under the SDGT sanctions program and the Iranian Financial Sanctions Regulations (“IFSR”). The power of attorney was removed fromthe account on July 29, 2016. During the year ended December 31, 2016, related revenues and profits generated by Santander UK were negligible relative tothe overall revenues and profits of Banco Santander SA. (f) An Iranian national, resident in the UK, who is currently designated by the US under the IFSR and the Weapons of Mass Destruction ProliferatorsSanctions Regulations, held a mortgage with Santander UK that was issued prior to such designation. The mortgage account was redeemed and closed onApril 13, 2016. No further drawdown has been made (or would be allowed) under this mortgage although Santander UK continued to receive repaymentinstalments prior to redemption. Revenues generated by Santander UK on this account in the year ended December 31, 2016 were negligible relative to theoverall revenues of Banco Santander SA. The same Iranian national also held two investment accounts with Santander ISA Managers Limited. The fundswithin both accounts were invested in the same portfolio fund. The accounts remained frozen until the investments were closed on May 12, 2016 and bankchecks issued to the customer. Revenues generated by Santander UK on these accounts in the year ended December 31, 2016 were negligible relative to theoverall revenues and profits of Banco Santander SA. (g) In addition, during the year ended December 31, 2016, Santander UK held a basic current account for an Iranian national, resident in the UK, previouslydesignated under the Iranian Transactions and Sanctions Regulations. The account was closed in September 2016. Revenues generated by Santander UK onthis account in the year ended December 31, 2016 were negligible relative to the overall revenues and profits of Banco Santander SA. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by Item 10 of Part III is included in our Proxy Statement for our 2017 Annual Meeting of Stockholders and is incorporated hereinby reference. ITEM 11. EXECUTIVE COMPENSATION. The information required by Item 11 of Part III is included in our Proxy Statement for our 2017 Annual Meeting of Stockholders and is incorporated hereinby reference. 77 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Securities Authorized for Issuance under Equity Compensation Plans The following table includes the information as of December 31, 2016 for each category of our equity compensation plan: Plan category Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights(a) (1) Weighted-averageexercise price ofoutstanding options,warrants and rights(b) Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a))(c) Equity compensation plans approved bysecurity holders(2) 314,491 $10.32 684,245 Equity compensation plans not approved bysecurity holders - - - Total 314,491 $10.32 684,245 (1)Excludes shares of restricted stock granted pursuant to our 2008 Equity Incentive Plan. The 912,650 shares of unvested restricted stock at December 31,2016 are issuable without the payment of any cash consideration by the grantee. (2)Our board of directors adopted the 2008 Plan on May 9, 2008 and shortly thereafter sought and obtained written consent from the holders of a majorityof our then outstanding shares. However, in response to an SEC comment in 2010, the disclosure in the foregoing table was revised for presentlyunknown reasons to reflect that the 2008 Plan was not approved by our stockholders. Our recent review of our records indicates that the written consentsigned by the holders of a majority of our then outstanding shares may not have complied with all requirements for a stockholder consent under theDelaware General Corporation Law (the “DGCL”). We believe that, even if the written consent did not satisfy all of the requirements applicable tostockholder consents under the DGCL, this written consent constituted approval of the 2008 Plan by the stockholders pursuant to the terms of the 2008Plan. In addition, regardless of whether the stockholders’ written consent complied with all requirements of the DGCL, we believe that the optionsgranted and restricted stock awarded by our board of directors under the 2008 Plan are valid. The 2008 Plan provides for grants of stock options, stock appreciation rights, performance units, restricted stock, restricted stock units and performanceshares. A total of five million shares of our common stock may be issued pursuant to the 2008 Plan. The exercise price per share for the shares to be issuedpursuant to an exercise of a stock option will be no less than the fair market value per share on the grant date, except that, in the case of an incentive stockoption granted to a person who holds more than 10.0% of the total combined voting power of all classes of our stock or any of our subsidiaries, the exerciseprice will be no less than 110.0% of the fair market value per share on the grant date. As of December 31, 2016, 912,650 shares of restricted stock and optionsto purchase 314,491 share of our common stock were outstanding. No awards may be granted under the 2008 Plan after May 9, 2018, except that any awardgranted before then may extend beyond that date. The other information required by Item 12 of Part III is included in our Proxy Statement for our 2017 Annual Meeting of Stockholders and is incorporatedherein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by Item 13 of Part III is included in our Proxy Statement for our 2017 Annual Meeting of Stockholders and is incorporated hereinby reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by Item 14 of Part III is included in our Proxy Statement for our 2017 Annual Meeting of Stockholders and is incorporated hereinby reference. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. Financial Statements and Schedules The financial statements are set forth under Item 8 of this annual report on Form 10-K. Financial statement schedules have been omitted since they are eithernot required, not applicable, or the information is otherwise included. Exhibit List The list of exhibits in the Exhibit Index to this Report is incorporated herein by reference. ITEM 16. FORM 10-K SUMMARY. None. Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 78 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. SIGNATURESIn accordance with section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report on Form 10-K to be signed on its behalf bythe undersigned, thereto duly authorized individual.Date: February 23, 2017CHINA BIOLOGIC PRODUCTS, INC.By: /s/ David (Xiaoying) Gao David (Xiaoying) GaoChief Executive OfficerBy: /s/ Ming Yang Ming YangChief Financial OfficerIn accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in thecapacities and on the dates indicated.Signature Title Date /s/ David (Xiaoying) Gao Chairman and Chief Executive Officer February 23, 2017David (Xiaoying) Gao (Principal Executive Officer) /s/ Ming Yang Chief Financial Officer February 23, 2017 Ming Yang (Principal Financial and Accounting Officer ) /s/ Sean Shao Director February 23, 2017Sean Shao /s/ Zhijun Tong Director February 23, 2017 Zhijun Tong /s/ Yungang Lu Director February 23, 2017 Yungang Lu /s/ Wenfang Liu Director February 23, 2017Wenfang Liu /s/ Albert (Wai Keung) Yeung Director February 23, 2017Albert (Wai Keung) Yeung /s/ Joseph Chow Director February 23, 2017Joseph Chow 79 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES CONTENTS PageReport of Independent Registered Public Accounting Firm F-1Consolidated Balance Sheets F-2Consolidated Statements of Comprehensive Income F-3Consolidated Statements of Changes in Equity F-4Consolidated Statements of Cash Flows F-5Notes to Consolidated Financial Statements F-7 - F-30 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Report of Independent Registered Public Accounting Firm The Board of Directors and StockholdersChina Biologic Products, Inc.: We have audited the accompanying consolidated balance sheets of China Biologic Products, Inc. and subsidiaries (the “Company”) as of December 31, 2016and 2015, and the related consolidated statements of comprehensive income, changes in equity and cash flows for each of the years in the three-year periodended December 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express anopinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of China BiologicProducts, Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), China Biologic Products, Inc.’sinternal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 23, 2017 expressed an unqualified opinionon the effectiveness of the Company’s internal control over financial reporting. /s/ KPMG Huazhen LLP Beijing, ChinaFebruary 23, 2017 F-1 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS Note December 31, 2016 December 31, 2015 USD USD ASSETS Current Assets Cash and cash equivalents 183,765,533 144,937,893 Time deposits - 38,032,593 Accounts receivable, net of allowance for doubtful accounts 3 33,918,796 25,144,969 Inventories 5 156,412,674 126,395,312 Prepayments and other current assets, net of allowance for doubtful accounts 4,12 18,275,717 24,545,597 Deposits related to land use rights, current portion 8 999,571 10,056,200 Total Current Assets 393,372,291 369,112,564 Property, plant and equipment, net 7 132,091,923 105,364,251 Land use rights, net 23,389,384 23,576,300 Equity method investment 9 10,614,755 8,718,133 Loan receivable 10 43,245,000 39,834,173 Other non-current assets 12 2,244,156 4,861,075 Total Assets 604,957,509 551,466,496 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable 6,158,601 9,681,835 Other payables and accrued expenses 11 59,798,145 57,462,563 Income tax payable 7,484,366 4,510,986 Total Current Liabilities 73,441,112 71,655,384 Deferred income 3,755,648 4,525,867 Other liabilities 12 6,623,926 8,323,446 Total Liabilities 83,820,686 84,504,697 Stockholders’ Equity Common stock: par value $0.0001; 100,000,000 shares authorized; 29,427,609 and 28,835,053 shares issued at December 31, 2016 and 2015,respectively; 27,172,905 and 26,580,349 shares outstanding at December 31, 2016 and 2015,respectively 2,943 2,884 Additional paid-in capital 22 105,459,610 105,079,845 Treasury stock: 2,254,704 shares at December 31, 2016 and 2015, respectively, at cost 15,21 (56,425,094) (56,425,094) Retained earnings 438,483,401 333,704,094 Accumulated other comprehensive loss (25,320,271) (18,605)Total equity attributable to China Biologic Products, Inc. 462,200,589 382,343,124 Noncontrolling interest 22 58,936,234 84,618,675 Total Stockholders’ Equity 521,136,823 466,961,799 Commitments and contingencies 10,18 - - Total Liabilities and Stockholders’ Equity 604,957,509 551,466,496 See accompanying notes to Consolidated Financial Statements. F-2 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended December 31, December 31, December 31, Note 2016 2015 2014 USD USD USD Sales 17 341,169,426 296,457,902 243,251,658 Cost of sales 124,034,448 106,482,626 80,025,375 Gross profit 217,134,978 189,975,276 163,226,283 Operating expenses Selling expenses 11,679,242 9,973,449 10,707,409 General and administrative expenses 54,519,122 41,391,520 32,129,985 Research and development expenses 7,021,992 6,024,368 4,161,901 Provision for other receivables in respect of an employee housingdevelopment project 6 - - 5,068,075 Income from operations 143,914,622 132,585,939 111,158,913 Other income (expenses) Equity in income (loss) of an equity method investee 9 2,519,201 (1,311,278) 8,646,181 Interest income 7,815,780 5,551,105 6,644,886 Interest expense (254,471) (1,727,335) (3,697,819)Loss from disposal of a subsidiary (75,891) - - Total other income, net 10,004,619 2,512,492 11,593,248 Earnings before income tax expense 153,919,241 135,098,431 122,752,161 Income tax expense 12 25,125,820 20,992,913 26,639,527 Net income 128,793,421 114,105,518 96,112,634 Less: Net income attributable to noncontrolling interest 24,014,114 25,062,815 25,195,794 Net income attributable to China Biologic Products, Inc. 104,779,307 89,042,703 70,916,840 Net income per share of common stock: 19 Basic 3.79 3.40 2.85 Diluted 3.74 3.27 2.71 Weighted average shares used in computation: 19 Basic 26,848,445 25,599,153 24,427,196 Diluted 27,249,144 26,567,366 25,685,064 Net income 128,793,421 114,105,518 96,112,634 Other comprehensive loss: Foreign currency translation adjustment, net of nil income taxes (31,303,262) (24,368,360) (1,918,715) Comprehensive income 97,490,159 89,737,158 94,193,919 Less: Comprehensive income attributable to noncontrolling interest 19,026,592 20,698,249 24,798,384 Comprehensive income attributable to China Biologic Products, Inc. 78,463,567 69,038,909 69,395,535 See accompanying notes to Consolidated Financial Statements F-3 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Accumulated Equity Common stock Additional other attributable Number of paid-in Treasury Retained comprehensive to China Biologic Noncontrolling Shares Par value capital stock earnings income (loss) Products, Inc. interest Total equity USD USD USD USD USD USD USD USD Balance as of January 1, 2014 27,341,744 2,734 72,031,864 (29,594,080) 173,744,551 21,506,494 237,691,563 66,278,046 303,969,609 Net income - - - - 70,916,840 - 70,916,840 25,195,794 96,112,634 Other comprehensive loss - - - - - (1,521,305) (1,521,305) (397,410) (1,918,715)Dividend declared tononcontrolling interestshareholders - - - - - - - (13,056,733) (13,056,733)Acquisition of noncontrollinginterests - - (68,802,855) - - - (68,802,855) (15,122,799) (83,925,654)Share repurchase - - - (70,000,000) - - (70,000,000) - (70,000,000)Share-based compensation - - 5,396,271 - - - 5,396,271 - 5,396,271 Excess tax benefits from stockoption exercises - - 1,333,594 - - - 1,333,594 277,805 1,611,399 Reissuance of treasury stock - - 10,189,059 23,023,459 - - 33,212,518 - 33,212,518 Common stock issued inconnection with: - Exercise of stock options 417,002 42 3,860,359 - - - 3,860,401 - 3,860,401 - Vesting of restricted shares 107,125 11 (11) - - - - - - Balance as of December 31,2014 27,865,871 2,787 24,008,281 (76,570,621) 244,661,391 19,985,189 212,087,027 63,174,703 275,261,730 Net income - - - - 89,042,703 - 89,042,703 25,062,815 114,105,518 Other comprehensive loss - - - - - (20,003,794) (20,003,794) (4,364,566) (24,368,360)Share-based compensation - - 12,114,272 - - - 12,114,272 - 12,114,272 Excess tax benefits from stockoption exercises - - 1,225,941 - - - 1,225,941 292,761 1,518,702 Reissuance of treasury stock - - 60,438,432 20,145,527 - - 80,583,959 - 80,583,959 Adjustments in noncontrollinginterest resulting fromcapital injections - - (452,962) - - - (452,962) 452,962 - Common stock issued inconnection with: - Exercise of stock options 780,557 78 7,745,900 - - - 7,745,978 - 7,745,978 - Vesting of restricted shares 188,625 19 (19) - - - - - - Balance as of December 31,2015 28,835,053 2,884 105,079,845 (56,425,094) 333,704,094 (18,605) 382,343,124 84,618,675 466,961,799 Net income - - - - 104,779,307 - 104,779,307 24,014,114 128,793,421 Other comprehensive loss - - - - - (26,315,740) (26,315,740) (4,987,522) (31,303,262)Dividend declared tononcontrolling interestshareholder - - - - - - - (10,901,312) (10,901,312)Share-based compensation - - 24,405,511 - - - 24,405,511 - 24,405,511 Excess tax benefits from stockoption exercises - - 2,299,316 - - - 2,299,316 314,515 2,613,831 Adjustments in noncontrollinginterest resulting from capitalinjections - - 513,397 - - - 513,397 (513,397) - Capital withdrawal bynoncontrolling interestshareholders - - (30,397,196) - - 1,014,074 (29,383,122) (33,608,839) (62,991,961)Common stock issued inconnection with: - Exercise of stock options 337,406 34 3,558,762 - - - 3,558,796 - 3,558,796 - Vesting of restricted shares 255,150 25 (25) - - - - - - Balance as of December 31,2016 29,427,609 2,943 105,459,610 (56,425,094) 438,483,401 (25,320,271) 462,200,589 58,936,234 521,136,823 See accompanying notes to Consolidated Financial Statements. F-4 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, December 31, December 31, 2016 2015 2014 USD USD USD CASH FLOWS FROM OPERATING ACTIVITIES: Net income 128,793,421 114,105,518 96,112,634 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 11,962,983 8,179,376 6,989,222 Amortization 775,053 854,364 758,232 Loss on sale of property, plant and equipment 293,098 3,024,830 172,032 Allowance (reversal) for doubtful accounts - accounts receivable, net 123,239 34,902 (24,462)Allowance for doubtful accounts - other receivables and prepayments 65,341 788 5,068,075 Impairment for other non-current assets 1,225,200 - - Write-down of obsolete inventories 256,862 76,587 324,584 Deferred tax (benefit) expense (3,006,541) (170,345) 3,483,890 Share-based compensation 24,405,511 12,114,272 5,396,271 Equity in (income) loss of an equity method investee (2,519,201) 1,311,278 (8,646,181)Loss from disposal of a subsidiary 75,891 - - Excess tax benefits from share-based compensation arrangements (2,613,831) (1,518,702) (1,611,399)Change in operating assets and liabilities: Accounts receivable (10,971,773) (7,146,311) (2,191,118)Prepayment and other current assets 1,946,800 879,165 (9,236,125)Inventories (40,077,384) (32,095,328) (13,418,971)Accounts payable 2,966,885 5,348,896 405,071 Other payables and accrued expenses 4,221,669 6,734,988 4,472,691 Deferred income (686,757) (416,185) (224,040)Income tax payable 6,022,145 (1,926,093) 5,683,912 Net cash provided by operating activities 123,258,611 109,392,000 93,514,318 CASH FLOWS FROM INVESTING ACTIVITIES: Payment for property, plant and equipment (49,371,318) (38,790,998) (17,194,201)Payment for intangible assets and land use rights (1,635,891) (13,500,526) (4,677,358)Refund of payments and deposits related to land use right 10,297,893 - 1,635,200 Proceeds upon maturity of time deposit - - 6,608,612 Proceeds from sale of property, plant and equipment and land use rights 393,019 827,020 220,135 Loans lent to a third party (12,332,718) (40,744,167) - Proceeds from disposal of a subsidiary 128,654 - - Receipt of government grants related to property and equipment - 2,452,864 - Net cash used in investing activities (52,520,361) (89,755,807) (13,407,612) See accompanying notes to Consolidated Financial Statements. F-5 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, December 31, December 31, 2016 2015 2014 USD USD USD CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock option exercised 3,558,796 7,745,978 3,860,401 Payment for share repurchase - - (70,000,000)Proceeds from short-term bank loans - 15,770,881 44,500,340 Repayment of short-term bank loans - (47,201,255) (22,833,400)Proceeds from long-term bank loans - - 70,000,000 Repayment of long-term bank loans - (66,300,000) (33,700,000)Payment for cash deposit as security for bank loans - - (104,172,005)Maturity of deposit as security for bank loans 37,756,405 63,152,258 30,370,670 Net proceeds from reissuance of treasury stock - 80,583,959 33,212,518 Acquisition of noncontrolling interest - - (86,830,499)Excess tax benefits from share-based compensation arrangements 2,613,831 1,518,702 1,611,399 Dividend paid by subsidiaries to noncontrolling interest shareholders (7,921,952) - (8,846,984)Dividend to the trial court to be held in escrow as to dispute with Jie’an - (3,690,814) - Payment to noncontrolling interest shareholders in connection with their capital withdrawal (58,091,018) - - Net cash (used in) provided by financing activities (22,083,938) 51,579,709 (142,827,560) EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH (9,826,672) (7,098,233) (597,409) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 38,827,640 64,117,669 (63,318,263) Cash and cash equivalents at beginning of year 144,937,893 80,820,224 144,138,487 Cash and cash equivalents at end of year 183,765,533 144,937,893 80,820,224 Supplemental cash flow information Cash paid for income taxes 22,210,476 23,348,371 17,652,514 Cash paid for interest expense 84,664 1,526,807 3,150,381 Noncash investing and financing activities: Acquisition of property, plant and equipment included in payables 4,912,937 6,363,392 3,300,284 Loan receivable offset by accounts payable 5,848,400 - - See accompanying notes to Consolidated Financial Statements. F-6 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2016, 2015 AND 2014 NOTE 1 – DESCRIPTION OF BUSINESS AND SIGNIFICANT CONCENTRATIONS AND RISKS China Biologic Products, Inc. (“CBP”) and its subsidiaries (collectively, the “Company”), through its subsidiaries in the People’s Republic of China (the“PRC”), is a biopharmaceutical company that is principally engaged in the research, development, manufacturing and sales of plasma-based pharmaceuticalproducts in the PRC. The PRC subsidiaries own and operate plasma collection stations that purchase and collect plasma from individual donors. The plasmais processed into finished goods after passing through a series of fractionating processes. All of the Company’s plasma products are prescription medicinesthat require government approval before the products are sold to customers. The Company primarily sells its products to hospitals and inoculation centersdirectly or through distributors in the PRC. Cash Concentration The Company maintains cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limitsfor its bank accounts located in the United States or may exceed Hong Kong Deposit Protection Board insured limits for its bank accounts located in HongKong or may exceed the insured limits for its bank accounts in China established by China Deposit Insurance Fund Management Institution. Total cash atbanks and deposits as of December 31, 2016 and December 31, 2015 amounted to $183,078,440 and $182,291,723, respectively, of which $2,744,704 and$3,020,569 are insured, respectively. The Company has not experienced any losses in uninsured bank deposits and does not believe that it is exposed to anysignificant risks on cash held in bank accounts. Sales Concentration The Company’s two major products are human albumin and human immunoglobulin for intravenous injection (“IVIG”). Human albumin accounted for39.2%, 37.6% and 39.3% of the total sales for the years ended December 31, 2016, 2015 and 2014, respectively. IVIG accounted for 34.6%, 42.2% and 40.4%of the total sales for the years ended December 31, 2016, 2015 and 2014, respectively. If the market demands for human albumin and IVIG cannot besustained in the future or the price of human albumin and IVIG decreases, the Company’s operating results could be adversely affected. Substantially all of the Company’s customers are located in the PRC. There were no customers that individually comprised 10% or more of sales during theyears ended December 31, 2016, 2015 and 2014. No individual customer represented 10% or more of accounts receivables as at December 31, 2016 and2015. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. Purchase Concentration There was one supplier, namely, Xinjiang Deyuan Bioengineering Co., Ltd. (“Xinjiang Deyuan”) (see Note 10), that comprised 10% or more of the totalpurchases during the year ended December 31, 2016 and 2015. No supplier that comprised 10% or more of the total purchases during the year endedDecember 31, 2014. Chongqing Sanda Great Exploit Pharmaceutical Co, Ltd. and Xinjiang Deyuan represented more than 10% of accounts payables as atDecember 31, 2016 and December 31, 2015, respectively. F-7 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles inthe United States of America (“GAAP”), and include the financial statements of the Company and its majority owned subsidiaries. All significantintercompany balances and transactions have been eliminated upon consolidation. The Company has no involvement with variable interest entities. TheCompany accounts for investments over which it has significant influence but not a controlling financial interest using the equity method of accounting. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and thereported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to suchestimates and assumptions include the useful lives of property, plant and equipment and intangibles with definite lives, the allowances for doubtful accounts,the fair value determinations of stock compensation awards, the realizability of deferred tax assets and inventories, the recoverability of intangible assets,land use rights, property, plant and equipment, equity method investment and loan receivable, and accruals for income tax uncertainties and othercontingencies. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions. Foreign Currency Translation The accompanying consolidated financial statements of the Company are reported in US dollar. The financial position and results of operations of theCompany’s subsidiaries in the PRC are measured using the Renminbi, which is the local and functional currency of these entities. Assets and liabilities of thesubsidiaries are translated at the prevailing exchange rate in effect at each period end. Revenues and expenses are translated at the average rate of exchangeduring the period. Translation adjustments are included in other comprehensive income (loss). Revenue Recognition Revenue represents the invoiced value of products sold, net of value added taxes (VAT). Revenue is recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred and the customer takes ownership andassumes risk of loss, the sales price is fixed or determinable and collection of the relevant receivable is probable. The Company mainly sells human albuminand human immunoglobulin to hospitals, inoculation centers and pharmaceutical distributors. For all sales, the Company requires a signed contract orpurchase order, which specify pricing, quantity and product specifications. Delivery of the product occurs when the customer receives the product, which iswhen the risks and rewards of ownership have been transferred. Delivery is evidenced by signed customer acknowledgement. The Company’s salesagreements do not provide the customer the right of return, unless the product is defective in which case the Company allows for an exchange of product orreturn. For the periods presented, defective product returns were inconsequential. F-8 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Fair Value Measurements The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or mostadvantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes betweenobservable and unobservable inputs, which are categorized in one of the following levels: • Level 1 Inputs: Unadjusted quoted prices for identical assets or liabilities in active markets accessible to the entity at the measurement date. • Level 2 Inputs: Other than quoted prices included in Level 1, inputs that are observable for the asset or liability, either directly or indirectly, forsubstantially the full term of the asset or liability. • Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, therebyallowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. The fair value measurement level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fairvalue measurement. See Note 16 to the Consolidated Financial Statements. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and demand deposits. The Company considers all highly liquid investments with original maturities ofthree-month or less at the time of purchase to be cash equivalents. Cash and cash equivalents at December 31, 2016 and 2015 include $98,022,000 and$85,422,000 of certificates of deposit with an initial term of three months or less. As of December 31, 2016 and 2015, the Company maintained cash and cash equivalents at banks in the following locations: December 31, 2016 December 31, 2015 USD USD PRC, excluding Hong Kong 171,539,309 130,319,811 U.S. 11,539,131 13,939,319 Total 183,078,440 144,259,130 F-9 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cashprovided by operating activities in the consolidated statements of cash flows. The Company maintains an allowance for doubtful accounts for estimatedlosses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses, the customers’ financialcondition, the amount of accounts receivables in dispute, the accounts receivables aging and the customers’ payment patterns. The Company reviews itsallowance for doubtful accounts monthly. Past due balances are reviewed individually for collectability. Account balances are charged off against theallowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. Inventories Inventories are stated at the lower of cost or market. Cost is determined using the weighted average method. Cost of work in progress and finished goodscomprise direct materials, direct production costs and an allocation of production overheads based on normal operating capacity. Adjustments are recorded towrite down the carrying amount of any obsolete and excess inventory to its estimated net realizable value based on historical and forecasted demand. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation and amortization of property, plant and equipment attributable to manufacturing activities is capitalized as part of inventories, and recognizedas cost of revenues when the inventory is sold. Cost incurred in the construction of property, plant and equipment, including process payments and deposits,are initially capitalized as construction-in-progress and transferred into their respective asset categories when the assets are ready for their intended use, atwhich time depreciation commences. Depreciation on property, plant and equipment is calculated on the straight-line method over the estimated useful lives of the assets. Estimated useful lives ofthe assets are as follows: Buildings30 yearsMachinery and equipment10 yearsFurniture, fixtures, office equipment and vehicles5-10 years When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and the proceeds received thereon.Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized and amortized over the remaininguseful life. F-10 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Equity Method Investment Investment in an investee in which the Company has the ability to exercise significant influence, but does not have a controlling interest is accounted forusing the equity method. Significant influence is generally presumed to exist when the Company has an ownership interest in the voting stock between 20%and 50%, and other factors, such as representation on the board of directors and participation in policy-making processes, are considered in determiningwhether the equity method of accounting is appropriate. Under the equity method of accounting, the Company’s share of the investee’s results of operationsis included in other income (expenses) in the Company’s consolidated statements of comprehensive income. Deferred taxes are provided for the differencebetween the book and tax basis of the investment. The Company recognizes a loss if it is determined that other than temporary decline in the value of theinvestment exists. The process of assessing and determining whether an impairment on a particular equity investment is other than temporary requires asignificant amount of judgment. To determine whether an impairment is other-than-temporary, management considers whether the Company has the abilityand intent to hold the investment until recovery and whether evidence indicating the carrying value of the investment is recoverable outweighs evidence tothe contrary. No impairment loss was recognized by the Company for the years ended December 31, 2016, 2015 and 2014. Government Grants Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attaching to them and the grantswill be received. Grants that compensate research and development expenses are recognized as a reduction to the related research and development expenses.Grants that compensate the Company for the cost of property, plant and equipment and land use rights are recognized as deferred income and are recognizedover the useful life of the asset by way of other income. For the year ended December 31, 2016, the Company received government grants of RMB5,056,361 (approximately $728,874), which have been recognizedas a reduction of research and development expenses. For the year ended December 31, 2015, the Company received government grants of RMB15,000,000 (approximately $2,452,864) related to the newmanufacturing facilities for factor products in Shandong Taibang, which was recorded as deferred income. These grants are amortized as the related assets aredepreciated. The grants amortized amounted to $410,369 and $118,751 for the year ended December 31, 2016 and 2015, respectively. For the year endedDecember 31, 2015, government grants of RMB7,280,600 (approximately $1,188,907), have been recognized as a reduction of research and developmentexpenses. For the year ended December 31, 2014, government grants of RMB12,963,600 (approximately $2,111,770), have been recognized as a reduction of researchand development expenses. For the year ended December 31, 2012, the Company received government grants of RMB18,350,000 (approximately $2,989,215) related to the technicalupgrade of the manufacturing facilities in Guizhou Taibang. The grants amortized amounted to $276,388, $297,434 and $224,191 for the years endedDecember 31, 2016, 2015 and 2014, respectively. Land Use Rights Land use rights represent the exclusive right to occupy and use a piece of land in the PRC for a specified contractual term. Land use rights are carried at cost,less accumulated amortization. Amortization is calculated using the straight-line method over the contractual period of the rights ranging from 40 to 50years. F-11 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Research and Development Expenses Research and development costs are expensed as incurred. Research and development expenses for the years ended December 31, 2016, 2015 and 2014 were$7,021,992, $6,024,368 and $4,161,901, respectively. These expenses include the costs of the Company’s internal research and development activities. Product Liability The Company’s products are covered by two separate product liability insurances each with coverages of approximately $2,883,000 (or RMB20,000,000) forthe products sold by Shandong Taibang Biological Products Co., Ltd. (“Shandong Taibang”) and Guizhou Taibang Biological Products Co., Ltd. (“GuizhouTaibang”), respectively. There were no product liability claims as of December 31, 2016. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss andtax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in whichthose temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized inthe consolidated statements of comprehensive income in the period that includes the enactment date. A valuation allowance is provided to reduce theamount of deferred tax assets if it is considered more likely than not that some portion or all of the deferred tax assets will not be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income taxpositions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in theperiod in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties ingeneral and administrative expenses. Share-based Payment The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the awardand recognizes the cost over the period during which an employee is required to provide service in exchange for the award, which generally is the vestingperiod. Long-lived Assets Long-lived assets, such as property, plant and equipment, and purchased intangible asset subject to amortization, are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or assetgroup be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to itscarrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognizedto the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flowmodels, quoted market values and third-party independent appraisals, as considered necessary. F-12 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net Income per Share Basic net income per share of common stock is computed by dividing net income attributable to common stockholders by the weighted average number ofcommon stock outstanding during the year using the two-class method. Under the two-class method, net income is allocated between common stock andother participating securities based on their participating rights in undistributed earnings. The Company’s nonvested shares were considered participatingsecurities since the holders of these securities participate in dividends on the same basis as common stockholders. Diluted net income per share is calculatedby dividing net income attributable to common stockholders as adjusted for the effect of dilutive common stock equivalent, if any, by the weighted averagenumber of common stock and dilutive common stock equivalent outstanding during the year. Potential dilutive securities are not included in the calculationof diluted earnings per share if the impact is anti-dilutive. Segment Reporting The Company has one operating segment, which is the manufacture and sales of human plasma products. Substantially all of the Company’s operations andcustomers are located in the PRC, and therefore, no geographic information is presented. Contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover awide range of matters, including, among others, government investigations and tax matters. An accrual for a loss contingency is recognized when it isprobable that a liability has been incurred and the amount of loss can be reasonably estimated. Legal costs incurred in connection with loss contingencies areexpensed as incurred. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts withCustomers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles thatgovern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. The original effective date forASU 2014-09 would have required the Company to adopt beginning in its first quarter of 2017. In August 2015, the FASB issued ASU No. 2015-14, Revenuefrom Contracts with Customers (Topic 606) – Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for one year and permits earlyadoption as early as the original effective date of ASU 2014-09. Accordingly, the Company may adopt the standard in either its first quarter of 2017 or 2018.The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of thedate of adoption. The Company plans to complete its evaluation by the third quarter of 2017, including an assessment of the new expanded disclosurerequirements and a final determination of the transition method we will use to adopt the new standard. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842)(“ASU 2016-02”), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets andlease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasingarrangements. ASU 2016-02 is effective for public companies for annual reporting periods, and interim periods within those years, beginning after December15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements. F-13 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting (“ASU 2016-09”), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes,classification of awards and classification in the statement of cash flows. This standard will be effective for public companies for fiscal years beginning afterDecember 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-09 on itsconsolidated financial statements. Adoption of this new standard is not expected to have a material impact on the Company's consolidated financialstatements. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which addressed and provided guidance foreach of eight specific cash flow issues with the objective of reducing the existing diversity in practice. This standard will be effective for public companiesfor fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact of adoptingASU 2016-15 on its consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This standard requiredthat companies recognize the income tax consequences of an intra-entity transfer of an asset (other than inventory) when the transfer occurs. Current guidanceprohibits companies from recognizing current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Thisstandard will be effective for public companies for annual periods beginning after December 15, 2017, including interim periods within that reporting period.The Company is currently evaluating the impact this guidance may have on its consolidated financial statements. NOTE 3 – ACCOUNTS RECEIVABLE Accounts receivable at December 31, 2016 and 2015 consisted of the following: December 31, 2016 December 31, 2015 USD USD Accounts receivable 34,452,392 25,588,593 Less: Allowance for doubtful accounts (533,596) (443,624) Total 33,918,796 25,144,969 The activity in the allowance for doubtful accounts – accounts receivable for the years ended December 31, 2016, 2015 and 2014 are as follows: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD Beginning balance 443,624 433,948 460,689 Provisions 123,239 34,902 6,211 Recoveries - - (30,673)Write-offs - - - Foreign currency translation adjustment (33,267) (25,226) (2,279)Ending balance 533,596 443,624 433,948 F-14 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 4 – PREPAYMENTS AND OTHER CURRENT ASSETS Prepayments and other current assets as of December 31, 2016 mainly represented other receivables of $10,117,032 and prepayments of $2,921,069.Prepayments and other current assets as of December 31, 2015 mainly represented other receivables of $17,846,006 and prepayments of $2,206,131. The activity in the allowance for doubtful accounts – other receivables and prepayments for the years ended December 31, 2016, 2015 and 2014 are asfollows: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD Beginning balance 4,924,063 5,207,840 142,951 Provisions 65,341 788 5,068,075 Recoveries - - - Write-offs - - - Foreign currency translation adjustment (317,508) (284,565) (3,186)Ending balance 4,671,896 4,924,063 5,207,840 NOTE 5 – INVENTORIES Inventories at December 31, 2016 and 2015 consisted of the following: December 31, 2016 December 31, 2015 USD USD Raw materials 80,781,903 57,418,230 Work-in-process 24,994,839 27,401,062 Finished goods 50,635,932 41,576,020 Total 156,412,674 126,395,312 Raw materials mainly comprised of the human plasma collected from the Company’s plasma collection stations. Work-in-process represented theintermediate products in the process of production. Finished goods mainly comprised plasma products. Provisions to write-down the carrying amount ofobsolete inventory to its estimated net realizable value amounted to $256,862, $76,587 and $324,584 for the years ended December 31, 2016, 2015 and2014, respectively, and were recorded as cost of sales in the consolidated statements of comprehensive income. F-15 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 6 – OTHER RECEIVABLES IN RESPECT OF AN EMPLOYEE HOUSING DEVELOPMENT PROJECT In 2009, 107 employees, or the Employee-participants, of Shandong Taibang entered into agreements, or the Housing Project Agreements, with a real estatedeveloper regarding a housing development project, pursuant to which the developer agreed to develop and deliver residential units to the Employee-participants by the end of 2011 and the Employee-participants paid the developer deposits equal to 80% of the purchase prices of the residential units. Toassist with their deposit payment, Shandong Taibang entered into separate agreements, or the Financial Assistance Agreements, with the Employee-participants and provided them with advances of up to 50% of the purchase prices of the residential units. These advances were to be repaid by deductionsfrom the Employee-participants’ salaries. In addition, Shandong Taibang also entered into a purchase agreement with the developer to purchase additionalunits in the development project and made a deposit of RMB3,823,200 (approximately $622,799). However, the developer failed to deliver the residentialunits and is unlikely to be able to perform the Housing Project Agreements. In August 2014, the Company entered into agreements, or the Advance PaymentAgreements, with the Employee-participants, pursuant to which the Company made advance payments to the Employee-participants equal to the depositsthat the Employee-participants had paid the developer pursuant to the Housing Project Agreements and refunded them the deductions previously made fromtheir salaries pursuant to the Financial Assistance Agreements together with accrued interest totaling RMB27,071,684 (approximately $4,409,977). InNovember 2014, Shandong Taibang entered into supplemental agreements to the Advance Payment Agreements, or the Supplemental Agreements, with theEmployee-participants, pursuant to which the Employee-participants transferred and assigned to Shandong Taibang their rights under the Housing ProjectAgreements, including their rights to pursue legal actions against and recover damages from the developer, and in return, Shandong Taibang waived its rightto claim the advance payments and the refunds of the deductions under the Advance Payment Agreements. During the year ended December 31, 2014, theCompany made a full provision of $5,068,075 in the consolidated financial statements for all the receivables in respect of this employee housingdevelopment project (see Note 4), including the deposits paid to the developer, the total advance payments and refunds made under this employee housingdevelopment project, as well as the related fees and expenses, because it became probable that these receivables may not be recoverable after all legal meansof collection were exhausted. NOTE 7 – PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at December 31, 2016 and 2015 consisted of the following: December 31, 2016 December 31, 2015 USD USD Buildings 34,131,032 31,505,133 Machinery and equipment 52,467,764 54,640,502 Furniture, fixtures, office equipment and vehicles 7,843,567 7,859,951 Total property, plant and equipment, gross 94,442,363 94,005,586 Accumulated depreciation (39,315,011) (31,521,859)Total property, plant and equipment, net 55,127,352 62,483,727 Construction in progress 61,825,470 26,115,927 Prepayment for property, plant and equipment 15,139,101 16,764,597 Property, plant and equipment, net 132,091,923 105,364,251 Depreciation expense for the years ended December 31, 2016, 2015 and 2014 was $11,962,983, $8,179,376 and $6,989,222, respectively. No interestexpenses were capitalized into construction in progress for the years ended December 31, 2016, 2015 and 2014. NOTE 8 – DEPOSITS RELATED TO LAND USE RIGHTS In 2012, Guizhou Taibang made a refundable payment of RMB83,400,000 (approximately $12,022,110) to the local government in connection with thepublic bidding for a land use right in Guizhou Province. Given the decrease of the land area to be provided by the local government, RMB13,000,000(approximately $1,873,950) and RMB 10,000,000 (approximately $1,441,500) was refunded by the local government in December 2013 and January 2014,respectively. Guizhou Taibang completed the bidding and purchased the land use right in December 2015. For the year ended December 31, 2016,RMB59,665,759 (approximately $8,600,819) was refunded by the local government. The remaining deposit is expected to be refunded in 2017. F-16 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 9 – EQUITY METHOD INVESTMENT The Company’s equity method investment as of December 31, 2016 and 2015 represented 35% equity interest investment in Xi’an Huitian Blood ProductsCo., Ltd. (“Huitian”). In October 2008, Shandong Taibang entered into an equity purchase agreement with one of the equity owners of Huitian (“Seller”) to acquire 35% equityinterest in Huitian. In connection with this transaction, in October 2008, Taibang Biological Limited (“Taibang Biological”) entered into an entrustagreement (the “Entrust Agreement”) with Shandong Taibang and the noncontrolling interest holder of Shandong Taibang, pursuant to which, TaibangBiological would pay the cash consideration, including interest, of $6,502,901 (or RMB44,327,887) to the Seller, and would bear the risks and benefits as a35% equity owner in Huitian. In addition, Taibang Biological would pay Shandong Taibang RMB120,000 (approximately $19,548) per year ascompensation for the administrative costs of Shandong Taibang’s holding of the 35% equity interest in Huitian on behalf of Taibang Biological. Suchamount paid and received is eliminated upon consolidation. Taibang Biological agreed to indemnify the noncontrolling interest holder of ShandongTaibang for any loss arising from the Entrust Agreement and has pledged the Company’s equity interest in Shandong Taibang as collateral against such loss. The excess of carrying amount over the Company’s share of net assets of equity method investees, which represented goodwill, is $1,179,637 and $1,260,243at December 31, 2016 and 2015, respectively. The equity method goodwill is not amortized; however, the investment is reviewed for impairment. NOTE 10 –LOAN RECEIVABLE (a)Current In June 2016, the Company entered into a RMB40,000,000 (approximately $5,766,000) loan agreement with Xinjiang Deyuan. Pursuant to the agreement,Guizhou Taibang agreed to provide Xinjiang Deyuan with interest-bearing loans at an interest rate of 6% per annum. The loan is unsecured and due on theearlier of 1) within five days after Xinjiang Deyuan obtaining other loans from financial institutions, or 2) September 20, 2016. Interest will be paid on thelast day of each month. On July 1, 2016, RMB40,000,000 (approximately $5,766,000) was lent to Xinjiang Deyuan. On October 18, 2016, the Company entered into a supplemental agreement to the loan agreement with Xinjiang Deyuan, pursuant to which the principal ofthe loan was agreed to offset accounts payable for the purchase of plasma from Xinjiang Deyuan in two installments, with the remaining principal of the loan,if any, being repaid by Xinjiang Deyuan no later than December 20, 2016. The Company has the right to charge an interest rate of 9% per annum for anyoverdue loan since September 21, 2016 according to loan agreement. In the fourth quarter of 2016, the principal of the loan was completely offset by accounts payable for the purchase of plasma from Xinjiang Deyuan.Furthermore, as agreed between the Company and Xinjiang Deyuan, interest receivable amounting to $35,723 and $675,933 for the foregoing loan and theloans as described in Note 10(b), respectively, was also offset by accounts payable for the purchase of plasma from Xinjiang Deyuan. F-17 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Interest income of $160,878 was recognized by Guizhou Taibang for the year ended December 31, 2016. $125,155 was received by Guizhou Taibang and$35,723 was offset as discussed above for the year ended December 31, 2016. (b)Non-current In August 2015, the Company entered into a cooperation agreement with Xinjiang Deyuan and the controlling shareholder of Xinjiang Deyuan. Pursuant tothe agreement, Guizhou Taibang agreed to provide Xinjiang Deyuan with interest-bearing loans at an interest rate of 6% per annum with an aggregateprincipal amount of RMB300,000,000 (approximately $43,245,000). The loans are due July 31, 2018 and secured by a pledge of Deyuan Shareholder’s58.02% equity interest in Xinjiang Deyuan. Interest will be paid on the 20th day of the last month of each quarter. For the year ended December 31, 2015,RMB258,663,461 (approximately $37,286,338) was lent to Xinjiang Deyuan. The remaining RMB41,336,539 (approximately $5,958,662) was lent duringthe three months period ended March 31, 2016. Interest income of $2,661,700 was recognized by Guizhou Taibang for the year ended December 31, 2016. $1,985,767 was received by Guizhou Taibang and$675,933 was offset as described in Note 10(a) for the year ended December 31, 2016. Interest income of $496,170 was recognized by Guizhou Taibang for the year ended December 31, 2015 and received by Guizhou Taibang for the year endedDecember 31, 2016. NOTE 11 – OTHER PAYABLES AND ACCRUED EXPENSES Other payables and accrued expenses at December 31, 2016 and 2015 consisted of the following: December 31, 2016 December 31, 2015 USD USD Payables to potential investors (1) 7,941,013 9,550,588 Payable to Guizhou Eakan Investing Corp. (2) 2,098,824 2,242,240 Payable to Guizhou Jie’an Company (3) - 1,565,052 Salaries and bonuses payable 16,740,846 13,520,721 Accruals for selling commission and promotion fee 4,391,160 2,360,933 Dividends payable to noncontrolling interest 7,952,467 5,309,920 Payables for construction work 5,364,441 7,257,489 Other tax payables 1,918,248 3,855,405 Advance from customers 3,976,832 1,934,321 Deposits received 2,541,420 3,615,143 Others 6,872,894 6,250,751 Total 59,798,145 57,462,563 (1)The payables to potential investors comprise deposits received from potential investors of $4,924,164 and $6,123,040 as of December 31, 2016 and2015, respectively, and related interest plus penalty on these deposits totaling $3,016,849 and $3,427,548 as of December 31, 2016 and 2015,respectively. In 2007, Guizhou Taibang received an aggregate amount of RMB50,960,000 (approximately $7,345,884) from certain potential investors in connectionwith their subscription to purchase shares in Guizhou Taibang. In 2010, the Company refunded RMB11,200,000 (approximately $1,614,480) to one ofthe potential investors. In 2016, the Company refunded RMB5,600,000 (approximately $807,240) to another potential investor pursuant to a settlementagreement entered into by Guizhou Taibang and this potential investor in August 2016. F-18 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (2)Guizhou Taibang has payables to Guizhou Eakan Investing Corp., amounting to approximately $2,098,824 and $2,242,240 as of December 31, 2016and 2015, respectively. The Company borrowed this interest free advance for working capital purpose for Guizhou Taibang. The balance is due ondemand. (3)Guizhou Taibang has payables to Jie’an, a former noncontrolling interest shareholder of Guizhou Taibang, amounting to nil and $1,565,052 as ofDecember 31, 2016 and 2015, respectively. In 2007, Guizhou Taibang received additional contributions from Jie’an of RMB6,480,000 (approximately$997,920) to subscribe for 1,800,000 shares in Guizhou Taibang. As a result of the capital withdrawal by Jie’an, these additional contributions wererefunded to Jie’an by Guizhou Taibang in 2016. (see Note 18) NOTE 12 – INCOME TAX The Company and each of its subsidiaries file separate income tax returns. The United States of America The Company is incorporated in the State of Delaware in the U.S., and is subject to U.S. federal corporate income tax at gradual rates of up to 35%. British Virgin Islands Taibang Biological is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands (BVI), Taibang Biological is not subjectto tax on income or capital gains. In addition, upon payments of dividends by Taibang Biological, no British Virgin Islands withholding tax is imposed. Hong Kong Taibang Holdings (Hong Kong) Limited (“Taibang Holdings”, formerly known as “Logic Holdings (Hong Kong) Limited”) is incorporated in Hong Kongand is subject to Hong Kong’s profits tax rate of 16.5% for the years ended December 31, 2016, 2015 and 2014. Taibang Holdings did not earn any incomethat was derived in Hong Kong for the years ended December 31, 2016, 2015 and 2014. The payments of dividends by Hong Kong companies are not subjectto any Hong Kong withholding tax. PRC The PRC’s statutory income tax rate is 25%. The Company’s PRC subsidiaries are subject to income tax at 25% unless otherwise specified. On February 12, 2009, Shandong Taibang received the High and New Technology Enterprise certificate from the Shandong provincial government. Thiscertificate entitled Shandong Taibang to pay income taxes at a 15% preferential income tax rate for a period of three years from 2008 to 2010. On October 31,2011, Shandong Taibang obtained a notice from the Shandong provincial government that the High and New Technology Enterprise qualification has beenrenewed for an additional three years from 2011 to 2013. In October 2014, Shandong Taibang obtained a notice from the Shandong provincial governmentthat granted it the High and New Technology Enterprise certificate. This certificate entitled Shandong Taibang to enjoy a preferential income tax rate of 15%for a period of three years from 2014 to 2016. Shandong Taibang will apply for a renewal of an additional three years from 2017 to 2019 upon the expirationof such certificate. F-19 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. According to CaiShui [2011] No. 58 dated July 27, 2011, Guizhou Taibang, being a qualified enterprise located in the western region of the PRC, enjoys apreferential income tax rate of 15% effective retroactively from January 1, 2011 to December 31, 2020. The components of earnings (losses) before income tax expense by jurisdictions are as follows: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD PRC, excluding Hong Kong 170,830,607 147,580,488 122,116,071 U.S. (19,408,283) (11,711,102) (8,032,150)BVI 2,498,629 (1,336,183) 8,625,859 Hong Kong (1,712) 565,228 42,381 Total 153,919,241 135,098,431 122,752,161 Income tax expense for the years ended December 31, 2016, 2015 and 2014 represents current income tax expense and deferred tax (benefit) expense: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD Current income tax expense 28,132,361 21,163,258 23,155,637 Deferred tax (benefit) expense (3,006,541) (170,345) 3,483,890 Total income tax expense 25,125,820 20,992,913 26,639,527 The effective income tax rate based on income tax expense and earnings before income taxes reported in the consolidated statements of comprehensiveincome differs from the PRC statutory income tax rate of 25% due to the following: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 (in percentage to earnings before income tax expense) PRC statutory income tax rate 25.0% 25.0% 25.0%Non-deductible expenses: Share-based compensation - 1.3% 0.5%Others 1.6% 0.1% 0.5%Tax rate differential (3.6)% - (2.2)%Effect of PRC preferential tax rate (10.9)% (10.5)% (9.7)%Bonus deduction on research and development expenses (1.5)% (1.5)% (1.4)%Change in valuation allowance 5.3% 1.3% (0.7)%PRC dividend withholding tax - - 7.3%Tax effect of equity method investment 0.4% (0.2)% 2.4%Effective income tax rate 16.3% 15.5% 21.7% F-20 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The PRC tax rate has been used because the majority of the Company’s consolidated pre-tax earnings arise in the PRC. As of December 31, 2016 and 2015, significant temporary differences between the tax basis and financial statement basis of assets and liabilities that gaverise to deferred taxes were principally related to the following: December 31, 2016 December 31, 2015 USD USD Deferred tax assets arising from: -Accrued expenses 3,954,375 3,225,045 -Deferred income 275,687 - -Property, Plant and Equipment 257,550 - -Other non-current assets 138,384 - -Tax loss carryforwards 27,783,051 8,669,632 Gross deferred tax assets 32,409,047 11,894,677 Less: valuation allowance (26,629,179) (8,160,611)Net deferred tax assets 5,779,868 3,734,066 Deferred tax liabilities arising from: - Intangible assets (235,217) (314,109)- Equity method investment (1,153,872) (509,021)- Dividend withholding tax (6,085,290) (7,351,023)Deferred tax liabilities (7,474,379) (8,174,153) Classification on consolidated balance sheets: Deferred tax assets – current, net (included in prepayments and other current assets) 3,954,375 3,225,045 Deferred tax assets – non-current, net (included in other non-current assets) 671,621 - Deferred tax liabilities - non-current, net (included in other liabilities) (6,320,507) (7,665,132) In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assetswill not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in whichthose temporary differences become deductible and tax loss carryforwards are utilized. Management considers the scheduled reversal of deferred taxliabilities (including the impact of available carryforwards periods), projected future taxable income, and tax planning strategies in making this assessment. The deferred tax assets of $27,783,051 for tax loss carry forwards as of December 31, 2016, of which $6,139,906 and $21,643,145 relate to tax losscarryforwards of certain PRC subsidiaries and CBP, respectively. For PRC income tax purposes, certain of the Company's PRC subsidiaries had tax losscarryforwards of $24,559,624, of which $6,322,563, $4,727,663, $4,755,017, $4,159,639 and $4,594,742 would expire by 2017, 2018, 2019, 2020 and 2021,respectively, if unused. For United States federal income tax purposes, CBP had tax loss carryforwards of approximately $63,656,308, of which $162,235,$3,382,154, $978,837, $1,296,319, $384,754, nil and $57,452,009 would expire by 2030, 2031, 2032, 2033, 2034 and 2035, 2036, respectively, if unused.In view of their cumulative losses positions, management determined it is more likely than not that deferred tax assets of these PRC subsidiaries will not berealized, and therefore full valuation allowances of $6,139,906 and $6,560,170 were provided as of December 31, 2016 and 2015, respectively. For deferredtax assets of CBP, management determined it is more likely than not that some portion of the deferred tax assets of CBP will not be realized, and thereforevaluation allowances of $20,489,273 and $1,600,441 were provided as of December 31, 2016 and 2015, respectively. F-21 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Management believes it is more likely than not that the Company will realize the benefits of the deferred tax assets, net of the valuation allowances, as ofDecember 31, 2016 and December 31, 2015. The following table presents the movement of the valuation allowance for deferred tax assets for the years ended December 31, 2016, 2015 and 2014: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD Beginning balance 8,160,611 6,661,139 7,558,590 Addition (deduction) during the year 18,676,456 1,703,771 (885,253)Foreign currency translation adjustment (207,888) (204,299) (12,198)Ending balance 26,629,179 8,160,611 6,661,139 According to the prevailing PRC income tax law and relevant regulations, dividends relating to earnings accumulated beginning on January 1, 2008 that arereceived by non-PRC-resident enterprises from PRC-resident enterprises are subject to withholding tax at 10%, unless reduced by tax treaties or similararrangement. Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding tax. Further, dividendsreceived by the Company from its overseas subsidiaries are subject to the U.S. federal income tax at 34%, less any qualified foreign tax credits. Based on thedividend policy the Company has provided the deferred tax liabilities of $7,351,023 on undistributed earnings of $74 million, approximately 50% ofShandong Taibang’s total undistributed earnings at December 31, 2014. During the year ended December 31, 2016, the deferred tax liabilities of $1,265,733was reversed following a sum of RMB82,760,000 (approximately $11,929,854) dividend distribution to Taibang Holdings (Hong Kong) Limited by TaibangBiotech (Shandong) Co., Ltd. in 2016, which was generated from distributed earnings of Shandong Taibang. Due to the Company’s plan and intention ofreinvesting its earnings in its PRC business, the Company has not provided for the related deferred tax liabilities on the remaining undistributed earnings ofthe PRC subsidiaries totaling $388 million as of December 31, 2016. As of January 1, 2014 and for each of the years ended December 31, 2014, 2015 and 2016, the Company and its subsidiaries did not have any unrecognizedtax benefits, and therefore no interest or penalties related to unrecognized tax benefits were accrued. The Company does not expect that the amount ofunrecognized tax benefits will change significantly within the next 12 months. The Company and each of its PRC subsidiaries file income tax returns in the United States and the PRC, respectively. The Company is subject to U.S. federalincome tax examination by tax authorities for tax years beginning in 2007. According to the PRC Tax Administration and Collection Law, the statute oflimitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute oflimitations is extended to five years under special circumstances where the underpayment of taxes is more than RMB100,000 (approximately $14,415). In thecase of transfer pricing issues, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. The PRC tax returns for theCompany’s PRC subsidiaries are open to examination by the PRC tax authorities for the tax years beginning in 2010. F-22 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 13 – OPTIONS AND NONVESTED SHARES Options Effective May 9, 2008, the Board of Directors adopted the China Biologic Products, Inc. 2008 Equity Incentive Plan, (“the 2008 Plan”). The 2008 Planprovides for grants of stock options, stock appreciation rights, performance units, restricted stock, restricted stock units and performance shares. A total of fivemillion shares of the Company’s common stock may be issued pursuant to the 2008 Plan. The exercise price per share for the shares to be issued pursuant toan exercise of a stock option will be no less than the fair market value per share on the grant date, except that, in the case of an incentive stock option grantedto a person who holds more than 10% of the total combined voting power of all classes of the Company’s stock or any of its subsidiaries, the exercise pricewill be no less than 110% of the fair market value per share on the grant date. No awards may be granted under the 2008 Plan after May 9, 2018, except thatany award granted before then may extend beyond that date. All the options to be granted will have 10-year terms. For the year ended December 31, 2016, 2015 and 2014, no stock options to purchase common stock were granted to any directors or employees. A summary of stock options activity for the years ended December 31, 2016, 2015 and 2014 is as follows: Weighted WeightedAverage Average Remaining Number of Exercise Contractual Aggregate Options Price Term in years Intrinsic Value USD USD Outstanding as of January 1, 2014 1,882,376 9.98 7.20 35,518,897 Granted - - Exercised (417,002) 9.26 (17,529,500) Forfeited and expired (32,920) 11.44 Outstanding as of December 31, 2014 1,432,454 10.16 6.53 81,753,119 Granted - - Exercised (780,557) 9.92 (68,089,712) Forfeited and expired - - Outstanding as of December 31, 2015 651,897 10.44 5.24 86,064,461 Granted - Exercised (337,406) 10.55 (35,180,367) Forfeited and expired - - Outstanding as of December 31, 2016 314,491 10.32 3.84 30,568,083 Vested as of December 31, 2016 314,491 10.32 3.84 30,568,083 Exercisable as of December 31, 2016 314,491 10.32 3.84 30,568,083 For the years ended December 31, 2016, 2015 and 2014, the Company recorded stock compensation expense of $649,203, $1,117,994 and $1,669,573,respectively, in general and administrative expenses. Nonvested shares For the years ended December 31, 2016, 2015 and 2014, nonvested shares were granted to certain directors and employees (collectively, the “Participant”).Pursuant to the nonvested share grant agreements between the Company and the Participant, the Participant will have all the rights of a stockholder withrespect to the nonvested shares. The nonvested shares granted to directors generally vest in one or two years. The nonvested shares granted to employeesgenerally vest in four years. F-23 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. A summary of nonvested shares activity for the year ended December 31, 2016, 2015 and 2014 is as follow: Number of Grant date weighted nonvested shares average fair value USD Outstanding as of January 1, 2014 362,750 20.91 Granted 299,000 51.88 Vested (107,125) 20.66 Forfeited (2,500) 9.85 Outstanding as of December 31, 2014 552,125 37.78 Granted 313,100 120.62 Vested (188,625) 34.78 Forfeited (7,500) 28.80 Outstanding as of December 31, 2015 669,100 77.49 Granted 511,200 119.75 Vested (255,150) 66.04 Forfeited (12,500) 66.74 Outstanding as of December 31, 2016 912,650 104.51 For the years ended December 31, 2016, 2015 and 2014, the Company recorded stock compensation expense of $23,756,308, $10,996,278 and $3,726,698in general and administrative expenses, respectively. As of December 31, 2016, approximately $81,666,998 of stock compensation expense with respect to nonvested shares is to be recognized over weightedaverage period of approximately 2.79 years. NOTE 14 – STATUTORY RESERVES The Company’s PRC subsidiaries are required to allocate at least 10% of its after tax profits as determined under generally accepted accounting principal inthe PRC to its statutory surplus reserve until the reserve balance reaches 50% of respective registered capital. The accumulated balance of the statutoryreserve as of December 31, 2016 and 2015 was $34,508,737 and $34,160,154, respectively. NOTE 15 – SHARE REPURCHASE On January 27, 2014, the Company entered into a repurchase agreement with an individual shareholder, pursuant to which the Company repurchased2,500,000 shares of common stock for a consideration of $70,000,000. The transaction was completed on February 28, 2014. NOTE 16 – FAIR VALUE MEASUREMENTS Management used the following methods and assumptions to estimate the fair value of financial instruments at the relevant balance sheet dates: · Short-term financial instruments (including cash and cash equivalents, time deposits, accounts receivable, other receivables, accounts payable, and otherpayables and accrued expenses) – The carrying amounts of the short-term financial instruments approximate their fair values because of the short maturity ofthese instruments. · Loan receivable – The carrying amounts of loan receivable approximate their fair value. The fair value is estimated using discounted cash flow analysisbased on the Company’s incremental borrowing rates for similar borrowing. F-24 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 17 – SALES The Company’s sales are primarily derived from the manufacture and sale of Human Albumin and Immunoglobulin products. The Company’s sales bysignificant types of product for the years ended December 31, 2016, 2015 and 2014 are as follows: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD Human Albumin 133,712,663 111,422,258 95,547,952 Immunoglobulin products: Human Immunoglobulin for Intravenous Injection 117,891,410 125,136,104 98,389,729 Other Immunoglobulin products 40,105,561 22,518,554 19,736,027 Placenta Polypeptide 32,178,681 27,194,800 24,029,706 Others 17,281,111 10,186,186 5,548,244 Total 341,169,426 296,457,902 243,251,658 NOTE 18 – COMMITMENTS AND CONTINGENCIES Commitments As of December 31, 2016, commitments outstanding for the purchase of property, plant and equipment approximated $27.3 million. As of December 31, 2016, commitments outstanding for the purchase of plasma from 2017 to 2018 approximated $44.7 million. Legal proceedings Dispute with Jie’an over Certain Capital Injection into Guizhou Taibang In May 2007, a 91% majority of Guizhou Taibang’s shareholders approved a plan to raise additional capital from qualified strategic investors through theissuance of an additional 20,000,000 shares of Guizhou Taibang. The plan required all existing Guizhou Taibang shareholders to waive their rights of firstrefusal to subscribe for the additional shares. The remaining 9% minority shareholder of Guizhou Taibang’s shares, Guizhou Jie’an Company, or Jie’an, didnot support the plan and did not waive its right of first refusal. In May 2007, Guizhou Taibang signed an Equity Purchase Agreement with certain allegedstrategic investors (who concealed their background), pursuant to which such investors agreed to invest an aggregate of RMB50,960,000 (approximately$7,345,884) in exchange for 21.4% of Guizhou Taibang’s equity interests. Such Equity Purchase Agreement was not approved or ratified by over two-thirdssupermajority of Guizhou Taibang’s shareholders, which approval or ratification is required under the PRC Company Law. At the same time, as an existingshareholder, Jie’an also subscribed for 1,800,000 shares, representing its pro rata share of the 20,000,000 shares being offered. In total, Guizhou Taibangreceived RMB50,960,000 (approximately $7,345,884) from the investors and RMB6,480,000 (approximately $934,092) from Jie’an. In June 2007, Jie’an brought a lawsuit against Guizhou Taibang, alleging that it had a right to acquire the 18,200,000 shares offered to the investors underthe Equity Purchase Agreement. The trial court denied Jie’an’s request, and the PRC Supreme Court ultimately sustained the original ruling in May 2009 anddenied the rights of first refusal of Jie’an over the 18,200,000 shares. F-25 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. During the second quarter of 2010, Jie’an requested that Guizhou Taibang register its 1.8 million shares of additional capital injection with the localadministration of industry and commerce, or AIC. Guizhou Taibang’s board of directors withheld its required ratification of Jie’an’s request, pending theoutcome of the ongoing litigation. In March 2012, Jie’an brought another lawsuit against Guizhou Taibang for refusing to register the shares. In July 2013,the trial court dismissed the lawsuit for lack of jurisdiction. Jie’an did not appeal the dismissal. In December 2013, Jie’an brought a third lawsuit against Guizhou Taibang, requesting Guizhou Taibang to register 1.8 million shares under its name with thelocal AIC. In July 2014, the trial court denied Jie’an’s request to register such shares. Despite the denial of Jie’an’s share registration request, the trial court,however, in its ruling, ordered Guizhou Taibang to pay accumulated dividends of RMB13,809,197 (approximately $1,990,595) associated with these sharesand the related interest expenses to Jie’an. Guizhou Taibang and Jie’an subsequently filed a cross-appeal. In December 2014, the appellate court ruled infavor of Jie’an supporting its request to register 1.8 million shares and ordered Guizhou Taibang to pay Jie’an its share of accumulated dividends ofRMB18,339,227 (approximately $2,643,600) associated with these shares plus the related interest expenses to Jie’an. In the first half of 2015, GuizhouTaibang paid an aggregate of RMB22,639,227 (approximately $3,263,445) to the trial court held in escrow pending further appeal of this case. GuizhouTaibang appealed to the High Court of Guizhou in June 2015 which overruled the decision of the appellate court and remanded the case to the trial court forretrial in September 2015. In August 2016, the trial court granted Jie’an’s petition to withdraw the lawsuit as Jie’an sought to withdraw its capitalcontribution in Guizhou Taibang pursuant to an agreement dated July 31, 2016. The funds held in escrow were credited to the consideration payable toJie’an for the capital withdrawal as described below. In November 2013, Guizhou Taibang held a shareholders meeting and the shareholders passed resolutions, or the November 2013 Resolutions, that, interalia, (i) determined that it was no longer necessary for Guizhou Taibang to obtain additional capital from investors; (ii) rejected Jie’an’s request that Jie’ansubscribe for additional shares of Guizhou Taibang alone and one or more other shareholders reduce their shareholding in Guizhou Taibang; and (iii)approved the issuance of a total of 20,000,000 new shares to all existing shareholders on a pro rata basis. Jie’an subsequently filed a fourth lawsuit againstGuizhou Taibang in December 2013, requesting that the court declare the November 2013 Resolutions void. Both the trial court and the appellate courtdenied Jie’an’s request. In March 2014, Guizhou Taibang held another shareholders meeting and the shareholders passed resolutions, or the March 2014 Resolutions, that, inter alia,re-calculated the ownership percentage in Guizhou Taibang based on the November 2013 Resolutions and the additional capital injections from existingshareholders. Guizhou Taibang subsequently updated the registration with the local AIC regarding the additional capital injections in August 2014. InSeptember 2014, Jie’an and Shenzhen Yigong Shengda Technology Co., Ltd., or Yigong Shengda, another minority shareholder of Guizhou Taibang filed alawsuit against Guizhou Taibang, requesting that the court declare both the November 2013 Resolutions and the March 2014 Resolutions void and instructGuizhou Taibang to withdraw the AIC registration. In November 2014, the trial court suspended this case pending the final outcome of the third lawsuit filedby Jie’an. In October 2015, the trial court denied their request. In May 2016, the appellate court vacated the trial court’s decision to uphold GuizhouTaibang’s shareholders resolution, and remanded the case for retrial. In August 2016, the trial court granted the petitions by Jie’an and Yigong Shengda towithdraw the lawsuit as Jie’an and Yigong Shengda sought to withdraw their respective capital contributions in Guizhou Taibang pursuant to an agreementdated July 31, 2016. F-26 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On July 31, 2016, Guiyang Dalin Biologic Technologies Co., Ltd., or Guiyang Dalin, Guizhou Taibang, Jie’an and Yigong Shengda entered into anagreement, pursuant to which Jie’an and Yigong Shengda agreed to withdraw their respective capital contributions in Guizhou Taibang for an aggregateconsideration of RMB415,000,000 (approximately $59,822,250). In August 2016, Guizhou Taibang paid the first installment of RMB90,000,000(approximately $12,973,500) of the consideration to Jie’an and Yigong Shengda. Guizhou Taibang completed the AIC registration for the foregoing capitalwithdrawal in October 2016 and paid the balance of the consideration to Jie’an and Yigong Shengda in November 2016. As a result of the capital withdrawal,Guiyang Dalin has become the sole shareholder of Guizhou Taibang. Dispute with Certain Individual Investors over Certain Capital Injection into Guizhou Taibang In part due to the invalidity of the Equity Purchase Agreement with certain alleged strategic investors in May 2007, which was never approved or ratified byGuizhou Taibang’s shareholders, such investors’ equity ownership in Guizhou Taibang and the related increase in registered capital of Guizhou Taibanghave never been registered with the local AIC. In January 2010, one individual among such investors brought a lawsuit against Guizhou Taibang requestingto register his 14.35% ownership interest in Guizhou Taibang with the local AIC and seeking the distribution of his share of Guizhou Taibang’s dividendsdeclared since 2007. In October 2010, the trial court denied such individual investor’s right as shareholders of Guizhou Taibang and his entitlement to share the dividends, whichruling was reaffirmed after a re-trial by the same trial court in December 2012. After such ruling, Guizhou Taibang attempted to return the originally receivedfund of RMB34,160,000 (approximately $4,924,164) to such investor by wiring the fund back to his bank account but was unable to do so due to the closureof his bank account. Another investor, however, accepted the returned fund of RMB11,200,000 (approximately $1,614,480) from Guizhou Taibang inNovember 2010. In 2013, the same individual investor appealed the case to the PRC Supreme Court, which also denied his claims for shareholder status inGuizhou Taibang and the related dividend distribution and accrued interest in September 2013. Such investor subsequently attempted to seek a re-trial bythe PRC Supreme Court, which request was denied by the PRC Supreme Court in January 2014. He then applied to the PRC Supreme Procuratorate to requestfor a review of the PRC Supreme Court’s decision and seek an appeal by the PRC Supreme Procuratorate to the PRC Supreme Court for an ultimate re-trial onhis behalf. In July 2015, the PRC Supreme Procuratorate rejected his request for review. As of December 31, 2016, Guizhou Taibang had maintained, on its balance sheet, payables to the investors of RMB34,160,000 (approximately $4,924,164)as originally received funds from such individual investor in respect of the shares in dispute, RMB20,586,941 (approximately $2,967,608) for the interestexpenses, and RMB341,600 (approximately $49,241) for the 1% penalty imposed by the Equity Purchase Agreement for any breach in the event thatGuizhou Taibang is required to return the original investment amount to such investor. F-27 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 19 – NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share of common stock for the periods indicated: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD Net income attributable to China Biologic Products, Inc. 104,779,307 89,042,703 70,916,840 Earnings allocated to participating nonvested shares (2,987,429) (2,070,762) (1,210,895)Net income allocated to common stockholders used in computing basic and dilutednet income per common stock 101,791,878 86,971,941 69,705,945 Weighted average shares used in computing basic net income per common stock 26,848,445 25,599,153 24,427,196 Diluted effect of stock option 400,699 968,213 1,257,868 Weighted average shares used in computing diluted net income per common stock 27,249,144 26,567,366 25,685,064 Net income per common stock – basic 3.79 3.40 2.85 Net income per common stock – diluted 3.74 3.27 2.71 During the year ended December 31, 2016, 2015 and 2014, no option was antidilutive or excluded from the calculation of diluted net income per commonstock. Further, rights issued pursuant to the stockholder rights plan (see Note 23) were excluded from the calculation of diluted net income per common stocksince they were antidilutive. NOTE 20 – CHINA BIOLOGIC PRODUCTS, INC. (PARENT COMPANY) The following represents condensed unconsolidated financial information of the Parent Company only: Condensed Balance Sheets: December 31, 2016 December 31, 2015 USD USD Cash 11,539,131 13,939,319 Prepayments and prepaid expenses 85,879 86,404 Property, plant and equipment, net 211 211 Investment in and amounts due from subsidiaries 454,309,702 372,035,937 Total Assets 465,934,923 386,061,871 Other payables and accrued expenses 3,734,334 3,718,747 Total Liabilities 3,734,334 3,718,747 Total Equity 462,200,589 382,343,124 Total Liabilities and Equity 465,934,923 386,061,871 Condensed Statements of Comprehensive Income: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD Equity in income of subsidiaries 124,187,590 100,753,805 78,948,990 General and administrative expenses (19,408,283) (10,693,991) (6,008,852)Other expenses, net - (1,017,111) (2,023,298)Earnings before income tax expense 104,779,307 89,042,703 70,916,840 Income tax expense - - - Net Income 104,779,307 89,042,703 70,916,840 F-28 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Condensed Statements of Cash Flows: For the Years Ended December 31, 2016 December 31, 2015 December 31, 2014 USD USD USD Net cash used in operating activities (2,400,188) (3,904,038) (444,755)Net cash used in investing activities - - - Net cash provided by financing activities - 15,192,269 2,416,821 Net (decrease) increase in cash (2,400,188) 11,288,231 1,972,066 Cash at beginning of year 13,939,319 2,651,088 679,022 Cash at end of year 11,539,131 13,939,319 2,651,088 NOTE 21 – FOLLOW-ON OFFERING OF COMMON STOCK On June 15, 2015, the Company completed a follow-on offering of 3,450,000 shares of common stock at a price of $105.00 per share, less the underwritingdiscounts and commissions and offering expenses. In this June 2015 follow-on offering, the Company sold 805,000 shares (including 105,000 shares soldpursuant to the exercise by the underwriters of their option to purchase additional shares from the Company) and certain selling stockholders sold 2,645,000shares (including 345,000 shares sold pursuant to the exercise by the underwriters of their option to purchase additional shares from such sellingstockholders). The Company raised net proceeds of approximately $80.6 million from this offering, after deducting the underwriting discounts andcommissions and offering expenses payable by the Company. The Company did not receive any proceeds from the sale of the shares by the sellingstockholders. On July 2, 2014, the Company completed a follow-on offering of 1,782,500 shares of common stock at a price of $38.00 per share, less the underwritingdiscounts and commissions and offering expenses. In this July 2014 follow-on offering, the Company sold 920,000 shares (including 120,000 shares soldpursuant to the exercise by the underwriters of their option to purchase additional shares from the Company) and a selling stockholder sold 862,500 shares(including 112,500 shares sold pursuant to the exercise by the underwriters of their option to purchase additional shares from such selling stockholder). TheCompany raised net proceeds of approximately $33.2 million from this offering, after deducting the underwriting discounts and commissions and offeringexpenses payable by the Company. The Company did not receive any proceeds from the sale of the shares by the selling stockholder. NOTE 22 – CAPITAL WITHDRAWAL BY TWO FORMER NONCONTROLLING INTEREST SHAREHOLDRERS OF GUIZHOU TAIBANG On October 26, 2016, Guizhou Taibang completed the requisite legal and administrative procedures, through which two former minority shareholders,holding a combined 15.3% equity interest in Guizhou Taibang, withdrew their respective capital contributions in Guizhou Taibang for an aggregateconsideration of RMB415,000,000 (approximately $59,822,250) pursuant to an agreement dated July 31, 2016. (see Note 18) NOTE 23 – STOCKHOLDER RIGHTS PLAN On February 22, 2017, the Board of Directors (the “Board”) adopted a stockholder rights plan (the “Rights Agreement”). Pursuant to the Rights Agreement,the Board of Directors authorized and declared a dividend distribution of one right (a “Right”) for each outstanding share of the common stock, par value$0.0001 per share (the “Common Shares”), of the Company to stockholders of record at the close of business on March 6, 2017 (the “Record Date”). EachRight entitles the registered holder to purchase from the Company one one-thousandth of a share of the Series A Participating Preferred Stock, par value$0.0001 per share (the “Preferred Shares”), of the Company at an exercise price of $550.00 per one one-thousandth of a Preferred Share, subject to adjustment(the “Exercise Price”). However, the Rights are not immediately exercisable and will become exercisable only upon the occurrence of certain events. Inparticular, after February 22, 2017: F-29 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·if a person or group acquires 15% or more of the Company’s Common Shares (including through derivatives), then the Rights will become exercisableand each Right will entitle its holder (except the acquiring person or group) to purchase, at the Exercise Price, a number of the Company’s CommonShares having a then-current market value of twice the Exercise Price; ·if after a person or group acquires 15% or more of the Company’s Common Shares, the Company merges into another company, an acquiring entitymerges into the Company or the Company sells or transfers more than 50% of its assets, cash flow or earning power, then each Right will entitle itsholder (except the acquiring person or group) to purchase, for the Exercise Price, a number of shares of common stock of the person engaging in thetransaction having a then-current market value of twice the Exercise Price; or ·after a person or group acquires 15% or more of the Company’s Common Shares, the Board may, at its option, exchange the Rights (except for Rightsheld by the acquiring person or group), in whole or in part, for Common Shares at an exchange ratio of one Common Share per Right (subject toadjustment). The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing asignificant penalty upon any person or group that acquires 15% or more of the Common Shares without the approval of the Board after February 22, 2017. Asa result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchangeoffer or other business combination involving the Company that is not approved by the Board. However, neither the Rights Agreement nor the Rights shouldinterfere with any merger, tender or exchange offer or other business combination approved by the Board. The Board of Directors may redeem the rights for$0.001 per right at any time before an event that causes the rights to become exercisable. If not redeemed, the right will expire on February 22, 2019. TheBoard had previously adopted similar preferred shares rights agreements on November 19, 2012, which expired on November 20, 2014, and on January 8,2015, which expired on January 8, 2017. F-30 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT INDEX Exhibit No. Description 2.1 Share Exchange Agreement between the registrant, Logic Express Limited and the selling stockholders signatory thereto, dated July 18,2006 (incorporated by reference to Exhibit 2 of the registration statement on Form SB-2 filed by the registrant on September 5, 2007) 3.1 Second Amended and Restated Certificate of Incorporation of China Biologic Products, Inc. (incorporated by reference to Exhibit 3.1 ofthe quarterly report on Form 10-Q filed by the registrant on August 5, 2014) 3.2 Third Amended and Restated Bylaws of China Biologic Products, Inc. as filed with the Secretary of State of the State of Delaware on June23, 2014 (incorporated by reference to Amendment No. 1 as filed with the SEC on November 2, 2016 to Form 8-K as filed with the SEC onJune 20, 2016) 3.1.1 Certificate of Correction to Certificate of Incorporation of China Biologic Products, Inc. as filed with the Secretary of State of the State ofDelaware on October 31, 2016 (incorporated by reference to Amendment No. 1 as filed with the SEC on November 2, 2016 to Form 8-K asfiled with the SEC on June 20, 2016) 3.1.2 Certificate of Change of Registered Office of China Biologic Products, Inc. as filed with the Secretary of State of the State of Delaware onNovember 1, 2016 4.1 Form of Registration Rights Agreement, dated June 5, 2009 (incorporated by reference to Exhibit 4.1 of the current report on Form 8-Kfiled by the registrant on June 5, 2009) 4.2 Form of 3.8% Convertible Senior Secured Note due 2011 (incorporated by reference to Exhibit 4.2 of the current report on Form 8-K filedby the registrant on June 5, 2009) 4.3 Form of Warrant (incorporated by reference to Exhibit 4.3 of the current report on Form 8-K filed by the registrant on June 5, 2009) 4.4 Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock of China Biologic Products, Inc.(incorporated by reference to Exhibit 3.1 of the registration form on Form 8-A12B filed by the registrant on November 21, 2012) 4.5* Preferred Shares Rights Agreement, between the registrant and Securities Transfer Corporation, dated as of February 22, 2017 10.1 China Biologic Products, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of the current report on Form 8-Kfiled by the registrant on May 13, 2008) 10.2 Form of Stock Option Award Agreement of China Biologic Products, Inc. (incorporated by reference to Exhibit 10.5 of the current reporton Form 8-K filed by the registrant on May 13, 2008) 80 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.3 Form of Restricted Stock Award Agreement of China Biologic Products, Inc. (incorporated by reference to Exhibit 3.3 of the current reporton Form 8-K filed by the registrant on August 6, 2011) 10.4 Group Secondment Agreement, dated October 28, 2002, between Shandong Taibang and the Shandong Institute (English Translation)(incorporated by reference to Exhibit 10.1 of the registration statement on Form SB-2/A filed by the registrant on December 3, 2007) 10.5 Amended and Restated Joint Venture Agreement, between Logic Express Limited and the Shandong Institute, dated as of March 12, 2006(English Translation) (incorporated by reference to Exhibit 10.2 of the registration statement on Form SB-2 filed by the registrant onSeptember 5, 2007) 10.6 Letter of Intent for Equity Transfer, between Logic Express Limited and the Shandong Institute, dated as of June 10, 2006 (EnglishTranslation) (incorporated by reference to Exhibit 10.3 of the registration statement on Form SB-2 filed by the registrant on September 5,2007) 10.7 Joint Venture and Cooperation Agreement between Mr. Fan Qingchun, Shandong Taibang and Shaanxi Power Construction Corporation,dated September 12, 2008 (incorporated by reference to Exhibit 10.2 of the current report on Form 8-K filed by the registrant on October16, 2008) 10.8 Agreement on Equity Transfer, Acquisition, Joint Venture and Cooperation, among Shandong Taibang, Shaanxi Power ConstructionCorporation and Mr. Fan Qingchun, dated September 12, 2008 (incorporated by reference to Exhibit 10.3 of the current report on Form 8-K filed by the registrant on October 16, 2008) 10.9 (Shareholder) Agreement among Shandong Taibang, Logic Express Limited and Biological Institute dated September 12, 2008(incorporated by reference to Exhibit 10.4 of the current report on Form 8-K, filed by the registrant on October 16, 2008) 10.10 Equity Transfer Agreement, dated September 26, 2008, among Logic Express Limited, Chongqing Dalin Biologic Technologies Co., Ltd.and certain shareholders of Chongqing Dalin Biologic Technologies Co., Ltd. (incorporated by reference to Exhibit 10.1 of the currentreport on Form 8-K filed by the registrant on October 2, 2008) 10.11 Equity Transfer Agreement, between Shandong Taibang and Mr. Fan Qingchun, dated October 10, 2008 (incorporated by reference toExhibit 10.1 of the current report on Form 8-K filed by the registrant on October 16, 2008) 10.12 Supplemental Agreement, dated November 3, 2008, among Logic Express Limited, Fan Shaowen, as representative of the shareholders ofChongqing Dalin Biologic Technologies Co., Ltd. and Chongqing Dalin Biologic Technologies Co., Ltd. (English Translation)(incorporated by reference to Exhibit 10.2 of the current report on Form 8-K filed by the registrant on November 7, 2008) 81 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.13 Second Supplemental Agreement, dated November 14, 2008, among Logic Express Limited, Fan Shaowen as representative of theshareholders of Chongqing Dalin Biologic Technologies Co., Ltd. and Chongqing Dalin Biologic Technologies Co., Ltd. (EnglishTranslation) (incorporated by reference to exhibit 10.3 of the current report on Form 8-K filed by the registrant on November 20, 2008) 10.14 Amended Equity Transfer Agreement, dated December 12, 2008, among Logic Express Limited, Chongqing Dalin Biologic TechnologiesCo., Ltd., and certain shareholders of Chongqing Dalin Biologic Technologies Co., Ltd. (English Translation) (incorporated by referenceto exhibit 10.4 of the current report on Form 8-K filed by the registrant on December 18, 2008) 10.15 Equity Transfer and Entrustment Agreement, dated April 6, 2009, among Logic Express, Shandong Taibang and the Shandong Institute(English Translation) (incorporated by reference to Exhibit 10.6 of the current report on Form 8-K filed by the registrant on April 13, 2009) 10.16 Asset Purchase Agreement, between Xia Jin An Tai Plasma Collection Co., Ltd. and Xia Jin County Plasma Collection Station, dated as ofOctober 20, 2006 (English Translation) (incorporated by reference to Exhibit 10.15 of the registration statement on Form SB-2/A filed bythe registrant on December 3, 2007) 10.17 Asset Purchase Agreement, between Liao Cheng An Tai Plasma Collection Co., Ltd. and Yang Gu County Plasma Collection Station,dated as of November 3, 2006 (English Translation) (incorporated by reference to Exhibit 10.16 of the registration statement on Form SB-2/A filed by the registrant on December 3, 2007) 10.18 Asset Purchase Agreement, between Qi He An Tai Plasma Collection Co., Ltd. and Qi He County Plasma Collection Station, dated as ofNovember 9, 2006 (English Translation) (incorporated by reference to Exhibit 10.14 of the registration statement on Form SB-2/A filed bythe registrant on December 3, 2007) 10.19 Asset Purchase Agreement, between He Ze An Tai Plasma Collection Co., Ltd and Yun Cheng County Plasma Collection Station, dated asof December 15, 2006 (English Translation) (incorporated by reference to Exhibit 10.22 of the registration statement on Form SB-2/A filedby the registrant on December 3, 2007) 10.20 Asset Purchase Agreement, between Zhang Qiu An Tai Plasma Collection Co., Ltd. and Zhang Qiu Plasma Collection Station, dated as ofDecember 31, 2006 (English Translation) (incorporated by reference to Exhibit 10.12 of the registration statement on Form SB-2/A filedby the registrant on December 3, 2007) 10.21 Asset Purchase Agreement, between Guang Xi Huan Jiang Missile Plasma Collection Co., Ltd. and Huan Jiang Maonan AutonomousCounty Plasma Collection Station, dated as of April 24, 2007 (English Translation) (incorporated by reference to Exhibit 10.13 of theregistration statement on Form SB-2/A filed by the registrant on December 3, 2007) 10.22 Asset Purchase Agreement, between Fang Cheng Plasma Collection Co., Ltd. and Fang Cheng Plasma Company, dated as of April 30,2007 (English Translation) (incorporated by reference to Exhibit 10.21 of the registration statement on Form SB-2/A filed by the registranton December 3, 2007) 82 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.23 Asset Purchase Agreement, between Guang Xi Huan Jiang Missile Plasma Collection Co., Ltd. and Huan Jiang Maonan AutonomousCounty Plasma Collection Station, dated as of August 5, 2007 (English Translation) (incorporated by reference to Exhibit 10.13 of theregistration statement on Form SB-2/A filed by the registrant on December 3, 2007) 10.24 Trademark Licensing Agreement, dated as of February 27, 2007 (English Translation) (incorporated by reference to Exhibit 10.17 of theregistration statement on Form SB-2/A filed by the registrant on December 3, 2007) 10.25 Loan Agreement, dated as of November 30, 2006, among Shandong Taibang and the Shandong Institute and Logic Express (EnglishTranslation) (incorporated by reference to Exhibit 10.18 of the registration statement on Form SB-2/A filed by the registrant on December3, 2007) 10.26 Supplementary Agreement, dated as of September 1, 2007, among Shandong Taibang, the Shandong Institute and Logic Express Limited(English Translation) (incorporated by reference to Exhibit 10.19 of the registration statement on Form SB-2/A filed by the registrant onDecember 3, 2007) 10.27 Form of Director’s Employment Agreement (incorporated by reference to Exhibit 10.8 of the registration statement on Form SB-2 filed bythe registrant on September 5, 2007) 10.28 Form of Independent Director Agreement (incorporated by reference to Exhibit 10.1 of the current report on Form 8-K filed by theregistrant on July 30, 2008) 10.29 Form of Indemnity Agreement (incorporated by reference to Exhibit 10.2 of the current report on Form 8-K filed by the registrant on July30, 2008) 10.30 Form of Guarantee and Pledge Agreement, dated June 10, 2009 (incorporated by reference to Exhibit 10.2 of the current report on Form 8-K filed by the registrant on June 5, 2009). 10.31 Form of Indemnification Agreement, dated June 10, 2009 (incorporated by reference to Exhibit 10.3 of the current report on Form 8-K filedby the registrant on June 5, 2009). 10.32 Cooperation Agreement, among Guizhou Taibang, Xinjiang Deyuan and its controlling shareholder, dated August 28, 2015 (SummaryEnglish Translation) (incorporated by reference to Exhibit 10.1 of the current report on Form 8-K filed by the registrant on September 2,2015) 10.33 Supplemental Agreement, between Guizhou Taibang and Xinjiang Deyuan, dated April 16, 2015 (Summary English Translation)(incorporated by reference to Exhibit 10.2 of the current report on Form 8-K filed by the registrant on April 16, 2015) 10.34 Cooperation Agreement, between Guizhou Taibang and Xinjiang Deyuan, dated September 30, 2014 (Summary English Translation)(incorporated by reference to Exhibit 10.1 of the current report on Form 8-K filed by the registrant on April 16, 2015) 10.35 Registered Equity Purchase Agreement, between Guiyang Dalin Biotechnology Co., Ltd. and Guizhou Eakan Pharmaceutical Co., Ltd.,dated August 21, 2014 (Summary English Translation) (incorporated by reference to Exhibit 10.1 of the current report on Form 8-K filedby the registrant on August 25, 2014) 83 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.36 Equity Exchange Agreement, between Guiyang Dalin Biotechnology Co., Ltd. and Guizhou Eakan Pharmaceutical Co., Ltd., datedAugust 21, 2014 (Summary English Translation) (incorporated by reference to Exhibit 10.2 of the current report on Form 8-K filed by theregistrant on August 25, 2014) 10.37 Unregistered Equity Purchase Agreement, between Guiyang Dalin Biotechnology Co., Ltd. and Guizhou Eakan Pharmaceutical Co., Ltd.,dated August 21, 2014 (Summary English Translation) (incorporated by reference to Exhibit 10.3 of the current report on Form 8-K filedby the registrant on August 25, 2014) 10.38 Summary English translation of Settlement Agreement among Guizhou Taibang Biological Products Co., Ltd., Guiyang Dalin BiologicTechnologies Co., Ltd., Guizhou Jie’an Company and Shenzhen Yigong Shengda Technology Co., Ltd. dated July 31, 2016 (incorporatedby reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q filed by the registrant on August 4, 2016) 10.39 Summary English translation of Guarantee Agreement among Guizhou Taibang Biological Products Co., Ltd., Guiyang Dalin BiologicTechnologies Co., Ltd., Guizhou Jie’an Company and Shenzhen Yigong Shengda Technology Co., Ltd. dated July 31, 2016 (incorporatedby reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q filed by the registrant on August 4, 2016) 10.40 Consulting Agreement by and between Company and Mr. Hui (David) Li dated July 1, 2016 (incorporated by reference to Exhibit 10.3 ofthe Quarterly Report on Form 10-Q filed by the registrant on August 4, 2016) 10.41 Second Amended and Restated Employment Agreement by and between the Company and Xiaoying (David) Gao dated August 4, 2016(incorporated by reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q filed by the registrant on August 4, 2016) 10.42 Second Amended and Restated Employment Agreement between the Company and Ming Yang dated November 1, 2016 (incorporated byreference to Exhibit 10.5 of the Quarterly Report on Form 10-Q filed by the registrant on November 2, 2016) 10.43 Second Amended and Restated Employment Agreement between the Company and Ming Yin dated November 1, 2016 (incorporated byreference to Exhibit 10.6 of the Quarterly Report on Form 10-Q filed by the registrant on November 2, 2016) 14 Code of Ethics (incorporated by reference to Exhibit 14 of the annual report on Form 10-KSB filed by the registrant on March 28, 2008) 21* Subsidiaries of the registrant 23.1* Consent of KPMG, an independent registered public accounting firm 31.1* Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 84 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 31.2* Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101* Interactive data files pursuant to Rule 405 of Regulation S-T *Filed herewith. 85 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.5 Execution Version PREFERRED SHARES RIGHTS AGREEMENTDated as of February 22, 2017 CHINA BIOLOGIC PRODUCTS, INC.andSECURITIES TRANSFER CORPORATION,as Rights Agent Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. TABLE OF CONTENTS PageSection 1. Certain Definitions1Section 2. Appointment of Rights Agent9Section 3. Issuance of Rights Certificates9Section 4. Form of Rights Certificates12Section 5. Countersignature and Registration13Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates13Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights15Section 8. Cancellation and Destruction of Rights Certificates17Section 9. Reservation and Availability of Preferred Shares18Section 10. Record Date for Securities Issued19Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights20Section 12. Certificate of Adjusted Exercise Price or Number of Shares27Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power27Section 14. Fractional Rights and Fractional Shares31Section 15. Rights of Action32Section 16. Agreement of Rights Holders32Section 17. Holders of Rights Certificate Not Deemed to be Stockholders33Section 18. Concerning the Rights Agent33Section 19. Merger, Consolidation or Change of Name of Rights Agent34Section 20. Duties of Rights Agent35Section 21. Change of Rights Agent38Section 22. Issuance of New Rights Certificates39Section 23. Redemption39Section 24. Exchange41Section 25. Notice of Certain Events43Section 26. Notices44Section 27. Supplements and Amendments45Section 28. Successors45Section 29. Determinations and Actions by the Board45Section 30. Benefits of this Agreement46Section 31. Severability46Section 32. Governing Law; Exclusive Jurisdiction46Section 33. Counterparts47Section 34. Descriptive Headings; Interpretation47Section 35. Costs of Enforcement48Section 36. Force Majeure48Section 37. USA PATRIOT Act48 -i-Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. TABLE OF CONTENTS(continued) PageExhibit AForm of Certificate of Designation of Rights, Preferences and Privileges of Series A Participating PreferredStockA-1Exhibit BForm of Rights CertificateB-1Exhibit CForm of Summary of RightsC-1 -ii-Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PREFERRED SHARES RIGHTS AGREEMENT This PREFERRED SHARES RIGHTS AGREEMENT (this “Agreement”), dated as of February 22, 2017, is by and between China Biologic Products,Inc., a Delaware corporation (the “Company”), and Securities Transfer Corporation, a Texas corporation, as rights agent (the “Rights Agent”). All capitalizedterms that are used in this Agreement shall have the respective meanings given thereto in Section 1. RECITALS WHEREAS, on January 8, 2015, the Company and the Rights Agent entered into that certain preferred shares rights agreement (the “2015Agreement”), which expired on January 8, 2017; WHEREAS, the Board of Directors of the Company (the “Board”) desires to adopt a new preferred shares rights agreement with substantially thesame terms as in the 2015 Agreement; WHEREAS, on February 22, 2017 (the “Rights Dividend Declaration Date”), the Board adopted this Agreement and authorized and declared adividend of one preferred share purchase right (each, a “Right,” and collectively, the “Rights”) for each Common Share outstanding as of the Close ofBusiness on March 6, 2017 (the “Record Date”), each Right initially representing the right to purchase one one-thousandth of a Preferred Share (as suchnumber may be adjusted pursuant to the provisions of this Agreement) and having the rights, preferences and privileges set forth in the Certificate ofDesignation of Rights, Preferences and Privileges of Series A Participating Preferred Stock, which was duly executed by the Company and filed with theSecretary of State of the State of Delaware on November 20, 2012, and a copy of which is attached hereto as Exhibit A, upon the terms and subject to theconditions set forth herein; and WHEREAS, the Board further authorized and directed the issuance of one Right (as such number may be adjusted pursuant to the provisions of thisAgreement) with respect to each Common Share that becomes outstanding (whether as an original issuance or from the Company’s treasury) between theRecord Date and the earlier of the (a) Distribution Date and (b) Expiration Date, and in certain circumstances after the Distribution Date. AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: (a) “2015 Agreement” has the meaning set forth in the recitals at the beginning of this Agreement. (b) “Acquiring Person” means any Person who or that, together with all Affiliates and Associates of such Person, is the BeneficialOwner of the Triggering Percentage or more of the Common Shares then outstanding, but shall not include (i) any Exempt Person or (ii) any GrandfatheredPerson unless and until such time as such Person shall become the Beneficial Owner of additional Common Shares representing two percent (2%) or more ofthe Common Shares then outstanding in addition to the Common Shares Beneficially Owned by such Grandfathered Person as of the Rights DividendDeclaration Date (the “Grandfathered Common Shares”) without the prior written approval of the Board. For the avoidance of doubt, in no event shall aGrandfathered Person be deemed as an Acquiring Person if and to the extent such Grandfathered Person becomes the Beneficial Owner of additional CommonShares in addition to its Grandfathered Common Shares with prior written approval of the Board. -1- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Notwithstanding the foregoing, no Person will be deemed to be an Acquiring Person as the result of an acquisition of Common Shares by an Exempt Personthat, by reducing the number of Common Shares then outstanding, increases the proportionate number of Common Shares that are Beneficially Owned bysuch Person to the Triggering Percentage or more of the Common Shares then outstanding; provided, however, that if a Person becomes the Beneficial Ownerof the Triggering Percentage or more of the Common Shares then outstanding solely as the result of a reduction in the number of Common Shares thenoutstanding due to an acquisition of Common Shares by an Exempt Person and, after such acquisition by such Exempt Person, becomes the Beneficial Ownerof one or more additional Common Shares (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding CommonShares in Common Shares or pursuant to a split or subdivision of the outstanding Common Shares), then such Person will be deemed to be an AcquiringPerson unless, upon becoming the Beneficial Owner of such additional Common Shares, such Person does not Beneficially Own the Triggering Percentage ormore of the Common Shares then outstanding. Notwithstanding the foregoing, if the Board determines in good faith that a Person who would otherwise be anAcquiring Person has become such inadvertently (including because (A) such Person was unaware that it Beneficially Owned a percentage of the CommonShares that would otherwise cause such Person to be an Acquiring Person or (B) such Person was aware of the extent of the Common Shares that itBeneficially Owned but had no actual knowledge of the consequences of such Beneficial Ownership pursuant to this Agreement) and without any intentionof changing or influencing control of the Company, and if such Person divested or divests (including by entering into an agreement with the Company,which agreement is satisfactory to the Board in its sole discretion, to divest and subsequently divests in accordance with the terms of such agreement, withoutexercising or retaining any power, including voting power, with respect to such Common Shares) as promptly as practicable a sufficient number of CommonShares so that such Person would no longer be an Acquiring Person, then such Person will not be deemed to be or to have become an Acquiring Person at anytime for any purposes of this Agreement. For all purposes of this Agreement, any calculation of the number of Common Shares outstanding at any particular time, including for purposes ofdetermining the particular percentage of the outstanding Common Shares of which any Person is the Beneficial Owner, will include the number of CommonShares not outstanding at the time of such calculation that such Person is otherwise deemed to Beneficially Own for purposes of this Agreement, but thenumber of Common Shares not outstanding that such Person, together with all Affiliates and Associates of such Person, is otherwise deemed to BeneficiallyOwn for purposes of this Agreement will not be deemed to be outstanding for the purpose of computing the percentage of outstanding Common Sharesowned by any other Person. -2- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (c) “Adjustment Shares” has the meaning set forth in Section 11(a)(ii). (d) “Affiliate” and “Associate” have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules andRegulations promulgated under the Exchange Act, as in effect on the Rights Dividend Declaration Date. (e) “Agreement” has the meaning set forth in the preamble hereto. (f) A Person will be deemed the “Beneficial Owner” of, and will be deemed to “Beneficially Own,” any securities: (i) that such Person or any of such Person’s Affiliates or Associates, directly or indirectly, owns or has the legal,equitable or contractual right or obligation to acquire (whether directly or indirectly and whether exercisable immediately or only after the passage of time,compliance with regulatory requirements, satisfaction of one or more conditions (whether or not within the control of such Person) or otherwise) (A) pursuantto any agreement, arrangement or understanding whether or not in writing (other than customary agreements with and between underwriters and selling groupmembers with respect to a bona fide public offering of securities); (B) upon the exercise of any conversion rights, exchange rights, rights (other than theRights), warrants or options, or otherwise; (C) pursuant to the power to revoke a trust, discretionary account or similar arrangement; (D) pursuant to the powerto terminate a repurchase or similar so-called “stock borrowing” agreement, arrangement or understanding; or (E) pursuant to the automatic termination of atrust, discretionary account or similar arrangement; provided, however, that a Person will not be deemed pursuant to this Section 1(e)(i) to be the BeneficialOwner of, or to Beneficially Own, securities (1) tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’sAffiliates or Associates until such tendered securities are accepted for purchase or exchange; (2) issuable upon the exercise of Rights at any time prior to theoccurrence of a Triggering Event; (3) issuable upon the exercise of Rights from and after the occurrence of a Triggering Event if such Rights were acquired bysuch Person or any of such Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22 (the “Original Rights”) orpursuant to Section 11(h) in connection with an adjustment made with respect to any Original Rights; or (4) that a Person or any of such Person’s Affiliates orAssociates may be deemed to have the right to acquire pursuant to any merger or other acquisition agreement between the Company and such Person (or oneor more of its Affiliates or Associates), or any tender, voting or support agreement entered into by such Person (or one or more of its Affiliates or Associates) inconnection therewith, if such agreement has been approved by the Board prior to there being an Acquiring Person; (ii) that such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote(including the power to vote or to direct the voting of) or dispose (or direct the disposition) of or has “beneficial ownership” of (as determined pursuant toRule 13d-3 of the General Rules and Regulations promulgated under the Exchange Act, as in effect on the Rights Dividend Declaration Date), includingpursuant to any agreement, arrangement or understanding whether or not in writing; provided, however, that a Person will not be deemed the BeneficialOwner of, or to Beneficially Own, any security pursuant to this Section 1(e)(ii) as a result of an agreement, arrangement or understanding whether or not inwriting to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy or consent given to such Person inresponse to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulationspromulgated under the Exchange Act; and (B) is not also then reportable by such Person on Schedule 13D pursuant to the Exchange Act (or any comparableor successor report); -3- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (iii) that are Beneficially Owned, directly or indirectly, by any other Person (or any of such Person’s Affiliates orAssociates) with which such first Person (or any of such first Person’s Affiliates or Associates) has any agreement, arrangement or understanding whether ornot in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering ofsecurities) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy to the extent contemplated by the proviso to Section 1(e)(ii))or disposing of any securities of the Company; provided, however, that no person who is an officer, director or employee of an Exempt Person will bedeemed, solely by reason of such person’s status or authority as such, to be a Beneficial Owner of, to have Beneficial Ownership of or to Beneficially Ownany securities of the Company that are Beneficially Owned (including in a fiduciary capacity) by an Exempt Person or by any other such officer, director oremployee of an Exempt Person; or (iv) that are the subject of a derivative transaction entered into by such Person or any of such Person’s Affiliates orAssociates, including, for these purposes, any derivative security acquired by such Person or any of such Person’s Affiliates or Associates that gives suchPerson or any of such Person’s Affiliates or Associates the economic equivalent of ownership of an amount of securities due to the fact that the value of thederivative security is explicitly determined by reference to the price or value of such securities, or that provides such Person or any of such Person’s Affiliatesor Associates an opportunity, directly or indirectly, to profit or to share in any profit derived from any change in the value of such securities, in any casewithout regard to whether (A) such derivative security conveys any voting rights in such securities to such Person or any of such Person’s Affiliates orAssociates; (B) the derivative security is required to be, or capable of being, settled through delivery of such securities; or (C) such Person or any of suchPerson’s Affiliates or Associates may have entered into other transactions that hedge the economic effect of such derivative security. In determining thenumber of Common Shares that are Beneficially Owned by virtue of the operation of this Section 1(e)(iv), the subject Person will be deemed to BeneficiallyOwn (without duplication) the notional or other number of Common Shares that, pursuant to the documentation evidencing the derivative security, may beacquired upon the exercise or settlement of the applicable security or as the basis upon which the value or settlement amount of such security, or theopportunity of the holder of such derivative security to profit or share in any profit, is to be calculated, in whole or in part, and in any case (or if no suchnumber of Common Shares is specified in such documentation or otherwise) as determined by the Board in good faith to be the number of Common Shares towhich the derivative security relates. -4- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (g) “Board” has the meaning set forth in the recitals at the beginning of this Agreement. (h) “Book Entry Shares” has the meaning set forth in Section 3(a). (i) “Business Day” means any day other than a Saturday, Sunday or any day on which the Federal Reserve Bank of New York isclosed. (j) “Close of Business” on any given date means 5:00 p.m., New York City time, on such date; provided, however, that if such dateis not a Business Day, it means 5:00 p.m., New York City time, on the next succeeding Business Day. (k) “Common Shares” means, unless otherwise specified, the shares of common stock, par value $0.0001 per share, of theCompany. When used with reference to any Person other than the Company, Common Shares means the capital stock with the greatest voting power, or theequity securities or other equity interest having power to control or direct the management, of such Person or, if such Person is a Subsidiary of another Person,of the Person that ultimately controls such first-mentioned Person. (l) “Common Share Equivalents” has the meaning set forth in Section 11(a)(iii). (m) “Company” has the meaning set forth in the preamble hereto, subject to the terms of Section 13(a). (n) “Current Per Share Market Price” of any security (a “Security” for purposes of this definition), for all computations other thanthose made pursuant to Section 11(a)(iii), means the average of the daily closing prices per share of such Security for the 30 consecutive Trading Daysimmediately prior to but not including such date, and for purposes of computations made pursuant to Section 11(a)(iii), the Current Per Share Market Price ofany Security on any date will be deemed to be the average of the daily closing prices per share of such Security for the 10 consecutive Trading Daysimmediately following but not including such date; provided, however, that in the event that the Current Per Share Market Price of the Security is determinedduring any period following the announcement by the issuer of such Security of (i) a dividend or distribution on such Security payable in shares of suchSecurity or securities convertible into such shares (other than the Rights), or (ii) any subdivision, combination, consolidation, reverse stock split orreclassification of such Security, and the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination,consolidation, reverse stock split or reclassification, has not occurred prior to the commencement of the requisite 30 Trading Day or 10 Trading Day period asset forth above, then, and in each such case, the Current Per Share Market Price will be appropriately adjusted to take into account ex-dividend trading. Theclosing price for each day will be the last sale price, regular way, reported at or prior to 4:00 p.m., New York City time, or, if no such sale takes place on suchday, the average of the bid and asked prices, regular way, reported as of 4:00 p.m. New York City time, in either case as reported in the principal consolidatedtransaction reporting system with respect to securities listed or admitted to trading on NASDAQ or, if the Security is not listed or admitted to trading onNASDAQ, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchangeon which the Security is listed or admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange, the last quotedprice reported at or prior to 4:00 p.m., New York City time, or, if on such date the Security is not so quoted, the average of the high bid and low asked pricesin the over-the-counter market, as reported as of 4:00 p.m., New York City time, by NASDAQ or such other system then in use, or, if on any such date theSecurity is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a marketin the Security selected by the Board. If on any such date no market maker is making a market in the Security, the fair value of such shares on such date asdetermined in good faith by the Board will be used, which determination will be described in a statement filed with the Rights Agent and will be conclusiveand binding on the Rights Agent and the holders of the Rights. If the Current Per Share Market Price of the Preferred Shares cannot be determined in themanner provided above or if the Preferred Shares are not publicly held or not listed or traded in a manner described above, then the Current Per Share MarketPrice of the Preferred Shares will be conclusively deemed to be (x) the Current Per Share Market Price of the Common Shares as determined pursuant to thisSection 1(m) multiplied by (y) 1,000 (as such number may be appropriately adjusted to reflect any subdivision, combination, consolidation, reverse stocksplit or reclassification of Common Shares occurring after the Rights Dividend Declaration Date). If the Security (other than the Preferred Shares) is notpublicly held or not so listed or traded, or if on any such date the Security is not so quoted and no such market maker is making a market in the Security, thenthe Current Per Share Market Price means the fair value per share as determined in good faith by the Board, after consultation with a nationally recognizedinvestment banking firm, whose determination will be described in a statement filed with the Rights Agent and will be conclusive and binding on the RightsAgent and the holders of the Rights. -5- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (o) “Current Exchange Value” means the product of the Current Per Share Market Price of Common Shares on the date of theoccurrence of an Exchange Determination (or the next Business Day, if such date is not a Business Day) multiplied by the number of Common Shares forwhich the Right would otherwise be exchangeable (without regard to whether there were sufficient Common Shares available therefor). (p) “Current Value” means the value of the Adjustment Shares issuable upon the exercise of a Right. (q) “Distribution Date” means the earlier of (i) the Close of Business on the 10th Business Day (or such later date as may bedetermined by action of the Board, which action must be taken prior to the Distribution Date that otherwise would have occurred) after the Shares AcquisitionDate (or, if the 10th Business Day after the Shares Acquisition Date occurs before the Record Date, then the Record Date); or (ii) the Close of Business on the10th Business Day (or such later date as may be determined by the Board) after the date that a tender or exchange offer by any Person (other than an ExemptPerson) is first published, sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations promulgated under the Exchange Act if,assuming the successful consummation thereof, such Person would be an Acquiring Person; provided, however, that if any tender or exchange offer referred toin clause (ii) of this Section 1(p) is cancelled, terminated or otherwise withdrawn prior to the Distribution Date without the purchase or exchange of anyCommon Shares pursuant thereto, then such offer will be deemed, for purposes of this paragraph, never to have been made. -6- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (r) “Equivalent Shares” means any class or series of capital stock of the Company having the same rights, privileges andpreferences as the Preferred Shares. (s) “Exchange Act” means the Securities Exchange Act of 1934, as amended. (t) “Exchange Determination” has the meaning set forth in Section 24(a). (u) “Exchange Ratio” has the meaning set forth in Section 24(a). (v) “Exempt Person” means (i) the Company or any Subsidiary of the Company, in each case including the officers and members ofthe board of directors thereof acting in their fiduciary capacities; (ii) any employee benefit plan of the Company or of any Subsidiary of the Company or anyentity or trustee holding (or acting in a fiduciary capacity in respect of) shares of capital stock of the Company for or pursuant to the terms of any such plan,or for the purpose of funding other employee benefits for employees of the Company or any Subsidiary of the Company; or (iii) any Person who or which theBoard determines, prior to the time such Person would otherwise be an Acquiring Person, should be exempted from the definition of Acquiring Person;provided, however, that the Board may make such exemption subject to such conditions, if any, as the Board may determine. (w) “Exercise Price” has the meaning set forth in Section 4(a). (x) “Expiration Date” means the earliest to occur of (i) the Close of Business on the Final Expiration Date; (ii) the RedemptionDate; or (iii) the time at which the Board orders the exchange of the Rights as provided in Section 24. (y) “Final Expiration Date” means the two year anniversary date of the date of this Agreement. (z) “Grandfathered Person” shall mean any Person who or which, together with all Affiliates and Associates of such Person, is, asof the Rights Dividend Declaration Date, the Beneficial Owner of the Trigger Percentage or more of the Common Shares then outstanding. (aa) “NASDAQ” means The NASDAQ Stock Market LLC. (bb) “Original Rights” has the meaning set forth in Section 1(e)(i). (cc) “Person” means any individual, firm, corporation, partnership, limited liability company, joint venture, business trust, trust,association, syndicate, group (as such term is used in Rule 13d-5 of the General Rules and Regulations promulgated under the Exchange Act, as in effect onthe Rights Dividend Declaration Date) or other entity, and, in each case, will include any successor (by merger or otherwise) of any such Person. (dd) “Post-Event Transferee” has the meaning set forth in Section 7(e). -7- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (ee) “Pre-Event Transferee” has the meaning set forth in Section 7(e). (ff) “Preferred Shares” means shares of Series A Participating Preferred Stock, par value $0.0001 per share, of the Company and, tothe extent that there are not a sufficient number of shares of Preferred Shares authorized to permit the full exercise of the Rights, any other series of preferredstock of the Company designated for such purpose containing terms substantially similar to the terms of the Preferred Shares. (gg) “Principal Party” has the meaning set forth in Section 13(b). (hh) “Record Date” has the meaning set forth in the recitals at the beginning of this Agreement. (ii) “Redemption Date” has the meaning set forth in Section 23(a). (jj) “Redemption Price” has the meaning set forth in Section 23(a). (kk) “Right” or “Rights” has the meaning set forth in the recitals at the beginning of this Agreement. (ll) “Rights Agent” has the meaning set forth in the preamble hereto. (mm) “Rights Certificate” means a certificate substantially in the form attached hereto as Exhibit B. (nn) “Rights Dividend Declaration Date” has the meaning set forth in the recitals at the beginning of this Agreement. (oo) “Section 11(a)(ii) Event” means any event described in Section 11(a)(ii). (pp) “Section 11(a)(ii) Trigger Date” has the meaning set forth in Section 11(a)(iii). (qq) “Section 13 Event” means any event described in clause (i), (ii) or (iii) of Section 13(a). (rr) “Securities Act” means the Securities Act of 1933, as amended. (ss) “Security” has the meaning set forth in Section 1(m). (tt) “Shares Acquisition Date” means the first date of public announcement (which, for purposes of this definition, includes thefiling or amending of a report pursuant to Section 13(d) of the Exchange Act or pursuant to a comparable successor statute) by the Company or an AcquiringPerson that an Acquiring Person has become such or that discloses information that reveals the existence of an Acquiring Person. (uu) “Spread” means the excess of (i) the Current Value over (ii) the Exercise Price. -8- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (vv) “Subsequent Transferee” has the meaning set forth in Section 7(e). (ww) “Subsidiary” of any Person means any firm, corporation, partnership, limited liability company, joint venture, business trust, trust,association, syndicate or other entity (whether or not incorporated) of which an amount of voting securities sufficient to elect a majority of the directors orPersons having similar authority, or a majority of the equity or ownership interests, is Beneficially Owned, directly or indirectly, by such Person, or any firm,corporation, partnership, limited liability company, joint venture, business trust, trust, association, syndicate or other entity (whether or not incorporated)otherwise controlled by such Person. (xx) “Substitution Period” has the meaning set forth in Section 11(a)(iii). (yy) “Summary of Rights” means a summary of this Agreement substantially in the form attached hereto as Exhibit C. (zz) “Trading Day” means a day on which the principal national securities exchange on which a referenced security is listed oradmitted to trading is open for the transaction of business or, if a referenced security is not listed or admitted to trading on any national securities exchange, aBusiness Day. (aaa) “Triggering Event” means any Section 11(a)(ii) Event or Section 13 Event. (bbb) “Trigger Percentage” means fifteen percent (15%) of the Common Shares then outstanding. (ccc) “Trust” has the meaning set forth in Section 24(b)(ii). (ddd) “Trust Agreement” has the meaning set forth in Section 24(b)(ii). Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as rights agent for the Company in accordance withthe terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-rights agentsas it may deem necessary or desirable upon 10 days’ prior written notice to the Rights Agent. If the Company appoints one or more co-rights agents, then therespective duties of the Rights Agent and such co-rights agents will be as the Company determines. The Rights Agent will have no duty to supervise, and willin no event be liable for the acts or omissions of, any co-rights agent. Section 3. Issuance of Rights Certificates. (a) Rights Evidenced by Certificates for Common Shares and Book Entry Shares. Until the Distribution Date, (i) the Rights (unlessearlier expired, redeemed or terminated) will be evidenced (subject to the provisions of Section 3(b) and Section 3(c)) by the certificates for Common Sharesregistered in the names of the holders thereof or, in the case of uncertificated Common Shares registered in book entry form (“Book Entry Shares”), bynotation in book entry accounts reflecting the ownership of such Common Shares (which certificates and Book Entry Shares, as applicable, will also bedeemed to be Rights Certificates) and not by separate Rights Certificates; and (ii) the Rights (and the right to receive Rights Certificates) will be transferableonly in connection with the transfer of the underlying Common Shares (including a transfer to the Company). As soon as practicable after the DistributionDate, the Company will prepare and execute, the Rights Agent will countersign and the Company will send or cause to be sent (and the Rights Agent will, ifrequested, send) (by mailing, in accordance with Section 26 or by such means as may be selected by the Company) to each record holder of Common Sharesas of the Close of Business on the Distribution Date (other than any Acquiring Person or any of its Affiliates or Associates), at the address of such holdershown on the transfer books of the Company or the transfer agent for the Common Shares, one or more Rights Certificates evidencing one Right for eachCommon Share so held, subject to adjustment as provided herein. Receipt of a Rights Certificate by any Person will not preclude a later determination that allor part of the Rights represented thereby are null and void pursuant to Section 7(e). To the extent that a Section 11(a)(ii) Event has also occurred, theCompany may implement such procedures as it deems appropriate in its sole discretion to minimize the possibility that Rights are received by any Personwhose Rights are null and void pursuant to Section 7(e). In the event that an adjustment in the number of Rights per Common Share has been made pursuantto Section 11, then at the time of distribution of the Rights Certificates, the Company will make the necessary and appropriate rounding adjustments (inaccordance with Section 14(a)) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractionalRights (in accordance with Section 14(a)). As of and after the Distribution Date, the Rights will be evidenced solely by the Rights Certificates and may betransferred by the transfer of the Rights Certificates as permitted hereby, separately and apart from any transfer of Common Shares, and the holders of suchRights Certificates as shown on the transfer books of the Company or the transfer agent for the Rights (which may be the Rights Agent) will be the recordholders thereof. The Company will promptly notify the Rights Agent in writing upon the occurrence of the Distribution Date. Until such notice is provided tothe Rights Agent, it may presume conclusively that the Distribution Date has not occurred. -9- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (b) Summary of Rights; Outstanding Common Shares. The Company will make available, or cause to be made available, promptlyafter the Record Date, a copy of the Summary of Rights to any holder of Rights who may so request from time to time prior to the Expiration Date. Withrespect to certificates for Common Shares and Book Entry Shares, as applicable, outstanding as of the Record Date or issued subsequent to the Record Date,until the earlier of the Distribution Date or the Expiration Date, the Rights will be evidenced by such certificates or Book Entry Shares, and the registeredholders of the Common Shares will also be the registered holders of the associated Rights. Until the earlier of the Distribution Date or the Expiration Date, thesurrender for transfer of any Common Shares in respect of which Rights have been issued (with or without a copy of the Summary of Rights) will alsoconstitute the transfer of the Rights associated with such Common Shares. Notwithstanding anything to the contrary in this Agreement, upon theeffectiveness of a redemption pursuant to Section 23 or an exchange pursuant to Section 24, the Company will not thereafter issue any additional Rights and,for the avoidance of doubt, no Rights will be attached to or will be issued with any Common Shares (including any Common Shares issued pursuant to anexchange) at any time thereafter. -10- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (c) Legend. Rights will be issued in respect of all Common Shares that are issued (whether as an original issuance or from theCompany’s treasury) after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date. Certificates representing such CommonShares will also be deemed to be certificates for Rights, and will bear the following legend if such certificates are issued after the Record Date but prior to theearlier of the Distribution Date or the Expiration Date: THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN APREFERRED SHARES RIGHTS AGREEMENT, DATED AS OF FEBRUARY 22, 2017, BETWEEN CHINA BIOLOGIC PRODUCTS, INC.(THE “COMPANY”) AND SECURITIES TRANSFER CORPORATION, AS RIGHTS AGENT, AS THE SAME MAY BE AMENDED FROMTIME TO TIME (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCEAND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. UNDER CERTAINCIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS (AS DEFINED IN THE RIGHTS AGREEMENT)MAY BE REDEEMED, MAY BECOME EXERCISABLE FOR SECURITIES OR ASSETS OF THE COMPANY OR SECURITIES OFANOTHER ENTITY, MAY BE EXCHANGED FOR SHARES OF COMMON STOCK OR OTHER SECURITIES OR ASSETS OF THECOMPANY, MAY EXPIRE OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND MAY NO LONGER BE EVIDENCED BYTHIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENTWITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES AS SETFORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OWNED BY, TRANSFERRED TO OR HAVE BEEN OWNED BYAN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY OF ITS AFFILIATES (AS DEFINED IN THERIGHTS AGREEMENT) OR ASSOCIATES (AS DEFINED IN THE RIGHTS AGREEMENT) WILL BE NULL AND VOID ANDWILL NO LONGER BE TRANSFERRABLE. With respect to any Book Entry Shares, a legend in substantially similar form will be included in a notice to the record holder of such shares in accordancewith applicable law. With respect to such certificates for Common Shares or Book Entry Shares, as applicable, containing the foregoing legend, until theearlier of the Distribution Date or the Expiration Date, (i) the Rights associated with the Common Shares represented by such certificates or Book EntryShares will be evidenced solely by such certificates or Book Entry Shares, (ii) the registered holders of the Common Shares will also be the registered holdersof the associated Rights and (iii) the surrender for transfer of any such certificates or Book Entry Shares (with or without a copy of the Summary or Rights)will also constitute the transfer of the Rights associated with the Common Shares represented thereby. Notwithstanding this Section 3(c), the omission of thelegend required hereby, the inclusion of a legend that makes reference to a rights agreement other than this Agreement or the failure to provide notice thereofwill not affect the enforceability of any part of this Agreement or the rights of any holder of Rights. -11- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (d) Acquisitions of Rights by the Company. In the event that the Company purchases or acquires any Common Shares after theRecord Date but prior to the earlier of the Distribution Date or the Expiration Date, any Rights associated with such Common Shares will be deemedcancelled and retired so that the Company will not be entitled to exercise any Rights associated with the Common Shares that are no longer outstanding. Section 4. Form of Rights Certificates. (a) Rights Certificates. The Rights Certificates (and the form of election to purchase and form of assignment, including thecertifications therein, to be printed on the reverse thereof) will be substantially in the form of Exhibit B hereto, and may have such marks of identification ordesignation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate (but which do not affect the rights, duties,responsibilities and liabilities of the Rights Agent) and are not inconsistent with the provisions of this Agreement, or as may be required to comply with anyapplicable law or with any rule or regulation made pursuant thereto, with any applicable rule or regulation of any applicable stock exchange or tradingsystem or the Financial Industry Regulatory Authority, or to conform to usage. Subject to the provisions of Section 11 and Section 22, the Rights Certificates,whenever distributed, will be dated as of the Record Date (or in the case of Rights issued with respect to Common Shares issued by the Company after theRecord Date, as of the date of issuance of such Common Shares) and on their face will entitle the holders thereof to purchase such number of one one-thousandths of a Preferred Share as will be set forth therein at the price set forth therein (such exercise price per one one-thousandth of a Preferred Share, the“Exercise Price”), but the number and type of securities purchasable upon the exercise of each Right and the Exercise Price will be subject to adjustment asprovided herein. (b) Certain Legends. Any Rights Certificate issued pursuant to Section 3(a), Section 11(h) or Section 22 that represents Rights thatare Beneficially Owned by an Acquiring Person, an Affiliate or Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, aSubsequent Transferee or (v) any nominee of any of the foregoing, and any Rights Certificate issued pursuant to Section 6 or Section 11 upon transfer,exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, will contain (to the extent feasible) the following legend: -12- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WASOR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON. ACCORDINGLY, THISRIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCESSPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT. (c) Uncertificated Rights. Notwithstanding anything to the contrary in this Agreement, the Company and the Rights Agent mayamend this Agreement to provide for uncertificated Rights in addition to or in place of Rights evidenced by Rights Certificates. Section 5. Countersignature and Registration. (a) Countersignature. The Rights Certificates will be executed on behalf of the Company by its Chairman of the Board, its ChiefExecutive Officer or its Chief Financial Officer, which execution will be attested to by the Secretary of the Company, in each case either manually or byfacsimile signature, and will have affixed thereto the Company’s seal (if any) or a facsimile thereof. The Rights Certificates will be countersigned, eithermanually or by facsimile signature, by an authorized signatory of the Rights Agent, but it will not be necessary for the same signatory to countersign all ofthe Rights Certificates. No Rights Certificate will be valid for any purpose unless countersigned by the Rights Agent. If any director or officer of theCompany who has signed or attested to any of the Rights Certificates ceases to be such director or officer of the Company before countersignature by theRights Agent and issuance and delivery by the Company, such Rights Certificates nevertheless may be countersigned by the Rights Agent and issued anddelivered by the Company with the same force and effect as though the person who signed or attested to such Rights Certificates on behalf of the Companyhad not ceased to be a director or officer of the Company. Any Rights Certificate may be signed or attested to on behalf of the Company by any person who,as of the actual date of the execution of such Rights Certificate, is a proper director or officer of the Company to sign such Rights Certificate, although at thedate of the execution of this Agreement any such person was not such a director or officer. (b) Transfer Books. Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its office designated for suchpurposes, books for registration and transfer of the Rights Certificates issued hereunder. Such books will show the names and addresses of the respectiveholders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates, the certificate number of each of the RightsCertificates and the date of each of the Rights Certificates. The Rights Agent will not register, or permit to be registered, any transfer or exchange of anyRights Certificates (or the underlying Rights) that have become null and void pursuant to Section 7(e), have been redeemed pursuant to Section 23 or havebeen exchanged pursuant to Section 24. -13- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a) Transfer, Split Up, Combination and Exchange of Rights Certificates. Subject to the provisions of Section 4(b), Section 7(e),Section 14 and Section 24, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date,any Rights Certificate (other than any Rights Certificate representing Rights that have become null and void pursuant to Section 7(e) or that have beenexchanged pursuant to Section 24) may be transferred, split up, combined or exchanged for another Rights Certificate entitling the registered holder topurchase a like number of one one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets, as the case may be)as the Rights Certificate surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring totransfer, split up, combine or exchange any Rights Certificate will make such request in writing delivered to the Rights Agent, and will surrender the RightsCertificate to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purpose. Notwithstanding anything in thisAgreement to the contrary, neither the Rights Agent nor the Company will be obligated to take any action whatsoever with respect to the transfer of any suchsurrendered Rights Certificate until the registered holder has properly completed and duly executed the certificate contained in the form of assignment on thereverse side of such Rights Certificate and has provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) orAffiliates or Associates thereof, in each case as the Company or the Rights Agent reasonably requests. Thereupon, subject to Section 4(b), Section 7(e),Section 14 and Section 24, the Rights Agent will countersign (by manual or facsimile signature) and deliver to the Person entitled thereto a Rights Certificateas so requested. The Company or the Rights Agent may require payment from the holder of a Rights Certificate of a sum sufficient to cover any tax orgovernmental charge that may be imposed in connection with any transfer, split up, combination or exchange of any Rights Certificate. If and to the extentthat the Company does require payment of any such tax or charge, the Company will provide the Rights Agent prompt written notice thereof and the RightsAgent will not deliver any Right Certificate unless and until the Rights Agent is satisfied that all such payments have been made, and the Rights Agent willforward any such sum collected by it to the Company or to such Person as the Company specifies by written notice. The Rights Agent will not have any dutyor obligation to take any action pursuant to any Section of this Agreement related to the issuance or delivery of Rights Certificates unless and until it issatisfied that all such taxes or charges have been paid. (b) Mutilated, Destroyed, Lost or Stolen Rights Certificates. Subject to the provisions of Section 7(e), Section 11(a)(ii) andSection 24, at any time after the Distribution Date and prior to the Expiration Date, upon receipt by the Company and the Rights Agent of evidencereasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate and such additional evidence of the identity of theBeneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent may request, and, in case of loss, theftor destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expensesincidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will make and deliver a newRights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Rights Certificate so lost, stolen,destroyed or mutilated. Every new Rights Certificate issued pursuant to this Section 6(b) in lieu of any lost, stolen, destroyed or mutilated Rights Certificatewill evidence an original additional contractual obligation of the Company, whether or not the lost, stolen, destroyed or mutilated Rights Certificate will beat any time enforceable by anyone, and, subject to Section 7(e) will be entitled to all the benefits of this Agreement equally and proportionately with any andall other Rights duly issued hereunder. -14- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights. (a) Exercise of Rights. Subject to Section 7(e), Section 23(b) and Section 24(a), the registered holder of any Rights Certificate mayexercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part on any Business Day at or after the Distribution Date andprior to the Close of Business on the Expiration Date by surrender of the Rights Certificate, with the form of election to purchase and certificate on the reverseside thereof properly completed and duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together with paymentof the Exercise Price for each one one-thousandth of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets, as the case maybe) as to which the Rights are exercised. (b) Price. The Exercise Price for each one one-thousandth of a Preferred Share issuable pursuant to the exercise of a Right is initially$550.00 and is subject to adjustment from time to time as provided in Section 11 or Section 13, and is payable in accordance with Section 7(c). (c) Payment. Except as otherwise provided in this Agreement, upon receipt of a Rights Certificate representing exercisable Rights,with the form of election to purchase and certification properly completed and duly executed, accompanied by payment of the aggregate Exercise Price forthe total number of one one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets, as the case may be) to bepurchased and an amount equal to any applicable transfer tax or governmental charge required to be paid by the holder of such Rights Certificate inaccordance with Section 9(e), the Rights Agent will, subject to Section 7(f) and Section 20(k), thereupon promptly (i) (A) requisition from any transfer agentof the Preferred Shares (or make available, if the Rights Agent is the transfer agent for the Preferred Shares) a certificate for the total number of one one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets, as the case may be) to be purchased (or, in the case ofuncertificated shares or other securities, requisition from the transfer agent a notice setting forth such number of shares or other securities to be purchased forwhich registration will be made on the transfer books of the Company), and the Company hereby irrevocably authorizes its transfer agent to comply with allsuch requests, or (B) if the Company has elected to deposit the total number of one one-thousandths of a Preferred Share (or, following a Triggering Event,other securities, cash or other assets, as the case may be) issuable upon exercise of the Rights hereunder with a depositary agent, requisition from suchdepositary agent depositary receipts representing interests in such number of one one-thousandths of a Preferred Share (or, following a Triggering Event,other securities, cash or other assets, as the case may be) as are to be purchased (in which case certificates for the Preferred Shares (or, following a TriggeringEvent, other securities, cash or other assets, as the case may be) represented by such receipts will be deposited by the transfer agent with such depositaryagent) and the Company hereby irrevocably directs such depositary agent to comply with such request; (ii) when appropriate, requisition from the Companythe amount of cash, if any, to be paid in lieu of the issuance of fractional shares in accordance with Section 14; (iii) after receipt of such certificates, notices,or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or namesas may be designated by such holder; and (iv) when appropriate, after receipt thereof, deliver such cash to or upon the order of the registered holder of suchRights Certificate. The payment of the Exercise Price (as such amount may be reduced (including to zero) pursuant to Section 11(a)(iii)), and an amount equalto any applicable transfer tax or governmental charge required to be paid by the holder of such Rights Certificate in accordance with Section 9(e), may bemade by certified bank check, money order, cashier’s check or bank draft payable to the order of the Company. In the event that the Company is obligated toissue securities of the Company other than Preferred Shares, pay cash or distribute other property pursuant to Section 11(a), then the Company will make allarrangements necessary so that such other securities, cash or other property are available for distribution by the Rights Agent, if and when appropriate.Notwithstanding anything to the contrary in this Agreement, the Company reserves the right to require that prior to the occurrence of a Triggering Event,upon any exercise of Rights, a number of Rights be exercised so that only whole Preferred Shares would be issued. -15- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (d) Partial Exercise. If the registered holder of any Rights Certificate exercises less than all the Rights evidenced thereby, then anew Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised will be issued by the Rights Agent and delivered to or upon theorder of the registered holder of such Rights Certificate, registered in such name as may be designated by such holder, subject to the provisions of Section 14. (e) Prohibited Issuances. Notwithstanding anything to the contrary in this Agreement, from and after the first occurrence of aTriggering Event, any Rights that are or were acquired or Beneficially Owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring Person,(ii) a transferee of an Acquiring Person (or an Affiliate or Associate of an Acquiring Person) who becomes a transferee after the Acquiring Person becomessuch (a “Post-Event Transferee”), (iii) a transferee of an Acquiring Person (or an Affiliate or Associate of an Acquiring Person) who becomes a transfereeprior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration)from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuingagreement, arrangement or understanding whether or not in writing regarding the transferred Rights or (B) a transfer that the Board has determined is part of aplan, arrangement or understanding that has as a primary purpose or effect the avoidance of this Section 7(e) (a “Pre-Event Transferee”), (iv) any subsequenttransferee receiving transferred Rights from a Post-Event Transferee or a Pre-Event Transferee, either directly or through one or more intermediate transferees(a “Subsequent Transferee”), or (v) any nominee of any of the foregoing will, in each case, become null and void without any further action, and no holder(whether or not such holder is an Acquiring Person or an Affiliate or Associate of an Acquiring Person) of such Rights will have any rights whatsoever(including the right to exercise) with respect to such Rights or any Rights Certificates that formerly evidenced such Rights, whether pursuant to anyprovision of this Agreement or otherwise. From and after the first occurrence of a Triggering Event, no Rights Certificate will be issued pursuant to thisAgreement (including to an Acquiring Person, an Affiliate or Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, a SubsequentTransferee or any nominee of any of the foregoing) that represents one or more Rights that are or have become void pursuant to this Section 7(e) or withrespect to any Common Shares otherwise deemed to be Beneficially Owned by any of the foregoing, and any Rights Certificate delivered to the Rights Agentthat represents Rights that are or have become null and void pursuant to this Section 7(e) will be cancelled. The Company will use all reasonable efforts toensure that the provisions of this Section 7(e) and Section 4(b) are complied with, but neither the Company nor the Rights Agent will have any liability toany holder of Rights Certificates or to any other Person as a result of the Company’s failure to make any determinations with respect to an Acquiring Person,an Affiliate or Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any nominee of any of theforegoing. The Company will provide the Rights Agent with written notice of the identity of any such Acquiring Person, Affiliate or Associate of anAcquiring Person, Post-Event Transferee, Pre-Event Transferee, Subsequent Transferee or any nominee of any of the foregoing, and the Rights Agent may relyon such notice in carrying out its duties pursuant to this Agreement and will be deemed not to have any knowledge of the identity of any such Person unlessand until it has received such notice. -16- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (f) Information Concerning Ownership. Notwithstanding anything to the contrary in this Agreement, neither the Rights Agent northe Company is obligated to undertake any action with respect to a registered holder of Rights upon the occurrence of any purported exercise or transfer ofRights as set forth in this Section 7 unless such registered holder, in addition to having complied with the requirements of Section 7(a), has (i) properlycompleted and duly executed the certificate contained in the form of election to purchase or form of assignment, as applicable, set forth on the reverse side ofthe Rights Certificate surrendered for such exercise or assignment; and (ii) provided such additional evidence (including the identity of the Beneficial Owner(or former Beneficial Owner) thereof and of the Rights evidenced thereby, and the Affiliates or Associates of such Beneficial Owner or former BeneficialOwner) as the Company or the Rights Agent may reasonably request. If such registered holder does not comply with the foregoing requirements, then theCompany will be entitled to conclusively deem such Rights to be Beneficially Owned by an Acquiring Person (or an Affiliate or Associate of an AcquiringPerson, a Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any nominee of any of the foregoing, as applicable) and, accordingly,such Rights will be null and void and not exercisable or transferable. Section 8. Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of exercise, transfer, split up,combination, redemption or exchange will, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or incancelled form, or, if surrendered to the Rights Agent, will be cancelled by it, and no Rights Certificates will be issued in lieu thereof except as expresslypermitted by any of the provisions of this Agreement. The Company will deliver to the Rights Agent for cancellation and retirement, and the Rights Agentwill so cancel and retire, any Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. Subject to applicable law,the Rights Agent will maintain electronic or physical records of all Rights Certificates that have been cancelled or destroyed by the Rights Agent. The RightsAgent must maintain such electronic or physical records for the time period required by applicable law. The Rights Agent must deliver all cancelled RightsCertificates to the Company, or shall, at the written request of the Company, destroy, or cause to be destroyed, such cancelled Rights Certificates, and in suchcase must deliver a certificate evidencing the destruction thereof to the Company (or, at the Company’s option, appropriate copies of the electronic orphysical records relating to Rights Certificates so cancelled or destroyed by the Rights Agent). -17- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 9. Reservation and Availability of Preferred Shares. (a) Reservation. The Company covenants and agrees that it will use all reasonable efforts to cause to be reserved and kept availableout of its authorized and unissued Preferred Shares not reserved for another purpose (and, following the occurrence of a Triggering Event, out of itsauthorized and unissued Common Shares or other securities, or out of its authorized and issued shares held in treasury), the number of Preferred Shares (and,following the occurrence of a Triggering Event, Common Shares or other securities) that will be sufficient to permit the exercise in full of all outstandingRights. (b) Listing. So long as the Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares or other securities)issuable and deliverable upon the exercise of the Rights may be listed on any national securities exchange, then the Company must use all reasonable effortsto cause, from and after such time as the Rights become exercisable (but only to the extent that it is reasonably likely that the Rights will be exercised), allshares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. (c) Registration. The Company must use all reasonable efforts to (i) file, as soon as practicable following the earliest date after thefirst occurrence of a Section 11(a)(ii) Event in which the consideration to be delivered by the Company upon exercise of the Rights is described inSection 11(a)(ii) or Section 11(a)(iii), or as soon as is required by law following the Distribution Date, as the case may be, a registration statement pursuant tothe Securities Act with respect to the securities purchasable upon exercise of the Rights on an appropriate form; (ii) cause such registration statement tobecome effective as soon as practicable after such filing; and (iii) cause such registration statement to remain effective (with a prospectus at all times meetingthe requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities and (B) theExpiration Date. The Company may temporarily suspend, from time to time for a period not to exceed 120 days after the date set forth in clause (i) of the firstsentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective or inorder to prepare and file any supplement or amendment to such registration statement that the Board determines to be necessary pursuant to applicable law.Upon any such suspension, the Company will issue a public announcement stating, and notify the Rights Agent in writing, that the exercisability of theRights has been temporarily suspended, as well as issue a public announcement, and notify the Rights Agent in writing, at such time as the suspension is nolonger in effect. In addition, if the Company determines that a registration statement is required following the Distribution Date, then the Company maytemporarily suspend the exercisability of the Rights until such time as such registration statement has been declared effective. The Company will also takesuch action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various states in connection with theexercisability of the Rights, as well as any other applicable law, rule or regulation. Notwithstanding anything to the contrary in this Agreement, the Rightswill not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction has been obtained (and the exercise thereof is permittedpursuant to applicable law), or an exemption therefrom is available, and until a registration statement in respect thereof has been declared and remainseffective. -18- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (d) Valid Issuance. The Company covenants and agrees that it will take all such action as may be necessary to ensure that allPreferred Shares (and, following the occurrence of a Triggering Event, Common Shares or other securities of the Company) delivered upon exercise of Rightswill, at the time of delivery of the certificates for such securities (or registration on the transfer books of the Company or the transfer agent for such securities)(subject to payment of the Exercise Price, if any), be duly and validly authorized and issued and fully paid and nonassessable. (e) Taxes and Charges. The Company further covenants and agrees that it will pay when due and payable any and all transfer taxesand governmental charges that may be payable in respect of the original issuance or delivery of Rights Certificates (or any Preferred Share, Common Share orother security of the Company, as the case may be) upon the exercise or exchange of Rights. Notwithstanding the foregoing, the Company is not required to(i) pay any transfer tax or governmental charge that may be payable in respect of any transfer or delivery of Rights Certificates (or certificates or depositaryreceipts for Preferred Shares, Common Shares or other securities of the Company, as the case may be) in a name other than, or the issuance or delivery ofcertificates or depositary receipts for Preferred Shares, Common Shares or other securities of the Company, as the case may be, in a name other than, that of theregistered holder of the Rights Certificate evidencing Rights surrendered for exercise or exchange; or (ii) issue or deliver any certificates or depositaryreceipts for Preferred Shares, Common Shares or other securities of the Company, as the case may be, upon the exercise or exchange of any Rights until anysuch transfer tax or charge has been paid (any such transfer tax or charge being payable by the registered holder of such Rights Certificate at the time ofsurrender or exchange) or it has been established to the Company’s satisfaction that no such tax or charge is due. The foregoing also apply to any transfertaxes and governmental charges that may be payable in respect of any uncertificated Rights Certificates, shares or other securities. Section 10. Record Date for Securities Issued. Each Person in whose name any certificate for a number of one one-thousandths of a Preferred Share(or any other security of the Company, including Common Shares) is issued (or registration on the transfer books of the Company or the applicable transferagent is effected) upon the exercise or exchange of Rights will for all purposes be deemed to have become the holder of record of such fractional PreferredShare (or other security of the Company) represented thereby on, and such certificate will be dated (or registration on the transfer books of the Company orthe applicable transfer agent effected), the date on which the Rights Certificate evidencing such Rights was duly surrendered and payment of the applicableExercise Price, if any, together with any applicable transfer tax or governmental charge required to be paid by the holder of such Rights Certificate inaccordance with Section 9(e), was made; provided, however, that if the date of such surrender and payment is a date upon which the transfer books of theCompany (or the applicable transfer agent) are closed, then such Person will be deemed to have become the record holder of such fractional Preferred Shares(or other securities of the Company) on, and such certificate will be dated (or registration on the transfer books of the Company or the applicable transferagent effected), the next succeeding Business Day on which the transfer books of the Company (or the applicable transfer agent) are open. Prior to theexercise of the Rights evidenced thereby, the holder of a Rights Certificate is not entitled to any rights of a holder of Preferred Shares (or any other security ofthe Company) for which the Rights are exercisable, including the right to vote, to receive dividends or other distributions, or to exercise any preemptiverights, and is not be entitled to receive any notice of any proceedings of the Company, except as provided herein. -19- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights. The Exercise Price, the number and kind of shares orother property covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a) Certain Events. (i) Certain Adjustments to Preferred Shares. Notwithstanding anything to the contrary in this Agreement, in the eventthat the Company at any time after the Rights Dividend Declaration Date (A) declares a dividend on the Preferred Shares payable in Preferred Shares,(B) subdivides or splits the outstanding Preferred Shares, (C) combines or consolidates the outstanding Preferred Shares (by reverse stock split or otherwise)into a smaller number of Preferred Shares or (D) issues any shares of its capital stock in a reclassification of the Preferred Shares (including any suchreclassification in connection with a share exchange, consolidation or merger in which the Company is the continuing or surviving corporation), then, ineach such event, except as otherwise provided in this Section 11(a)(i) and Section 7(e), (1) the Exercise Price in effect at the time of the record date for suchdividend or of the effective date of such subdivision, split, combination, consolidation or reclassification, and the number and kind of Preferred Shares orcapital stock of the Company, as the case may be, issuable on such date, will be proportionately adjusted so that the holder of any Right exercised after suchtime will be entitled to receive, upon payment of the Exercise Price then in effect, the aggregate number and kind of Preferred Shares or securities of theCompany, as the case may be, that, if such Right had been exercised immediately prior to such date (and at a time when the Preferred Shares transfer books ofthe Company were open), such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, split,combination, consolidation or reclassification; provided, however, that in no event will the consideration to be paid upon the exercise of one Right be lessthan the aggregate par value of the shares of capital stock of the Company issuable upon the exercise of one Right. If an event occurs that would require anadjustment pursuant to both this Section 11(a)(i) and Section 11(a)(ii), then the adjustment provided for in this Section 11(a)(i) will be in addition to, and willbe made prior to, any adjustment required pursuant to Section 11(a)(ii). (ii) Exercise of Rights Following Certain Events. Subject to Section 23 and Section 24, in the event that any Person, atany time after the Rights Dividend Declaration Date, becomes an Acquiring Person, unless the event causing such Person to become an Acquiring Person is atransaction set forth in Section 13(a), then promptly following the occurrence of such event each holder of a Right, except as provided below and inSection 7(e), will thereafter have the right to receive for each Right, upon exercise thereof in accordance with the terms of this Agreement and payment of theExercise Price in effect immediately prior to the occurrence of such event, in lieu of a number of one one-thousandths of a Preferred Share, such number ofCommon Shares as equals the quotient obtained by dividing (A) the product obtained by multiplying (1) the Exercise Price in effect immediately prior to thefirst occurrence of such event by (2) the number of one one-thousandths of a Preferred Share for which a Right was exercisable (or would have beenexercisable if the Distribution Date had occurred) immediately prior to the first occurrence of such event by (B) 50% of the Current Per Share Market Price forCommon Shares on the date of such first occurrence of such event (such number of shares, the “Adjustment Shares”); provided, however, that the ExercisePrice and the number of Common Shares so receivable upon the exercise of a Right will be subject to further adjustment as appropriate in accordance withSection 11(e). In the event that a Section 11(a)(ii) Event has occurred and the Rights are outstanding, then, subject to Section 27, the Company may not takeany action that would eliminate or diminish the benefits intended to be afforded by the Rights. The Company will promptly notify the Rights Agent inwriting when this Section 11(a)(ii) applies. -20- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (iii) Insufficient Common Shares. In the event that the number of Common Shares that are authorized by the Company’sAmended and Restated Certificate of Incorporation, as amended, but not outstanding or reserved for issuance for purposes other than upon exercise of theRights are not sufficient to permit the exercise in full of the Rights in accordance with Section 11(a)(ii), or if any necessary regulatory or stockholderapproval for such issuance has not been obtained by the Company, then, in the event that the Rights become exercisable, the Company will (A) determine theSpread and (B) with respect to each Right (subject to Section 7(e)), make adequate provision to substitute for the Adjustment Shares issuable pursuantthereto, upon the exercise of a Right and the payment of the applicable Exercise Price, (1) cash, (2) a reduction in the Exercise Price, (3) Preferred Shares,(4) other equity securities of the Company (including shares or units of shares of any series of preferred stock that, by virtue of having dividend, voting andliquidation rights substantially comparable to those of the Common Shares, the Board has deemed in good faith to have substantially the same value oreconomic rights as the Common Shares (such shares or units of shares of preferred stock, “Common Share Equivalents”)), (5) debt securities of the Company,(6) other assets or (7) any combination of the foregoing, in each case having an aggregate value equal to the Current Value (less the amount of any reductionin the Exercise Price), where such aggregate value has been determined by the Board based upon the advice of a nationally recognized investment bankingfirm selected by the Board, which determination will be described in a written statement filed with the Rights Agent and will be binding on the Rights Agentand the holders of the Rights; provided, however, that if the Company has not made adequate provision to deliver value pursuant to clause (B) above within30 days following the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of redemption pursuant toSection 23(a) expires (the later of (x) or (y), the “Section 11(a)(ii) Trigger Date”), then the Company will be obligated to deliver, upon the surrender forexercise of a Right and without requiring payment of the Exercise Price, Common Shares (to the extent available and except to the extent that the Companyhas not obtained any necessary stockholder or regulatory approval for such issuance) and such number or fractions of Preferred Shares and then, if necessary,cash, which shares or cash have an aggregate value equal to the Spread. If the Board determines in good faith that it is likely that sufficient additionalCommon Shares could be authorized for issuance upon exercise in full of the Rights or that any necessary stockholder or regulatory approval for suchissuance could be obtained, the 30 day period set forth above may be extended and re-extended to the extent necessary (with prompt written notice of anysuch extension provided to the Rights Agent) from time to time, but not more than 120 days after the Section 11(a)(ii) Trigger Date, so that the Company mayseek stockholder approval for the authorization of such additional Common Shares or take such action necessary to obtain such regulatory approval (suchperiod, as it may be extended, the “Substitution Period”). To the extent that the Company determines that some action need be taken pursuant to the first orsecond sentences of this Section 11(a)(iii), the Company (a) will provide, subject to Section 7(e), that such action applies uniformly to all outstanding Rightsand (b) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek such stockholder approval, to take anyaction necessary to obtain such regulatory approval or to decide the appropriate form of distribution to be made pursuant to such first sentence and todetermine the value thereof. In the event of any such suspension, the Company will issue a public announcement (and promptly provide written notice to theRights Agent) stating that the exercisability of the Rights has been temporarily suspended, as well as issue a public announcement (and promptly providewritten notice to the Rights Agent) at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the CommonShares will be the Current Per Share Market Price of the Common Shares on the Section 11(a)(ii) Trigger Date and the value of any Common Share Equivalentwill be deemed to have the same value as the Common Shares on such date. The Board may, but will not be required to, establish procedures to allocate theright to receive Common Shares upon the exercise of the Rights among holders of Rights pursuant to this Section 11(a)(iii). -21- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (b) Dilutive Rights Offering. If the Company, at any time after the Rights Dividend Declaration Date, fixes a record date for theissuance of rights, options or warrants to all holders of Preferred Shares entitling such holders (for a period expiring within 45 days after such record date) tosubscribe for or purchase Preferred Shares or Equivalent Shares, or securities convertible into Preferred Shares or Equivalent Shares, at a price per share (orhaving a conversion or exercise price per share, if a security that is convertible into or exercisable for Preferred Shares or Equivalent Shares) less than theCurrent Per Share Market Price of the Preferred Shares on such record date, then, in each such case, the Exercise Price to be in effect after such record date willbe determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number ofPreferred Shares and Equivalent Shares (if any) outstanding on such record date, plus the number of Preferred Shares or Equivalent Shares, as the case may be,that the aggregate offering price of the total number of Preferred Shares or Equivalent Shares, as the case may be, to be offered or issued (or the aggregateinitial conversion price of the convertible securities to be offered or issued) would purchase at such Current Per Share Market Price, and the denominator ofwhich shall be the number of Preferred Shares and Equivalent Shares (if any) outstanding on such record date, plus the number of additional Preferred Sharesor Equivalent Shares, as the case may be, to be offered for subscription or purchase (or into which the convertible securities so to be offered are initiallyconvertible); provided, however, that in no event will the consideration to be paid upon the exercise of one Right be less than the aggregate par value of theshares of capital stock of the Company issuable upon the exercise of one Right. If such subscription price may be paid in a consideration part or all of whichis in a form other than cash, then the value of such consideration will be as determined in good faith by the Board, whose determination will be described in astatement filed with the Rights Agent and will be binding on the Rights Agent and the holders of the Rights. Preferred Shares and Equivalent Shares ownedby or held for the account of the Company will not be deemed outstanding for the purpose of any such computation. Such adjustment will be madesuccessively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, then the Exercise Price will beadjusted to be the Exercise Price that would then be in effect if such record date had not been fixed. -22- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (c) Distributions. If the Company, at any time after the Rights Dividend Declaration Date, fixes a record date for the making of adistribution to all holders of Preferred Shares (including any such distribution made in connection with a share exchange, consolidation or merger in whichthe Company is the continuing or surviving corporation) of cash (other than a periodic cash dividend out of the earnings or retained earnings of theCompany), assets (other than a dividend payable in Preferred Shares, but including any dividend payable in stock other than Preferred Shares), evidences ofindebtedness, subscription rights, options or warrants (excluding those referred to in Section 11(b)), then, in each such case, the Exercise Price to be in effectafter such record date will be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator ofwhich will be the Current Per Share Market Price of a Preferred Share on such record date, less the fair market value per Preferred Share (as determined in goodfaith by the Board, whose determination will be described in a statement filed with the Rights Agent and will be conclusive and binding on the Rights Agentand the holders of the Rights) of the portion of the cash, assets or evidences of indebtedness to be so distributed or of such subscription rights, options orwarrants applicable to one Preferred Share, and the denominator of which shall be such Current Per Share Market Price of a Preferred Share on such recorddate; provided, however, that in no event will the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares ofcapital stock of the Company issuable upon the exercise of one Right. Such adjustment will be made successively whenever such a record date is fixed, andin the event that such distribution is not so made, then the Exercise Price will be adjusted to be the Exercise Price that would have been in effect if suchrecord date had not been fixed. (d) Insignificant Changes. Notwithstanding anything to the contrary in this Agreement, no adjustment in the Exercise Price isrequired unless such adjustment would require an increase or decrease of at least 1% of the Exercise Price; provided, however, that any adjustments that byreason of this Section 11(d) are not required to be made will be carried forward and taken into account in any subsequent adjustment. All calculationspursuant to this Section 11 must be made to the nearest cent or to the nearest ten-millionth of a Preferred Share or ten-thousandth of any other share orsecurity, as the case may be. Notwithstanding the first sentence of this Section 11(d), any adjustment required by this Section 11 must be made no later thanthe earlier of (i) two years from the date of the transaction that requires such adjustment or (ii) the Expiration Date. (e) Shares Other Than Preferred Shares. If as a result of an adjustment made pursuant to Section 11(a) or Section 13(a), the holderof any Right thereafter exercised will become entitled to receive any shares of capital stock other than Preferred Shares, then thereafter the number of suchother shares so receivable upon exercise of any Right and, if required, the Exercise Price thereof, will be subject to adjustment from time to time in a mannerand on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained in Section 11(a), Section 11(b), Section 11(c),Section 11(d), Section 11(g), Section 11(h), Section 11(i), Section 11(j), Section 11(k) and Section 11(l), and the provisions of Section 7, Section 9,Section 10 and Section 13 with respect to the Preferred Shares will apply on like terms to any such other shares. -23- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (f) Rights Issued Subsequent to Adjustment. All Rights originally issued by the Company subsequent to any adjustment made tothe Exercise Price hereunder will evidence the right to purchase, at the adjusted Exercise Price, the number of one one-thousandths of a Preferred Share (andother shares of other capital stock or other securities, assets or cash of the Company, if any) purchasable from time to time hereunder upon exercise of theRights, all subject to further adjustment as provided herein. (g) Effect of Adjustments on Existing Rights. Unless the Company has exercised its election as provided in Section 11(h), upon eachadjustment of the Exercise Price as a result of the calculations made in Section 11(b) and Section 11(c), each Right outstanding immediately prior to themaking of such adjustment will thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Preferred Shares (calculated to thenearest ten-millionth of a Preferred Share) obtained by (i) multiplying (A) the number of one one-thousandths of a Preferred Share covered by a Rightimmediately prior to this adjustment by (B) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price, and (ii) dividing theproduct so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price. (h) Adjustment in Number of Rights. The Company may elect on or after the date of any adjustment of the Exercise Price to adjustthe number of Rights, in substitution for any adjustment in the number of one one-thousandths of a Preferred Share purchasable upon the exercise of a Right.Each of the Rights outstanding after such adjustment of the number of Rights will be exercisable for the number of one one-thousandths of a Preferred Sharefor which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights willbecome that number of Rights (calculated to the nearest ten-thousandth) obtained by dividing the Exercise Price in effect immediately prior to adjustment ofthe Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price. The Company will make a public announcement (andpromptly provide written notice to the Rights Agent) of its election to adjust the number of Rights, indicating the record date for the adjustment and, ifknown at the time, the amount of the adjustment to be made. This record date may be the date on which the Exercise Price is adjusted or any day thereafter,but, if any Rights Certificates have been issued, will be at least 10 days later than the date of the public announcement. If any Rights Certificates have beenissued, upon each adjustment of the number of Rights pursuant to this Section 11(h), the Company will, as promptly as practicable, distribute or cause to bedistributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14, the additional Rights towhich such holders will be entitled as a result of such adjustment, or, at the option of the Company, will distribute or cause to be distributed to such holdersof record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, ifrequired by the Company, new Rights Certificates evidencing all the Rights to which such holders will be entitled after such adjustment. Rights Certificatesto be so distributed will be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjustedExercise Price) and will be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. -24- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (i) Rights Certificates Unchanged. Irrespective of any adjustment or change in the Exercise Price or the number of one one-thousandths of a Preferred Share issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express theExercise Price per one one-thousandth of a Preferred Share and the number of one one-thousandths of a Preferred Share that were expressed in the initialRights Certificates issued hereunder. (j) Par Value Limitations. Before taking any action that would cause an adjustment reducing the Exercise Price below the par orstated value, if any, of the number of one one-thousandths of a Preferred Share issuable upon exercise of the Rights, the Company will take any corporateaction that may, in the opinion of its counsel, be necessary in order that the Company may duly and validly issue as fully paid and nonassessable shares suchnumber of one one-thousandths of a Preferred Share at such adjusted Exercise Price. (k) Deferred Issuance. In any case in which this Section 11 requires that an adjustment in the Exercise Price be made effective as ofa record date for a specified event, the Company may elect to defer (with prompt written notice to the Rights Agent) until the occurrence of such event theissuance to the holder of any Right exercised after such record date of the number of one one-thousandths of a Preferred Share and other capital stock orsecurities, assets or cash of the Company, if any, issuable upon such exercise over and above the number of one one-thousandths of a Preferred Share andother capital stock or securities, assets or cash of the Company, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to suchadjustment; provided, however, that the Company must deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right toreceive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment. (l) Reduction in Exercise Price. Notwithstanding anything to the contrary in this Section 11, the Company is entitled to make suchreductions in the Exercise Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it, in its sole discretion,determines to be advisable in order that any (i) consolidation or subdivision of the Preferred Shares or Common Shares, (ii) issuance wholly for cash of anyPreferred Shares or Common Shares at less than the applicable Current Per Share Market Price, (iii) issuance wholly for cash of Preferred Shares or CommonShares or securities that by their terms are convertible into or exchangeable for Preferred Shares or Common Shares, (iv) stock dividend or (v) issuance ofrights, options or warrants referred to in this Section 11 hereafter made by the Company to holders of Preferred Shares or Common Shares is not be taxable tosuch stockholders. -25- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (m) No Diminishment of Benefit of Rights. The Company covenants and agrees that, after the Distribution Date, it will not, except aspermitted by Section 23, Section 24 or Section 27, take (or permit to be taken) any action if at the time that such action is taken it is reasonably foreseeablethat such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights. (n) Certain Adjustments to Common Shares. Notwithstanding anything to the contrary in this Agreement, in the event that theCompany, at any time after the Rights Dividend Declaration Date and prior to the Distribution Date, (i) declares or pays a dividend on the Common Sharespayable in Common Shares, (ii) subdivides or splits the outstanding Common Shares (other than by the payment of dividends payable in Common Shares),(iii) combines or consolidates the outstanding Common Shares (by reverse stock split or otherwise) into a lesser number of Common Shares or (iv) issues anyshares of its capital stock in a reclassification of the Common Shares (including any such reclassification in connection with a share exchange, consolidationor merger in which the Company is the continuing or surviving corporation), then, in each such event, except as otherwise provided in this Section 11 orSection 7(e): (A) each Common Share (or shares of capital stock issued in such reclassification of the Common Shares) outstanding immediately followingsuch time will have associated with it the number of Rights as were associated with one Common Share immediately prior to the occurrence of such event;(B) the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, split, combination, consolidationor reclassification will be adjusted so that the Exercise Price thereafter equals the result obtained by multiplying the Exercise Price in effect immediately priorto such time by a fraction, the numerator of which shall be the total number of Common Shares outstanding immediately prior to such event and thedenominator of which shall be the total number of Common Shares outstanding immediately after such event; provided, however, that in no event will theconsideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon theexercise of such Right; and (C) the number of one one-thousandths of a Preferred Share (or shares of such other capital stock) issuable upon the exercise ofeach Right outstanding after such event equals the number of one one-thousandths of a Preferred Share (or shares of such other capital stock) as were issuablewith respect to one Right immediately prior to such event. Each Common Share that becomes outstanding after an adjustment has been made pursuant to thisSection 11(n) will have issued with it that number of Rights, exercisable at the Exercise Price and for the number of one one-thousandths of a Preferred Share(or shares of such other capital stock), as one Common Share has associated with it immediately following the adjustment made pursuant to thisSection 11(n). If an event occurs that would require an adjustment pursuant to both this Section 11(n) and Section 11(a)(ii), then the adjustment provided forin this Section 11(n) will be in addition to, and will be made prior to, any adjustment required pursuant to Section 11(a)(ii). The adjustments provided for inthis Section 11(n) will be made successively whenever such a dividend is declared or paid or such a subdivision, split, combination, consolidation orreclassification is effected. (o) Adjustment of Rights Associated with Certain Distributions. Other than in connection with a transaction contemplated bySection 11(n), in the event that the Company, at any time after the Rights Dividend Declaration Date and prior to the Distribution Date, issues or distributesany securities or assets in respect of Common Shares (other than (A) a distribution or dividend of its capital stock and (B) pursuant to any non-extraordinaryperiodic cash dividend), then the Company will make such adjustments, if any, in the Exercise Price or the number of Rights or securities or other propertypurchasable upon exercise of Rights as the Board, in its sole discretion, may deem to be appropriate under the circumstances in order to adequately protectthe interests of the holders of the Rights generally, and the Company and the Rights Agent will amend this Agreement as necessary to provide for suchadjustments. -26- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 12. Certificate of Adjusted Exercise Price or Number of Shares. Whenever an adjustment is made, or any event affecting the Rights or theirexercisability (including an event that causes the Rights to become null and void) occurs as provided in Section 11 or Section 13, the Company mustpromptly (a) prepare a certificate setting forth such adjustment or describing such event and providing a brief statement of the facts and computationsaccounting for such adjustment or event; (b) provide the Rights Agent and each transfer agent for the Common Shares or Preferred Shares a copy of suchcertificate; and (c) if a Distribution Date has occurred, mail a brief summary of such adjustment or event to each holder of a Rights Certificate in accordancewith Section 25. Notwithstanding the foregoing, the failure of the Company to make or provide such certification or notice will not affect the validity of suchadjustment or the force or effect of the requirement for such adjustment. The Rights Agent will (i) be fully protected in relying on any such certificate and onany adjustment or statement contained therein; (ii) have no duty or liability with respect thereto; and (iii) not be deemed to have knowledge of any suchadjustment or event unless and until it has received such certificate. Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power. (a) Certain Transactions. In the event that, following a Shares Acquisition Date, directly or indirectly, (i) the Companyconsolidates with, or merges with and into, any other Person (other than a wholly owned Subsidiary of the Company in a transaction that complies withSection 11(m)) and the Company is not be the continuing or surviving corporation of such consolidation or merger, (ii) any Person (other than a whollyowned Subsidiary of the Company in a transaction that complies with Section 11(m)) consolidates with, or merges with and into, the Company, and theCompany is the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of theCommon Shares are changed into or exchanged for stock or other securities of any other Person or the Company, or cash or any other property, or (iii) theCompany sells, exchanges, mortgages or otherwise transfers (or one or more of its Subsidiaries sells, exchanges, mortgages or otherwise transfers), in onetransaction or a series of related transactions, assets, cash flow or earning power aggregating to 50% or more of the assets, cash flow or earning power of theCompany and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company or one or more of its wholly owned Subsidiaries inone or more transactions, each of which individually (and together) complies with Section 11(m)), then, concurrent with and in each such case, properprovision must be made so that (A) each holder of a Right (except as provided in Section 7(e)) thereafter has the right to receive, upon the exercise thereof at aprice per Right equal to the Exercise Price multiplied by the number of one one-thousandths of a Preferred Share for which a Right was exercisableimmediately prior to the occurrence of such Section 13 Event in accordance with the terms of this Agreement, and in lieu of Preferred Shares, such number ofduly and validly authorized and issued and fully paid and nonassessable and freely tradable Common Shares of the Principal Party, free of any liens,encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Exercise Price by thenumber of one one-thousandths of a Preferred Share for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if aSection 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of such one one-thousandths of a PreferredShare for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Exercise Price in effect immediately priorto such first occurrence of a Section 11(a)(ii) Event), and (2) dividing that product (which, following the first occurrence of a Section 13 Event, will bereferred to as the “Exercise Price” for each Right and for all purposes of this Agreement) by 50% of the Current Per Share Market Price of the Common Sharesof such Principal Party on the date of consummation of such Section 13 Event; provided, however, that the price per Right so payable and the number ofCommon Shares of such Principal Party so receivable upon exercise of a Right will be subject to further adjustment as appropriate in accordance withSection 11(e) to reflect any events covered thereby occurring in respect of the Common Shares of such Principal Party after the occurrence of such Section 13Event; (B) such Principal Party will thereafter be liable for, and must assume, by virtue of such Section 13 Event, all the obligations and duties of theCompany pursuant to this Agreement; (C) the term “Company” will thereafter be deemed to refer to such Principal Party, it being specifically intended thatthe provisions of Section 11 will apply only to such Principal Party following the first occurrence of a Section 13 Event; (D) such Principal Party must takesuch steps (including the reservation of a sufficient number of its Common Shares) in connection with the consummation of any such transaction as may benecessary to ensure that the provisions hereof will thereafter be applicable, as nearly as reasonably may be, in relation to its Common Shares thereafterdeliverable upon the exercise of the Rights; (E) the provisions of Section 11(a)(ii) will be of no effect following the first occurrence of any Section 13 Event;and (F) upon the subsequent occurrence of any consolidation, merger, sale, exchange, mortgage, transfer or other extraordinary transaction in respect of suchPrincipal Party, each holder of a Right will thereupon be entitled to receive, upon exercise of a Right and payment of the Exercise Price as provided in thisSection 13(a), such cash, shares, rights, warrants and other property that such holder would have been entitled to receive had such holder, at the time of suchtransaction, owned the Common Shares of the Principal Party receivable upon the exercise of a Right pursuant to this Section 13(a), and such Principal Partymust take such steps (including reservation of a sufficient number of shares of its capital stock) as may be necessary to permit the subsequent exercise of theRights in accordance with the terms hereof for such cash, shares, rights, warrants and other property. For purposes hereof, the “earning power” of the Companyand its Subsidiaries will be determined in good faith by the Board on the basis of the operating income of each business operated by the Company and itsSubsidiaries during the three fiscal years preceding the date of such determination (or, in the case of any business not operated by the Company or any of itsSubsidiaries during the three fiscal years preceding such date, during the period that such business was operated by the Company or any of its Subsidiaries). -27- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (b) Principal Party. For purposes of this Agreement, the term “Principal Party” means (i) in the case of any transaction described inclause (i) or (ii) of Section 13(a) (A) the Person that is the issuer of the securities into which the Common Shares are converted in the consolidation or merger,or, if there is more than one such issuer, the issuer whose Common Shares have the greatest aggregate market value of shares outstanding, or (B) if nosecurities are so issued, (1) the Person that is the other party to the consolidation or merger, if such Person survives the consolidation or merger, or, if there ismore than one such Person, the Person whose Common Shares have the greatest aggregate market value of shares outstanding, (2) if the Person that is theother party to the merger does not survive such consolidation or merger, the Person that does survive such consolidation or merger (including the Company ifit survives) or (3) the Person resulting from the consolidation or merger; and (ii) in the case of any transaction described in clause (iii) of Section 13(a), thePerson that is the party receiving the greatest portion of the assets, cash flow or earning power transferred pursuant to such transaction or transactions, or, ifmore than one Person that is a party to such transaction or transactions receives the same portion of the assets or earning power so transferred and each suchportion would, were it not for the other equal portions, constitute the greatest portion of the assets or earning power so transferred, or if the Person receivingthe greatest portion of the assets or earning power cannot be determined, whichever of such Persons is the issuer of Common Shares having the greatestaggregate market value of shares outstanding; provided, however, that in the case of each of clause (i) and (ii) of this Section 13(b), if the Common Shares ofsuch Person are not at such time, or have not been continuously over the preceding 12-month period, registered pursuant to Section 12 of the Exchange Act,then if such Person is (x) a direct or indirect Subsidiary of another Person whose Common Shares are and have been so registered, the term “Principal Party”will refer to such other Person, (y) a direct or indirect Subsidiary of more than one Person whose Common Shares are and have been so registered, the term“Principal Party” will refer to whichever of such Persons is the issuer of Common Shares having the greatest aggregate market value of shares outstanding, or(z) if such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the samePerson, the rules set forth in clauses (x) and (y) above will apply to each of the owners having an interest in the venture as if the Person owned by the jointventure was a Subsidiary of both or all of such joint venturers, and the Principal Party in each such case must bear the obligations set forth in this Section 13in the same ratio as its interest in such Person bears to the total of such interests. -28- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (c) Certain Arrangements. The Company will not consummate or permit to occur any Section 13 Event unless (A) the PrincipalParty has a sufficient number of authorized, unissued and unreserved Common Shares to permit the exercise in full of the Rights in accordance with thisSection 13 and (B) prior thereto the Company and the Principal Party have executed and delivered to the Rights Agent a supplemental agreement confirmingthat (1) the requirements of this Section 13 will be promptly performed in accordance with their terms, (2) the Principal Party will, upon consummation ofsuch Section 13 Event, assume this Agreement in accordance with Section 13(a) and Section 13(b), (3) such Section 13 Event will not result in a default bythe Principal Party pursuant to this Agreement (as it has been assumed by the Principal Party) and (4) the Principal Party, as soon as practicable after the dateof such Section 13 Event and at its own expense, will: (i) prepare and file a registration statement pursuant to the Securities Act with respect to the Rights and the securitiespurchasable upon exercise of the Rights on an appropriate form, and use its best efforts to cause such registration statement to (x) become effective as soon aspracticable after such filing and (y) remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date,and similarly comply with applicable state securities laws; -29- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (ii) use its best efforts to list (or continue the listing of) the Rights and the securities purchasable upon exercise of theRights on a national securities exchange or to meet the eligibility requirements for quotation on a national securities exchange and to list (and continue thelisting of) the Rights and the securities purchasable upon exercise of the Rights on a national securities exchange; (iii) deliver to holders of the Rights historical financial statements for the Principal Party and its Affiliates that complyin all respects with the requirements for registration on Form 10 (or any successor form) promulgated under the Exchange Act; and (iv) take all other action as may be necessary to allow the Principal Party to issue the securities purchasable uponexercise of the Rights. (d) Prohibited Transactions. (i) Notwithstanding anything to the contrary in this Agreement, if the Principal Party has a provision in any of itsauthorized securities or in its organizational documents that would have the effect of (i) causing the Principal Party to issue (other than to holders of Rightspursuant to Section 13), in connection with, or as a consequence of, the consummation of a Section 13 Event, Common Shares or common stock equivalentsof the Principal Party at less than the then Current Per Share Market Price thereof or securities exercisable for, or convertible into, Common Shares or commonstock equivalents of the Principal Party at less than such Current Per Share Market Price, or (ii) providing for any special payment, tax, charge or similarprovision in connection with the issuance of the Common Shares of the Principal Party pursuant to the provisions of this Section 13, then the Companyhereby agrees with each holder of Rights that it will not consummate any such Section 13 Event unless prior thereto the Company and such Principal Partyhave executed and delivered to the Rights Agent a supplemental agreement providing that such provision has been cancelled, waived, amended or rescinded,or that such authorized securities will be redeemed, so that such provision will have no effect in connection with, or as a consequence of, the consummationof such Section 13 Event. (ii) Notwithstanding anything to the contrary in this Agreement, the Company hereby agrees with each holder of Rightsthat it will not consummate or permit to occur any Section 13 Event if (A) at the time or immediately after such Section 13 Event there are any rights,warrants, instruments or securities outstanding, or any agreements or arrangements, that, as a result of the consummation of such Section 13 Event, wouldeliminate or diminish in any material respect the benefits intended to be afforded by the Rights; (B) all rights of first refusal or preemptive rights in respect ofthe issuance of Common Shares or common stock equivalents of the Principal Party upon exercise of outstanding Rights have not been irrevocably waived orrendered inapplicable; (C) prior to, simultaneously with or immediately after such Section 13 Event, the stockholders of the Person who constitutes, or wouldconstitute, the Principal Party have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates; or (D) the form ornature of organization of the Principal Party would preclude or limit the exercisability of the Rights. -30- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (e) Continued Applicability. The provisions of this Section 13 will similarly apply to successive mergers, consolidations, sales,exchanges, mortgages, transfers or other extraordinary transactions. In the event that a Section 13 Event occurs at any time after the occurrence of aSection 11(a)(ii) Event, then the Rights that have not theretofore been exercised will thereafter become exercisable in the manner described in Section 13(a)(without taking into account any prior adjustment required by Section 11(a)(ii)). Section 14. Fractional Rights and Fractional Shares. (a) Cash in Lieu of Fractional Rights. The Company will not be required to issue fractions of Rights (except prior to theDistribution Date as provided in Section 11(n)) or to distribute Rights Certificates that evidence fractional Rights. In lieu of such fractional Rights, theCompany will pay to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable an amount incash equal to the same fraction of the Current Per Share Market Price of a whole Right, calculated as of the Trading Day immediately prior to the date onwhich such fractional Rights would have been otherwise issuable. (b) Cash in Lieu of Fractional Preferred Shares. The Company will not be required to issue fractions of Preferred Shares (other thanfractions that are integral multiples of one one-thousandth of a Preferred Share) upon exercise or exchange of the Rights or to distribute certificates thatevidence fractional Preferred Shares (other than fractions that are integral multiples of one one-thousandth of a Preferred Share). Interests in fractions ofPreferred Shares in integral multiples of one one-thousandth of a Preferred Share may, at the election of the Company, be evidenced by depositary receiptspursuant to an appropriate agreement between the Company and a depositary selected by the Company; provided, however, that such agreement mustprovide that the holders of such depositary receipts have all of the rights, privileges and preferences to which they are entitled as Beneficial Owners of thePreferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one one-thousandth of aPreferred Share, the Company may pay to the registered holders of Rights Certificates at the time that such Rights are exercised or exchanged as providedherein an amount in cash equal to the same fraction of the current market value of one one-thousandth of a Preferred Share. For purposes of this Section 14(b),the current market value of one one-thousandth of a Preferred Share will be one one-thousandth of the Current Per Share Market Price of a Preferred Share,calculated as of the Trading Day immediately prior to the date of such exercise or exchange. (c) Cash in Lieu of Fractional Common Shares. The Company is not required to issue fractions of Common Shares or to distributecertificates that evidence fractional Common Shares upon the exercise or exchange of Rights. In lieu of such fractional Common Shares, the Company maypay to the registered holders of Rights Certificates at the time such Rights are exercised or exchanged as provided herein an amount in cash equal to the samefraction of the current market value of a Common Share. For purposes of this Section 14(c), the current market value of a Common Share will be the CurrentPer Share Market Price of a Common Share, calculated as of the Trading Day immediately prior to the date of such exercise or exchange. -31- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (d) Waiver of Fractional Rights. Except as permitted by this Section 14, the holder of a Right, by the acceptance of such Right,expressly waives such holder’s right to receive any fractional Rights or any fractional shares of any security upon the exercise or exchange of a Right. (e) Procedure for Payment. Whenever a payment for fractional Rights, Preferred Shares or Common Shares is to be made by theRights Agent pursuant to this Agreement, the Company will (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonabledetail the facts related to such payment and the prices or formulas utilized in calculating such payments; and (ii) provide sufficient monies to the RightsAgent to make such payments. The Rights Agent will be fully protected in relying upon such certificate and will have no duty with respect thereto, and willnot be deemed to have knowledge of any payment for fractional Rights, Preferred Shares or Common Shares pursuant to this Agreement unless and until theRights Agent has received such certificate and sufficient monies. Section 15. Rights of Action. All rights of action in respect of this Agreement, except those rights of action given to the Rights Agent pursuant toSection 18, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of CommonShares). Any registered holder of any Rights Certificate (or, prior to the Distribution Date, any registered holders of Common Shares), without the consent ofthe Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, any other holder of Common Shares), may, on suchholder’s own behalf and for such holder’s own benefit and the benefit of other holders of Rights, enforce, and may institute and maintain any suit, action orproceeding against the Company to enforce, this Agreement or otherwise act in respect of such holder’s right to exercise such holder’s Rights evidenced bysuch Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available tothe holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreementand will be entitled to specific performance of the obligations of any Person (including the Company) subject to this Agreement, and injunctive relief againstactual or threatened breaches or violations of this Agreement by any Person (including the Company), in each case without having to post a bond. Section 16. Agreement of Rights Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the RightsAgent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will not be evidenced by a Rights Certificate and will be transferable only inconnection with the transfer of the Common Shares; (b) after the Distribution Date, the Rights Certificates are transferable only on the transfer books of the Rights Agent if surrenderedat the office of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate formsand certificates fully completed; -32- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (c) subject to Section 6(a) and Section 7(f), the Company and the Rights Agent may deem and treat the Person in whose name theRights Certificate (or, prior to the Distribution Date, the associated certificate for Common Shares or Book Entry Shares, as applicable) is registered as theabsolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or theassociated certificate for Common Shares or Book Entry Shares, as applicable, made by anyone other than the Company or the Rights Agent) for all purposeswhatsoever, and neither the Company nor the Rights Agent (subject to Section 7(e)) will be affected by any notice to the contrary; (d) notwithstanding anything to the contrary in this Agreement, neither the Company nor the Rights Agent will have any liabilityto any holder of a Right (or a beneficial interest in a Right) or other Person as a result of the inability of the Company or the Rights Agent to perform any oftheir respective obligations pursuant to this Agreement by reason of any preliminary or permanent injunction or other order, judgment, decree or ruling(whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory, self-regulatory or administrative agency orcommission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restrainingperformance of such obligation; provided, however, that the Company will use all reasonable efforts to have any such injunction, order, judgment, decree orruling lifted or otherwise overturned as promptly as practicable; (e) Rights that are Beneficially Owned by certain Persons will, under the circumstances set forth in Section 7(e), become null andvoid; and (f) this Agreement may be supplemented or amended from time to time in accordance with Section 27. Section 17. Holders of Rights Certificate Not Deemed to be Stockholders. No holder, as such, of any Rights Certificate will be entitled to vote orreceive dividends or be deemed for any purpose to be the holder of the number of one one-thousandths of a Preferred Share or any other securities of theCompany that may at any time be issuable on the exercise or exchange of the Rights represented thereby, nor will anything contained herein or in any RightsCertificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote forthe election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or toreceive notice of meetings or other actions affecting stockholders (except as specifically provided in Section 25), or to receive dividends or subscriptionrights, or otherwise, until the Rights evidenced by such Rights Certificate have been exercised or exchanged in accordance with the provisions hereof. Section 18. Concerning the Rights Agent. (a) Compensation; Reimbursement; Indemnification. The Company agrees to pay to the Rights Agent reasonable compensation forall services rendered by it hereunder and, from time to time, on demand of the Rights Agent, the reasonable and documented out-of-pocket expenses andcounsel fees and other disbursements incurred by the Rights Agent in connection with the preparation, negotiation, delivery, execution, amendment andadministration of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, andto hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including the reasonable anddocumented fees of its outside counsel) incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (which grossnegligence, bad faith or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction) for any actiontaken, suffered or omitted to be taken by the Rights Agent in connection with the acceptance, administration, exercise and performance of its duties pursuantto this Agreement, including the costs and expenses of defending against any claim of liability and appealing any claim of liability arising therefrom,directly or indirectly. The provisions of this Section 18 and Section 20 will survive the termination of this Agreement, the exercise, exchange or expiration ofthe Rights and the resignation, replacement or removal of the Rights Agent. -33- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (b) Reliance by the Rights Agent. The Rights Agent is authorized to rely conclusively on, and will be protected and incur noliability for, or in respect of any action taken, suffered or omitted to be taken by it in connection with its acceptance and administration of this Agreement,and the exercise and performance of its duties pursuant to this Agreement, in reliance upon any (i) Rights Certificate, (ii) certificate (or registration on thetransfer books of the Company, including, in the case of uncertificated shares, by notation in book entry accounts reflecting ownership) for Preferred Shares,Common Shares or other securities of the Company issuable upon exercise of Rights or (iii) instrument of assignment or transfer, power of attorney,endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document reasonably believed by it, in the absence of grossnegligence, bad faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable judgmentof a court of competent jurisdiction), to be genuine and to be duly executed and, where necessary, verified or acknowledged, by the proper Person, orotherwise upon the advice of counsel as set forth in Section 20. The Rights Agent will not be required to take notice, or be deemed to have any knowledge, ofany fact, event or determination of which it was supposed to receive notice hereunder (including any dates or events defined in this Agreement or thedesignation of any Person as an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and the Rights Agent will be fully protected and willincur no liability for failing to take action in connection therewith, unless and until it has received such notice in writing. Section 19. Merger, Consolidation or Change of Name of Rights Agent. (a) Merger or Consolidation of Rights Agent. Any Person into which the Rights Agent or any successor Rights Agent may bemerged or with which it may effect a share exchange or be consolidated, or any Person resulting from any merger, share exchange or consolidation to whichthe Rights Agent or any successor Rights Agent is a party, or any Person succeeding to the corporate trust, stock transfer or stockholder services business ofthe Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent pursuant to this Agreement without the execution or filing of anypaper or any further act on the part of any of the parties hereto so long as such Person is eligible for appointment as a successor Rights Agent pursuant to theprovisions of Section 21. The purchase of all or substantially all of the Rights Agent’s assets employed in the performance of this Agreement, or transfer orrights agent services generally, will be deemed to be a merger, share exchange or consolidation for purposes of this Section 19. If at the time that suchsuccessor Rights Agent succeeds to the agency created by this Agreement any of the Rights Certificates have been countersigned but not delivered, then anysuch successor Rights Agent may adopt the countersignature of any predecessor Rights Agent and deliver such Rights Certificates so countersigned, and if atthat time any of the Rights Certificates have not been countersigned, then any successor Rights Agent may countersign such Rights Certificates either in thename of the predecessor Rights Agent or in the name of the successor Rights Agent. In all such cases, such Rights Certificates will have the full force andeffect provided in the Rights Certificates and in this Agreement. -34- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (b) Change of Name of Rights Agent. If at any time the name of the Rights Agent is changed and at such time any of the RightsCertificates have been countersigned but not delivered, then the Rights Agent may adopt the countersignature under its prior name and deliver such RightsCertificates so countersigned, and if at any time any of the Rights Certificates have not have been countersigned, then the Rights Agent may countersignsuch Rights Certificates either in its prior name or in its changed name. In all such cases, such Rights Certificates will have the full force and effect providedin the Rights Certificates and in this Agreement. Section 20. Duties of Rights Agent. The Rights Agent undertakes to perform the duties and obligations imposed by this Agreement (and no impliedduties or obligations) upon the following terms and conditions, all of which the Company and the holders of Rights Certificates, by their acceptance thereof,will be bound: (a) Before the Rights Agent acts or refrains from acting, the Rights Agent may consult with legal counsel that it selects (who may belegal counsel for the Company or an employee of the Rights Agent), and the advice or opinion of such counsel will be full and complete authorization andprotection to the Rights Agent, and the Rights Agent will incur no liability for or in respect of, any action taken, suffered or omitted to be taken by it in theabsence of gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction) in accordance with such advice or opinion. (b) Whenever in the performance of its duties pursuant to this Agreement the Rights Agent deems it necessary or desirable that anyfact or matter (including the identity of any Acquiring Person and the determination of the Current Per Share Market Price of any security) be proved orestablished by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter (unless other evidence in respect thereof isspecifically prescribed herein) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, theChief Executive Officer or the Chief Financial Officer of the Company and delivered to the Rights Agent, and such certificate will be full and completeauthorization and protection to the Rights Agent, and the Rights Agent will incur no liability for or in respect of any action taken, suffered or omitted to betaken in the absence of gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined by afinal, non-appealable judgment of a court of competent jurisdiction) by it pursuant to the provisions of this Agreement in reliance upon such certificate. -35- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (c) The Rights Agent will be liable hereunder to the Company and any other Person only for its and its directors’, officers’,employees’, Affiliates’, agents’, advisors’ and representatives’ own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith orwillful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction). In no event will the Rights Agent be liablefor special, indirect or consequential loss or damage of any kind whatsoever (including lost profits), even if the Rights Agent has been advised of thepossibility of such loss or damage. (d) The Rights Agent will not be liable hereunder for or by reason of any of the statements of fact or recitals contained in thisAgreement, the Rights Certificates or any certificate (or registration on the transfer books of the Company, including, in the case of uncertificated shares, bynotation in book entry accounts reflecting ownership) for Preferred Shares, Common Shares or other securities of the Company issuable upon exercise ofRights, or be required to verify the same (except, in each case, its countersignature thereof, if applicable), and all such statements and recitals are and will bedeemed to have been made by the Company only. (e) The Rights Agent will not (i) have any liability for or be under any responsibility in respect of the validity of this Agreement orthe execution and delivery hereof (except the due authorization, execution and delivery hereof by the Rights Agent) or in respect of the validity or executionof any Rights Certificate (except its countersignature thereof) or any certificate (or registration on the transfer books of the Company, including, in the case ofuncertificated shares, by notation in book entry accounts reflecting ownership) for Preferred Shares, Common Shares or other securities of the Companyissuable upon exercise of Rights (except, in each case, its countersignature thereof, if applicable); (ii) be responsible for any change in the exercisability orexchangeability of Rights (including certain Rights becoming null and void pursuant to Section 7(e)), except with respect to the exercise of Rightsevidenced by Rights Certificates after notice of such change has been provided by the Company; (iii) be responsible for any breach by the Company of anycovenant or condition contained in this Agreement or any Rights Certificate; (iv) be responsible for (A) any adjustment or change required pursuant toSection 3, Section 11, Section 13, Section 23 or Section 24, (B) the manner, method or amount of any such adjustment or change or (C) ascertaining theexistence of facts that would require any such adjustment or change (except with respect to the exercise of Rights evidenced by Rights Certificates afterreceipt by the Rights Agent of a certificate furnished pursuant to Section 12 describing such adjustment or change); (v) be responsible for any determinationby the Board of the Current Per Share Market Price of any security pursuant to this Agreement; or (vi) by any act hereunder be deemed to make anyrepresentation or warranty as to the authorization or reservation of any securities to be issued pursuant to this Agreement or any Rights Certificate or as towhether any such securities will, when issued, be duly and validly authorized and issued and fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver, or cause to be performed, executed, acknowledgedand delivered, all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out orperforming by the Rights Agent of its duties pursuant to this Agreement. -36- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunderfrom any of the Chairman of the Board, the Chief Executive Officer or the Chief Financial Officer of the Company, and it is authorized to apply to any suchdirector or officer for advice or instructions in connection with its duties pursuant to this Agreement. Such advice and instructions will be full and completeauthorization and protection to the Rights Agent, and the Rights Agent will not be liable for or in respect of any action taken, suffered or omitted to be takenby it in accordance with the written advice or instructions of any such director or officer or for any delay in acting while waiting for those instructions, ineach case in the absence of gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined bya final, non-appealable judgment of a court of competent jurisdiction). The Rights Agent will be fully and completely authorized and protected in relying onthe latest-dated instructions received from any such director or officer. Any application by the Rights Agent for written instructions from the Company may,at the option of the Rights Agent, set forth in writing any action proposed to be taken, suffered or omitted to be taken by the Rights Agent pursuant to thisAgreement and the date on or after which such action will be taken, suffered or omitted to be taken. The Rights Agent will not be liable for any action takenor suffered by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in suchapplication (which date must not be less than 10 Business Days after, but not including, the date on which any such director or officer of the Companyactually receives such application, unless any such director or officer has consented in writing to an earlier date) unless, prior to taking any such action (orthe effective date in the case of an omission), the Rights Agent has received, in response to such application, written instructions with respect to the proposedaction or omission specifying a different action to be taken, suffered or omitted to be taken. (h) The Rights Agent and any member, stockholder, director, officer, employee or Affiliate of the Rights Agent (in each case, otherthan an Acquiring Person) may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction inwhich the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not the RightsAgent pursuant to this Agreement. Nothing herein will preclude the Rights Agent or any such member, stockholder, director, officer, employee or Affiliatefrom acting in any other capacity for the Company or for any other Person. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder eitheritself (including through its directors, officers and employees) or by or through its attorneys or agents, and the Rights Agent will not be answerable oraccountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company, to the holders of Rights orto any other Person resulting from any such act, omission, default, neglect or misconduct in the absence of gross negligence, bad faith or willful misconductin the selection and continued employment thereof (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealablejudgment of a court of competent jurisdiction). -37- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (j) No provision of this Agreement requires the Rights Agent to expend or risk its own funds or otherwise incur any financialliability in the performance of any of its duties hereunder (other than costs and expenses incurred by the Rights Agent in providing services to the Companyin the ordinary course of its business as the Rights Agent) or in the exercise of its rights if it reasonably believes, after consultation with counsel, thatrepayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in theform of election to purchase or form of assignment, as the case may be, has either (i) not been properly completed or (ii) indicates an affirmative response toclause (1) or clause (2) thereof, then the Rights Agent will not take any further action with respect to such requested exercise or transfer without firstconsulting with the Company. (l) From time to time after the Distribution Date, upon the written request of the Company, the Rights Agent will promptly deliverto the Company a list, as of the most recent practicable date (or as of such earlier date as may be specified by the Company), of the record holders of Rightsand Rights Certificates. Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties pursuant to thisAgreement upon 30 days’ written notice to the Company (or such lesser notice as is acceptable to the Company) and to each transfer agent of the PreferredShares and the Common Shares (in the event that the Rights Agent or one of its Affiliates is not also such transfer agent), delivered to the Company inaccordance with Section 26. In the event that any transfer agency relationship in effect between the Company and the Rights Agent or any of its Affiliatesterminates, the Rights Agent will be deemed to have automatically resigned and be discharged from its duties under this Agreement on the effective date ofsuch termination, and the Company will be responsible for sending any required notices. The Company may remove the Rights Agent or any successorRights Agent, with or without cause, upon 30 days’ notice in writing to the Rights Agent or any successor Rights Agent, as the case may be, and to eachtransfer agent of the Preferred Shares and the Common Shares (in the event that the Rights Agent or one of its Affiliates is not also such transfer agent),delivered to the Rights Agent in accordance with Section 26. If the Rights Agent resigns or is removed or otherwise becomes incapable of acting, then theresigning, removed or incapacitated Rights Agent must, upon the Company’s request, remit to the Company or to any successor Rights Agent, all books,records, funds, certificates or other documents or instruments of any kind then in its possession that were acquired by such resigning, removed orincapacitated Rights Agent in connection with its services as the Rights Agent in accordance with its record retention policy. Following such removal,resignation or incapacity, the Company will appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of 30days after giving written notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitatedRights Agent or by the registered holder of a Rights Certificate (who must, together with such notice, submit such registered holder’s Rights Certificate forinspection by the Company), then any registered holder may apply, at the Company’s expense, to a court of competent jurisdiction for the appointment of anew Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such court, must be either (a) a Person organized, in good standingand doing business pursuant to the laws of the United States or any state of the United States that is authorized pursuant to such laws to exercise corporatetrust, stock transfer or stockholder services, is subject to supervision or examination by federal or state authorities and has at the time of its appointment asRights Agent a combined capital and surplus of at least $50,000,000 or (b) an Affiliate or direct or indirect wholly owned Subsidiary of such Person. Afterappointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it had been originally named as RightsAgent without further act or deed, and the predecessor Rights Agent must deliver and transfer to the successor Rights Agent any property at the time held byit hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for such purpose. Not later than the effective date of any suchappointment, the Company will file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Shares and theCommon Shares (in the event that the Rights Agent or one of its Affiliates is not also such transfer agent), and deliver such notice to the holders of RightsCertificates in accordance with Section 26. Notwithstanding anything to the contrary in this Agreement, failure to give any notice provided for in thisSection 21, or any defect therein, will not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successorRights Agent, as the case may be. Upon appointment, any successor Rights Agent will, unless the context requires otherwise, be deemed to be the RightsAgent for all purposes of this Agreement. -38- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 22. Issuance of New Rights Certificates. Notwithstanding anything to the contrary in this Agreement or the Rights, the Company may, at itsoption, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board to reflect any adjustment or change in the ExercisePrice and the number or kind or class of shares or other securities or property purchasable pursuant to the Rights Certificates made in accordance with theprovisions of this Agreement. In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior to theExpiration Date, the Company will, with respect to Common Shares so issued or sold (whether pursuant to the exercise of stock options or pursuant to anyemployee benefit plan or arrangement or upon the exercise, conversion or exchange of other securities of the Company outstanding as of the Rights DividendDeclaration Date or upon the exercise, conversion or exchange of securities issued by the Company after the Rights Dividend Declaration Date (except, ineach case, as may otherwise be provided in the instruments governing such securities)), and may, in any other case, if deemed necessary or appropriate by theBoard, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (a) no suchRights Certificate will be issued if, and to the extent that, the Company is advised by counsel that such issuance would create a significant risk of or result inmaterial adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued or would create a significant risk of orresult in such options or employee plans or arrangements failing to qualify for otherwise available special tax treatment; (b) no such Rights Certificate will beissued if, and to the extent that, appropriate adjustment will otherwise have been made in lieu of the issuance thereof; and (c) the Company will have noobligation to distribute Rights Certificates to any Acquiring Person, Affiliate or Associate of an Acquiring Person, Post-Event Transferee, Pre-EventTransferee, Subsequent Transferee or any nominee of any of the foregoing. -39- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 23. Redemption. (a) Right to Redeem. The Board may, at its option, at any time prior to the earlier of (i) the Distribution Date or (ii) the Close ofBusiness on the Final Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right, as suchamount may be appropriately adjusted to reflect any stock split, stock dividend, recapitalization or similar transaction occurring after the Rights DividendDeclaration Date (such redemption price, the “Redemption Price”). Notwithstanding anything to the contrary in this Agreement, the Rights will not beexercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the Company’s right of redemption pursuant to this Section 23 has expired.The Company may, at its option, pay the Redemption Price in Common Shares (based on the Current Per Share Market Price of Common Shares at the time ofredemption), cash or any other form of consideration deemed appropriate by the Board, in its sole discretion, to be at least equivalent to the RedemptionPrice. Such redemption of the Rights by the Board may be made effective at such time, on such basis and with such conditions as the Board in its solediscretion may establish. The date on which the Board elects to make the redemption effective is referred to as the “Redemption Date.” (b) General Redemption Procedures. Immediately upon the action of the Board ordering the redemption of the Rights (or at suchlater time as the Board may establish for the effectiveness of such redemption), evidence of which will have been filed with the Rights Agent, and withoutany further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights will be toreceive the Redemption Price for each Right so held. The Company will promptly give public notice of any such redemption (with prompt written noticethereof also provided to the Rights Agent). Promptly after the action of the Board ordering the redemption of the Rights, the Company will give, or cause tobe given, notice of such redemption to the holders of Rights Certificates in accordance with Section 26; provided, however, that any notice that is soprovided will be deemed given, whether or not the holder receives the notice. Each such notice of redemption must state the method by which the payment ofthe Redemption Price is to be made. The failure to give, or any defect in, any notice required by this Section 23 will not affect the legality or validity of theaction taken by the Board or of the redemption. (c) Discharge of Obligations. Notwithstanding anything to the contrary in this Agreement, in the event of a redemption pursuant toSection 23(a), the Company may, at its option, discharge all of its obligations with respect to the Rights by (i) issuing a press release or making a publicly-available filing with the Securities and Exchange Commission announcing the manner of redemption of the Rights and (ii) mailing payment of theRedemption Price to the holders of Rights at the addresses of such holders as shown on the transfer books of the Rights Agent or, prior to the DistributionDate, on the transfer books of the Company or the transfer agent for the Common Shares, and upon such action, all outstanding Right Certificates will be voidwithout any further action by the Company. (d) Prohibited Purchases. Notwithstanding anything to the contrary in this Agreement, neither the Company nor any of itsAffiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than as specifically set forth in this Section 23or in Section 24, or other than in connection with the purchase or repurchase of Common Shares prior to the Distribution Date. -40- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 24. Exchange. (a) Exchange of Common Shares for Rights. The Board may, at its option, at any time after any Person becomes an AcquiringPerson, exchange all or part of the then outstanding and exercisable Rights (which will not include Rights that have become null and void pursuant to theprovisions of Section 7(e)) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stockdividend, recapitalization or similar transaction occurring after the Rights Dividend Declaration Date (such exchange ratio, the “Exchange Ratio,” and suchdetermination by the Board to effect such exchange, an “Exchange Determination”). Notwithstanding the foregoing, from and after the occurrence of aSection 13 Event, any Rights that theretofore have not been exchanged pursuant to this Section 24(a) will thereafter be exercisable only in accordance withSection 13 and may not be exchanged (or eligible for exchange) pursuant to this Section 24(a). (b) Exchange Procedures. (i) Immediately following an Exchange Determination and without any further action or notice, the right to exercisesuch Rights will terminate and the only right thereafter of a holder of such Rights is to receive that number of Common Shares equal to the number of suchRights held by such holder multiplied by the Exchange Ratio. The Company will promptly give public notice of any such exchange (with prompt writtennotice thereof also provided to the Rights Agent), and thereafter will promptly give, or cause to be given, notice of such exchange to the holders of the thenoutstanding Rights (other than Rights that have become null and void pursuant to the provisions of Section 7(e)) by mailing such notice, in accordance withSection 26; provided, however, that any notice that is so provided will be deemed given, whether or not the holder receives the notice. Each such notice ofexchange must state the method by which the exchange of Common Shares for Rights is to be effected (including the actions that must be taken by theholders of Rights to receive Common Shares in exchange for Rights) and, in the event of any partial exchange, the number of Rights that are to beexchanged. Any partial exchange will be effected pro rata based on the number of Rights (other than Rights that have become null and void pursuant to theprovisions of Section 7(e)) held by each holder of Rights. Following an Exchange Determination, the Company may implement such procedures as it deemsappropriate, in its sole discretion, to minimize the possibility that any Common Shares (or other consideration) issuable pursuant to this Section 24 arereceived by Persons whose Rights are null and void pursuant to Section 7(e). Prior to effecting any exchange, the Company may require, or cause the trusteeof the Trust to require, as a condition thereof, that any registered holder of Rights provide such evidence (including the identity of the Beneficial Owner (orformer Beneficial Owner) thereof and the Affiliates or Associates of such Beneficial Owner or former Beneficial Owner) as the Company may reasonablyrequest in order to determine if such Rights are null and void pursuant to Section 7(e). If such registered holder does not comply with the foregoingrequirements, then the Company will be entitled to conclusively deem such Rights to be Beneficially Owned by an Acquiring Person (or an Affiliate orAssociate of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any nominee of any of the foregoing) and,accordingly, such Rights will be null and void and not exchangeable in connection herewith. Any Common Shares (or other securities) issued at the directionof the Board in connection with an Exchange Determination will be duly and validly authorized and issued and fully paid and nonassessable, and theCompany will be deemed to have received as consideration for such issuance a benefit having a value that is at least equal to the aggregate par value of theCommon Shares (or other securities) so issued. The failure to give, or any defect in, any notice required by this Section 24 will not affect the legality orvalidity of the action taken by the Board or of such exchange. -41- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (ii) The exchange of the Rights pursuant to Section 24(a) may be made effective at such time, on such basis and withsuch conditions as the Board, in its sole discretion, may establish. Without limiting the foregoing, prior to effecting an exchange pursuant to Section 24(a),the Board may direct the Company to enter into a trust agreement in such form and with such terms as the Board approves (the “Trust Agreement”). If theBoard so directs, then the Company must enter into the Trust Agreement and must issue to the trust created by such agreement (the “Trust”) all of theCommon Shares (or other consideration) issuable pursuant to the exchange (or any portion thereof that has not theretofore been issued in connection with theexchange). From and after the time at which such Common Shares (or other consideration) are issued to the Trust, all stockholders then entitled to receiveCommon Shares (or other consideration) pursuant to the exchange will be entitled to receive such shares or consideration (and any dividends or distributionsmade thereon after the date on which such shares or consideration are deposited into the Trust) only from the Trust and solely upon compliance with therelevant terms and provisions of the Trust Agreement. (c) Insufficient Shares. In the event that there are not sufficient Common Shares issued but not outstanding or authorized butunissued to permit any exchange of Rights as contemplated in accordance with Section 24(a), then the Company will either take such action as may benecessary to authorize additional Common Shares for issuance upon exchange of the Rights or alternatively, at the option of the Board, with respect to eachRight (i) pay cash in an amount equal to the Current Exchange Value in lieu of issuing Common Shares in exchange therefor; (ii) issue debt or equitysecurities (or a combination thereof) having a value equal to the Current Exchange Value in lieu of issuing Common Shares in exchange for each such Right,where the value of such securities will be determined by the Board based upon the advice of a nationally recognized investment banking firm selected by theBoard, which determination will be described in a written statement filed with the Rights Agent and will be binding on the Rights Agent and the holders ofRights; or (iii) deliver any combination of cash, property, Common Shares, Preferred Shares, Equivalent Shares or other securities having a value equal to theCurrent Exchange Value in exchange for each Right. To the extent that the Company determines that some action need be taken pursuant to thisSection 24(c), then the Board may temporarily suspend the exercisability of the Rights for a period of up to 120 days following the date on which theExchange Determination has occurred in order to seek any authorization of additional Common Shares or to decide the appropriate form of distribution to bemade pursuant to the above provision and to determine the value thereof. Upon any such suspension, the Company will issue a public announcement stating,and notify the Rights Agent in writing, that the exercisability of the Rights has been temporarily suspended, as well as issue a public announcement, andnotify the Rights Agent in writing, at such time as the suspension is no longer in effect. -42- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (d) Cash in Lieu of Fractional Common Shares. In connection with an Exchange Determination, the Company will not be requiredto issue fractions of Common Shares or to distribute certificates that evidence fractional Common Shares. In lieu of such fractional Common Shares, theCompany may pay to the registered holders of Rights Certificates with regard to which such fractional Common Shares would otherwise be issuable anamount in cash equal to the same fraction of the Current Per Share Market Price of a Common Share, calculated as of the Trading Day immediately prior tothe date of the Exchange Determination. Section 25. Notice of Certain Events. (a) Certain Distributions. If the Company proposes, at any time after the Distribution Date, to (i) declare or pay any dividendpayable in stock of any class to the holders of Preferred Shares or to make any other distribution to the holders of Preferred Shares (other than a regularquarterly or periodic cash dividend out of earnings or retained earnings of the Company), (ii) offer to the holders of Preferred Shares rights or warrants tosubscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) effect anyreclassification of the Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) effect any shareexchange, consolidation or merger into or with any other Person (other than a wholly owned Subsidiary of the Company in a transaction that complies withSection 11(m)), (v) effect any sale or other transfer (or permit one or more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series ofrelated transactions, of more than 50% of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person,(vi) effect the liquidation, dissolution or winding up of the Company, (vii) declare or pay any dividend on the Common Shares payable in Common Shares or(viii) effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in CommonShares), then, in each such case, the Company will give written notice of such proposed action to the Rights Agent and the holders of Rights Certificates inaccordance with Section 26, which notice must specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the dateon which such subdivision, combination, reclassification, share exchange, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is totake place and the date of participation therein by the holders of Preferred Shares or Common Shares, if any such date is to be fixed, and such notice must beso given in the case of any action covered by clause (i) or (ii) above at least 10 Business Days prior to but not including the record date for determiningholders of Preferred Shares for purposes of such action, and in the case of any such other action, at least 10 Business Days prior to but not including the dateof the taking of such proposed action or the date of participation therein by the holders of Preferred Shares or Common Shares, whichever is earlier. (b) Certain Events. If any Triggering Event has occurred, then (i) the Company will as soon as practicable thereafter give, or causeto be given, to each holder of Rights Certificates a notice in accordance with Section 26 of the occurrence of such Triggering Event, which notice mustspecify the event and the consequences of the event to holders of Rights pursuant to Section 11(a)(ii) or Section 13, and (ii) all references in this Section 25to Preferred Shares will thereafter be deemed to be references to Common Shares or, if appropriate, other securities. -43- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any RightsCertificate to or on the Company will be sufficiently given or made if in writing and sent by a recognized national overnight delivery service, fax (when suchfax is transmitted to the fax number set forth below and confirmation of transmission is received) or first-class mail, postage prepaid, addressed (until anotheraddress is filed in writing with the Rights Agent by the Company) as follows: China Biologic Products, Inc.18th Floor, Jialong International Building19 Chaoyang Park RoadChaoyang District, Beijing 100125People’s Republic of ChinaAttention: Corporate SecretaryFax: 8610 6598 3222 with a copy (which will not constitute notice) to: Davis Polk & Wardwell2201 China World Office 21 Jian Guo Men Wai AvenueChao Yang DistrictBeijing 100004People’s Republic of ChinaAttention: Howard ZhangFax: 8610 8567 5002 Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder ofany Rights Certificate to or on the Rights Agent will be sufficiently given or made if in writing and sent by a recognized national overnight delivery service,fax (when such fax is transmitted to the fax number set forth below and confirmation of transmission is received) or first-class mail, postage prepaid, addressed(until another address is filed in writing with the Company by the Rights Agent) as follows: Securities Transfer Corporation2591 Dallas Parkway, Suite #102Frisco, Texas 75034United StatesAttention: Kevin Halter, Jr.Fax: 469 633 0069 Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holders of Rights or RightsCertificates (or, if prior to the Distribution Date, to the holders of Common Shares) will be sufficiently given or made if in writing and sent by a recognizednational overnight delivery service or first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the transfer booksof the Rights Agent or the Company or the transfer agent for the Common Shares. Any notice that is sent or mailed in the manner herein provided will bedeemed given whether or not the holder receives the notice. Notwithstanding anything to the contrary in this Agreement, prior to the Distribution Date, theissuance of a press release or the making of a publicly-available filing by the Company with the Securities and Exchange Commission will constitutesufficient notice by the Rights Agent or the Company to the holders of securities of the Company, including the Rights, for all purposes of this Agreementand no other notice need be given. -44- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 27. Supplements and Amendments. Prior to the occurrence of a Distribution Date, the Company may in its sole discretion supplement oramend this Agreement in any respect without the approval of any holders of Rights Certificates, Preferred Shares or Common Shares, and the Rights Agentmust, if the Company so directs, execute such supplement or amendment. From and after the occurrence of a Distribution Date, the Company and the RightsAgent may from time to time supplement or amend this Agreement without the approval of any holders of Rights Certificates in order to (i) cure anyambiguity, (ii) correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein or otherwisedefective, including any change in order to satisfy any applicable law, rule or regulation, (iii) shorten or lengthen any time period hereunder or (iv) change orsupplement the provisions hereunder in any manner that the Company may deem necessary or desirable and that does not adversely affect the interests of theholders of Rights (other than an Acquiring Person, an Affiliate or Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, aSubsequent Transferee or any nominee of any of the foregoing), including extending the Final Expiration Date; provided, however, that this Agreement maynot be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, a time period relating to when the Rights may be redeemed at a timewhen the Rights are not then redeemable; provided further, however, that the right of the Board to extend the Distribution Date does not require anyamendment or supplement hereunder. Upon the delivery of a certificate from an appropriate officer of the Company that states that the proposed supplementor amendment is in compliance with the terms of this Section 27, the Rights Agent must execute such supplement or amendment, and the Rights Agentacknowledges and agrees that time is of the essence in executing such supplement or amendment. Notwithstanding the foregoing, the Rights Agent will notbe required to execute any such supplement or amendment that adversely affects its rights, duties, or obligations pursuant to this Agreement. Prior to theDistribution Date, the interests of the holders of Rights and Rights Certificates will be deemed to be coincident with the interests of the holders of CommonShares. Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent will bind andinure to the benefit of their respective successors and assigns hereunder. Section 29. Determinations and Actions by the Board. The Board (or an authorized committee thereof) has the exclusive power and authority toadminister this Agreement and to exercise all rights and powers specifically granted to the Board or the Company pursuant hereto, or as may be necessary oradvisable in the administration of this Agreement, including the right and power to (a) interpret the provisions of this Agreement and (b) make alldeterminations deemed necessary or advisable for the administration of this Agreement (including a determination as to whether to redeem the Rights or toamend this Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (ii) below, all omissions withrespect to the foregoing) that are done or made by the Board (or an authorized committee thereof) in good faith will (i) be final, conclusive and binding onthe Company, the Rights Agent, the holders of Rights Certificates and all other Persons and (ii) not subject the Board (or an authorized committee thereof) orany of the directors serving on the Board to any liability to any Person, including the Rights Agent and the holders of Rights Certificates. In administeringthis Agreement and exercising the rights and powers specifically granted to the Board and to the Company hereunder, and in interpreting this Agreement andmaking any determination hereunder, the Board (or an authorized committee thereof) may consider any and all facts, circumstances or information that itdeems to be necessary, useful or appropriate. The Rights Agent is always entitled to assume that the Board acted in good faith and will be fully protected andincur no liability in reliance thereon. -45- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 30. Benefits of this Agreement. Nothing in this Agreement may be construed to give to any Person other than the Company, the RightsAgent and the registered holders of Rights Certificates (and, prior to the Distribution Date, the registered holders of Common Shares) any legal or equitableright, remedy or claim pursuant to this Agreement. This Agreement is for the sole and exclusive benefit of the Company, the Rights Agent and the registeredholders of Rights Certificates (and, prior to the Distribution Date, the registered holders of Common Shares). Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or otherauthority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement will remain in full forceand effect and will in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything to the contrary in this Agreement, if anysuch term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board determines in its good faithjudgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, then the right of redemptionset forth in Section 23 will be reinstated and will not expire until the Close of Business on the 10th Business Day following the date of such determination bythe Board. Section 32. Governing Law; Exclusive Jurisdiction. (a) Governing Law. This Agreement and each Right and Rights Certificate issued hereunder will be deemed to be a contract madepursuant to the laws of the State of Delaware and for all purposes will be governed by and construed in accordance with the laws of the State of Delawareapplicable to contracts made and to be performed entirely within such State; provided, however, that all provisions regarding the rights, duties andobligations of the Rights Agent will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and tobe performed entirely within such State. (b) Exclusive Jurisdiction. -46- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (i) The Company and the registered holders of Rights Certificates (and, prior to the Distribution Date, the registeredholders of Common Shares) each hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, if such courtlacks subject matter jurisdiction, the United States District Court for the District of Delaware, over any suit, action or proceeding arising out of or relating toor concerning this Agreement. The Company and the registered holders of Rights Certificates (and, prior to the Distribution Date, the registered holders ofCommon Shares) each acknowledge that the forum designated by this Section 32(b)(i) has a reasonable relation to this Agreement and to such Persons’relationship with one another. (ii) The Company and the registered holders of Rights Certificates (and, prior to the Distribution Date, the registeredholders of Common Shares) each hereby waive, to the fullest extent permitted by applicable law, any objection that they now or hereafter have to personaljurisdiction or to the laying of venue of any such suit, action or proceeding brought in any court referred to in Section 32(b)(i) (or the appellate courtsthereof). The Company and the registered holders of Rights Certificates (and, prior to the Distribution Date, the registered holders of Common Shares) eachundertake not to commence any action subject to this Agreement in any forum other than the forum described in Section 32(b)(i). The Company and theregistered holders of Rights Certificates (and, prior to the Distribution Date, the registered holders of Common Shares) each hereby agree that, to the fullestextent permitted by applicable law, a final and non-appealable judgment in any such suit, action or proceeding brought in any such court will be conclusiveand binding upon such Persons. Section 33. Counterparts. This Agreement and any supplements or amendments hereto may be executed in any number of counterparts and each ofsuch counterparts will for all purposes be deemed to be an original, and all such counterparts will together constitute one and the same instrument, it beingunderstood that all parties need not sign the same counterpart. A signature to this Agreement transmitted electronically (including by fax and .pdf) will havethe same authority, effect and enforceability as an original signature. No party hereto may raise the use of such electronic transmission to deliver a signature,or the fact that any signature or agreement or instrument was transmitted or communicated through such electronic transmission, as a defense to the formationof a contract, and each party forever waives any such defense, except to the extent such defense relates to lack of authenticity. Section 34. Descriptive Headings; Interpretation. (a) Descriptive Headings. The table of contents and descriptive headings of the several Sections of this Agreement are inserted forconvenience only and will not control or affect the meaning or construction of any of the provisions hereof. (b) Interpretation. (i) Unless otherwise indicated, all references herein to Sections or Exhibits will be deemed to refer to Sections orExhibits of or to this Agreement, as applicable. Any capitalized terms used in any Exhibit but not otherwise defined therein have the meaning set forth in thisAgreement. All Exhibits attached hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if fully set forth herein. -47- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (ii) Unless otherwise indicated, the words “include,” “includes” and “including,” when used herein, are deemed in eachcase to be followed by the words “without limitation.” (iii) The words “hereof,” “herein, “herewith” and words of similar import will, unless otherwise stated, be constructed torefer to this Agreement as whole and not to any particular provision of this Agreement. (iv) The word “or” is used in the inclusive sense of “and/or.” The terms “or,” “any” and “either” are not exclusive. (v) Whenever the context may require, any pronouns used in this Agreement include the corresponding masculine,feminine or neuter forms, and the singular form of nouns and pronouns include the plural and vice versa. (vi) Where a word or phrase is defined, each of its other grammatical forms has a corresponding meaning. (vii) References to “$” are to the lawful currency of the United States of America. Section 35. Costs of Enforcement. The Company agrees with each registered holder of Rights Certificates (and, prior to the Distribution Date, theregistered holders of Common Shares) that if the Company or any other Person the securities of which are purchasable upon exercise of the Rights fails tofulfill any of its obligations pursuant to this Agreement, then the Company or such Person must reimburse any registered holder of Rights Certificates for thecosts and expenses (including legal fees) incurred by such holder in any action to enforce such holder’s rights pursuant to any Right or this Agreement. Section 36. Force Majeure. Notwithstanding anything to the contrary in this Agreement, the Rights Agent will not be liable for any delays orfailures in performance resulting from acts beyond its reasonable control, including acts of God, terrorist acts, shortage of supply, breakdowns ormalfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage orretrieval systems, labor difficulties, war or civil unrest. Section 37. USA PATRIOT Act. The Company acknowledges that the Rights Agent is subject to the customer identification program requirementspursuant to the USA PATRIOT Act and its implementing regulations, and that the Rights Agent must obtain, verify and record information that allows theRights Agent to identify the Company. Accordingly, prior to accepting an appointment hereunder, the Rights Agent has received information from theCompany that will help the Rights Agent to identify the Company, including the Company’s physical address, tax identification number, organizationaldocuments, certificate of good standing, license to do business or such other information that the Rights Agent deems necessary and, pending verification ofsuch received information, the Rights Agent may request additional such information. The Company agrees to provide all reasonably requested informationnecessary for the Rights Agent to verify the Company’s identity in accordance with such customer identification program requirements. [Signature page follows.] -48- Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CHINA BIOLOGIC PRODUCTS, INC. By:/s/ David (Xiaoying) Gao Name: David (Xiaoying) Gao Title: Chief Executive Officer SECURITIES TRANSFER CORPORATION By:/s/ George Johnson Name: George Johnson Title: Vice President [Signature Page to Rights Agreement] Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT A CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGESOF SERIES A PARTICIPATING PREFERRED STOCK OFCHINA BIOLOGIC PRODUCTS, INC. Pursuant to Section 151 of theGeneral Corporation Law of the State of Delaware The undersigned, David (Xiaoying) Gao, does hereby certify that: 1. He is the duly elected and acting Chief Executive Officer of China Biologic Products, Inc., a Delaware corporation (the “Corporation”). 2. Pursuant to the authority conferred upon the Board of Directors of the Company (the “Board”) by the Amended and Restated Certificate ofIncorporation, as amended, of the Corporation, on November 19, 2012, the Board adopted the following resolutions creating a series of preferred stock, parvalue $0.0001 per share (“Preferred Stock”), of the Corporation designated as Series A Participating Preferred Stock: RESOLVED: That pursuant to the authority vested in the Board by the Amended and Restated Certificate of Incorporation, as amended, of theCorporation (the “Charter”), the Board does hereby provide for the issuance of a series of Preferred Stock of the Corporation and does hereby fix and hereinstate and express the designations, powers, preferences and relative and other special rights, and the qualifications, limitations and restrictions, of such seriesof Preferred Stock as follows: Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Participating Preferred Stock.” The Series AParticipating Preferred Stock shall have a par value of $0.0001 per share, and the number of shares constituting such series shall be 1,000,000. Such numberof shares may be increased or decreased by resolution of the Board; provided, however, that no decrease shall reduce the number of shares of Series AParticipating Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise ofoutstanding options, rights or warrants or upon the exercise of any options, rights or warrants issuable upon conversion of any outstanding securities issuedby the Corporation convertible into Series A Participating Preferred Stock. Section 2. Proportional Adjustment. In the event that the Corporation shall at any time after the issuance of any share or shares of Series AParticipating Preferred Stock (the “Rights Declaration Date”) (a) declare any dividend on the common stock of the Corporation, par value $0.0001 per share(the “Common Stock”), payable in shares of Common Stock, (b) subdivide the outstanding Common Stock or (c) combine the outstanding Common Stockinto a smaller number of shares, then in each such case the Corporation shall simultaneously effect a proportional adjustment to the number of outstandingshares of Series A Participating Preferred Stock by an amount the numerator of which is the number of shares of Common Stock outstanding immediately aftersuch event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. A-1 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 3. Dividends and Distributions. (a) Subject to Section 2 and to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking priorand superior to the shares of Series A Participating Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stockshall be entitled to receive, when, as and if declared by the Board out of funds legally available for the purpose, quarterly dividends payable in cash on thelast day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”),commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock, inan amount per share (rounded to the nearest cent) equal to the greater of (i) $1.00 and (ii) subject to Section 2, 1,000 times the aggregate per share amount ofall cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividendpayable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the CommonStock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the firstissuance of any share or fraction of a share of Series A Participating Preferred Stock. (b) The Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided inparagraph (a) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of CommonStock); provided, however, that, in the event that no dividend or distribution shall have been declared on the Common Stock during the period between anyQuarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A ParticipatingPreferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Participating Preferred Stock from theQuarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Participating Preferred Stock, unless the date of issue of suchshares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date ofissue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders ofshares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of whichevents such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bearinterest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amount of such dividends at the time accruedand payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board may fix a recorddate for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declaredthereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof. A-2 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 4. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights: (a) Subject to the provision for adjustment hereinafter set forth, each share of Series A Participating Preferred Stock shall entitle theholder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event that the Corporation shall at any time afterthe Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stockor (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders ofshares of Series A Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction thenumerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of sharesof Common Stock that were outstanding immediately prior to such event. (b) Except as otherwise provided herein, in any other Certificate of Designation creating a series of Preferred Stock or any similarstock, the Charter or the Second Amended and Restated Bylaws of the Corporation (the “Bylaws”), or by law, the holders of shares of Series A ParticipatingPreferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of theCorporation. (c) Except as set forth herein or as required by law, the holders of Series A Participating Preferred Stock shall have no special votingrights and their consent shall not be required (except to the extent that they are entitled to vote with holders of Common Stock as set forth herein) for takingany corporate action. (d) (i) If at any time dividends on any Series A Participating Preferred Stock shall be in arrears in an amount equal to sixquarterly dividends thereon, then the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) that shallextend until such time as all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on allshares of Series A Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, allholders of Preferred Stock (including holders of Series A Participating Preferred Stock) with dividends in arrears in an amount equal to six quarterly dividendsthereon, voting as a class, irrespective of series, shall have the right to elect two directors. (ii) During any default period, such voting right of the holders of Series A Participating Preferred Stock may beexercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 4(d) or at any annual meeting of stockholders, and thereafter atannual meetings of stockholders; provided, however, that such voting shall not be exercised unless the holders of at least one-third in number of shares ofPreferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise bythe holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during anexisting default period, they shall have the right, voting as a class, to elect directors to fill such vacancies, if any, in the Board as may then exist up to twodirectors or, if such right is exercised at an annual meeting of stockholders, to elect two directors. After the holders of Preferred Stock shall have exercisedtheir right to elect directors in any default period and during the continuance of such period, the number of directors shall not be increased or decreasedexcept by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with theSeries A Participating Preferred Stock. A-3 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their rightto elect directors, the Corporation shall, by action of the Chairman of the Board, the Chief Executive Officer or the majority of the directors in accordancewith the Bylaws, promptly call a special meeting of the holders of Preferred Stock for such purpose. Notice of such meeting and of any annual meeting atwhich holders of Preferred Stock are entitled to vote pursuant to this paragraph (d)(iii) shall be given to each holder of record of Preferred Stock by mailing acopy of such notice to such holder at such holder’s last address as the same appears on the books of the Corporation. Notwithstanding the provisions of thisparagraph (d)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meetingof the stockholders. (iv) In any default period, the holders of Common Stock and other classes of stock of the Corporation, if applicable,shall continue to be entitled to elect the whole number of directors until the holders of Preferred Stock shall have exercised their right to elect two directorsvoting as a class, after the exercise of which right (A) the directors so elected by the holders of Preferred Stock shall continue in office until their successorsshall have been elected by such holders or until the expiration of the default period, and (B) any vacancy in the Board may (except as provided insubparagraph (ii) of this Section 4(d)) be filled by vote of a majority of the remaining directors theretofore elected by the holders of the class of stock thatelected the director whose office shall have become vacant. References in this Section 4(d) to directors elected by the holders of a particular class of stockshall include directors elected by such directors to fill vacancies as provided in clause (B) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (A) the right of the holders of Preferred Stock as a class to electdirectors shall cease, (B) the term of any directors elected by the holders of Preferred Stock as a class shall terminate and (C) the number of directors shall besuch number as may be provided for in the Charter or the Bylaws irrespective of any increase made pursuant to the provisions of subparagraph (ii) of thisSection 4(d) (such number being subject, however, to change thereafter in any manner provided by law or in the Charter or Bylaws). Any vacancies in theBoard effected by the provisions of clauses (B) and (C) in the preceding sentence may be filled by a majority of the remaining directors. Section 5. Certain Restrictions. (a) The Corporation shall not declare any dividend on, make any distribution on, or redeem or purchase or otherwise acquire forconsideration any shares of Common Stock after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock unless concurrentlytherewith it shall declare a dividend on the Series A Participating Preferred Stock as required by Section 3 hereof. A-4 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (b) Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock asprovided in Section 3 hereof are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares ofSeries A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire forconsideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating PreferredStock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as todividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, except dividends paid ratably on the Series AParticipating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders ofall such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as todividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock; provided, however, that the Corporation may atany time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (eitheras to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock, orany shares of stock ranking on a parity with the Series A Participating Preferred Stock, except in accordance with a purchase offer made in writing or bypublication (as determined by the Board) to all holders of such shares upon such terms as the Board, after consideration of the respective annual dividendrates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatmentamong the respective series or classes. (c) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration anyshares of stock of the Corporation unless the Corporation could, pursuant to paragraph (a) of this Section 5, purchase or otherwise acquire such shares at suchtime and in such manner. Section 6. Reacquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Corporation inany manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorizedbut unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board,subject to the conditions and restrictions on issuance set forth herein, in the Charter or in any other Certificate of Designation creating a series of PreferredStock or any similar stock or as otherwise required by law. A-5 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 7. Liquidation, Dissolution or Winding Up. (a) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made tothe holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating PreferredStock unless, prior thereto, the holders of shares of Series A Participating Preferred Stock shall have received an amount equal to $1,000 per share of Series AParticipating Preferred Stock, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of suchpayment (the “Series A Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additionaldistributions shall be made to the holders of shares of Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shallhave received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by(ii) 1,000 (as appropriately adjusted to reflect events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such numberin clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment inrespect of all outstanding shares of Series A Participating Preferred Stock and Common Stock, respectively, holders of Series A Participating Preferred Stockand holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of theAdjustment Number to one with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (b) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A LiquidationPreference and the liquidation preferences of all other series of Preferred Stock, if any, that rank on a parity with the Series A Participating Preferred Stock,then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In theevent, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall bedistributed ratably to the holders of Common Stock. (c) In the event that the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on the CommonStock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smallernumber of shares, then in each such case the Corporation shall simultaneously effect a proportional adjustment to the Adjustment Number in effectimmediately prior to such event by an amount the numerator of which is the number of shares of Common Stock outstanding immediately after such eventand the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. Consolidation, Merger, etc. In the event that the Corporation shall enter into any consolidation, merger, combination,conversion, share exchange or other transaction in which the shares of Common Stock are exchanged for or changed into other stock, securities, cash and/orany other property (payable in kind), then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchangedor changed in an amount per share (subject to Section 2) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property(payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. A-6 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 9. No Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable. Section 10. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Preferred Stock as to the payment ofdividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 11. Amendment. At any time when any shares of Series A Participating Preferred Stock are outstanding, neither the Charter nor thisCertificate of Designation shall be amended in any manner that would materially alter or change the powers, preferences or special rights of the Series AParticipating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares ofSeries A Participating Preferred Stock, voting separately as a class. Section 12. Fractional Shares. Series A Participating Preferred Stock may be issued in fractions of a share that shall entitle the holder, inproportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rightsof holders of Series A Participating Preferred Stock. I further declare under penalty of perjury that the matters set forth in the foregoing Certificate of Designation are true and correct to my ownknowledge. Executed at Chicago, Illinois on November 19, 2012 By:/s/ David (Xiaoying) Gao Name: David (Xiaoying) Gao Title: Chief Executive Officer A-7 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT B FORM OFRIGHTS CERTIFICATE Certificate No. R-[●][●] Rights NOT EXERCISABLE AFTER FEBRUARY 22, 2019 OR SUCH EARLIER DATE AS THE RIGHTS ARE REDEEMED, EXCHANGED ORTERMINATED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY (AS DEFINED BELOW), AT$0.001 PER RIGHT, AND EXCHANGE, IN EACH CASE PURSUANT TO THE TERMS SET FORTH IN THE RIGHTS AGREEMENT (ASDEFINED BELOW). UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANAFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) ANDANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTSCERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR ANAFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON. ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTSREPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTSAGREEMENT.]1 RIGHTS CERTIFICATECHINA BIOLOGIC PRODUCTS, INC. This certifies that ______________________________, or registered assigns, is the registered owner of the number of Rights set forth above, eachof which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of February 22, 2017 (the “RightsAgreement”), between China Biologic Products, Inc., a Delaware corporation (the “Company”), and Securities Transfer Corporation, a Texas corporation (the“Rights Agent,” which term shall include any successor Rights Agent pursuant to the Rights Agreement), to purchase from the Company at any time after theDistribution Date (as such term is defined in the Rights Agreement) and prior to the Expiration Date (as such term is defined in the Rights Agreement) at theoffice of the Rights Agent designated for such purpose, or at the office of its successor as Rights Agent, one one-thousandth of a fully paid and nonassessableshare of Series A Participating Preferred Stock, par value $0.0001 per share (the “Preferred Shares”), of the Company, at an exercise price of $550.00 per oneone-thousandth of a Preferred Share (the “Exercise Price”), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchaseand related Certificate duly executed. The number of Rights evidenced by this Rights Certificate (and the number of one one-thousandths of a Preferred Sharethat may be purchased upon exercise hereof) set forth above, and the Exercise Price per share set forth above, are the number and Exercise Price as of February22, 2017 based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Exercise Price and the number and kind ofPreferred Shares or other securities that may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification andadjustment upon the occurrence of certain events. The Company reserves the right to require prior to the occurrence of a Triggering Event (as such term isdefined in the Rights Agreement) that a number of Rights be exercised so that only whole Preferred Shares will be issued. Capitalized terms used in thisRights Certificate without definition shall have the meanings ascribed to them in the Rights Agreement. 1 The portion of the legend in brackets is to be inserted only if applicable and will replace the preceding sentence. B-1 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by this Rights Certificate are beneficially owned by an Acquiring Person,an Affiliate or Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any nominee of any of theforegoing, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of suchSection 11(a)(ii) Event. This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions arehereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights,limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, whichlimitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement.Copies of the Rights Agreement are on file at the principal executive offices of the Company and the above-mentioned office of the Rights Agent and areavailable without cost upon written request. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights Certificate may be redeemed by the Company, at its option,at a redemption price of $0.001 per Right at any time prior to the earlier of (i) the Distribution Date or (ii) the Close of Business on the Final Expiration Date.In addition, under certain circumstances after any Person becomes an Acquiring Person, the Rights may be exchanged, in whole or in part, for CommonShares, or cash other securities of the Company having essentially the same value or economic rights as such shares. Immediately upon the action of theBoard authorizing any such exchange, and without any further action or any notice, the Rights (other than Rights that are not subject to such exchange) willterminate and the Rights will only enable holders to receive the Common Shares (or cash or other securities or assets of the Company) issuable upon suchexchange. This Rights Certificate, with or without other Rights Certificates, upon surrender at the office of the Rights Agent designated for such purpose, maybe exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like number ofone one-thousandths of a Preferred Share as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holderto purchase. If this Rights Certificate is exercised in part, then the holder will be entitled to receive upon surrender hereof another Rights Certificate or RightsCertificates for the number of whole Rights not exercised. B-2 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. No fractions of Preferred Shares (other than fractions that are integral multiples of one one-thousandth of a Preferred Share, which may, at theelection of the Company, be evidenced by depositary receipts) will be issued upon the exercise of any Right or Rights evidenced hereby. In lieu thereof, acash payment will be made as provided in the Rights Agreement. The Company, at its election, may require that a number of Rights be exercised so that onlywhole Preferred Shares would be issued. No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the number ofone one-thousandths of a Preferred Share or any other securities of the Company that may at any time be issuable on the exercise or exchange hereof, norshall anything contained in herein or in the Rights Agreement be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of theCompany or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consentto any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as specifically provided in the Rights Agreement), orto receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised or exchangein accordance with the Rights Agreement. This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. B-3 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of _______________, 201[●]. ATTEST: CHINA BIOLOGIC PRODUCTS, INC. By: By: Name: Name: Title: Title: Countersigned: SECURITIES TRANSFER CORPORATION, as Rights Agent By: Name: Title: B-4 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. [Form of Reverse Side of Rights Certificate] FORM OF ASSIGNMENT (To be executed by the registered holder if suchholder desires to transfer the Rights Certificate.) FOR VALUE RECEIVED _____________________ hereby sells, assigns and transfers unto (Please print name and address of transferee) this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint __________________________as attorney-in-fact to transfer the within Rights Certificate on the books of China Biologic Products, Inc., with full power of substitution. Dated: ____________________ Signature Signature Medallion Guaranteed: Signatures must be guaranteed by an “Eligible Guarantor Institution” (with membership in an approved signature guarantee medallion program at alevel acceptable to the Rights Agent) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended. All guarantees must be by a financialinstitution (such as a bank or broker) that is a participant in the Securities Transfer Agents Medallion Program (STAMP), the NASDAQ Medallion SignatureProgram (MSP) or the Stock Exchanges Medallion Program (SEMP) and must not be dated. Guarantees by a notary public are not acceptable. B-5 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CERTIFICATE The undersigned hereby certifies, for the benefit of the Company and all holders of Rights and Common Shares, by checking the appropriate boxesthat: (1)the Right(s) evidenced by this Rights Certificate are not Beneficially Owned and ¨ are ¨ are not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person, an Affiliate or Associate of an AcquiringPerson, a Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any nominee of any of the foregoing; and (2)after due inquiry and to the best knowledge of the undersigned, it ¨ did ¨ did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person, anAffiliate or Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any nominee ofany of the foregoing. Dated: ____________________ Signature Signature Medallion Guaranteed: Signatures must be guaranteed by an “Eligible Guarantor Institution” (with membership in an approved signature guarantee medallion program at alevel acceptable to the Rights Agent) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended. All guarantees must be by a financialinstitution (such as a bank or broker) that is a participant in the Securities Transfer Agents Medallion Program (STAMP), the NASDAQ Medallion SignatureProgram (MSP) or the Stock Exchanges Medallion Program (SEMP) and must not be dated. Guarantees by a notary public are not acceptable. B-6 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. [Form of Reverse Side of Rights Certificate – continued] FORM OF ELECTION TO PURCHASE (To be executed if holder desires toexercise Rights represented by the Rights Certificate.) To: China Biologic Products, Inc. The undersigned hereby irrevocably elects to exercise _________________________ Rights represented by this Rights Certificate to purchase thenumber of one one-thousandths of a Preferred Share (or such other securities of the Company or of any other Person that may be issuable upon the exercise ofthe Rights) issuable upon the exercise of such Rights and requests that certificates for such shares be issued in the name of and delivered to: Please insert social securityor other identifying number (Please print name and address) If such number of Rights shall not be all of the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance remaining of such Rightsshall be registered in the name of and delivered to: Please insert social securityor other identifying number (Please print name and address) Dated: ____________________ Signature Signature Medallion Guaranteed: Signatures must be guaranteed by an “Eligible Guarantor Institution” (with membership in an approved signature guarantee medallion program at alevel acceptable to the Rights Agent) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended. All guarantees must be by a financialinstitution (such as a bank or broker) that is a participant in the Securities Transfer Agents Medallion Program (STAMP), the NASDAQ Medallion SignatureProgram (MSP) or the Stock Exchanges Medallion Program (SEMP) and must not be dated. Guarantees by a notary public are not acceptable. B-7 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CERTIFICATE The undersigned hereby certifies, for the benefit of the Company and all holders of Rights and Common Shares, by checking the appropriate boxesthat: (1)the Right(s) evidenced by this Rights Certificate are not Beneficially Owned and ¨ are ¨ are not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person, an Affiliate or Associate of an AcquiringPerson, a Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any nominee of any of the foregoing; and (2)after due inquiry and to the best knowledge of the undersigned, it ¨ did ¨ did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person, anAffiliate or Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any nominee ofany of the foregoing. Dated: ____________________ Signature Signature Medallion Guaranteed: Signatures must be guaranteed by an “Eligible Guarantor Institution” (with membership in an approved signature guarantee medallion program at alevel acceptable to the Rights Agent) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended. All guarantees must be by a financialinstitution (such as a bank or broker) that is a participant in the Securities Transfer Agents Medallion Program (STAMP), the NASDAQ Medallion SignatureProgram (MSP) or the Stock Exchanges Medallion Program (SEMP) and must not be dated. Guarantees by a notary public are not acceptable. B-8 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. [Form of Reverse Side of Rights Certificate – continued] NOTICE The signature in the foregoing Forms of Assignment and Election to Purchase, as the case may be, must conform to the name as written upon the faceof this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. IN THE EVENT THAT THE CERTIFICATIONS SET FORTH IN THE FOREGOING FORMS OF ASSIGNMENT AND ELECTION TOPURCHASE, AS THE CASE MAY BE, ARE NOT COMPLETED, THEN THE COMPANY AND THE RIGHTS AGENT WILL DEEM THEBENEFICIAL OWNER OF THE RIGHTS EVIDENCED BY THIS RIGHT CERTIFICATE TO BE AN ACQUIRING PERSON, AN AFFILIATE ORASSOCIATE OF AN ACQUIRING PERSON, A POST-EVENT TRANSFEREE, A PRE-EVENT TRANSFEREE, A SUBSEQUENT TRANSFEREE ORANY NOMINEE OF ANY OF THE FOREGOING, AS THE CASE MAY BE, AND SUCH ASSIGNMENT OR ELECTION TO PURCHASE WILL NOTBE HONORED AND THE RIGHTS EVIDENCED BY THIS RIGHTS CERTIFICATE WILL BE DEEMED TO BE NULL AND VOID. B-9 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT C FORM OF SUMMARY OFPREFERRED SHARES RIGHTS AGREEMENTOFCHINA BIOLOGIC PRODUCTS, INC. On February 22, 2017, the Board of Directors (the “Board”) of China Biologic Products, Inc. (the “Company”) authorized and declared a dividenddistribution of one right (a “Right”) for each outstanding share of the common stock, par value $0.0001 per share (the “Common Shares”), of the Companyto stockholders of record at the close of business on March 6, 2017 (the “Record Date”). Each Right entitles the registered holder to purchase from theCompany one one-thousandth of a share of Series A Participating Preferred Stock, par value $0.0001 per share (the “Preferred Shares”), of the Company atan exercise price of $550.00 per one one-thousandth of a Preferred Share, subject to adjustment (the “Exercise Price”). The complete terms of the Rights areset forth in a Rights Agreement (the “Rights Agreement”), dated as of February 22, 2017, between the Company and Securities Transfer Corporation, asrights agent. The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works byimposing a significant penalty upon any person or group that acquires fifteen percent (15%) (the “Triggering Percentage”) or more of the Common Sharesof the Company without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to rendermore difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board.However, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer or other business combination approved bythe Board. For those interested in the specific terms of the Rights Agreement, the following is a summary description. Please note, however, that this descriptionis only a summary and is not complete, and should be read together with the entire Rights Agreement, which has been filed with the Securities and ExchangeCommission as an exhibit to a Registration Statement on Form 8-A and an Annual Report on Form 10-K. A copy of the Rights Agreement is available free ofcharge from the Company. Distribution and Transfer of Rights; RightsCertificates:The Board has declared a dividend of one Right for each outstanding Common Share. Prior to the DistributionDate (as defined below): ·the Rights will be evidenced by and trade with the certificates for the Common Shares (or,with respect to any uncertificated Common Shares registered in book entry form, by notationin book entry), in either case together with a copy of this Summary of Rights, and no separaterights certificates will be distributed;·new Common Shares certificates issued after the Record Date will contain a legendincorporating the Rights Agreement by reference (for uncertificated Common Sharesregistered in book entry form, this legend will be contained in a notation in book entry); and C-1 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·the surrender for transfer of any certificates for Common Shares (or the surrender for transfer ofany uncertificated Common Shares registered in book entry form) will also constitute thetransfer of the Rights associated with such Common Shares. Rights will accompany any new Common Shares that are issued after the Record Date. After the Distribution Date, the Company will mail Rights certificates to the Company’s stockholders as of theclose of business on the Distribution Date and the Rights will become transferable apart from the CommonShares. Thereafter, such Rights certificates alone will represent the Rights. Distribution Date:Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the CommonShares and become exercisable following (1) the 10th business day (or such later date as may be determinedby the Board) after the public announcement that any Acquiring Person has acquired beneficial ownership ofthe Triggering Percentage or more of the Common Shares or (2) the 10th business day (or such later date asmay be determined by the Board) after a person or group announces a tender or exchange offer that wouldresult in beneficial ownership by a person or group of the Triggering Percentage or more of the CommonShares. For purposes of the Rights Agreement, beneficial ownership is defined to include the ownership ofderivative securities. The date on which the Rights separate from the Common Shares and become exercisable is referred to as the“Distribution Date.” “Acquiring Person” means a person or group of affiliated or associated persons who has acquired beneficialownership of the Triggering Percentage or more of the Common Shares; provided however, no person who, atthe time of the adoption of the Rights Agreement, beneficially owns the Triggering Percentage or more of theCommon Shares shall be deemed to be an Acquiring Person (i.e. a stockholder’s existing ownership of theCommon Shares will be grandfathered), unless and until such person acquires beneficial ownership ofadditional two percent (2%) or more of the Common Shares without the pre-approval of the Board. Preferred Shares Purchasable Upon Exerciseof Rights:After the Distribution Date, each Right will entitle the holder to purchase, for the Exercise Price, one one-thousandth of a Preferred Share having economic and other terms similar to that of one Common Share. Thisportion of a Preferred Share is intended to give the stockholder approximately the same dividend, voting andliquidation rights as would one Common Share, and should approximate the value of one Common Share. C-2 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. More specifically, each one one-thousandth of a Preferred Share, if issued, will: ·not be redeemable;·entitle holders to quarterly dividend payments of $0.001 per share, or an amount equal to thedividend paid on one Common Share, whichever is greater;·entitle holders upon liquidation either to receive $1 per share or an amount equal to thepayment made on one Common Share, whichever is greater;·have the same voting power as one Common Share;·if the Common Shares are exchanged via merger, consolidation or a similar transaction, willentitle holders to a per share payment equal to the payment made on one Common Share. Flip-In Trigger:If an Acquiring Person obtains beneficial ownership of the Triggering Percentage or more of the CommonShares, then each Right will entitle the holder thereof to purchase, for the Exercise Price, a number ofCommon Shares (or, in certain circumstances, cash, property or other securities of the Company) having athen-current market value of twice the Exercise Price. However, the Rights are not exercisable following theoccurrence of the event set forth above until such time as the Rights are no longer redeemable by theCompany, as further described below. Following the occurrence of an event set forth in preceding paragraph, all Rights that are or, under certaincircumstances specified in the Rights Agreement, were beneficially owned by an Acquiring Person or certainof its transferees will be null and void. Flip-Over Trigger:If, after an Acquiring Person obtains the Triggering Percentage or more of the Common Shares, (i) theCompany merges into another entity, (ii) an acquiring entity merges into the Company or (iii) the Companysells or transfers more than 50% of its assets, cash flow or earning power, then each Right (except for Rightsthat have previously been voided as set forth above) will entitle the holder thereof to purchase, for theExercise Price, a number of shares of common stock of the person engaging in the transaction having a then-current market value of twice the Exercise Price. Redemption of the Rights:The Rights will be redeemable at the Company’s option for $0.001 per Right (payable in cash, CommonShares or other consideration deemed appropriate by the Board) at any time on or prior to the 10th businessday (or such later date as may be determined by the Board) after the public announcement that an AcquiringPerson has acquired beneficial ownership of the Triggering Percentage or more of the Common Shares.Immediately upon the action of the Board ordering redemption, the Rights will terminate and the only right ofthe holders of the Rights will be to receive the $0.001 redemption price. The redemption price will beadjusted if the Company undertakes a stock dividend or a stock split. C-3 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exchange Provision:At any time after the date on which an Acquiring Person beneficially owns the Triggering Percentage or moreof the Common Shares, the Board may exchange the Rights (except for Rights that have previously beenvoided as set forth above), in whole or in part, for Common Shares at an exchange ratio of one Common Shareper Right (subject to adjustment). In certain circumstances, the Company may elect to exchange the Rights forcash or other securities of the Company having a value approximately equal to one Common Share. Expiration of the Rights:The Rights expire on the earliest of (i) 5:00 p.m., New York City time, on the 2 year anniversary date of thedate of the Rights Agreement (unless such date is extended) or (ii) the redemption or exchange of the Rightsas described above. Amendment of Terms of Rights Agreementand Rights:The terms of the Rights and the Rights Agreement may be amended in any respect without the consent of theholders of the Rights on or prior to the Distribution Date. Thereafter, the terms of the Rights and the RightsAgreement may be amended without the consent of the holders of Rights in order to cure any ambiguities, tomake changes that do not adversely affect the interests of holders of the Rights or to shorten or lengthen anytime period pursuant to the Rights Agreement. Voting Rights; Other Stockholder Rights:The Rights will not have any voting rights. Until a Right is exercised, the holder thereof, as such, will have noseparate rights as stockholder of the Company. Anti-Dilution Provisions:The Board may adjust the Exercise Price, the number of Preferred Shares issuable and the number ofoutstanding Rights to prevent dilution that may occur from a stock dividend, a stock split or a reclassificationof the Preferred Shares or Common Shares. With certain exceptions, no adjustments to the Exercise Price will be made until the cumulative adjustmentsamount to at least 1% of the Exercise Price. No fractional Preferred Shares will be issued and, in lieu thereof,an adjustment in cash will be made based on the current market price of the Preferred Shares. Taxes:The distribution of Rights should not be taxable for federal income tax purposes. However, following an eventthat renders the Rights exercisable or upon redemption of the Rights, stockholders may recognize taxableincome. C-4 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 21 CHINA BIOLOGIC PRODUCTS, INC.SUBSIDIARIES OF REGISTRANT The subsidiaries of China Biologic Products, Inc. are as follows: Jurisdiction of Name Incorporation or Organization Ownership InterestTaibang Biological Ltd. BVI 100.0%Taibang Holdings (Hong Kong) Limited HK 100.0%Taibang Biotech (Shandong) Co., Ltd. Shandong PRC 100.0%Taibang (Beijing) Pharmaceutical Research Institute Co., Ltd. Beijing PRC 100.0%Shandong Taibang Biological Products Co., Ltd. Shandong PRC 82.76%Qihe Antai Plasma Co., Ltd. Shandong PRC 82.76%Xiajin Antai Plasma Co., Ltd. Shandong PRC 82.76%Zhangqiu Antai Plasma Co., Ltd. Shandong PRC 82.76%Liaocheng Antai Plasma Co., Ltd. Shandong PRC 82.76%Yishui Taibang Plasma Co., Ltd. Shandong PRC 82.76%Heze Antai Plasma Co., Ltd. Shandong PRC 82.76%Ningyang Taibang Plasma Co., Ltd. Shandong PRC 82.76%Cao Xian Taibang Plasma Co., Ltd. Shandong PRC 82.76%Taibang Biologic Plasma Co., Ltd., Fangcheng District,Fangchenggang City Guangxi PRC 82.76%Huanjiang Taibang Plasma Co., Ltd. Guangxi PRC 82.76%Yuncheng Ziguang Biologic Technology Zone Co., Ltd. Shandong PRC 82.76%Zaozhuang Taibang Plasma Co., Ltd. Shandong PRC 82.76%Xinglong Xian Taibang Plasma Co., Ltd. Hebei PRC 82.76%Daming Xian Taibang Plasma Co., Ltd. Hebei PRC 82.76%Guiyang Dalin Biologic Technologies Co., Ltd. Guizhou PRC 100.0%Guizhou Taibang Biological Products Co., Ltd. Guizhou PRC 100.0%Guizhou Qianfeng Renyuan Bio Material Co., Ltd. Guizhou PRC 100.0%Puding Xian Taibang Plasma Co., Ltd. Guizhou PRC 100.0%Huangping Xian Taibang Plasma Co., Ltd. Guizhou PRC 100.0%Danzhai Xian Qianfeng Plasma Co., Ltd. Guizhou PRC 100.0%Nayong Xian Qianfeng Plasma Co., Ltd. Guizhou PRC 100.0%Sansui Xian Qianfeng Plasma Co., Ltd. Guizhou PRC 100.0%Weining Xian Qianfeng Plasma Co., Ltd. Guizhou PRC 100.0%Zhenyuan Xian Qianfeng Plasma Co., Ltd. Guizhou PRC 100.0% Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 23.1 Consent of Independent Registered Public Accounting Firm The Board of DirectorsChina Biologic Products, Inc.: We consent to the incorporation by reference in the registration statement (No. 333-204761) on Form S-3 and the registration statement (No. 333-151263) onForm S-8 of China Biologic Products, Inc. of our reports dated February 23, 2017, with respect to the consolidated balance sheets of China Biologic Products,Inc. and subsidiaries as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, changes in equity and cash flowsfor each of the years in the three-year period ended December 31, 2016, and the effectiveness of internal control over financial reporting as of December 31,2016, which reports appear in the December 31, 2016 annual report on Form 10-K of China Biologic Products, Inc. /s/ KPMG Huazhen LLPBeijing, ChinaFebruary 23, 2017 Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 31.1 CERTIFICATIONS I, David (Xiaoying) Gao, certify that: 1.I have reviewed this annual report on Form 10-K of China Biologic Products, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: February 23, 2017 /s/ David (Xiaoying) Gao David (Xiaoying) Gao Chief Executive Officer (Principal Executive Officer) Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 31.2 CERTIFICATIONS I, Ming Yang, certify that: 1.I have reviewed this annual report on Form 10-K of China Biologic Products, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: February 23, 2017 /s/ Ming Yang Ming Yang Chief Financial Officer (Principal Financial and Accounting Officer) Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, David (Xiaoying) Gao, the Chief Executive Officer of CHINA BIOLOGIC PRODUCTS, INC. (the “Company”), DOES HEREBYCERTIFY that: 1. The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Report”), fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. IN WITNESS WHEREOF, the undersigned has executed this statement this 23rd day of February, 2017. /s/ David (Xiaoying) Gao David (Xiaoying) Gao Chief Executive Officer (Principal Executive Officer) A signed original of this written statement required by Section 906 has been provided to China Biologic Products, Inc. and will be retained by ChinaBiologic Products, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed forpurposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company,whether made before or after the date hereof, regardless of any general incorporation language in such filing. Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, Ming Yang, the Chief Financial Officer of CHINA BIOLOGIC PRODUCTS, INC. (the “Company”), DOES HEREBY CERTIFY that: 1. The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Report”), fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. IN WITNESS WHEREOF, the undersigned has executed this statement this 23rd day of February, 2017. /s/ Ming Yang Ming Yang Chief Financial Officer (Principal Financial and Accounting Officer) A signed original of this written statement required by Section 906 has been provided to China Biologic Products, Inc. and will be retained by ChinaBiologic Products, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed forpurposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company,whether made before or after the date hereof, regardless of any general incorporation language in such filing. Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: China Biologic Products, Inc., 10-K, February 23, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Address: 18th Floor, 19 Chaoyang Park Road Chaoyang District, Beijing 100125 People’s Republic of China China: +86 10 6598 3099 ir@chinabiologic.com Web site: www.chinabiologic.com China Biologic Products, Inc. 

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