Sinovac Reports Fiscal 2005 Results

Sinovac Reports Fiscal 2005 Results

July 17, 2006

    BEIJING, July 17 /Xinhua-PRNewswire/ -- Sinovac Biotech
Ltd. (Amex: SVA), a leading provider of biopharmaceutical
products in China, announced financial results for its
fiscal year ended December 31, 2005.  Sales increased 33.4%
to $8,608,000 in 2005 from $6,454,000 in 2004.

    Sinovac's CEO, Mr. Weidong Yin commented, "We had
an excellent year in 2005: we received final regulatory
approval for two new vaccines, began human clinical trials
for a pandemic flu vaccine and increased our sales by
33.4%. This year we will strive to increase the production
and sales of Healive in order to capture a bigger share of
China's hepatitis A vaccine market and continue to promote
our combined hepatitis A and B vaccine, Bilive, as a
high-end product. In addition, we expect to begin sales of
our Anflu(TM) product in our first full flu season.  As
always, we are pressing ahead with our R&D programs. We
recently completed phase I clinical trials for our H5N1
pandemic influenza vaccine.  We intend to apply for
authorization from the China SFDA to begin phase II trials
as soon as possible, in our efforts to bring this product
to market to meet the health threats posed by the pandemic
flu to the global community. We are also developing a
vaccine against Japanese encephalitis. Finally, I want to
state that we are taking our fiscal and corporate
governance responsibilities very seriously.  We found some
errors and are making every effort to correct them and
prevent future mistakes."

    Gross profit increased 38.7% to $6,262,000 in 2005 from
$4,516,000 in 2004 and gross profit margin was 72.7% and
70.0% respectively.

    Net loss increased by 9.5% to $5,111,000 in 2005 from
$4,667,000 in 2004. The increase in net loss was primarily
due to increases in selling, general and administrative
(SG&A) expenses, which increased 16.2% to $10,278,000
in 2005 from $8,843,000 in 2004.  SG&A expenses include
sales expenses, stock-based compensation expenses, and
withholding tax liability associated with the exercise of
stock options by Sinovac's employees.  The increase in
sales expenses is primarily due to the exploration of new
markets and efforts to improve sales networks and sales
strategy in 2005.  Stock-based compensation expense
decreased to $3,356,000 in 2005 from $4,428,000 in 2004. 
However, Sinovac believes it may be liable for PRC
withholding taxes associated with the exercise of stock
options by its employees and has accordingly accrued a
current liability of $1,455,000, which was charged to
SG&A expenses in 2005.

    About Sinovac

    Sinovac Biotech Ltd. is a China-based biopharmaceutical
company that focuses on the research, development,
manufacture and commercialization of vaccines that protect
against human infectious diseases.  Sinovac's vaccines
include Healive(TM) (hepatitis A), Bilive(TM) (combined
hepatitis A and B) and Anflu(TM) (influenza).  Sinovac is
currently developing human vaccines against the H5N1 strain
of pandemic influenza, Japanese encephalitis and SARS.

    Additional information about Sinovac is available on
its website, http://www.sinovac.com and the Sinovac
Investor Relations website,
http://finance.groups.yahoo.com/group/Sinovac_Biotech_IR/
    
    To be added to our distribution list, please email:
[e-mail]

    Safe Harbor Statement

    This announcement contains forward-looking statements. 
These statements are made under the "safe harbor"
provisions of the U.S. Private Securities Litigation Reform
Act of 1995.  These forward-looking statements can be
identified by words or phrases such as "will,"
"expects," "anticipates,"
"future," "intends," "plans,"
"believes," "estimates" and similar
statements. Among other things, the business outlook and
quotations from management in this press release contain
forward-looking statements.  Statements that are not
historical facts, including statements about Sinovac's
beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties.  A number of important factors could cause
actual results to differ materially from those contained in
any forward-looking statement.  Sinovac does not undertake
any obligation to update any forward-looking statement,
except as required under applicable law.

    For more information, please contact:

     Craig H. Bird
     Segue Investor Relations
     Tel:   [phone]
     Fax:   [phone]
     Email: [e-mail]

SOURCE  Sinovac Biotech Ltd.