Skystar Bio-Pharmaceutical Announces Expansion Plans and Growth Expectations

XI’AN, CHINA--(Marketwire - July 14, 2009) - Skystar Bio-Pharmaceutical Company (NASDAQ: SKBI) (“Skystar” or the “Company”), a China-based producer and distributor of veterinary medicines, vaccines, micro-organisms and feed additives, today announced its business expansion plans and growth expectations following the Company’s recent common stock listing on the NASDAQ Capital Market.

Skystar’s veterinary healthcare and medical care products cover the major segments of the animal farming industry through its four product lines: veterinary medications, micro-organisms, feed additives and veterinary vaccines. The Company has a robust portfolio of over 170 products, as well as over 40 products under development for which the Company expects approval this year. Skystar has a strategic sales and distribution network of more than 1,128 agents and 400 direct customers. Skystar’s distribution network covers all 29 farm producing provinces in China. Skystar is currently the only China-based veterinary supply company that is listed on a U.S. stock exchange.

“At this stage in our corporate development, we are pleased to increase our visibility by listing on the NASDAQ Capital Market,” Weibing Lu, Skystar’s Chairman and Chief Executive Officer, stated. “We are competing in a young and fragmented industry where demand exceeds supply. We hold a significant competitive advantage by offering four product lines that address key segments of the animal farming industry, whereas most of our competitors offer only one or two products. We also strive to deliver higher quality and more effective products, with lower prices and better service than our competitors. We are leveraging our extensive distribution network and solid customer base by adding an estimated 40 products currently under development. In addition, we are seeking to increase our manufacturing capabilities as well as exploring acquisition opportunities in our industry.

“We are in the process of completing our vaccine manufacturing facility, which is expected in the fourth quarter of this year,” continued Mr. Lu. “Once completed, this facility is expected to increase our vaccine production capacity by 2,300%, from 250 million units to 6 billion units, with a projected increase in revenue of $14 million with gross margin of $8.4 to $9.8 million in 2010. We also expect to complete our micro-organism and feed additives facility in the fourth quarter of this year, which is anticipated to increase our micro-organism and feed additives production capacity by 48.7%. Once completed, the micro-organism facility is expected to add $2.7 million in revenue with gross margin of $1.9 million in 2010.”

For fiscal 2008, Skystar reported $25.6 million in total revenues and net income of $5.6 million, compared with revenues of $15.1 million and net loss of $2.0 million for fiscal year 2007. For fiscal 2003 through 2008, Skystar has achieved a compound annual growth rate of 84.39% for revenues and 84.36% for gross margins.

Skystar Common Stock

Skystar common stock began trading on June 26, 2009 on the NASDAQ Capital Market. A public offering of 1.61 million shares of common stock at $12.98 per share was completed on July 8, 2009 for gross proceeds of $20.89 million.

About Skystar Bio-Pharmaceutical Company

Skystar is a China-based developer and distributor of veterinary healthcare and medical care products. Skystar has four product lines (veterinary medicines, micro-organisms, vaccines and feed additives) and over 170 products, with over 40 additional products in the developmental stage. Skystar has formed strategic sales distribution networks covering 29 provinces throughout China. For additional information, please visit http://www.skystarbio-pharmaceutical.com.

To be added to the Company’s email distribution for future news releases, please send your request to skystar@tpg-ir.com.

Forward-looking Statements

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People’s Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.