-- Revenue Increased 62% to $70.6 Million in 3Q08 --

-- 3Q08 Net Income Increased 38% to $16.5 Million --

-- 3Q08 Diluted EPS $0.21 versus 3Q07 Diluted EPS $0.16 --

NEW YORK, Nov. 10 /Xinhua-PRNewswire-FirstCall/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter ('OTC') products in China, today announced financial results for the quarter ended September 30, 2008.

Financial Results

Revenue in the third quarter of 2008 increased 62% year over year to $70.6 million from $43.5 million, reflecting a continued increase in demand for the Company's OTC and prescription pharmaceutical products. Revenue from pharmaceutical products increased 75% to $62.1 million from $35.5 million in the third quarter of 2007. Revenue from OTC pharmaceutical products increased 91% to $37.8 million from $19.8 million in the prior year's third quarter, reflecting continued recognition of the Company's new products supported by effective marketing campaigns. Sales generated by CCXA and Boke, which were not subsidiaries in the third quarter of 2007, were major contributors to the increase in OTC sales and generated a combined $17.1 million of revenue during the third quarter of 2008. Strong sales of the Jinji series and Jinji Yimucao products also contributed to the increase in OTC revenue during the third quarter of 2008. Prescription pharmaceutical products generated $24.3 million in revenue during the third quarter of 2008, a 55% year over year increase. Prescription pharmaceutical sales increasingly reflect contributions from the Company's diversifying product portfolio, including recently launched CCXA prescription products, as well as from existing products. Expanding rural market coverage also drove prescription pharmaceutical revenue performance during the third quarter of 2008. Nutraceutical product revenue increased approximately 6% to $8.5 million in the third quarter of 2008 from $8.0 million in the prior year's period, and decreased as a percentage of total revenue to approximately 12% versus 18% in the comparable period. The increase in Nutraceutical revenue was mainly attributed to the increase in sales of peptide tablets and peptide powder. The Company continues to focus on selling and marketing higher growth pharmaceutical products.

Gross profit in the third quarter of 2008 increased 54% to $47.2 million from $30.7 million in the third quarter of 2007. Gross margin was approximately 66.9%, compared to 70.5% in the prior year's period, reflecting the integration of CCXA and a shift in product mix.

For the third quarter of 2008, operating expenses increased 52% to $25.3 million from $16.7 million in the comparable period of 2007. The increase in operating expenses was primarily due to increases in sales and marketing expenses, as well as additional depreciation and amortization costs due to the Boke and CCXA acquisitions. Income from operations in the third quarter of 2008 increased 56% to $21.8 million from $14.0 million in the third quarter of 2007, while operating margin was 31%, compared to 32% in the third quarter of the prior year.

Net income for the third quarter of 2008 increased 38% to $16.5 million, or $0.21 per diluted share, compared to $11.9 million, or $0.16 per diluted share, in the prior year's period. Diluted share count in the third quarter of 2008 was 85.4 million, compared to 75.3 million in the third quarter of 2007.

Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented, 'We are very pleased with our financial performance in the third quarter of 2008, which demonstrates continued growth across all of our product categories. We are also extremely well-capitalized versus competitors, with over $220 million of cash and operating cash flow up 80% year over year. Lastly, our third quarter results support our confidence in our brand strength, expansion into rural markets, and unique positioning as a leading consolidator in China's healthcare space.'

Mr. Liu concluded, 'Today we are increasing our full year 2008 revenue expectation to at least $250 million, up from prior guidance of $245 million. We are reiterating our full year 2008 net income expectation of $62 million, which excludes convertible note interest expense for the second half of 2008, and also excludes any contributions from Nuo Hua and GHK acquisitions. These recently closed acquisitions should create several exciting opportunities for our Company including enhanced distribution reach in strategic areas like hospital pharmacies, new product development and expertise bringing new products to market in the future.'

Conference Call

The Company will hold a conference call at 8:00 am ET on November 10, 2008 to discuss its fiscal third quarter 2008 results. Listeners may access the call by dialing 1-866-578-5801 or 1-617-213-8058 for international callers, access code: 73013671. A webcast will also be available through AOBO's website at http://www.bioaobo.com . A replay of the call will be available through November 17, 2008. Listeners may access the replay by dialing 1-888- 286-8010 or 1-617-801-6888 for international callers, access code: 59642931.

About American Oriental Bioengineering Inc.

American Oriental Bioengineering Inc. is a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter products in China.

Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other factors identified in the Company's filings with the Securities and Exchange Commission, including the Form 10-Q for the quarter ended September 30, 2008, may cause actual results or events to differ materially from those described in the forward looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.