Terminates Prior LOI and Acquires Profitable Holding Company to Strengthen Distribution Network and Retail Presence

Acquires Research and Product Development Company to Expedite Product Launches

Conference Call Scheduled for October 22, 2008 at 8:00 am E.T.

NEW YORK, Oct. 21 /Xinhua-PRNewswire-FirstCall/ -- American Oriental Bioengineering, Inc. (NYSE: AOB) ('AOBO'), a leading marketer and manufacturer of pharmaceutical and healthcare products in China, today announced that it has completed the acquisition of Nuo Hua Investment Company Ltd. ('Nuo Hua'), as well as the acquisition of GuangXi HuiKe Research and Development Company Ltd. ('GHK'), in cash transactions totaling $53.1 million. Nuo Hua is a holding company with subsidiaries and affiliated companies that maintain a significant presence in pharmaceutical wholesale and retail distribution in China. AOBO acquired Nuo Hua for $39.5 million after terminating a previously announced, non-binding Letter of Intent to acquire another company in the distribution industry in China, as discussed below. GHK is engaged in pharmaceutical research and product development leading to SFDA approval and expedient product launches in China. The acquired companies are profitable and AOBO believes that the acquisitions will significantly enhance AOBO's distribution platform and product launch capabilities, particularly for new product launches starting in 2009.

Tony Liu, Chief Executive Officer of American Oriental Bioengineering stated, 'We are very pleased to acquire Nuo Hua and GHK and today's announcement represents a major step toward achieving our goal of becoming one of China's top pharmaceutical companies. Nuo Hua provides us with a diverse range of incremental wholesale and retail distribution opportunities, such as in new top-tier hospitals and rural areas, both of which bolster our long-term growth capabilities. GHK lends the innovation we need to bring new products to market quickly and effectively, and brings us several existing patents, a fantastic team of product specialists, and industry know-how in China's complex pharmaceutical registration process.'

Liu continued, 'The combination of Nuo Hua and GHK together is particularly exciting because we can leverage new product development across our enhanced wholesale and retail distribution network, which, through Nuo Hua, now covers major top-tier (Class II and Class III) hospitals in Northern China, additional provincial and municipal hospitals, lower level distributors and retail chain pharmacies throughout the country. As a result of these two transactions, we anticipate at least three new product launches next year and at least ten in 2010. Each of these products targets an addressable market size of at least $200 million annually. We look forward to building on our proven marketing skills with a more robust product pipeline and a more formidable distribution presence going forward.'

Nuo Hua Investment Company, Ltd.

Nuo Hua Investment Company Ltd. ('Nuo Hua'), through its subsidiaries and affiliate companies, distributes more than 6,000 pharmaceutical products through an extensive sales network covering major urban and rural areas in China. Nuo Hua's distribution platform covers major top-tier (Class II and Class III) hospitals in Northern China, and also includes provincial and municipal hospitals, lower level distributors and retail chain pharmacies throughout the country. Nuo Hua has achieved a compound annual revenue growth rate of more than 30 percent since fiscal 2006. In 2009, AOBO anticipates that it will consolidate revenue from Nuo Hua of approximately $80 million and net income of $2.3 million.

AOBO entered into an acquisition agreement to acquire Nuo Hua for approximately $39.5 million in cash after terminating a previously announced, non-binding Letter of Intent to acquire another company in the distribution industry in China. Management believes that acquiring Nuo Hua instead of the other company was a more efficient use of cash, allowed AOBO to acquire compelling distribution assets at a lower price, and also allowed AOBO to conserve cash for future acquisitions and growth plans.

GuangXi HuiKe Research and Development Company Ltd.

GuangXi HuiKe ('GHK') is engaged in pharmaceutical research and product development leading to SFDA approval and expedient product launches in China. The Company employs 22 professionals and provides research and development through innovative technology, raw material selection, extraction and production of pharmaceutical products. The Company also has a dedicated focus on navigating the new drug approval and launch process in China, and has completed over 60 development projects over the past few years, including obtaining new drug production licenses, approvals for clinical trials, and technology patents. AOBO acquired GHK for $13.6 million in cash.

The monetary exchange rate used for these transactions was US$1.00: RMB 6.83.

Conference Call

The Company will hold a conference call at 8:00 am ET (8:00 pm China Time) on Wednesday, October 22, 2008, to discuss the acquisitions of Nuo Hua and GHK. Listeners may access the call by dialing the following numbers: United States toll free: +1-866-316-1368, International: +1-913-312-0845, Northern China toll free: +10-800-714-0970, Southern China toll free: +10-800-140-0945. A webcast will also be available on the Company's website at http://www.bioaobo.com . A replay of the call will be available through October 29, 2008. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for international callers, access code: 4634165.

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-K for the year ended December 31, 2007 and the Form 10-Q for the quarter ended June 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.

SOURCE American Oriental Bioengineering, Inc.