##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission file number 000-51409
 BEIJING MED-PHARM CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-0434726(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)600 W. Germantown Pike, Suite 400Plymouth Meeting, Pennsylvania
    
    19462(Address of principal executive offices)
    
    (Zip Code)
 (610 ) 940-1675
(Registrants telephone number, including area code)
 þ o
  o o þ
 o þ




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##### 



BEIJING MED-PHARM CORPORATION
INDEX
 Page No.Part I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of June 30, 2007 (Unaudited) and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations (Unaudited) for the three and six months
ended June 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Stockholders Equity (Unaudited) for the three and
six months ended June 30, 2007
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended
June 30, 2007 and 2006
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results Of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23Part II OTHER INFORMATIONItem 1A. Risk Factors
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 6. Exhibits
    
    
    30SIGNATURESCertificate of the Chief Executive OfficerCertificate of the Chief Financial OfficerCertificate of the Chief Executive Officer, required by Rule 13a-14(b)Certificate of the Chief Financial Officer, required by Rule 13a-14(b)
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 BEIJING MED-PHARM CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)June 30,
    
    
    December 31,2007
    
    
    2006AssetsCurrent Assets:Cash and Cash Equivalents
    
    $
    10,399,735
    
    
    $
    15,330,606Restricted Cash
    
    
    498,513
    
    
    
    108,000Accounts Receivable, net of allowance for doubtful accounts of $0
    
    
    8,824,311
    
    
    
    7,237,167Inventory, net of allowance for obsolescence of $0
    
    
    1,870,503
    
    
    
    1,969,547Note Receivable
    
    
    659,000
    
    
    
    Other Receivables
    
    
    287,629
    
    
    
    350,151VAT Receivable
    
    
    357,225
    
    
    
    597,119Prepaid Expenses and Other Current Assets
    
    
    1,080,430
    
    
    
    597,439Total Current Assets
    
    
    23,977,346
    
    
    
    26,190,029Restricted Cash
    
    
    157,000
    
    
    
    157,000Property and Equipment, net
    
    
    440,071
    
    
    
    312,594Investments, at Cost
    
    
    131,416
    
    
    
    128,205Intangible Assets, net of accumulated amortization
    
    
    600,889
    
    
    
    728,722Total Assets
    
    $
    25,306,722
    
    
    $
    27,516,550Liabilities and Stockholders EquityCurrent Liabilities:Notes Payable
    
    $
    117,378
    
    
    $
    117,378Related Party Notes Payable
    
    
    258,567
    
    
    
    548,422Accounts Payable
    
    
    5,947,829
    
    
    
    6,063,956Accounts Payable Wanhui Group
    
    
    
    
    
    
    214,227Deferred Revenue
    
    
    80,476
    
    
    
    18,159Accrued Payroll
    
    
    532,212
    
    
    
    533,290Accrued Professional Fees
    
    
    186,933
    
    
    
    140,349Accrued Taxes and related expenses
    
    
    80,313
    
    
    
    85,603Accrued Social Welfare and related expenses
    
    
    206,250
    
    
    
    204,134Accrued Contract Allowance
    
    
    457,896
    
    
    
    462,581Accrued Other
    
    
    481,296
    
    
    
    442,172Total Current Liabilities
    
    
    8,349,150
    
    
    
    8,830,271Notes Payable, long term
    
    
    59,082
    
    
    
    126,495Total Liabilities
    
    $
    8,408,232
    
    
    $
    8,956,766Stockholders Equity:Common Stock, $.001 Par Value; 50,000,000 Shares Authorized;
26,854,943 and 26,522,868 Shares Issued and Outstanding as of
June 30, 2007 and December 31, 2006, respectively
    
    $
    26,855
    
    
    $
    26,523Additional Paid in Capital
    
    
    30,388,955
    
    
    
    28,039,112Common Stock Warrants
    
    
    5,494,499
    
    
    
    6,371,332Accumulated Deficit
    
    
    (19,210,397
    )
    
    
    (15,964,418
    )Accumulated Other Comprehensive Income
    
    
    198,578
    
    
    
    87,235Total Stockholders Equity
    
    
    16,898,490
    
    
    
    18,559,784Total Liabilities and Stockholders Equity
    
    $
    25,306,722
    
    
    $
    27,516,550
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BEIJING MED-PHARM CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Revenues
    
    $
    7,179,880
    
    
    $
    5,398,797
    
    
    $
    12,865,315
    
    
    $
    10,121,581Cost of Sales
    
    
    6,630,913
    
    
    
    5,221,754
    
    
    
    11,855,559
    
    
    
    9,773,859Gross Margin
    
    
    548,967
    
    
    
    177,043
    
    
    
    1,009,756
    
    
    
    347,722Sales and Marketing Expenses
    
    
    305,589
    
    
    
    281,273
    
    
    
    726,936
    
    
    
    589,605General & Administration Expenses
    
    
    1,896,241
    
    
    
    1,538,716
    
    
    
    3,754,751
    
    
    
    2,938,653Total Operating Expenses
    
    
    2,201,830
    
    
    
    1,819,989
    
    
    
    4,481,687
    
    
    
    3,528,258Loss From Operations
    
    
    (1,652,863
    )
    
    
    (1,642,946
    )
    
    
    (3,471,931
    )
    
    
    (3,180,536
    )Other Income (Expense):Interest Income
    
    
    119,245
    
    
    
    42,078
    
    
    
    269,576
    
    
    
    92,222Interest Expense
    
    
    (24,790
    )
    
    
    (7,202
    )
    
    
    (43,624
    )
    
    
    (23,589
    )Other Expense
    
    
    
    
    
    
    (3,415
    )
    
    
    
    
    
    
    (3,415
    )Total Other Income
    
    
    94,455
    
    
    
    31,461
    
    
    
    225,952
    
    
    
    65,218Loss Before Provision For Income Taxes
    
    
    (1,558,408
    )
    
    
    (1,611,485
    )
    
    
    (3,245,979
    )
    
    
    (3,115,318
    )Provision For Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,863Net Loss
    
    $
    (1,558,408
    )
    
    $
    (1,611,485
    )
    
    $
    (3,245,979
    )
    
    $
    (3,149,181
    )Basic and Diluted Loss Per Share
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.12
    )
    
    $
    (0.14
    )Basic and Diluted Weighted-average
Shares Outstanding
    
    
    26,738,948
    
    
    
    22,778,328
    
    
    
    26,664,122
    
    
    
    22,338,002
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BEIJING MED-PHARM CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited)
 AccumulatedOtherComprehensiveCommon Stock
    
    
    
    
    
    
    Common
    
    
    
    
    
    
    Income Foreign
    
    
    TotalNumber
    
    
    $.001 Par
    
    
    Additional
    
    
    Stock
    
    
    Accumulated
    
    
    Currency
    
    
    Stockholdersof Shares
    
    
    Value
    
    
    Paid-in Capital
    
    
    Warrants
    
    
    Deficit
    
    
    Translation
    
    
    EquityBalance as of December 31,
2006
    
    
    26,522,868
    
    
    $
    26,523
    
    
    $
    28,039,112
    
    
    $
    6,371,332
    
    
    $
    (15,964,418
    )
    
    $
    87,235
    
    
    $
    18,559,784Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    316,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316,028Warrant Exercise
    
    
    118,323
    
    
    
    118
    
    
    
    1,013,526
    
    
    
    (479,833
    )
    
    
    
    
    
    
    
    
    
    
    533,811Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,687,571
    )
    
    
    
    
    
    
    (1,687,571
    )Other Comprehensive LossForeign Currency
Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,597
    
    
    
    39,597Total Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,647,974
    )Balance as of March 31, 2007
    
    
    26,641,191
    
    
    $
    26,641
    
    
    $
    29,368,666
    
    
    $
    5,891,499
    
    
    $
    (17,651,989
    )
    
    $
    126,832
    
    
    $
    17,761,649Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    356,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    356,396Warrant and Option Exercises
    
    
    213,752
    
    
    
    214
    
    
    
    663,893
    
    
    
    (397,000
    )
    
    
    
    
    
    
    
    
    
    
    267,107Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,558,408
    )
    
    
    
    
    
    
    (1,558,408
    )Other Comprehensive LossForeign Currency
Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,746
    
    
    
    71,746Other Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,486,661
    )Balance as of June 30, 2007
    
    
    26,854,943
    
    
    $
    26,855
    
    
    $
    30,388,955
    
    
    $
    5,494,499
    
    
    $
    (19,210,397
    )
    
    $
    198,578
    
    
    $
    16,898,490
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BEIJING MED-PHARM CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 For the six months ended June 30,2007
    
    
    2006Cash Flows from Operating Activities:Net Loss
    
    $
    (3,245,979
    )
    
    $
    (3,149,181
    )Adjustments to Reconcile Net Loss to Net Cash Used In Operating
Activities:Depreciation and amortization of Property and Equipment
    
    
    51,901
    
    
    
    38,829Amortization of Intangible Assets
    
    
    127,833
    
    
    
    129,541Stock-Based Compensation
    
    
    672,424
    
    
    
    567,024Loss on Disposal of Asset
    
    
    19,589
    
    
    
    3,398Increase in Accounts Receivable
    
    
    (1,587,144
    )
    
    
    (346,697
    )Decrease (Increase) in Inventory
    
    
    99,045
    
    
    
    (265,933
    )(Increase) Decrease in Other Receivables
    
    
    62,522
    
    
    
    31,014Decrease in Value Added Tax Receivable
    
    
    239,894
    
    
    
    15,349(Increase) Decrease in Prepaid Expenses and Other Current Assets
    
    
    (482,991
    )
    
    
    3,745(Decrease) Increase in Accounts Payable
    
    
    (116,127
    )
    
    
    (254,610
    )Increase in Deferred Revenue
    
    
    62,317
    
    
    
    166Decrease in Accrued Payroll
    
    
    (1,078
    )
    
    
    (15,862
    )Increase (Decrease) in Accrued Professional Fees
    
    
    46,584
    
    
    
    (124,150
    )Decrease in Accrued Taxes and related expenses
    
    
    (5,290
    )
    
    
    Increase in Accrued Social Welfare and related expenses
    
    
    2,115
    
    
    
    (Decrease) Increase in Contract Allowances
    
    
    (4,685
    )
    
    
    4,233Increase in Accrued Other
    
    
    39,126
    
    
    
    96,017Net Cash Used in Operating Activities
    
    
    (4,019,944
    )
    
    
    (3,267,117
    )Cash Flows from Investing Activities:Acquisition payment due to Wanwei Group
    
    
    (214,227
    )
    
    
    (412,089
    )Acquisition of Property and Equipment
    
    
    (198,966
    )
    
    
    (135,957
    )Note Receivable with Rongheng
    
    
    (659,000
    )
    
    
    Net Cash Used In Investing Activities
    
    
    (1,072,193
    )
    
    
    (548,046
    )Cash Flows from Financing Activities:Net Proceeds from Exercise of Warrants
    
    
    800,916
    
    
    
    2,591,318Payments on Note Payable
    
    
    (357,268
    )
    
    
    (69,643
    )Increase in restricted cash
    
    
    (390,513
    )
    
    
    Investment held for sale
    
    
    (1,852
    )
    
    
    Net Cash Provided by Financing Activities
    
    
    51,283
    
    
    
    2,521,675Effect of exchange rate changes on cash
    
    
    109,983
    
    
    
    11,671Net Decrease in Cash and Equivalents
    
    
    (4,930,871
    )
    
    
    (1,281,817
    )Cash and Equivalents, Beginning
    
    
    15,330,606
    
    
    
    6,905,911Cash and Equivalents, Ending
    
    $
    10,399,735
    
    
    $
    5,624,094Supplemental Disclosure of Cash Flow Information:Cash Paid During the Years for:Income Taxes
    
    $
    0
    
    
    $
    50,290Interest
    
    
    25,533
    
    
    
    33,768
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BEIJING MED-PHARM CORPORATION AND SUBSIDIARIES
 
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 1. Basis of Presentation:
  Earnings Per Share:
 New Accounting Policy: Accounting for Uncertainty in Income Taxes Accounting for Contingencies Accounting for Income Taxes
    7




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New Accounting Pronouncement:
   Reclassifications:
 2. Acquisition:
  3. Segment Information:
    8




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Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Pharmaceutical Distribution
    
    $
    7,159,275
    
    
    
    5,385,757
    
    
    $
    12,844,710
    
    
    
    10,064,870Sales and Marketing
    
    
    20,605
    
    
    
    13,040
    
    
    
    20,605
    
    
    
    56,711Sales and Marketing intersegment
    
    
    139,241
    
    
    
    225,610
    
    
    
    240,770
    
    
    
    363,933Eliminations
    
    
    (139,241
    )
    
    
    (225,610
    )
    
    
    (240,770
    )
    
    
    (363,933
    )Total Revenue
    
    $
    7,179,880
    
    
    
    5,398,797
    
    
    $
    12,865,315
    
    
    
    10,121,581Pharmaceutical Distribution
    
    $
    127,246
    
    
    
    (91,250
    )
    
    $
    (150,644
    )
    
    
    (224,107
    )Sales and Marketing
    
    
    (695,644
    )
    
    
    (452,571
    )
    
    
    (1,099,885
    )
    
    
    (844,976
    )Corporate
    
    
    (1,414,727
    )
    
    
    (1,059,065
    )
    
    
    (2,645,974
    )
    
    
    (2,039,292
    )Eliminations
    
    
    330,263
    
    
    
    (40,060
    )
    
    
    424,572
    
    
    
    (72,161
    )Total Operating Loss
    
    $
    (1,652,863
    )
    
    
    (1,642,946
    )
    
    $
    (3,471,931
    )
    
    
    (3,180,536
    )
 4. Shareholders Equity
  Three months ended June 30,
    
    Six months ended June 30,2007
    
    2006
    
    2007
    
    2006Weighted average basic shares
    
    
    26,738,948
    
    
    
    22,778,328
    
    
    
    26,664,122
    
    
    
    22,338,002
  Three months ended June 30,
    
    Six months ended June 30,2007
    
    2006
    
    2007
    
    2006Number of shares
    
    
    2,206,001
    
    
    
    1,555,926
    
    
    
    2,035,286
    
    
    
    1,796,385Range of exercise price
    
    $
    1.15  $10.90
    
    
    $
    1.15-$4.20
    
    
    $
    1.15  $10.90
    
    
    $
    1.15-$4.20
 5. Stock-Based Compensation:
  9




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Three months ended June 30,
    
    Six months ended June 30,2007
    
    2006
    
    2007
    
    2006Expected life (years)
    
    
    5.0
    
    
    
    5.0
    
    
    
    5.0
    
    
    
    5.0Risk-free interest rate
    
    
    5.23
    %
    
    
    5.19
    %
    
    
    5.15%-5.23
    %
    
    
    4.32-5.19
    %Expected Volatility
    
    
    80
    %
    
    
    105.30
    %
    
    
    78.8-80
    %
    
    
    93.6-105.3
    %Expected Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %
    Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregatePrice
    
    
    Term
    
    
    IntrinsicOptions
    
    
    per Share
    
    
    (in years)
    
    
    ValueOutstanding on January 1, 2007
    
    
    2,103,000
    
    
    $
    2.08
    
    
    
    
    
    
    
    Granted
    
    
    40,000
    
    
    
    7.95
    
    
    
    
    
    
    
    Outstanding on March 31, 2007
    
    
    2,143,000
    
    
    $
    2.18
    
    
    
    7.78
    
    
    $
    4,682,150Granted
    
    
    460,000
    
    
    
    9.23
    
    
    
    
    
    
    
    Exercised
    
    
    (35,728
    )
    
    
    1.75
    
    
    
    
    
    
    
    Outstanding on June 30, 2007
    
    
    2,567,272
    
    
    $
    3.45
    
    
    
    7.94
    
    
    $
    8,865,022Exercisable on June 30, 2007
    
    
    1,241,151
    
    
    $
    1.63
    
    
    
    7.13
    
    
    $
    2,022,606
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Weighted-AverageGrant-Date FairNonvested Shares
    
    Shares
    
    
    ValueNonvested at January 1, 2007
    
    
    1,147,175
    
    
    $
    1.92Granted
    
    
    500,000
    
    
    
    6.17Vested
    
    
    (321,054
    )
    
    
    2.13Non-vested at June 30, 2007
    
    
    1,326,121
    
    
    $
    3.75
  6. Note Receivable:
  7. Subsequent events:
    11




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12




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with the Consolidated Financial
Statements and notes thereto contained herein and in conjunction with the financial statements and
notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31,
2006, filed with the SEC on March 26, 2007.
 Forward-Looking Statements
  Overview
  
    
    pre-market entry analysis;
    
    clinical trial management;
    
    product registration;
    
    market research;
    
    pharmaceutical marketing to physicians, hospitals and other healthcare providers; and
    
    pharmaceutical distribution.
 13




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##### Table of Contents




    
    western medicines;
    
    traditional Chinese medicines;
    
    bio-chemical medicines; and
    
    medical applications.
 Rongheng
   GPC Joint Venture
    14




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Pico
  Sunstone
   15




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Our Opportunity
   Our Strategy and Solution
  
    
    combine our market development sources with market fulfillment services;
    
    use our marketing arm to create demand for products that we offer
exclusively through our distribution arm on a national basis in China;
    
    grow both internally and through strategic acquisitions of product
marketing and distribution rights and of other distributors; and
 16




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
    
    provide an experienced management team and transparent financial
reporting through the reports that we are required to file as a
reporting company under the Securities Exchange Act of 1934, as
amended, or the Exchange Act.
 Our Product Portfolio
  
    
    Propess. Propess vaginal insert, or Propess, is a vaginal
insert used to ripen the cervix in preparation for
childbirth when labor is induced. The manufacturer of
Propess is Cytokine PharmaSciences, Inc., or Cytokine. We
entered into an agreement with Cytokine in August 2005 to
market and distribute Propess in China. We began marketing
Propess and recorded revenues with respect to this product
during the first six months of 2006.
    
    Anpo. Anpo, or ritodrine hydrochloride, is a muscle
relaxant available in both injectable and oral forms, and
is used for managing pre-term labor. In July 2006, we
entered into an agreement with Taiwan Biotech Co. Ltd. to
serve as the exclusive distributor of Anpo in mainland
China. We began marketing Anpo and recorded revenues with respect to
this product during the last six months of 2006.
    
    Misopess. Misopess vaginal insert, or Misopess, is a
vaginal insert under investigation in several countries for
cervical ripening and induction of labor. The manufacturer
of Misopess is Cytokine. We entered into an agreement with
Cytokine in November 2006 to conduct late-stage clinical
development, registration, sales, marketing and
distribution in China. Under terms of the agreement, we
will initiate a Chinese registration trial of Misopess,
with the expectation that, once Mispoess receives US FDA
approval, data from this single trial will permit a
regulatory application with the SFDA in late 2008 or 2009.
    
    Fentora. Fentora, or fentanyl buccal tablet, received US
FDA approval in September 2006 for the management of
breakthrough pain in patients with cancer. The manufacturer
of Fentora is Cephalon, Inc, or Cephalon. We entered into a
service agreement with Cephalon in December 2006 under
which we will complete the clinical development and
registration process for Fentora in China.
    
    Clindesse. Clindesse, or clindamycin phosphate vaginal cream, is
indicated for the treatment of bacterial vaginosis in non-pregnant
women. The manufacturer of Clindesse is KV Pharmaceutical Company
(KV). Under the terms of the agreement we entered into with KV in July
2007, we will complete late stage clinical development and
registration of Clindesse(TM) with the SFDA prior to assuming
responsibilities for sales, marketing and distribution in China.
    
    Ondansetron. Ondansetron Flashtab ®, is a generic form of Zofran®, a
5-HT(3) antagonist used to reduce nausea and vomiting induced by
cytotoxic chemotherapy and radiotherapy and to prevent post-operative
nausea and vomiting. The manufacturer of Orndestron is Shanghai
Ethypharm (Ethypharm). Under the terms of the agreement we entered
into with Ethypharm in July 2007, Ethypharm will pursue registration
of Orndansetron and we will then be responsible for sales, marketing,
distribution and supply in China.
    
    Galake.Galake is currently approved for marketing in China and is
indicated for the relief of pain associated with conditions including
trauma, surgery, cancer, lower back pain, arthritis and headache. The
manufacturer of Galake is Lotus Healthcare, Inc. (Lotus). Under the
terms of the agreement we entered into with Lotus, we will promote and
sell Galake in China.
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Critical Accounting Policies
 Uncertainty in Income Taxes
 Accounting for Uncertainty in
Income Taxes Accounting for Contingencies Accounting for Income Taxes
     Revenue Recognition
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Results of Operations
 Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
 Net Revenue:
  Cost of Sales:
  Sales and Marketing Expenses:
  General and Administrative Expenses:
  Interest Income:
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##### Table of Contents



Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
 Net Revenue
  Cost of Sales:
  Sales and Marketing Expenses:
  General and Administrative Expenses:
  Interest Income and Expense:
  20




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##### Table of Contents



Liquidity and Capital Resources
     
    
    Our operating expenses and general working capital;
    
    The marketing of our current and future products;
    
    Our pursuit of internal growth and strategic acquisition of Shanghai Rongheng
Pharmaceutical Company Limited (Rongheng); and
    
    The expenses necessary to maintain our status as an Exchange Act reporting company.
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22




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Rate Sensitivity
  Interest Rate Sensitivity
  
 ITEM 4. Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures
  (b) Changes in Internal Control Over Financial Reporting
  23




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1A. Risk Factors
  We may be unsuccessful in our strategy of expanding our product
portfolio, acquiring complementary businesses or integrating acquired businesses.
   
    
    the assimilation of new operations, technologies and personnel;
    
    unforeseen or hidden liabilities;
    
    the diversion of resources from our existing businesses;
    
    the inability to generate sufficient revenue to offset the costs and expenses of acquisitions; and
    
    the potential loss of, or harm to relationships with, employees, customers and suppliers
as a result of the integration of new businesses.
 The commercial success of our products depends upon the degree of market acceptance among the
medical community. Failure to attain market acceptance among the medical community would have an
adverse impact on our operations and profitability.
  
    
    the safety and effectiveness of the product;
    
    the effectiveness of our efforts to market our products to hospitals and physicians;
    
    the products cost effectiveness;
    
    the products perceived advantages and disadvantages relative to competing products or treatments; and
    
    the prevalence and severity of side effects.
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We may continue to experience delays in product introduction and marketing or interruptions in
supply.
   We may be unsuccessful in attracting or retaining key sales, marketing and other personnel.
  If we are unable to satisfy the regulatory requirements relating to internal controls, or if our
internal controls over financial reporting are not effective, our stock price could decline.
  We may not achieve our projected development goals in the time frames we announce and expect.
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We may be unable to acquire, or may be delayed in acquiring, Shanghai Rongheng Pharmaceutical
Company Limited, or Rongheng.
  We may be unable to complete the joint venture transaction contemplated by (i) the Shareholders
Agreement among the Company, Alliance BMP Limited and Alliance Boots PLC, or the Shareholders
Agreement, (ii) the Joint Venture Contract, or the GPC JV Contract, with Alliance BMP Limited and
Guangzhou Pharmaceuticals Corporation and (iii) the related agreements.
  We may not be able to complete the joint venture transaction contemplated by our non-binding letter
of intent with Biaodian Medical Information Co., Ltd., or Biaodian.
  We may be unable to acquire, or may be delayed in acquiring, a minority interest in Sunstone.
  26




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If we are successful in acquiring a minority interest in Sunstone, we may be exposed to liability
from Sunstones historical operations.
  We will not be able to acquire Sunstone without reasonable assurance that Sunstone has undertaken
particular remedial measures to prevent recurrences of certain of its historical business
practices.
  Because we are purchasing a minority interest in Sunstone, we will not have control over Sunstones
operations or financial reporting function.
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Because we do not or will not initially have majority control of a number of our subsidiaries and
joint ventures, we are dependent on the majority owners of these subsidiaries and joint ventures to
operate these enterprises in a manner consistent with our plans and requirements.
  We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination
that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our
business.
  Anti-corruption measures taken by the PRC government to correct improper sales practices in the
pharmaceutical industry could adversely affect our revenue and reputation.
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ITEM 4. Submission of Matters to a Vote of Security Holders
    For
    

Against
    

Withheld
    

Abstain
    
    BrokerNon-VotesElection of DirectorsDavid (Xiaoying) Gao
    
    
    22,811,944
    
    
    
    *
    

    
    
    
    
    
    
    *
    

    
    
    *Martyn D. Greenacre
    
    
    22,811,914
    
    
    
    *
    

    
    
    
    
    
    
    *
    
    
    
    *Michel Y. de Beaumont
    
    
    21,782,397
    
    
    
    *
    

    
    
    1,029,547
    
    
    
    *
    

    
    
    *Jack M. Ferraro
    
    
    22,811,696
    
    
    
    *
    

    
    
    250
    
    
    
    *
    
    
    
    *Frank J. Hollendoner
    
    
    22,809,944
    
    
    
    *
    

    
    
    2,000
    
    
    
    *
    
    
    
    *John W. Stakes III, M.D.
    
    
    22,811,944
    
    
    
    *
    

    
    
    
    
    
    
    *
    
    
    
    *Albert Yeung
    
    
    22,811,944
    
    
    
    *
    

    
    
    
    
    
    
    *
    
    
    
    *Approval of
the Companys 2007 Omnibus Equity Compensation Plan
    
    
    16,158,608
    
    
    
    44,571
    

    
    
    
    
    
    
    5,800
 
 *
    
    Not Applicable ITEM 5. Other Information
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ITEM 6. Exhibits
 2.1
    
    Sale and Purchase Agreement, dated as of July 14, 2007, by
and among Beijing Med-Pharm Corporation, Han Zhiqiang and
Tong Zhijun (Incorporated by reference to Exhibit 2.1 of
the Companys Current Report on Form 8-K filed with the
SEC on July 14, 2007).10.1
    
    Shareholders Agreement, dated as of July 14, 2007, by and
among Beijing Med-Pharm Corporation, Han Zhiqiang, Tong
Zhijun, Hong Kong Fly International Health Care Limited
and Sunstone Pharmaceutical Co., Ltd. (Incorporated by
reference to Exhibit 10.1 of the Companys Current Report
on Form 8-K filed with the SEC on July 14, 2007).31.1
    
    Certificate of the Chief Executive Officer of Beijing
Med-Pharm Corporation required by Rule 13a-14(a) under the
Exchange Act.31.2
    
    Certificate of the Chief Financial Officer of Beijing
Med-Pharm Corporation required by Rule 13a-14(a) under the
Exchange Act32.1
    
    Certificate of the Chief Executive Officer of Beijing
Med-Pharm Corporation required by Rule 13a-14(b) under the
Exchange Act32.2
    
    Certificate of the Chief Financial Officer of Beijing
Med-Pharm Corporation required by Rule 13a-14(b) under the
Exchange Act
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SIGNATURES
  Beijing Med-Pharm CorporationDate: August 14, 2007
    /s/ DAVID GAODavid GaoChief Executive Officer
(Principal Executive Officer) Date: August 14, 2007
    /s/ FRED M. POWELLFred M. PowellChief Financial Officer
(Principal Financial and Accounting
Officer) 31