Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH), a China-based pharmaceutical company engaged in the production, manufacturing and distribution of Traditional Chinese Medicine (TCM) in China, today releases a letter to shareholders from Hongwei Qu, Bohai's Chairman, President and Chief Executive Officer, providing investors with management's vision for the company in fiscal 2011.

Dear Shareholders:

It is my pleasure to discuss Bohai's various corporate developments to date as well as our plans for the future. While many companies are facing challenges amid today's economic uncertainties, we believe Bohai is very well positioned to capitalize on a series of healthcare reform measures implemented by the Chinese government that is targeting the expansion of healthcare coverage to 900 million rural Chinese citizens. We believe these favorable market conditions (combined with certain protections that our lead products enjoy) have enhanced our ability to implement our marketing initiatives for our growing portfolio of 15 Traditional Chinese Medicine products in China which, in turn, gives us confidence in our ability to generate growing revenues and profits and, ultimately, value for our shareholders.

If you've been following our company, you may be aware that Bohai's over-the counter and prescription products, combined with our dedicated in-house sales team and marketing initiatives have generated exceptional results to date, including over $49 million in net revenue and $7.9 million in net income in 2009. This past September 28th, we were pleased to announce that Bohai improved on these impressive results by reporting net revenue of $59.3 million, net income of $9.5 million and an impressive basic EPS of $0.64, or $0.57 on a fully diluted basis, for our fiscal year ended June 30, 2010.

Bohai's record financial performance has been made possible through our focused growth strategy, which emphasizes quality products and aggressive sales and marketing efforts to leverage the ?protected? manufacturing status and national insurance coverage for certain of our lead products. With over 300 employees devoted to sales, operating from 20 offices throughout China, Bohai is committed to meeting the greater demand for TCM and taking full advantage of the favorable market conditions in China.

As reported in the media over the past year, China is undergoing a dramatic expansion of its national health insurance policies through the implementation of new government programs established in early 2009 that are seeking to extend health insurance coverage to previously uncovered Chinese citizens. With the government paying up to 90 percent of certain pharmaceutical products' costs, these policies are opening up the pharmaceutical industry in China to a target demographic of approximately 900 million rural Chinese, who for the most part, have not purchased medicines on a large scale due to their limited income.

It is important to note that of the limited number of approved reimbursable products for rural areas on the PRC's Essential Drug List (known as the ?EDL? in China), Bohai currently produces two products and has the rights to produce another four EDL products at any time of our choosing. The rural reimbursement initiatives supported by the EDL list are separate from China's National Drug Reimbursement List ("NDRL"), for which our three top selling products are eligible and reimbursable by the government as well.

Going forward, it has been estimated that China plans to increase its healthcare spending from US$96 billion in 2008 to approximately US$125 Billion by 2011, with the goal of covering 90% of its population with basic medical insurance at that time. As these polices go into effect, and of further benefit to Bohai, the Chinese government is officially supporting the use of TCM by including certain TCM products in its list of nationally reimbursable products.

Bohai's three lead products, Tongbi Capsules, Tongbi Tablets and Lung Nourishing Cream, are already eligible for reimbursement under China's National Medical Insurance Program. For this reason, we are placing a significant emphasis on these products in our marketing budget through increased advertising, sales initiatives, and prescription drug promotion via conferences, seminars and directly to hospitals.

Looking back, Bohai has experienced a number of significant events over the past year. In January 2010, Bohai became a U.S. listed operating company and raised $12 million in a convertible note and warrant financing. Using these funds, Bohai is implementing a proactive marketing strategy designed to significantly increase revenue on all the TCM products Bohai currently sells, with a particular focus on our three lead products.

In April and May of 2010, Bohai introduced a total of five new products, increasing its total TCM offering from 10 to 15. In addition, Bohai has the right to produce 14 additional products based on an aggregate portfolio of 29 TCM formulations that we are approved by the PRC government to manufacture. All of our products are based on established traditional formulas, so we enjoy low research and development costs.

Since we became public, we have taken steps to enhance our corporate governance as we seek to be a model US listed Chinese company. Of note, we were very pleased when Gene Hsiao joined Bohai as our new Chief Financial Officer in the middle of this year. Gene is a highly qualified financial professional with over 15 years of experience working with public companies and we are pleased to have him on board. Of note, he is also bi-lingual and resident in the U.S. In July, we added three distinguished independent directors to join myself on the board. Included in this group are a renowned expert in TCM, Chengde Wang, a well regarded public company accounting expert, Adam Wasserman, and the China Capital Markets group leader of an international law firm, Louis Bevilacqua.

As we move into fiscal 2011, we expect to further increase marketing and advertising for our growing portfolio of TCM medicines, with a particular focus on our lead products: Tongbi Capsules and Tongbi Tablets, formulated to treat various forms of arthritis, and Lung Nourishing Cream, a liquid product used in the treatment of asthma and other common respiratory ailments.

Not only are these products reimbursable through insurance in China, two of them are sheltered from competition in some way. Tongbi Capsules are an exclusively ?protected? medicine in China, meaning Bohai is the only manufacturer permitted to sell the product, and Lung Nourishing Cream was recently awarded a patent in China that lasts 20 years.

In addition to our sales initiatives in China, we also want to improve our standing in the US capital markets. One of our goals going forward is to have Bohai listed on a more senior exchange, such as NASDAQ or NYSE AMEX, as soon as we meet all listing requirements. We believe this will be a major benefit to both Bohai and our valued shareholders.

On behalf of myself, our board of directors and our senior management team, I want to thank you for your attention and support. Whether you are currently a Bohai shareholder or considering becoming one, we never lose sight of the fact that you have a vested interest in our success. We have built and positioned a great team of professionals in both China and the United States in order to take us to the next level and improve on Bohai's prior achievements.

I look forward to communicating with you again soon.

Sincerely,
Hongwei Qu
Chairman, President and CEO
Bohai Pharmaceuticals Group, Inc.

About Bohai Pharmaceuticals Group, Inc.

Based in the city of Yantai, Shandong Province, China, Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH) is engaged in the production, manufacturing and distribution of herbal pharmaceuticals based on Traditional Chinese Medicine in China. Bohai's medicines address common health problems such as rheumatoid arthritis, viral infections, gynecological diseases, cardio vascular issues and respiratory diseases. Bohai's products are sold either by prescription through hospitals or over-the-counter through local pharmacies and retail drug store chains. Bohai has approximately 600 employees, including approximately 300 sales representatives, operating from 20 offices throughout China. Bohai's three lead products, Tongbi Capsules, Tongbi Tablets and Lung Nourishing Cream, are eligible for reimbursement under China's National Medical Insurance Program.

For comprehensive investor relations material, including fact sheets, research reports, presentations and video, please follow the appropriate link: Investor Relations Portal, Investor Fact Sheet and Overview Video.

For additional information, please visit Bohai's corporate website: www.bohaipharma.com.

Additional Information Relating to Bohai's Trading Data

Due to certain recent disruptions in the marketplace relating to quotations on the OTC Bulletin Board operated by FINRA (OTCBB), incomplete trading data may exist for certain companies like Bohai. Real-time trading data for Bohai on the OTCQB market is available through the below link. Readers are advised that OTCQB market is operated by the owner of otcmarkets.com, and Bohai Pharmaceuticals Group, Inc. makes no representation or warranty regarding the OTCQB market.

For real-time trading data for Bohai on the OTCQB market, including Level 2 quotes, please visit: www.otcmarkets.com/stock/boph/quote.

Cautionary Note Regarding Forward Looking Statements

This press release, the letter to shareholders referred to herein and the statements of representatives of Bohai Pharmaceuticals Group, Inc. (the ?Company?) related thereto contain, or may contain, among other things, ?forward-looking statements? within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are ?forward-looking statements,? including any other statements of non-historical information. These forward-looking statements are subject to significant known and unknown risks and uncertainties and are often identified by the use of forward-looking terminology such as ?guidance,? ?projects,? ?may,? ?could,? ?would,? ?should,? ?believes,? ?expects,? ?anticipates,? ?estimates,? ?intends,? ?plans,? ?ultimately? or similar expressions. All forward-looking statements involve material assumptions, risks and uncertainties, and the expectations contained in such statements may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including factors and risks discussed in the periodic reports that the Company files with the Securities and Exchange Commission (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. The Company undertakes no duty to update these forward-looking statements except as required by law.

Company Contact:
Bohai Pharmaceuticals Group, Inc.
Gene Hsiao, Chief Financial Officer
212-521-4470
or
Financial Communications Contact:
Trilogy Capital Partners - Asia
Darren Minton, President
Toll-free: 800-592-6067
info@trilogy-capital.com