Luoxin Announces 2011 Third Quarterly Results

Profit Attributable to Shareholders Surges 18.0% to Approximately RMB 327,432,000

Accelerate the establishment of a broader sales network

Enhance the market share of its products

Continue to improve the Group’s core competencies

Unaudited financial summary

HONG KONG, Nov. 1 2011 /PRNewswire-Asia/ -- Shandong Luoxin Pharmacy Stock Co., Ltd. (“Luoxin” or the “Company”, together with its subsidiaries, the “Group”, stock code: 8058), a leading PRC pharmaceutical enterprise, today announced its unaudited third quarterly results for the nine months ended 30 September 2011 (the “period under review”).

During the period under review, the Company continued to strengthen its R&D, production and distribution capabilities, thereby maintaining a good operating condition. The Company’s turnover increased by 29.8% year-on-year to approximately RMB1,170,883,000. Gross profit rose by 49% to approximately RMB717,896,000, with gross profit margin increased by 7.9% points to 61.3%. The Company’s profit attributable to shareholders surged by 18.0% to approximately RMB327,432,000. Weighted average earnings per share were RMB53.71 cents, representing an increase of 18.0% over the corresponding period in 2010. The board of directors of the Company does not recommend payment of a dividend for the nine months ended 30 September 2011.

Mr. Liu Baoqi, Chairman of Luoxin, said, “With the government’s proactive introduction of medical reforms, the further standardization and input into the pharmaceutical industry, and the improvement of public health services in 2011, the financial input into the medical and health areas has gradually increased. Together with the expansion of medical insurance coverage, the strengthening of rural health services, the enhancement of new rural cooperative medical services and the trends of aging population, the acceleration in urbanization, and the steady growth of the global pharmaceutical market, the development of pharmaceutical industry in the PRC will continue to be promising in 2011. Luoxin has been consistent in implementing the development strategies as formulated earlier and the targets of the Twelfth Five-Year Plan. A sound operation has thus been sustained in the first year of the Twelfth Five-Year Plan. As a result, the profit attributable to shareholders of the Group recorded remarkable growth compared to that of the same period last year, achieving strong momentum driving the growth of the Group. The outstanding results were attributable to the support and cooperation of all shareholders, customers, suppliers, business partners and the public, as well as the concerted and unremitting efforts of the management and staff of the Group.”

As at 30 September 2011, the Company’s cash on hand and cash equivalents amounted to approximately RMB780,862,000. The strong cash position is favourable for the future development of the Company.

Prior to the period under review, the Group has been recognised as an “Industrial Model Enterprise in the National Integrated Platform for New Pharmaceutical Research, Development and Technology (Shandong)” and “Key High-Tech Enterprise under the State Torch Program” The Group has also been permitted to establish the “Post-Doctoral Research Workshop”. On such basis, during the period under review, the Group was permitted to establish the “Shandong Key Lyophilized Powder Injection Pharmaceutical Laboratory”, the “Shandong Key Lyophilized Powder Injection Pharmaceutical Engineering Laboratory” and the position of “Taishan Scholar - Pharmaceutical expert consultant”, which introduced talents and built a stronger platform of research and development and technology improvement for the Group, which will further strengthen the research and development capacities of the Group and enhance its overall competitiveness. At the same time, the Group has also received 22 patents of invention in the PRC. It is now applying for 14 patents of invention in the PRC. Five new drugs were approved for production and registration. As of 30 September 2011, the Group had 55 patents, of which 45 were national patents.

Meanwhile, Luoxin’s progress on the construction of production facilities is also on schedule. The construction of infusion workshop and ancillary facilities of Shandong Yuxin Pharmacy Co., Ltd. has completed, and is expected to generate revenue next year. Besides, the progress of the construction of pharmaceutical raw materials project of Shandong Hengxin Pharmacy Co., Ltd. is accelerated. The first phase of the project is scheduled to be completed and ready for operation at the end of the year.

Chairman Liu Baoqi concluded, “Luoxin will continue to pursue the strategic directions of “Technology-driven enterprise with determination and efforts” under the favourable operating environment. By fully leveraging on the opportunities arising from the integration of the pharmaceutical industry, we will continue to expand our investment in research and development to enhance the standards in research and development as well as technologies, and to strengthen the capabilities of the internal research and development team. This will enable us to invent and develop more products of higher technology, better quality and higher added value. The Group also aims at reducing the production cost and expanding the production scale so as to achieve economies of scale, a low cost of production and differentiation of competitive edge. As our new plants for Yuxin and Hengxin, which are under construction, commence production, production capabilities will be increased to satisfy the growing demand for pharmaceutical products in the market. The construction of new plants will also facilitate the development of new categories of pharmaceutical products and expand the Group’s scope in research and development on new drugs more effectively. This will facilitate a more comprehensive development in our business. The Group will also accelerate the establishment of the sales team and proactively establish a broader sales network so as to enhance the market share of our products and continue to improve our core competencies. With the implementation of the strategies stated above, we anticipated that “Luoxin” will be transformed into a brand representing a world-class pharmaceutical enterprise. With the rapid growth in production capacities and the launch of more high value-added products, the Group is confident in maintaining a steady growth in its business so as to bring satisfactory returns to our shareholders.”

About Shandong Luoxin Pharmacy Stock Co., Ltd.

Luoxin has been listed on the GEM of the Stock Exchange of Hong Kong Limited since 9 December 2005. The Company was recognized as one of the “Top Ten Pharmaceutical Enterprises with Growth Potential” and named as one of the “Top 100 Pharmaceutical Companies in China” since 2006. It was also selected on the “List of Small and Medium-sized Enterprises in China with Most Potentials” by Forbes for three consecutive years. The Company is principally engaged in the development, manufacturing and sale of different types of prescription and OTC (over-the-counter) medicines in 4 major categories: (1) system-specific medicines, including digestive system medicines, cardiovascular system medicines and respiratory system medicines; (2) anti-viral medicines; (3) antibiotics, including Cephalosporines antibiotics, Quinolones antibiotics and Macrolides antibiotics; (4) other chemical medicines, including Antineoplastic medicines. The Company’s production facilities are located in the High and New Technology Experimental Zone, Linyi, Shandong Province, the PRC, and has obtained all required production permits as well as GMP certification. Its sales and marketing networks cover 27 provinces and 4 municipalities in the PRC.

Issued by Porda Havas International Finance Communications Group for and on behalf of Shandong Luoxin Pharmacy Stock Co., Ltd.

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