Shanghai Pharmaceuticals Group's Subsidiary Keyuan Xinhai Pharmaceutical Signs Strategic Agreement with Guangdong CDC

Pioneering to Develop High-end Vaccine Business

HONG KONG, Feb. 27, 2012 /PRNewswire-Asia/ -- Shanghai Pharmaceuticals Holding Co. Ltd., ("Shanghai Pharmaceuticals Group" or the "Company" and, together with its subsidiaries, the "Group"; stock code: 601607.SH; 02607.HK), a leading integrated pharmaceutical manufacturer and distributor in China,announcedthatits subsidiary Beijing Keyuan Xinhai Pharmaceutical Co., Ltd.("Keyuan Xinhai") signed a strategic agreement with the Centre for Disease Control and Prevention of Guangdong Province ("Guangdong CDC") on February 23 in Guangzhou.

Keyuan Xinhai achieved a leaping growth in its vaccine business from 2006 to 2011. It has established business relationships with six largest vaccine manufacturers in the world, namely Pfizer, Merck Sharp & Dohme, Sanofi Pasteur, Novartis, GlaxoSmithKline and Abbott, covering areas from import to nationwide distribution, from CDC in the north to CDC across China, and from governments' procurement, vaccine promotion to third-party logistics services. Keyuan Xinhai currently ranks second in terms of domestic high-end vaccine sales.

In order to be a pioneer in the high-end vaccine segment and further increase the profitability of its vaccines, the Group needs to rapidly establish its national CDC direct-sales network. Guangdong, a major province for vaccine sales in China, has one-seventh market share in the country (worth over RMB1 billion). Vaccine procurement and distribution at all levels in Guangdong, except Maoming, Foshan, Qingyuan and Zhaoqing, is centrally managed by Guangdong CDC. The Group's strategy is to forge strategic partnerships with governments for collaborating in specific businesses and achieving a breakthrough in southern China.

The collaboration aims to integrate Guangdong CDC's advantages in bio-pharmaceutical bases, government affairs and R&D and that of Keyuan Xinhai in information technology, logistics and professional technology in order to enhance modern and professional standards for the management, circulation and control of biological products in Guangdong. After thorough discussion as well as amicable negotiation, both parties decided to jointly set up a research institute of supply chain management of biological products in Guangdong, which will develop a demonstration base for standardized vaccine distribution at warehouses as well as a base for biological product skill training to initially establish a third-party logistics system that meets the needs of distribution by the modern vaccine cold chain, giving cold chain education, enhancing the safety as well as compliance of biological products and boosting CDC's service quality as well as operating efficiency. In addition, leveraging on the successful cooperation in this project, both parties will further their research and collaboration in areas such as the marketing of biological products, information management and cold chain technology.

About Shanghai Pharmaceticals Holding Co., Ltd.

Shanghai Pharmaceuticals Group is the only integrated pharmaceutical company in the PRC that has leading positions in both pharmaceutical product and distribution markets. It was China's second-largest pharmaceutical distributor and third-largest pharmaceutical producer. The Group adopts an integrated vertical business model and provides solutions in pharmaceutical manufacturing, distribution, logistics storage and retail. The Group currently offers more than 400 pharmaceutical products as well as pharmaceutical distribution and supply chain solutions to more than 7,600 hospitals and medical institutions in China. The Group also operates approximately 1,700 self-operated and franchise stores nationwide.

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