Luoxin Announces 2012 Interim Results

Turnover Surges 28.72% to Approximately RMB1,004,977,000

Fully Leveraging on the Opportunities arising from the Integration of the Pharmaceutical Industry

Maintaining a Sustainable and Healthy Development

HONG KONG, Aug. 7, 2012 /PRNewswire-Asia/ --

Unaudited financial summary

Shandong Luoxin Pharmacy Stock Co., Ltd. ("Luoxin" or the "Company", HKEx stock code: 8058), a leading PRC pharmaceutical enterprise, announced its unaudited interim results for the six months ended 30 June 2012 (the "period under review") today.

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 28.72% year-on-year to approximately RMB1,004,977,000. Gross profit rose by 37.45% to approximately RMB651,245,000, with gross profit margin increased by 4.12% points to 64.80%. The Company's profit attributable to shareholders surged by 5.38% to approximately RMB243,290,000. Weighted average earnings per share were RMB39.91 cents, representing an increase of 5.38% over the corresponding period in 2011. The board of directors of the Company does not recommend payment of an interim dividend for the six months ended 30 June 2012.

Mr. Liu Baoqi, Chairman of Luoxin, said, "With the medical reforms actively implemented by the PRC government, the perennial increase in medical, healthcare and pharmaceutical expenditures, the development of the pharmaceutical industry in the PRC will continue to be promising in the foreseeable future. As a leading modern pharmaceutical enterprise in the PRC, Luoxin has always been committed to its core strategies, i.e. enhancing capabilities in technology innovations, research and development, distribution and production, and striving to provide reliable, high-technology and high value-added pharmaceutical products. During the period under review, Luoxin fully leveraged on the opportunities arising from market expansion and adjusted to market demands by investing additional resources to enhance its production capacity and technologies and expedite new product development. At the same time, Luoxin has been keen on tapping into a broader market to increase its market share so as to boost its growth both in turnover and earnings, with a view to laying a solid foundation for sustainable development of Luoxin in the future. Therefore, the outstanding results achieved by Luoxin during the period under review 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 Luoxin."

As at 30 June 2012, the Company's cash on hand and cash equivalents amounted to approximately RMB677,390,000. The stable cash position is favourable for the future development of the Company.

Prior to the period under review, Luoxin has established or been recognised as an "Industrial Model Enterprise in the National Integrated Platform for New Pharmaceutical Research, Development and Technology (Shandong)", the "National Post-Doctoral Research Workshop", "Key High-Tech Enterprise under the State Torch Program", the "Shandong Key Lyophilized Powder Injection Pharmaceutical Laboratory", the "Shandong Key Lyophilized Powder Injection Pharmaceutical Engineering Laboratory", the position of "Taishan Scholar - Pharmaceutical expert consultant" and the "Enterprise Academician Workstation of Shandong Province", which have built a strong platform for talent introduction, research and development and technology improvement, which in turn strengthens the research and development capabilities and overall competitiveness of Luoxin. At the same time, Luoxin is now applying for 30 patents of invention in the PRC. As of 30 June 2012, Luoxin had 57 patents, of which 47 were national patents of invention.

As regards the construction of production facilities, with the Drug Manufacturing Certificate in place, Shandong Yuxin Pharmacy Co., Ltd. has completed the construction of its infusion workshop and ancillary facilities, and is speeding up the construction of its solid dosage workshop (in compliance with European Union certification standards) and Lyophilized Powder Injection workshop and solid dosage workshop (both in compliance with the new GMP standard of China). Besides, Shandong Hengxin Pharmacy Co., Ltd. is speeding up the construction of its pharmaceutical raw materials project, the first phase of which is expected to be completed and commence operations in the second half of 2012.

Looking ahead, the pharmaceutical industry will become one of the priorities of national policies and thus enjoy optimistic prospects. In the pharmaceutical industry, being one of the supported industries under the Twelfth Five-Year Plan, it is expected that the PRC central government will allocate more resources to the pharmaceutical and medical equipment sectors, and a modern market system for the circulation of pharmaceutical products will be established during the Twelfth Five-Year Plan period so as to enhance the concentration of the industry. Luoxin is confident in maintaining its sustainable and healthy development.

Chairman Liu Baoqi concluded, "In the future, 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, the Group will continue to expand its investment in research and development to enhance the standards in research and development as well as technologies, and to strengthen the capabilities of its internal research and development team. This will enable Luoxin to invent and develop more products of higher technology, better quality and higher added value. Luoxin also aims at reducing production cost and expanding production scale so as to achieve economies of scale, low cost of production and differentiated competitive edge. Upon completion and commencement of production of its new plants of Yuxin and Hengxin, Luoxin will be able to increase its production capacity to satisfy the growing market demand for pharmaceutical products. The new plants will also help the introduction of new dosage forms and expand the scope of new drug development more effectively, thus facilitating Luoxin's comprehensive business growth. Luoxin will also accelerate the establishment of its sales team and proactively broaden its sales network so as to enhance the market share of products and continue to improve its core competencies; and continue to aim to make 'Luoxin' a world-class brand in the pharmaceutical industry. With the rapid growth in production capacities and the launch of more high value-added products, Luoxin is confident in maintaining a steady growth in its business so as to bring satisfactory returns to its 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 four 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.

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