Luoxin Announces 2012 Third Quarterly Results

Turnover Surges 37.90% to Approximately RMB 1,614,683,000

Continue to Invent and Develop Products of Higher Technology, Better Qualityand Higher AddedValue Constantly Improve Core Competitiveness

HONG KONG, Nov. 6, 2012 /PRNewswire/ --

Unaudited financial summary

Shandong Luoxin Pharmacy Stock Co., Ltd. ("Luoxin" or the "Company", stock code: 8058), a leading PRC pharmaceutical enterprise, today announced its unaudited third quarterly results for the nine months ended 30 September 2012 (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 37.90% year-on-year to approximately RMB1,614,683,000. Gross profit rose by 49.0% to approximately RMB1,069,673,000, with gross profit margin increased by 4.94% points to 66.25%. The Company's profit attributable to shareholders surged by 10.74% to approximately RMB362,613,000. Weighted average earnings per share were RMB59.48 cents, representing an increase of 10.74% over the corresponding period in 2012. The board of directors of the Company does not recommend the payment of any dividend for the nine months ended 30 September 2012.

Mr. Liu Baoqi, Chairman of Luoxin, said, "As the Government proactively carries forward the deepening of medical reforms, tightens supervision on and increase the funding for the pharmaceutical industry in 2012, the pharmaceutical industry in the PRC will continue to be promising. Luoxin has 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, the Company fully leveraged on the opportunities arising from market expansion and adjusted to market demands by investing additional resources to enhance its productivity and technologies and expedite new product development. At the same time, the Company 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 the Company in the future. As a result, the Company recorded remarkable growth compared to that of the same period last year. 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 the staff of the Company."

As at 30 September 2012, the Company's cash and cash equivalents amounted to approximately RMB1,125,718,000. The strong cash position is favourable for the future development of the Company.

During the period under review, the Company was approved to establish a national and local joint engineering laboratory by the National Development and Reform Commission. Prior to the period, the Group has established or been recognised as the "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 Lyophilized Powder Injection Pharmaceutical Engineering Laboratory", the position of "Taishan Scholar - Pharmaceutical expert consultant" and the "Enterprise Academician Workstation of Shandong Province". All the above have built a stronger platform for talent introduction, research and development and technology improvement, which will further strengthen the research and development capabilities and overall competitiveness of the Company.

In the new products and patents aspect, during the period under review, the Company was applying for 28 invention patents in the PRC. As of 30 September 2012, the Company had 59 patents, of which 49 were invention patents in the PRC. On the other hand, during the period under review, the Company was granted four Drug Manufacturing Certificates and three New Drug Certificates, adding the total to 274 and 46 respectively as of 30 September 2012.

In the construction of production facilities aspect, 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 2012.

Mr. Liu Baoqi, Chairman of Luoxin, concluded, "For the first 3 quarters of 2012, although the market situation experienced pressure as a result of the implementation of a number of policies, such as the tendering of essential drugs, the new GMP, the drug price reduction and the restriction on the use of antibiotics, the Company has consistently adhered to its established development strategies and the targets of the Twelfth Five-Year Plan, and sustained balanced and healthy development of the research and development, management, production, human resources and market network of the Company. In the future, the pharmaceutical industry will become one of the priorities of national policies and thus enjoy optimistic prospects. The Company will continue to pursue the strategic direction 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 Company 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 the Company to invent and develop more products of higher technology, better quality and higher added value. The Company 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 the completion and commencement of production of its new plants of Yuxin and Hengxin, the Company will be able to increase its production capacity to satisfy the ever growing market demand for pharmaceutical products. The new plants will also help the introduction of new dosage forms and expand the research and development scope of new drug more effectively, thus facilitating the Company's comprehensive business growth. The Company 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 competitiveness. We expect to make 'Luoxin' an internationally renowned brand in the pharmaceutical industry. With the rapid growth in productivity and the launch of more high value-added products, we are confident in maintaining a steady business growth and bringing 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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