HANGZHOU, China, March 17, 2015 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ CM: CJJD) (the "Company" or "China Jo-Jo"), a leading China-based retail and wholesale distributor of pharmaceutical and health care products through its own online and retail pharmacies, today announced that the Company, through one of its controlled subsidiaries, Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. ("Jiuzhou Pharmacy") has reached a joint venture agreement with Shanghai Jianbao Technology Co., Ltd. ("Shanghai Jianbao"), China's leading Pharmacy Benefit Management ("PBM") provider which owns and operates Yikatong (the "E-Pharmacy-Card"), a popular pharmacy and health insurance benefit card with over 180,000 current users to form a joint venture (the "JV"). The joint venture agreement requires Shanghai Jianbao to direct the majority of its online E-Pharmacy-Card transactions to China Jo-Jo's official online pharmacy site, www.dada360.com, which is expected to significantly improve the Company's online pharmacy revenue and profit margin in 2015.
According to the joint venture agreement, Shanghai Jianbao and Jiuzhou Pharmacy will hold 65% and 35% of the JV respectively. Shanghai Jianbao will be in charge of directing the online sales of Yikatong to China Jo-Jo's e-commerce site, and has committed a minimum monthly sales volume of RMB 10 million (or approximately US$1.6 million) by the end of 2015. With over 180,000 E-Pharmacy Card users, the total online transaction of E-Pharmacy Card reached about RMB 300 million (or US$48 million) among five network pharmacies including Jiuzhou Pharamcy in 2014. It is expected that Shanghai Jianbao will shift the majority of those online sales volume to China Jo-Jo after the announced partnership. In return, China Jo-Jo, being one of handful online pharmacy license holders in China, will handle the actual online sales, procurement and delivery of pharmaceutical and health care products to E-Pharmacy Card users. Both sides agree that the JV will consider applying for a new online pharmacy license after monthly revenue achieves at least RMB 10 million and certain other eligibilities are met.
Mr. Lei Liu, Chairman of the Company, stated, "All future E-Pharmacy-Card businesses will be directed to our own online pharmacy, not via any third-party platform. This shall greatly enhance customer loyalty as well as our profit margin. It's also a sustainable and recurring business model that is hard for our competitors to imitate. To ensure our goal of online pharmacy sales surpass sales of our retail stores within the next three years, we have to grow China Jo-Jo from a regional drugstore chain into a national online drugstore and fundamentally change our sales and distribution model. We aim to become one of the first drugstore chains by leveraging PBM model to effectively control the rising health care cost in China."
About Yikatong (the "E-Pharmacy-Card ")
Yikatong, or E-Pharmacy Card is a pharmacy/health insurance benefit card service provided by Shanghai Jianbao and its affiliates. The card, which is mostly issued to the insured business entities and their employees and family members, turns the traditional medical insurance into tangible products. The users of Yikatong can purchase pharmaceutical and health care products and services in a network of healthcare institutes without going through the complex claiming procedures.
About Shanghai Jianbao
Shanghai Jianbao is the first Third-Party Administrator (TPA) for healthcare insurance that specialized in Pharmacy Benefit Management (PBM) in China. It has two subsidiaries, Hangzhou Yibao Healthcare Management Co., Ltd., and Shanghai Yibao Healthcare Management Co., Ltd..
About China Jo-Jo Drugstores, Inc.
China Jo-Jo Drugstores, Inc., through its own retail drugstores, wholesale distributor and online pharmacy, is a leading retailer and wholesale distributor of pharmaceutical and healthcare products in China. As of December 31, 2014, the Company had 60 retail pharmacies in Hangzhou. The Company's wholesale subsidiary not only supplies its retail stores, but also distributes drug and other healthcare products to other drugstores and drug vendors. The Company routinely posts important information on its corporate websites at www.jiuzhou-drugstore.com (Chinese) and www.chinajojodrugstores.com (English).
Forward Looking Statement
Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate," the negatives thereof, or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. It is routine for the Company's internal projections and expectations to change as the quarter and year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change. Although these expectations may change, the Company is under no obligation to inform you if they do. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of numerous factors, including the risks associated with the effect of changing economic conditions in the People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products. Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements.
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