China Medicine Significantly Broadens Product Portfolio

China Medicine Corporation
2007-04-18 02:19 656

Company Successfully Adds Approximately 800 New Products as a Result of New Bidding Process

GUANGZHOU, China, April 17 /Xinhua-PRNewswire-FirstCall/ -- China Medicine Corporation (OTC Bulletin Board: CHME) (“CMC” or “China Medicine”), a leading distributor of prescription and over the counter medicines, traditional Chinese medicines, herbs and nutritional supplements announced today it has acquired the rights to sell and distribute approximately 800 new and established pharmaceutical products to hospitals and medical facilities in selected national provinces in China and throughout the Guangdong Province.

Beginning in 2007, in an effort by the Guangdong government to help consolidate the provincial medicine acquisition market and promote a transparent bidding process, an on-line bidding system was established which has been called “Guangdong Sunshine Medicine Public Internet Bidding System.” The new system provides an opportunity for distributors to openly bid for medicine distribution rights. CMC, through its wholly owned subsidiary, Guangzhou Konzern Pharmaceutical Co., Ltd. (“Konzern”), successfully bid against approximately 1,700 medicine distributors nationwide and participated in the bidding based on its strong reputation, distribution network and working capital position. The bidding is to be held annually with Konzern winning the rights to sell and distribute a total of 774 new products during 2007. Such rights are usually valid for one year and some distribution rights are valid for up to eighteen months and the prices the company will pay to manufacturers are fixed for a one year period providing enhanced margin predictability. All 774 new products are to be sold and distributed within the Guangdong province. Konzern was one of the most successful bidders for new product rights during the online auction process.

Among the 774 new product distribution rights Konzern obtained, there are 120 antibiotic based products, 178 products for treating cardiovascular disease, 56 cancer medications, 32 hepatitis medications, 95 products for treatment of respiratory system diseases, 124 products focused on treatment of the digestive system, 63 products for treatment of gynecological diseases and 106 nutritional supplements. Konzern now has the exclusive distribution rights for 352 of these products in the Guangdong Province which generated approximately US$23 million in revenue in the province in 2006. Among the 352 products obtained, 6 were existing products Konzern already distributed with the remaining representing new products for the Company. The 6 existing products generated US$6.8 million in revenue in 2006. Among the 774 new products 62 percent are considered traditional western medicines and 33 percent are Chinese herbal remedies.

Several of the products that Konzern has secured are patented. Those products are widely prescribed by physicians while also addressing large market opportunities. A number of these products generated significant sales such as Piperacillin Sodium and Sulbactam, Sodium (Antibiotics) and Monosialogangliosides, a medicine for the treatment of the cerebrovascular system and the nervous system, both of which are exclusively distributed by Konzern Guangdong. The sales for these two leading products totaled US$2.8 million in 2006. Many of the products are new drugs which leverage revolutionary technologies such as the Pingxuan Capsule for the treatment of dizziness and the Hongjin Xiaojie Capsule for the treatment of hyperplasia of mammary glands and hysteromyoma. Many of the new products are traditional Chinese medicines which are promoted by the Chinese government and protected by government policies. These products are to treat orthopedic problems and rheumatism.

“We believe the new bidding process created by the local government in Guangdong will have a long term positive impact on China Medicine both locally and on a broader national scale,” stated Mr. Yang Senshan, CEO & President of CMC. “Based on our reputation, expansive geographic footprint, customer relationships and strong financial position we believe we can increase sales of these products now under our control while capitalizing on the opportunity to become a leading distributor of drugs in China as the industry further consolidates in favor of larger more established partners and the bidding process such as the one conducted in Guangdong becomes more commonplace on a national scale.”

Guangdong, located on the south coast of the PRC, is considered one of the most populous provinces in China with a population of more than 110 million people. Additionally Guangdong has become one of the most affluent provinces with the highest GDP among all provinces at approximately $329.7 billion at the end of 2006. The online bidding process covers 1,126 non-profit healthcare facilities in cities and other healthcare facilities in the counties and townships in Guangdong province, China. Based on the continued rollout of this new platform it is widely believed that this will be the preferred method for securing drug distribution rights in the future in China.

Mr. Yang concluded, “CMC will continue to actively participate in this new system while cooperating with the local government to ensure the company establishes a leading market share in the Guangdong province. As a result of securing these new drugs we estimate a 50 percent increase to approximately 2,250 products we now sell as compared to 2006. Additionally, our goal will be to continue to develop our own portfolio of proprietary products to complement our drug distribution business. We believe the combination of these efforts in conjunction with the strong secular growth of the healthcare market in China will lead to further revenue and net income growth in 2007.”

About China Medicine Corporation:

CMC is a distributor of prescription and over the counter medicines, traditional pharmaceutical medicines, traditional Chinese medicines, Chinese herbs and dietary supplements to over 28 provinces and 800 customers within China. CMC sells more than 1,500 products and is actively building a pipeline of proprietary traditional and Chinese herbal remedy products targeting oncology, high blood pressure and the removal of Aflatoxins from food and animal feed. For more information visit CMC’s website at .

Safe Harbor Statement:

This press release contains forward-looking statements concerning China Medicine Corporation’s business and products. The actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company’s reports filed with the Securities and Exchange Commission. China Medicine Corporation undertakes no duty to revise or update any forward- looking statements to reflect events or circumstances after the date of this release.

Source: China Medicine Corporation