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China Shenghuo Announces Management Expansion and Enhanced Internal Controls

KUNMING, China, March 4 /PRNewswire-Asia/ -- China Shenghuo Pharmaceutical Holdings, Inc. (NYSE Alternext US: KUN) ("China Shenghuo" or the "Company"), today announced the expansion of its senior management team to better align with the Company's business outlook, to optimize operations, and increase efficiencies across the organization. The Company expanded the number of senior management personnel from 5 to 9 in preparation for the anticipated growth in its sales and operations. Additional measures were implemented to support, monitor and further enhance existing internal controls to strengthen the Company's reporting and governance.

Furthermore, the Company recently appointed two new independent directors to the Company's Board of Directors. Both new directors are experts in their respective industry, namely, accounting and corporate finance, and research and development in traditional Chinese medicine.

"An optimally structured senior management is vital as we recognize how significant the next stage of development is for the Company. We have installed senior level executives with specific areas of expertise to make us a more effective company," commented Mr. Gui Hua Lan, Chairman of China Shenghuo. "It is also very important that we continue to strengthen our Board with seasoned professionals experienced in drug development, the capital markets, and corporate governance. The expanded management team will lead the Company to become more efficient, and reinforces the Company's commitment to new drug development to attain the growth and performance targets we have set."

Senior management recently implemented a series of measures designed to improve and strengthen its internal control framework. Of particular importance are enhanced internal controls for financial reporting. In addition, management made significant improvements in the transparency and efficiency within each department. Each department is required to submit a set of operational guidelines to senior management for approval and then strictly adhere to these rules. Recognizing that improving the knowledge base of the workforce strengthens the overall competitive position of the Company; training programs have been made available to all employees. Courses in sales, marketing and planning, research and development, production techniques, and leadership training are offered. The educational programs are designed to enhance employees' performance within their department and the Company culture.

"It is imperative for the Company to improve its internal control systems as it helps management obtain timely and accurate information to make both tactical and strategic decisions. Effective internal controls are one of the keys to accountability," continued Mr. Lan. "Our improvements are focused on making the new management structure more efficient so we achieve long-term sustainable growth."

"As we look ahead to the next four years, our expanded senior management team has a mandate to foster the growth of our operations. The goal is for management to achieve annual revenue and net income growth of 25% during this period. The improved internal control measures will help us manage this expected growth as well as minimizing our operating risk. We will leverage our strength in R&D, production and sales to become an industrial leader in our sector. We expect to finish the application for a new series of first-aid medicines for the treatment of trauma. Our plan is designed to provide a healthy drug pipeline to produce new drugs to the market," concluded Mr. Lan.

About China Shenghuo

Founded in 1995, China Shenghuo is a specialty pharmaceutical company that focuses on the research, development, manufacture and marketing of

Sanchi-based medicinal and pharmaceutical, nutritional supplement and cosmetic products. Through its subsidiary, Kunming Shenghuo Pharmaceutical (Group) Co., Ltd., it owns thirty SFDA (State Food and Drug Administration) approved medicines, including the flagship product Xuesaitong Soft Capsules, which has already been listed in the Insurance Catalogue. At present, China Shenghuo incorporates a sales network of agencies and representatives throughout China, which markets Sanchi-based traditional Chinese medicine to hospitals and drug stores as prescription and OTC drugs primarily for the treatment of cardiovascular, cerebrovascular and peptic ulcer disease. The Company also exports medicinal products to countries such as Indonesia, Russia and Kyrgyzstan. For more information, please visit http://www.shenghuo.com.cn .

Safe Harbor Statement

This press release may contain certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, risks of litigation and governmental or other regulatory proceedings arising out of or related to any of the matters described in recent press releases, including arising out of the restatement of the Company's financial statements; the Company's continuing ability to satisfy any requirements which may be prescribed by the Exchange for continued listing on the Exchange; risks arising from potential weaknesses or deficiencies in the Company's internal controls over financial reporting; the Company's reliance on one supplier for Sanchi; the possible effect of adverse publicity on the Company's business, including possible contract cancellation; the Company's ability to develop and market new products; the Company's ability to establish and maintain a strong brand; the Company's continued ability to obtain and maintain all certificates, permits and licenses required to open and operate retail specialty counters to offer its cosmetic products and conduct business in China; protection of the Company's intellectual property rights; market acceptance of the Company's products; changes in the laws of the People's Republic of China that affect the Company's operations; cost to the Company of complying with current and future governmental regulations; the impact of any changes in governmental regulations on the Company's operations; general economic conditions; and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Source: China Shenghuo Pharmaceutical Holdings, Inc.
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