Luoxin Announces 2011 First Quarterly Results

Profit Attributable to Shareholders Increased 19.0% to Approximately RMB 127,374,000

Increasing the Categories of Pharmaceutical Products

Expanding the Scope in Research and Development on New Drugs

HONG KONG, May 13, 2011 /PRNewswire-Asia/ --

Unaudited financial summary

Shandong Luoxin Pharmacy Stock Co., Ltd. ("Luoxin" or the "Company", stock code: 8058), a leading PRC pharmaceutical enterprise, announced its unaudited first quarterly results for the three months ended 31 March 2011 (the "period under review") today.

During the period under review, the Company continued to strengthen R&D, production and distribution capabilities, thereby maintaining a good operating condition. The Company's turnover increased by 27.7% year-on-year to approximately RMB390,026,000, gross profit rose by 48.2% to approximately RMB239,086,000, gross profit margin increased by 8.5% points to 61.3%, profit attributable to shareholders surged by 19.0% to approximately RMB127,374,000. Weighted average earnings per share were RMB21.0 cents, representing an increase of 19.3% over the corresponding period in 2010. The board of directors of the Company does not recommend payment of an interim dividend for the three months ended 31 March 2011.

Mr. Liu Baoqi, Chairman of Luoxin, said, "As the pharmaceutical industry in the PRC continued to grow in 2011, during the period under review, the Company fully leveraged on the opportunities arising from the expansion in the market and invested additional resources in enhancing production capabilities and technologies. Demand from market was fulfilled whilst the research and development on new products was accelerated. At the same time, the Company has been keen on tapping into a broader market in order to increase its market share. This in turn will allow satisfactory growth in both turnover and earnings, laying a solid foundation for its sustainable development in future."

As at 31 March 2011, the Company's cash on hand and cash equivalents amounted to approximately RMB730,064,000. The strong cash position will be favourable for the future development of the Company.

During the period under review, the Company was allowed to establish the position of "Taishan Scholar - Pharmaceutical expert consultant", attracting more talent and building a stronger platform of research and development for the Company, which will further strengthen the research and development competencies of the Company. In addition, during the period under review, the Company received 4 patents of invention in the PRC. It is now applying for 23 patents of invention in the PRC. The production and registration of 4 new drugs were also approved.

Recently, Chairman Liu was awarded "The National May 1 Labour Medal" by the Chinese National Federation of Trade Unions, which is one of the most honourable awards to praise one's outstanding contributions to socialist economy, politics, culture and society.

Chairman Liu added, "It is my honour to receive the "The National May 1 Labour Medal" by the Chinese National Federation of Trade Unions. Looking ahead, as the development of the pharmaceutical industry is one of the focuses of the State's policies in future, the prospect of the pharmaceutical industry is still optimistic. The pharmaceutical industry has already been included as one of the industries that will be supported by the policies in the Twelfth Five-Year Plan published by the PRC central government. It is expected that the central government will allocate more resources to the pharmaceutical and medical equipment industries. A modern and liquid market system for pharmaceutical products will be established during the term of the Twelfth Five-Year Plan so as to enhance the concentration of the industry. As we have begun the construction of new plants for "Yuxin" and "Hengxin", production capabilities will be increased to satisfy the growing demand for pharmaceutical products in the market. This will help us to increase the categories of pharmaceutical products, expand the scope in research and development on new drugs more effectively, and facilitate a more comprehensive business development. It is anticipated by the Company that "Luoxin" will be transformed into a brand representing world-class pharmaceutical enterprise, and will bring consistent satisfactory return to our 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 three 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) antibiotics, including Cephalosporines antibiotics, Quinolones antibiotics and Macrolides antibiotics; (2) anti-viral medicines; (3) system-specific medicines, including digestive system medicines, cardiovascular system medicines and respiratory system medicines; (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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