Sihuan acquires company

SHENZHEN SIHUAN PHARMACEUTICAL ACQUIRES HAINAN XINFUCHENG TECHNOLOGY PHARMACEUTICAL CO., LTD. OF YANGPU, HAINAN

The Board of Directors of Sihuan Pharmaceutical Holdings Group Ltd. (the “Group”) wishes to announce that its wholly-owned subsidiary, Shenzhen Sihuan Pharmaceutical Co., Ltd “Shenzhen Sihuan”) has today acquired a 100% equity interest comprising 2,000,000 shares of RMB1.00 each in the capital of Hainan XinFuCheng Technology Pharmaceutical Co., Ltd. (“药业有限公司海南新福程科技" or “Hainan XinFuCheng”). Shenzhen Sihuan will pay the vendors, Zhang Xiao Ming (张小民) and Zhang Ai Lin (张爱玲), a total cash consideration (the “Consideration”) of RMB 1.9 million.

The Consideration, which is paid in full on completion of the acquisition, is arrived at on a willing
buyer, willing seller basis, and is based on the valuation of the net assets of Hainan XinFuCheng as at 23 July 2007. This valuation was determined by an independent valuer, Hainan Haixin Accountant Affairs Office (海南海信会计师事务所).

The abovementioned transaction will be funded by internal resources and is not expected to have any material impact on the earnings per share and net tangible assets per share of the Group for the financial year ending 31 December 2008.