Sihuan invests in Beijing's Largest Privately Owned Drug Distributor

Acquires 45% of Beijing Purenhong for RMB50.7m

Earnings-accretive based on PE of 3.8 times FY08 guaranteed profitafter tax

Deal further strengthens Sihuan’s market share in Beijing

SINGAPORE, 15 May 2008 Mainboard-listed Sihuan Pharmaceutical Holdings Group Ltd (四环医药控股集团有限公司, Sihuan, or the Group) , a leading manufacturer of cardiocerebral vascular (CV) drugsin the PRC, today announced that it will acquire 45% of Beijing’s largest privately owned pharmaceutical products distribution company for RMB 50.7 million.

Established in 2000, Beijing Purenhong Pharmaceutical Co Ltd (北京普仁鸿医药销售有限公司 or Beijing Purenhong) distributes a variety of pharmaceutical products, in particular specialised medicines on behalf of major PRC and international pharmaceutical companies to 130 major hospitals in Beijing.This latest move is part of Sihuan’s continuing efforts to ramp up products sales. With the acquisition of Beijing Purenhong, Sihuan will be able to generate even greater demand for both its CV and non-CV drugs, other than its best-selling Kelinao in the capital.

Sihuan’s Executive Chairman and Chief Executive Officer (CEO), Dr Che Fengsheng (车冯升), said: “Beijing is one of our core markets for CV drugs and this acquisition represents a key step towards building a stronger presence in China’s booming capital. Last year, approximately 10% of our sales revenue came from Beijing. Going forward, we believe this contribution will increase as we leverage on Beijing Purenhong’s established distribution network and sales experience to secure an even higher market share in Beijing.“Beijing Purenhong is a well-managed company with excellent long-term prospects. We are pleased to have this opportunity to participate in its growth. The deal, which is accretive toour earnings, will certainly add to our future profits.

”The Group is paying an attractive price-earnings (PE) multiple for Beijing Purenhong at 3.8 times, based on FY08 guaranteed profit after tax of RMB 30.0 million. In the event that the actual profit after tax is lower than the guaranteed level of RMB 30.0 million, Beijing Purenhong will undertake to compensate Sihuan for any shortfall in profit by proportionately returning the RMB 50.7 million purchase price. This company recorded a net attributable profit of RMB 10.0 million for the financial year ended 31 December 2007.

Recently, Sihuan reported a strong 66% year-on-year jump in net net attributable profit toRMB 53.1 million for the first quarter ended 31 March 2008, continuing the growth momentum of the earlier quarters. This sterling performance arose from higher demandfor a wide range of its CV and non-CV drugs, as Sihuan stepped up marketing to top-tier hospitals.