Sihuan Q3 Result Release

Sihuan on track for record 2008 from robust demand for its CV and non-CV drugs in China

9M08 net attributable profit of RMB180m has already exceeded 2007’s full-year profit

Strong cashflow from operations gives Group cash position of RMB228m and zero debt

Sihuan’s pipeline of drugs like GM-1 and Edaravone will strengthen Group’s market leadership in China’s cardiocerebral vascular sector

SINGAPORE, 3 November 2008 FOR IMMEDIATE RELEASEA leading manufacturer of cardiocerebral vascular (CV) drugs in China, Sihuan Pharmaceutical Holdings Group Ltd. (Sihuan, the Group,四环医药控股集团有限公司), is on track for a record profit for 2008. Not only has net attributable profit for the nine months to 30 September 2008 (9M08) swelled 42% year-on-year (yoy) to RMB179.7million, it has also surpassed the profit achieved for full-year 2007 of RMB179.3 million.

Group revenue surged 95% yoy to RMB366.1 million because of robust demand for Sihuan’s wide range of cardiocerebral vascular (CV) as well as non-CV drugs in the PRC. The 73% yoy growth in CV drug sales in 9M08 was driven by the strong take-up of its top products – Kelinao, Anjieli and Chuanqing – as well as the fast-rising acceptance of QuAo/Ninxinao (also known as cerebroprotein hydrolysate injections), which is distributed by Shenzhen Sihuan.

The Group’s non-CV drugs registered sales of RMB66.6 million in 9M08, a 334% rise from 9M07’s RMB15.4 million, largely because of contributions from wholly-owned Shenzhen Sihuan Pharmaceutical Co., Ltd (Shenzhen Sihuan). The maiden pre-tax profit of RMB5.6 million from 45%-owned distribution firm Beijing Purenhong Pharmaceutical Co., Ltd (Beijing Purenhong) also lifted the Group’s earnings.

Dr Che Fengsheng (车冯升), Sihuan’s Executive Chairman and Chief Executive Officer, commented: “All along, Sihuan has carefully maintained a strategy of enhancing our edge in CV drugs while diversifying into the non-CV drug segment through organic growth acquisitions that strengthen our R&D, marketing and distribution. This strategy has paid off handsomely, putting us in an excellent position to achieve outstanding results for the full year of 2008.

“We are confident that our pipeline of new drugs – such as GM-1 or Aogan, Luoanming and Edaravone – will add noticeably to our earnings when they are launched next year and will boost Sihuan’s market leadership in China’s CV drug sector. We also expect to receive further approvals from China’s State Food and Drug Administration for other new products that we have lined up in both the CV and non-CV drug segments.”

Sihuan generated strong cashflow from its operations of RMB146.1 million in 9M08, against RMB107.6 million previously, given the Group’s prudent working capital management, With this, Sihuan enjoyed a strong cash position of RMB227.7 million, with zero debt, despite making investments of RMB108.2 million to sharpen its competitive edge in the PRC pharmaceutical sector.

Given these factors, the Group is well placed toovercome the current challenges presented by the financial crisis worldwide, and to even strengthen its leading position. The Group expects the PRC pharmaceutical industry to consolidate further, so the operating environment is likely to remain competitive. However, recent moves by the Chinese government to raise subsidies to the healthcare sector and launch the medical insurance scheme, are already impacting the pharmaceutical industry positively and lend support to its continuing growth.

Added Dr Che: “We see the industry’s further consolidation as positive developments because we believe that our strong R&D capability and high product quality that meet stringent regulatory standards will clearly differentiate Sihuan from its competitors. Sihuan is therefore well-positioned to seize any opportunities presented by these macroeconomic policy changes.” Just two weeks ago, the Group boosted its portfolio by acquiring the right to distribute and sell a well-received drug, Edaravone, in China. This drug – which complements the Group’s flagship product, Kelinao – improves efficacy in the treatment of stroke patients. Sihuan will start distributing Edaravone by the end of 2008 and is optimistic about itsability to penetrate and enjoy a good share of the drug’s current market.