Shanghai Pharmaceuticals Makes Breakthrough in Manufacturing M&A since H-Share Listing

Shanghai Pharmaceuticals Holding Co. Ltd., ("Shanghai Pharmaceuticals" or the "Company" and, together with its subsidiaries, the "Group; stock code: 601607.SH; 02607.HK), is pleased to announce that 2011 marks another meaningful year for the Company since the listing of its A Shares on the Shanghai Stock Exchange after the Company successfully merged with Shanghai Industrial Pharmaceutical Investment Co., Ltd ("Shanghai Industrial Pharma") and Shanghai Zhongxi Pharmaceutical Co.,Ltd. ("Zhongxi Pharmaceutical") by absorption in 2010.The Company has been listed on the Hong Kong Stock Exchange since 20 May 2011, completing its overseas offering. The Company issued 696,000,000 H Shares which accounted for 25.9% of the expanded share capital. The offer price was HK$23 per share and a total of HK$16 billion was raised. The IPO was the largest overseas among the Chinese enterprises in 2011 and the world's top ten in the same year.Since its H share listing, the Company has gradually enhanced its industry position, while revenue and profit from its core business surged to their new highs. Industry experts predicted that the pharmaceutical M&A market will become turbulent in 2012. The Company has accelerated its move in M&A this year. Yesterday, one of the wholly-subsidized company of Shanghai Pharmaceuticals, Shanghai Zhongxi Sunve Pharmaceutical Co.,Ltd. ("Zhongxi Sunve") entered into an investment agreement with Shanghai Jinhe Bio-Technology Co., Ltd ("Jinhe Bio-Technology") for acquiring a 51% equity interest in Jinhe Bio-Technology. This acquisition will increase the investment in the area of anti-tumor active pharmaceutical ingredients (APIs).Anti-tumor drugs have been the fastest growing category of medicine in China in recent years, with a growth rate much higher than the pharmaceutical industry average. Among the anti-tumor drugs, the natural botanical type, especially taxanes (such as taxol and docetaxel), represents the largest proportion. Jinhe Bio-Technology is a high-tech enterprise engaged in the research, manufacturing and sales of botanical anti-tumor APIs as well as intermediates. The anti-tumor taxanes Jinhe Bio-Technology develop and produce fill the domestic gap and meet the domestic demand with a market share of over 50%. Jinhe Bio-Technology currently focuses on three types of botanical anti-tumor products, namely taxanes from taxus biomass, irinotecan from camptotheca acuminate and podophyllotoxin from podophyllum hexandrum, and has obtained a number of patents in these segments. With products that meet international standards, Jinhe Bio-Technology is recognized as an incubating technical "little giant" enterprise by the Science and Technology Commission of Shanghai Municipality.Zhongxi Sunve, a core subsidiary of Shanghai Pharmaceuticals specializing in APIs and related formulations, has received manufacturing approvals for the APIs of taxol and docetaxel in China at fairly early years. After this collaboration, both parties can integrate their resources and join hands together to quickly develop competitive advantages in botanical anti-tumor medicine. The investment mainly covers the construction of new plants that meetChina's GMP and U.S. FDA requirements. The new company is expected to be developed into a botanical anti-tumor drug API manufacturer with the largest domestic market share as well as global influence within a time frame of three years.