HANGZHOU, China, October 27, 2015 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ CM: CJJD) (the "Company" or "China Jo-Jo"), a leading China-based pharmacy with retail, wholesale and online distributor of pharmaceutical and health care products through its own online and retail pharmacies, announced healthcare reforms intended to consolidate, modernize and accelerate chain pharmacy growth in China.
A mandate of China's health insurance program requires pharmacies to have government reimbursement licensure in order to process authorized prescription reimbursements. This component of China's health insurance program has become a critical and growing revenue source for established pharmacies, especially in cities. In the 3rd calendar quarter of 2015, the Chinese Government decided to accelerate growth in domestic chain pharmacies for those participants who have historically demonstrated adherence to high standards of excellence. As such, rules governing the inspection and qualifications process of newly acquired chain drugstore locations were rescinded. The rationale was that the inspection process formerly placed undue burden on chain drugstores in order to requalify newly acquired storefronts for pharmacy certification. The former recertification process would shutter a newly acquired but operational pharmacy for more than a year, depending on the store location, while waiting for new licensure.
A new proposal has been approved intended to reward large chain drugstore operators who can standardize and accelerate the development of the pharmacy market in China into a mature model that is best able to service the growing demands of consumers both in retail stores and online storefront formats. The new mode of doing business starting in 2016 is expected to promote industry consolidation meant to inhibit unauthorized sale and production of counterfeit or mislabeled products while promoting and accelerating chain pharmacy growth for those businesses who can adhere to strict quality standards. The new model allows for chain drugstores to enter into contractual agreements with the State Council, allowing for quicker startup times of newly acquired storefronts. In exchange for this accelerated process, chain drugstores will have to transform the operations of new storefronts into modern, standardized operations promising to adhere to the highest standards of safety and regulatory oversight subject to periodic inspections by the PRC.
Mr. Liu Lei, CEO of China Jo-Jo commented, "China Jo-Jo is in full support of these healthcare reforms in China as it allows for chain drugstores such as ours to have an immediate return on invested capital. With a dual prong approach; selling pharmaceutical and healthcare products both online and in retail storefronts, we believe the new legislation will allow China Jo-Jo to become an industry consolidator in-line with strong secular trends and government policy promoting growth in our industry."
About China Jo-Jo Drugstores, Inc.
China Jo-Jo Drugstores, Inc., through its own retail drugstores, wholesale distributor and online pharmacy, is a leading retailer and wholesale distributor of pharmaceutical and healthcare products in China. As of June 30, 2015, the Company had 59 retail pharmacies in Zhejiang Province, China. The Company's wholesale subsidiary not only supplies its retail stores, but also distributes drug and other healthcare products to other drugstores and drug vendors. The Company routinely posts important information on its corporate websites at www.jiuzhou-drugstore.com (Chinese) and www.chinajojodrugstores.com (English).
Forward Looking Statement
Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "estimate," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate," the negatives thereof, or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. It is routine for the Company's internal projections and expectations to change as the quarter and year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change. Although these expectations may change, the Company is under no obligation to inform you if they do. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of numerous factors, including the risks associated with the effect of changing economic conditions in the People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products. Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Investor Relations Contact:
Christopher Chu, Taylor Rafferty
Tel: (908) 251-9869
Email: christopher.chu@taylor-rafferty.com
Company Contact in U.S.
Steve Liu
steve.liu@jojodrugstores.com
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