Luoxin Announces 2012 First Quarterly Results

• Gross Profit Surges 25.47% to Approximately RMB 299,866,000
• Fully Leveraging on the Opportunities Arising from the Integration of the Pharmaceutical Industry
• Continue to Improve Core Competencies

Hong Kong, May 9, 2012 /PRNewswire-Asia/ --

Unaudited financial summary

Shandong Luoxin Pharmacy Stock Co., Ltd. ("Luoxin" or the "Company", stock code: 8058), a leading PRC pharmaceutical enterprise, announced its unaudited first quarterly results for the three months ended 31 March 2012 (the "period under review") today.

During the period under review, the Company continued to strengthen its R&D, production and distribution capabilities, thereby maintaining a good operating condition. The Company's turnover increased by 21.63% year-on-year to approximately RMB474,406,000. Gross profit rose by 25.47% to approximately RMB299,866,000, with gross profit margin increased by 1.93% points to 63.21%. The Company's profit attributable to shareholders surged by 1.98% to approximately RMB129,894,000. Weighted average earnings per share were RMB21.31 cents, representing an increase of 2.01% over the corresponding period in 2011. The board of directors of the Company does not recommend payment of an interim dividend for the three months ended 31 March 2012.

Mr. Liu Baoqi, Chairman of Luoxin, said, "With the government's proactive introduction of medical reforms, the further standardisation and input into the pharmaceutical industry, we believe the development of pharmaceutical industry in the PRC will continue to be promising in 2012. Luoxin has been consistent in implementing the development strategies as formulated earlier, and has always insisted on strategic core competencies in science and technology innovation, enhancement on our research, development and distribution, and consolidation of production. Best endeavours were used to provide reliable, high-technology and high value-added pharmaceutical products. During the period under review, we fully leveraged on the opportunities arising from the expansion in the market and fulfilled market demand by investing additional resources in enhancing its production capabilities, technologies and in the research and development of new products. At the same time, Luoxin has been keen on tapping into a broader market in order to increase its market share so as to boost our growth in both turnover and earnings to build a solid foundation for a sustainable development of the Group in the future. As a result, the Group recorded remarkable growth compared to that of the same period last year. The outstanding results were attributable to the support and cooperation of all shareholders, customers, suppliers, business partners and the public, as well as the concerted and unremitting efforts of the management and staff of the Group."

As at 31 March 2012, the Company's cash on hand and cash equivalents amounted to approximately RMB763,348,000. The strong cash position is favourable for the future development of the Company.

Prior to the period under review, the Group has been recognised as an "Industrial Model Enterprise in the National Integrated Platform for New Pharmaceutical Research, Development and Technology (Shandong)" and "Key High-Tech Enterprise under the State Torch Program". The Group has also been permitted to establish the "National Post-Doctoral Research Workshop". On such basis, the Group was further permitted to establish the "Shandong Key Lyophilized Powder Injection Pharmaceutical Laboratory", the "Shandong Key Lyophilized Powder Injection Pharmaceutical Engineering Laboratory", the position of "Taishan Scholar -- Pharmaceutical expert consultant" and the "Enterprise Academician Workstation of Shandong Province", which have built a stronger platform on talent introduction, research and development and technology improvement for the Group to further strengthen its research and development capacities and enhance its overall competitiveness. At the same time, the Group is now applying for 28 patents of invention in the PRC. As of 31 March 2012, the Group had 57 patents, of which 47 were national patents.

Meanwhile, Luoxin's progress on the construction of production facilities is also on schedule. Shandong Yuxin Pharmacy Co., Ltd. was granted the Drug Manufacturing Certificate and the construction of its infusion workshop and ancillary facilities was completed, and is expected to generate revenue in 2012. Besides, the progress of the construction of pharmaceutical raw materials project of Shandong Hengxin Pharmacy Co., Ltd. is accelerated. The first phase of the project is scheduled to be completed and ready for operation in 2012.

Chairman Liu Baoqi concluded, "In the past 2012 first quarter, Luoxin has been consistent in implementing development strategies as formulated earlier and the targets of the Twelfth Five-Year Plan. A sound operation has thus been sustained in the first year of the Twelfth Five-Year Plan, supporting a balanced, healthy development in research and development, management, production, human resources, and market network. Looking ahead, as the development of the pharmaceutical industry will be one of the focuses of the State policies, the prospects of the pharmaceutical industry is optimistic. The pharmaceutical industry is one of the supported industries in the Twelfth Five-Year Plan of the PRC central government. The central government will allocate more resources to the pharmaceutical and medical equipment industries, and that a modern market system for the circulation of pharmaceutical products will be established during the Twelfth Five-Year Plan so as to enhance the concentration of the industry. We will continue to pursue the strategic directions of 'Technology-driven enterprise with determination and efforts' under the favourable operating environment. By fully leveraging on the opportunities arising from the integration of the pharmaceutical industry, Luoxin will continue to expand our investment in research and development to enhance the standards in research and development as well as technologies, and to strengthen the capabilities of the internal research and development team. This will enable us to invent and develop more products of higher technology, better quality and higher added value. We also aim at reducing the production cost and expanding the production scale so as to achieve economies of scale, a low cost of production and differentiation of competitive edge. As our new plants for Yuxin and Hengxin commence production, production capabilities will be increased to satisfy the growing market demand for pharmaceutical products. The construction of new plants will also assist the development of new categories of pharmaceutical products and expand our scope in research and development on new drugs more effectively. This will facilitate a more comprehensive development in our business. Luoxin will also accelerate the establishment of the sales team and proactively establish a broader sales network so as to enhance the market share of our products and continue to improve our core competencies. With the implementation of the strategies stated above, we anticipated that 'Luoxin' will be transformed into a brand representing a world-class pharmaceutical enterprise and are confident in maintaining a steady growth in our business so as to bring satisfactory returns to our shareholders."

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About Shandong Luoxin Pharmacy Stock Co., Ltd.

Luoxin has been listed on the GEM of the Stock Exchange of Hong Kong Limited since 9 December 2005. The Company was recognized as one of the “Top Ten Pharmaceutical Enterprises with Growth Potential” and named as one of the “Top 100 Pharmaceutical Companies in China” since 2006. It was also selected on the “List of Small and Medium-sized Enterprises in China with Most Potentials” by Forbes for four consecutive years. The Company is principally engaged in the development, manufacturing and sale of different types of prescription and OTC (over-the-counter) medicines in 4 major categories: (1) system-specific medicines, including digestive system medicines, cardiovascular system medicines and respiratory system medicines; (2) anti-viral medicines; (3) antibiotics, including Cephalosporines antibiotics, Quinolones antibiotics and Macrolides antibiotics; (4) other chemical medicines, including Antineoplastic medicines. The Company’s production facilities are located in the High and New Technology Experimental Zone, Linyi, Shandong Province, the PRC, and has obtained all required production permits as well as GMP certification. Its sales and marketing networks cover 27 provinces and 4 municipalities in the PRC.

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