China Aoxing Pharmaceutical To Acquire Shijiazhuang Company

China Aoxing Pharmaceutical's subsidiary Hebei Aoxing Pharmaceutical Group Company signed a definitive acquisition agreement to acquire Shijiazhuang Lerentang Pharmaceutical Company.

"We are excited to gain significant progress in the LRT transaction and believe this acquisition will further support our position as a leading, diversified pain management products company," commented Zhenjiang Yue, chairman and CEO of China Aoxing. "With LRT's integration, we will execute a key part of our business strategy by acquiring an established brand, profitable business, and synergistic product portfolio with significant commercialization value. LRT has a number of high value pain management products, including its flagship product, Zhong Tong An Capsules, that have not reached their full market potential."

LRT is a pharmaceutical company organized under the laws of China specializing in the manufacturing and distribution of modernized Chinese traditional medicines, with a strong portfolio of pain management products. The definitive acquisition agreement contemplates that CAXG will acquire 100% ownership of LRT. The purchase price will be paid RMB80 million in cash and eight million shares of the company's common stock. Completion of the transaction is expected to occur within the next 70 days. Completion, however, is subject to a number of conditions, including the receipt of approval from the Chinese government.

LRT, based in Shijiazhuang, was founded in 1935. It is a reportedly profitable company with the total product sales of approximately US$9 million for the year ended December, 2007. LRT currently has 127 SFDA-approved products in its portfolio and has developed a rich line of pain management drugs in pills, tablets, capsules, oral solutions and other formulations. LRT's best selling product is the Zhong Tong An Capsules, an effective pain medicine developed solely by LRT to relieve dental pain, sore throats and oral ulcers. Zhong Tong An Capsules accounted for approximately 50% of LRT's total revenue in 2007.

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