Tongjitang Chinese Medicines Company Announces Definitive Purchase Agreement to Acquire Qinghai Pulante Pharmaceutical Company

SHENZHEN, China--(BUSINESS WIRE)--Tongjitang Chinese Medicines Company (NYSE: TCM - News) (“Tongjitang” or the “Company”), a leading specialty pharmaceutical company focusing on the development, manufacturing, marketing and selling of modernized traditional Chinese medicine in China, today announced that it has signed a definitive purchase agreement to acquire Qinghai Pulante Pharmaceutical Co. Ltd. (“Pulante”), a privately owned plant-based pharmaceutical company. The Company anticipates that consideration for the acquisition will be in cash, with an initial payment of approximately RMB 25.5 million. Tongjitang will make additional payments over the next three years based on Pulante’s financial and operational performance. The transaction is subject to customary closing conditions and applicable regulatory approvals.

Pulante is located in Xining in the Qinghai province of China and was founded in 2000. It develops, manufactures, markets, and distributes SFDA-approved Tibetan recipe-originated medicines in China. Pulante’s major revenue-generating product, Chongcao Qingfei Capsules, is an OTC product which alleviates the symptoms of respiratory diseases, and targets patients with Chronic Obstructive Pulmonary Disease (“COPD”), a common disease among more than 300 million smokers in China. In 2007, Pulante generated revenue of approximately RMB40 million and was profitable. Pulante’s manufacturing facility in Xining is a GMP-certified manufacturing facility.

Xiaochun Wang, Tongjitang’s chief executive officer and chairman of its board of directors, stated, "We are excited to welcome Pulante to our expanding business operations and believe that this transaction will further diversify our product portfolio, particularly in our OTC operating segment. Chongcao Qingfei is considered one of the top brands treating Chronic Obstructive Pulmonary Disease in China. We intend to drive Pulante’s sales with a focus on the COPD market, through our existing sales network and well-established distribution channels.”

“We will continue to look for profitable acquisition opportunities like Pulante to diversify revenue and add compelling new products or brands to our portfolio. As always, we intend to deploy capital efficiently to generate good returns on our investments,” concluded Wang.

About Tongjitang Chinese Medicines Company

Tongjitang Chinese Medicines Company, through its operating subsidiaries Tongjitang Pharmaceutical, Guizhou LLF Pharmaceutical, Tongjitang Distribution, Tongjitang Chain Stores, and Tongjitang Planting, is a vertically integrated and profitable specialty pharmaceutical company focusing on the development, manufacturing, marketing and selling of modernized traditional Chinese medicine in China. Tongjitang’s principal executive offices are located in Shenzhen, China.

Tongjitang’s flagship product, Xianling Gubao, is the leading traditional Chinese medicine for the treatment of osteoporosis in China as measured by sales in Renminbi amounts. In addition to Xianling Gubao, the company manufactures and markets 10 other modernized traditional Chinese medicine products and 37 western medicines. Visit www.tongjitang.com for more information.

Safe Harbor Statement

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from those described in the forward -looking statements in this press release. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our growth strategy; our future business development, results of operations and financial condition; our heavy dependence on the success of Xianling Gubao; our ability to market Xianling Gubao to hospitals and to retail pharmacies; the retail prices of our principal products’ being subject to price control by the government authorities in China; our products’ inclusion in national and provincial medical catalogs of the National Medical Insurance Program in China; our ability to obtain approval from the State Food and Drug Administration in China to convert a provisional national production standard of our principal products to a national final production standard; our ability to continue having the exclusive production rights for our products; our ability to further improve our barrenwort extraction efficiency; our ability to obtain manufacturing or marketing approval for our future products; our dependence on a limited number of distributors for a significant portion of our net revenues; our ability to protect our intellectual property rights and defend infringement or misappropriation claims by third parties; intense competition in the pharmaceutical market in China; the supply of quality medicinal raw materials; and uncertainties with respect to the legal system in China. Further information regarding these and other risks is and will be included in our registration statement on Form F-1 and other documents filed and to be filed with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of the date of this press release, and the Company undertakes no duty to update such information, except as required under applicable law.

Contact: In the U.S.: Integrated Corporate Relations, Inc. Ashley Ammon MacFarlane and Christine Duan 203-682-8200 (Investor Relations) or In Asia: Integrated Corporate Relations, Inc. Xuyang Zhang 86 10 8523 3087 (Investor Relations)

Source: Tongjitang Chinese Medicines Company

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