Beijing Med-Pharm buys 63% stake in Rongheng

Beijing Med-Pharm has signed definitive agreements to purchase a majority interest in fellow Chinese drugmaker Shanghai Rongheng Pharmaceutical from Shanghai CAS Shenglongda Biotech and Shanghai Rongheng International Trade Co of Orient International. The deal is subject to a number of conditions including receipt of Chinese central government approval, and is expected to close by the end of the second quarter of 2007.

Under the terms of the deals, Beijing Med-Pharm will acquire a 63.3% stake in Rongheng and begin immediate participation in the management of the company, in anticipation of government approval of the transaction. A transition team, led by David Gao, has been formed. The current general manager of Rongheng, Zhou Jianwei, will remain in that position. Mr Zhou has worked in the drug industry for 25 years and served as executive vice president of Shanghai Pharmaceuticals before joining Rongheng.

Rongheng is a drug distribution enterprise with operations in Shanghai, China's largest city with 17 million residents, that distributes over 400 pharmaceutical products to more than 250 hospitals in Shanghai, including almost all of the top-tier hospitals in the city, generating annual income of $12.0 million in 2006.