China Aoxing acquires LRT for $10.8M

China Aoxing Pharmaceutical, which claims it has the largest manufacturing facility and product pipeline for highly regulated narcotic and pain medication in China, says that its subsidiary, Hebei Aoxing Pharmaceutical, has signed a definitive acquisition agreement to acquire Shijiazhuang Lerentang Pharmaceutical. LRT is a drug company organized under Chinese legislation specializing in the manufacturing and distribution of modernized Chinese traditional medicines, with a strong portfolio of pain management products.

The deal sees China Aoxing acquiring 100% ownership of LRT. The purchase price is 80.0 million renminbi ($10.8 million) in cash and eight million shares of the company's common stock. Completion of the transaction was expected to occur within 70 days of the March 12 announcement. However, it is subject to a number of conditions, including Chinese government approval.

LRT, based in Shijiazhuang City, Hebei Province, was founded in 1935. It is a profitable company with the total product sales of around $9.0 million for the year ended December, 2007. It currently has 127 State Food and Drug Administration-approved products in its portfolio and has developed a rich line of pain management drugs in pill, tablet, capsule, oral solution and other formulations. LRT's best selling product is its Zhong Tong An Capsules, an effective pain medicine developed solely by the firm to relieve dental pain, sore throats and oral ulcers. Zhong Tong An Capsules accounted for about 50% of its total revenue in 2007. LRT currently has 52 products listed in the first and second classes of the National Medical Insurance Program, and 101 entered in the national over-the-counter medicine book. In 2004, the firm passed Good Manufacturing Practice certificates for all of its production lines.