China Traditional Chinese Medicine Says Guangdong Yifang to Acquire 51% Stake of Longzhong Pharmaceutical

According to marketscreener.com, China Traditional Chinese Medicine Holdings Co., Ltd. (the "Company", together with its subsidiaries, the "Group") has made a voluntary announcement about the investment in Longzhong Pharmaceutical by way of equity transfer.

The Company, through Guangdong Yifang Pharmaceutical Co., Ltd. ("Guangdong Yifang"), an 87.3%-owned subsidiary of the Company, entered into an investment agreements with the Gansu Provincial Hospital of traditional Chinese medicine ("TCM"), the shareholder of Longzhong Pharmaceutical Co., Ltd. ("Longzhong Pharmaceutical") on 30 December 2019, pursuant to which Guangdong Yifang agreed to acquire 51% equity interest of Longzhong Pharmaceutical held by Gansu Provincial Hospital of TCM for 138.71 million yuan.

After completion of the equity transfer, Guangdong Yifang will hold 51% equity interest in Longzhong Pharmaceutical, while Gansu Provincial Hospital of TCM and Gansu Pharmaceutical Investment Group Co., Ltd ("Gansu Pharmaceutical Investment") will hold 35% and 14% equity interest respectively.

Longzhong Pharmaceutical is established by the Gansu Provincial Hospital of TCM, in order to realize the corporatization and market-oriented operation for its formula preparation center. It is mainly engaged in the manufacture of the hospital-made formula and the processing of decoction pieces. Acquiring Longzhong Pharmaceutical is able to achieve the corporation between the Company and the hospital. On one hand, this investment can help the Group enter into the market of hospital-made formula manufacture. On the other hand, it is beneficial to further strengthen the competitiveness of the Group on concentrated TCM granules, TCM finished drugs, and TCM decoction pieces business, so as to achieve the full TCM supply chain layout of the Group in Gansu province.

China TCM is the core platform established by Sinopharm Group for the TCM segment, principally engaged in the manufacture and sales of TCM. Headquartered in Foshan, Guangdong, the Company has nearly 15,000 employees and 95 subsidiaries (ended December 2019).

The Company has a complete industrial chain and integrates research, manufacturing, and sales as a whole. The products have covered several major fields including Chinese patent medicine, herbal pieces, formula granules, and chemical medicine.