Retailing, Franchising, and Consumerism Business Intelligence in China

Tongjitang Chinese Medicines Will Acquire Qinghai Pulante Pharmaceutical Company

Tongjitang Chinese Medicines Company has signed a definitive purchase agreement to acquire Qinghai Pulante Pharmaceutical Company, a privately owned plant-based pharmaceutical company.

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."

Tongjitang anticipates that consideration for the acquisition will be in cash, with an initial payment of approximately CNY25.5 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, 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.

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