Bohai to acquire rights to 14 approved Traditional Chinese Medicines for $7,200,000

Dec 14 2010

Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH), a China-based pharmaceutical company engaged in the production, manufacturing and distribution of Traditional Chinese Medicine (TCM), has entered into a binding agreement with Shandong Daxin Microbiology Pharmaceutical Industry Co., Ltd. to acquire the rights to 14 approved TCM medicines that were previously issued to Daxin by the Shandong Branch of the State Food and Drug Administration of China ("SFDA").  The aggregate purchase price is approximately $7,200,000 (CNY 48 million), of which approximately $3,000,000 (CNY 20 million) will be paid within 15 days from the execution of the agreement.  The remaining balance will be paid on or before January 31, 2011.  

The product acquisitions expand Bohai's delivery platforms to include two new categories: powder and pellet formulations.  The Chinese government's Essential Drug List (EDL) for TCM, which was established in 2009 as part of China's healthcare reform, has the most product categories in these two areas.  Among the 14 medicines being acquired by Bohai, four are currently included on the EDL and an additional five medicines are included in the National Drug Reimbursement List (NRDL).  Additionally, 3 of the 14 are prescription medicines and 11 will be available for sale Over-the-Counter.  Inclusion on either the EDL or NRDL allows for up to 100% insurance coverage by the Chinese government.  

"Bohai is excited to significantly expand our potential product offerings with the acquisition of these 14 products, which we believe offer great value to our shareholders," said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals Group. "The ongoing national health insurance reform promises to drive tremendous growth in the Chinese markets, particularly with respect to TCM and in rural areas, where over 900 million people reside.  Patient purchased drugs from the EDL will receive 100% government coverage, so ensuring Bohai expands patient options for medicines on this list will be a key component of our growth strategy.  Importantly, these new products will leverage our existing 300 person sales-force and help us gain additional TCM market-share in China."

Bohai's 14 newly acquired medicines are in addition to the 29 traditional Chinese medicine products that the Company is authorized to produce, of which 15 are currently in production.