Fosun Pharma Announces Proposed Listing on Main Board of

Hong Kong Stock Exchange

Maximum Offer Price Set at HK$13.68 to Raise up to HK$5.3 Billion**

Innovation for Good Health

Operations Strategically Cover the Healthcare Industry Value Chain

Strive to Become a Leading Enterprise in the Global Pharmaceutical Industry

16 October 2012, Hong Kong - Shanghai Fosun Pharmaceutical (Group) Co., Ltd.(“Fosun Pharma” or the “Company” and, together with its subsidiaries, the “Group”), aleading healthcare company in the PRC, announced the proposed listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”).  

The Company plans to offer an aggregate of 336,070,000 H Shares, of which approximately 302,463,000 H shares are international offer shares (subject to adjustment and the Over-allotment Option) and approximately 33,607,000 H shares are Hong Kong offer shares (subject to adjustment). Up to an aggregate of 50,410,500 H shares, or approximately 15% of the offering H shares initially available under the global offering, will be allotted and issued by the Company if the Over-allotment Option is exercised, at a maximum offer price of HK$13.68 per share to raise up to HK$5.3 billion. The Hong Kong public offering will open at 9:00 a.m. on 17 October 2012, Wednesday and close at 12:00 noon on 22 October 2012, Monday. Dealings of shares on the SEHK are expected to commence on 30 October 2012,Tuesday, under the stock code 02196 in board lots of 500 shares each.  

UBS AG, Hong Kong Branch (“UBS”), China International Capital Corporation Hong Kong Securities Limited (“CICC”), J.P. Morgan Securities (Asia Pacific) Limited (“JPM”) and Deutsche Bank AG, Hong Kong Branch (“DB”) are the Joint Global Coordinators, UBS Securities Hong Kong Limited, CICC, J.P. Morgan Securities (Far East) Limited and DB are the Joint Sponsors and UBS, CICC, JPM (for the Hong Kong Public Offering), J.P. Morgan Securities plc (for the International Offering) and DB are the Joint Bookrunners and Joint Lead Managers in the global offering. 

Fosun Pharma is a leading healthcare company in the PRC. The Group was established in 1994 with headquarters located in Shanghai and listed on the Shanghai Stock Exchange since 1998. The Group further strengthened corporate governance and investor relationship management, and therefore achieved significant outcome. Besides SSE 180 Index, CSI 300 Index, SSE Dividend Index, SSE Corporate Governance Index, Fosun Pharma has also been successfully included in the SSE Private Enterprise 50 Index and SSE Social Responsibility Index. According to IMS Health Incorporated (“IMS”), the Group was one of the top five domestic pharmaceutical companies in the PRC by revenue from the pharmaceutical manufacturing segment in 2011. The Group’s business operations strategically cover multiple important segments in the healthcare industry value chain, with business segments include pharmaceutical manufacturing, pharmaceutical distribution and retail, healthcare services, and diagnostic products and medical devices. The Group has maintained a relatively high growth, with revenue and gross profit in 2009-2011 growing with a CAGR of 29.3% and 40.3% respectively. The consolidated forecast profit attributable to owners of the Company is expected to amount to not less than RMB1.49 billion, increased by 27.8% as compared to the same period last year. Forecast basic earnings per Share for 2012 would be RMB0.67 or HK$0.81 (not taking into account any H Shares that may be issued pursuant to exercise of the over-allotment option). 

Mr. Chen Qiyu, Executive Director and Chairman of Fosun Pharma, said, “Currently,China’s pharmaceutical market is among those with the highest growth potential in the world. Most of the global leading pharmaceutical enterprises usually grow from countries that have a strong domestic market for pharmaceutical products. In the coming 5-10 years, China’s pharmaceutical market is likely to follow the U.S. and become the second largest market in the world with a world-class pharmaceutical enterprise. Healthcare expenditure has been essential along with society development and it is expected that the demand of healthcare will become stronger in the future. Currently, around 80% of our revenue generated by pharmaceutical businesses is contributed by the China market. We believe this position will continue in the future for a relatively long period.”

Innovation and R&D Achievements

Fosun Pharma has strong research and development capabilities and a robust product pipeline that is focused on biopharmaceutical drugs. During the track record period, the Group’s strategy to focus on research and development ensures its continuous investment to further improve the Company’s production capacity and efficiency, which include research and development expenses for capitalization, on average accounted for 8% to 10% of the Company’s revenue of the pharmaceutical manufacturing segment. As of 30 June 2012, Fosun Pharma had over 100 pipeline products, with research and development activities mainly focus on innovative drugs, biopharmaceutical drugs, and first-to-market chemical generic drugs in core pharmaceutical segments such as oncology, metabolism and alimentary tract, and cardiovascular system etc. The Group has established four research and development platforms dedicated to develop in areas like  large molecule biopharmaceutical drugs (including monoclonal antibodies) and small molecule chemical drugs, and set up international research and development team in Shanghai, Chongqing, and the U.S.. 

Pharmaceutical Manufacturing: Focusing on Five Major Therapeutic Areas

The Group engages in the research and development, manufacturing, and sales and marketing of pharmaceutical products in the pharmaceutical manufacturing segment. The Group primarily focuses on the five major therapeutic areas in China, which include metabolism and alimentary tract, cardiovascular system, oncology, central nervous system and anti-infection. 13 most important products produced by the Group also enjoy leading positions within their respective market segments. Currently, pharmaceutical manufacturing is the Group’s core business, which is the major contributor to the revenue of major businesses of the Group. In the first half of 2012,  pharmaceutical manufacturing segment accounted for 62.8% of the Group’s total revenue. Driven by continuous rapid growth of its major products and expanded product portfolio through integration, acquisition and independent research and development, revenue of the Group’s pharmaceutical manufacturing segement in the first half of 2012 increased by 22.7% as compared to the same period last year. According to IMS, the Group is one of the top five domestic pharmaceutical companies in the PRC by revenue from the pharmaceutical manufacturing segment in 2011. The Group is also a leading supplier for anti-malaria medicines. The artesunate products produced by the Group are endorsed by the WHO and have been widely used in many countries. 

Pharmaceutical Distribution: Leading Brand in the Retail and Distribution - Sinopharm

For pharmaceutical retail and distribution businesses, Sinopharm, jointly established by Fosun Pharma and China National Pharmaceutical Group Corporation, has been the largest pharmaceutical distributor in China since 2003 and established a leading supply chain service style, and leading market position. Sinopharm was listed on the SEHK in 2009 with current market capitalization amounted to RMB52.4 billion. Revenue of Sinopharm has increased more than 10 times in 8 years, while its net profit also rise for more than 20 times, and reached RMB1.56 billion in 2011. Currently, distribution network of Sinopharm covers more than half of the hospitals in China, with its market share higher than 2 times as compared to the enterprise which ranked the second. Currently, Fosun Pharma holds a 32.1% equity interest in Sinopharm and is its second largest beneficial shareholder. Besides, the Group operates directly or by franchise under the names “Golden Elephant Pharmacy’’ in Beijing, and ‘‘For Me Pharmacy’’ in Shanghai. As at 30 June 2012, the retail pharmacy network included a total of 670 retail pharmacies. 

Medical Services: Pioneer in Premium, Specialty and General Healthcare Services

As continued economic development increases in China, the demand for healthcare services is growing significantly, especially there are many development opportunities in the premium, specialty and general healthcare services. As a pioneer in the premium, specialty and general healthcare services market among leading healthcare enterprises in China, Fosun Pharma has entered the premium healthcare services market by investing in Chindex International Inc., which mainly operates the United Family Hospital, and provides premium medical services in Beijing, Shanghai, Tianjin and Guangzhou. Also, the Group is currently managing and operating one general hospital and one specialty hospital. Leveraging on the Group’s market position and brand name as well as the first-mover advantage among the leading healthcare enterprises in the PRC, we believe the Group can efficiently manage the hospitals, allocate resources, and achieve significant economies of scale for the healthcare services business. 

Exceptional Management Team with Entrepreneurship

Most of the founders of Fosun Pharma are experts in the bio-pharmaceutical field. The Board of Directors and senior management team also have proven track records of operational success, and were the core managements of pharmaceutical companies plus extensive experience in various segments of the pharmaceutical industry. The Group’s exceptional management team has demonstrated entrepreneurship that has helped to capture market opportunities, establish and implement successful business strategies, assess and manage risks and guide the development of the company into higher growth areas, and increased the overall profitability of the Company and laid a solid foundation for continued future success.

Looking ahead, Fosun Pharma will expand the product portfolio through internal research and development, acquisitions and strategic alliances, aim to build a product portfolio consisting of a broad range of products in major therapeutic areas, continue to focus on innovative drugs, first-to-market generic drugs or branded generic drugs that have high technological production barriers-to-entry. The Group also intended to expand the sales team for pharmaceutical manufacturing segment to improve the efficiency of our sales and marketing operations. There are significant acquisition and consolidation opportunities in the fragmented PRC healthcare industry for industry leaders, the Group will continue to accelerate growth through acquisitions, strategic alliances and effective business integration. In addition to core pharmaceutical manufacturing segment, the Group will develop other business segments, particularly healthcare services business. 

Mr. Chen Qiyu concluded, “Our goal is to consolidate and further enhance our position as a leading healthcare company in the PRC. We will continue to invest in innovative research and development and increase our market share in the pharmaceutical manufacturing and other business segments in the PRC market. Meanwhile, we endeavor to expand our presence in various potential international markets to further implement our global strategy and strive to become a leading enterprise in the global pharmaceutical market.”

*  For identification purposes only

** If the Over-allotment Option is exercised