Beijing Med-Pharm Corporation has signed a definitive agreements to purchase a majority interest in the Shanghai Rongheng Pharmaceutical Co., Ltd. (Rongheng) from Shanghai CAS Shenglongda Biotech (Group) Co., Ltd. (Shanghai CAS) and Shanghai Rongheng International Trade Co. Ltd. of Orient International (Holding) Co. (Orient International).

According to a company press release, the transaction is subject to a number of conditions including receipt of Chinese central government approval, and is expected to close by the end of the second quarter of 2007.

Rongheng is a pharmaceutical distribution enterprise with operations in Shanghai, China's largest city with 17 million residents. Rongheng distributes over 400 pharmaceutical products to more than 250 hospitals in Shanghai, including almost all of the top tier hospitals in the city, generating annual revenues of $12 million in 2006. In January 2007, Beijing Med-Pharm announced that it had emerged as the winning bidder for shares of Rongheng, posted on the Shanghai United Assets and Equity Exchange in accordance with Chinese law.

"We are pleased to have reached final agreements with the current owners of Rongheng and look forward to supporting the company's continued success," says David Gao, CEO of Beijing Med-Pharm. "When we complete this transaction, our second significant acquisition in China, Rongheng will become a key component of our unique proprietary distribution network, complementing our current operations in Beijing and anticipated expansion to Guangdong province through the Alliance Boots joint venture. This is another important step toward our objective to have truly national distribution capabilities in China for our partners and our own products."

Under the terms of the agreements, Beijing Med-Pharm will acquire a 63.3 per cent stake in Rongheng and will begin immediate participation in the management of the company, in anticipation of Chinese government approval of the transaction. A transition team, led by David Gao, has been formed. The current General Manager of Rongheng, Zhou Jianwei, will remain in that position. Zhou has 25 years of experience in the pharmaceuticals business and served as executive vice president of Shanghai Pharmaceuticals before joining Rongheng.

Beijing Med-Pharm expects to file an application with the central government by the end of March, 2007. No assurance can be provided that the application will be approved or that the acquisition will be completed.

Beijing Med-Pharm is a pharmaceutical marketing and distribution company that offers the following services in China: pre-market entry analysis; clinical trial management; product registration; market research; pharmaceutical distribution to hospitals; and pharmaceutical marketing to physicians, hospitals and other healthcare providers.