China Jo-Jo Drugstores Chairman's Open Letter to Shareholders

Mar 10, 2016, 09:00 ET from China Jo-Jo Drugstores, Inc.

HANGZHOU, China, March 10, 2016 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ CM: CJJD) (the "Company" or "China Jo-Jo"), a leading China-based pharmacy with retail, wholesale and online distribution of pharmaceutical and health care products through its own online and retail pharmacies, released an Open Letter to Shareholders from its Chairman and CEO, Mr. Lei Liu, updating current activities and outlining its corporate strategy for 2016, as follows:

Dear Fellow Shareholders:

As we move fully into the 2016 calendar year, I thought it would be appropriate to bring our shareholders at large up to speed on the Company's operational highlights, progress and future goals. Since our launch China Jo-Jo has grown to become one of China's strongest regional chain pharmacy brands.  We are an early adopter and pioneer of the Western large chain pharmacy model in China, which combines convenience store shopping and access to pharmacy dispensary services within the same space. 

Today, our large chain drugstore model has expanded to include premium value added services such as access to doctors who are trained in traditional Chinese medicine and Western medicine, and holistic spa treatments. In parallel to developing our physical retail pharmacy presence, the last several years has been dedicated to the rapid development of our online sales presence.  As an early mover, and pioneer in adopting online pharmacy sales in China, we remain wholly committed to the development of this new sales channel in China.  Following China's legalization of online pharmaceutical sales, growth in this industry has been exponential and embraced by consumers looking for convenient access to pharmacy dispensary services and online shopping for health and wellness products.  Admittedly China Jo-Jo has sacrificed potential gains and regional expansion of its physical store fronts in our effort to increase allocation of resources and investments into the development of the Company's mobile and e-commerce platform.  As of recent, we have been fortunate enough to bolster our IT development through the strategic hiring of senior level technologists from Alibaba as our own online pharmaceutical sales continue to grow annually at a rate of over 100% since launch. 

Our simple goal is to become one of the leading online and physical retail chain pharmacy stores in China. Looking at our most recent performance, the Company's third quarter fiscal 2016 online sales from our own website reached $ 8.8 million, or roughly 55 million yuan, up more than 400% year over year.  We were pleased to report that for the first time store sales growth from China Jo-Jo's own branded storefront exceeded sales from our third party platform sites.  We believe this step change in sales growth was prompted by management's differentiated sales model, in addition to gaining customers through commercial health insurance participation where customers in this category have higher rates of repeat business in addition to higher levels of spend in comparison to other categories of online customers. In many cases due to commercial health insurance participation, we have successfully retained satisfied customers who benefit from utilizing their commercial health insurance dollars to shop in our online pharmacy.

Moving beyond these initial efforts to foster growth in infrastructure and the development of the online pharmaceutical space, we look to further enhance the ability to sell products online. As of current, we have introduced additional IT development staff and in the past two years have invested nearly $ 1.6 million or roughly 10 million yuan for the recruitment of key technical personnel, optimizing our system for mobile shopping and sales, pc app development. We also continue to build relationships with commercial health insurance providers and pharmacy benefits management providers that will build up our e-commerce sites customer base which now consists of over 3 million customers, 70% of which are mobile users.

Despite macro-economic pressures affecting the capital markets, our vision for the Company's future remains upbeat.  We continue to seek avenues that best serve our existing customers while gaining users on our platform from an operational perspective.  As a publicly listed Company we believe that these efforts in building the businesses critical mass is paramount to creating shareholder value. Based on market conditions and if the opportunity arises we will seek other ways to create shareholder value and would be open to purchase our own stock on the open market as a demonstration of our belief in our mission.

Moving forward our efforts are focused on building market leadership, creating deeper relationships with our customers, remain supportive of building sustaining regional growth in wealthy areas around coastal China, while supporting the government's e-commerce initiatives for the pharmaceutical space; including the efforts to create greater access to pharmacy services in more rural parts of China. Fiscally it is our goal to remain profitable while continuing to build critical mass and cost efficiency that positively impact our margins and bottom line.

Our goal over the next 10 years, is to grow to a base of over 50 million customers. We believe we will do this by continuing to develop our e-commerce strategy, in addition to partnering with network hospital, pharmacy benefit providers and commercial health insurance providers.  We will continue to provide operational and financial updates as we continue this exciting journey to build the strongest retail and online pharmacy brand that we possibly can in China.

About China Jo-Jo Drugstores, Inc.

China Jo-Jo Drugstores, Inc., through its own retail drugstores, wholesale distributor and online pharmacy, is a leading retailer and wholesale distributor of pharmaceutical and healthcare products in China. As of December 31, 2015, the Company had 59 retail pharmacies in Zhejiang Province, China. The Company's wholesale subsidiary not only supplies its retail stores, but also distributes drug and other healthcare products to other drugstores and drug vendors. The Company routinely posts important information on its corporate websites at www.jiuzhou-drugstore.com (Chinese) and www.chinajojodrugstores.com (English).

Forward Looking Statement

Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "estimate," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate," the negatives thereof, or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. It is routine for the Company's internal projections and expectations to change as the quarter and year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change. Although these expectations may change, the Company is under no obligation to inform you if they do. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of numerous factors, including the risks associated with the effect of changing economic conditions in the People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products. Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Investor Relations Contact:
Christopher Chu, Taylor Rafferty
Tel: (908) 251-9869
Email: christopher.chu@taylor-rafferty.com

Company Contact in U.S.
Steve Liu
steve.liu@jojodrugstores.com

SOURCE China Jo-Jo Drugstores, Inc.



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