Tongjitang Chinese Medicines Acquires Guiyang Liquor Factory

USA - English

• USA - English

SHENZHEN, China, Feb. 2 /PRNewswire-Asia-FirstCall/ -- Tongjitang Chinese Medicines Company (the "Company" or "Tongjitang") (NYSE: TCM), a leading specialty pharmaceutical company focusing on the development, manufacturing, marketing and selling of modernized traditional Chinese medicine in China, today announced that it has set up a joint venture with a third party to acquire 100% of state-owned Guiyang Liquor Factory ("Guiyang Liquor") for RMB120.6 million in cash. Tongjitang owns 95% of the joint venture and will pay its share of the consideration in full by February 2010. This acquisition is expected to be completed in the first quarter of 2010.

Guiyang Liquor manufactures and sells 3 brands of Chinese liquors: "Guiyang Da Qu," "Qian Chun Liquor" and "Gui Liquor." According to its audited financial statements, Guiyang Liquor was profitable and achieved revenues of RMB18.9 million in 2008. Guiyang Liquor was founded in 1958 and is located in Guiyang City, Guizhou Province, China.

Tongjitang intends to achieve the following strategic objectives through this transaction:

    -- Enter the Chinese traditional medicinal liquor market. Guiyang Liquor
       is well-known in Guizhou Province, which is a leading province for
       producing branded Chinese liquors. Chinese liquor can be applied orally
       or topically to play an important role in the treatment of bone-related
       diseases. Tongjitang plans to launch 2-3 Chinese traditional medicinal
       liquors within the next few years.
    -- Enhance Tongjitang's orthopedic brand. Tongjitang believes that new
       Chinese traditional medicinal liquor products, together with
       Tongjitang's Xianling Gubao, LLF's Heiguteng Capsules, Jingfang's
       Fengshi Gutong and Jingshu products, will further enhance brand
       leadership in orthopedic traditional Chinese medicine in both the
       prescription and OTC markets.
    -- Strengthen Guiyang Liquor's geographic presence. Tongjitang will
       augment Guiyang Liquor's existing presence and drive additional brand
       recognition nationwide through Tongjitang's already sizeable sales and
       distribution channels.

Mr. Xiaochun Wang, Tongjitang's Chief Executive Officer and Chairman of the Board of Directors, commented, "We are very pleased to announce the acquisition of Guiyang Liquor. Chinese liquor has a long history of use in conjunction with traditional Chinese medicines to improve efficacy. Furthermore, new ingredients can be added to liquors to form customized medicinal liquors and create unique treatments. We believe this acquisition will complement our orthopedic portfolio and help us step into the untapped Chinese traditional medicinal liquor market. We are confident that we can translate Guiyang Liquor's regionally well-known brand and good reputation into nationally improved sales."

About Tongjitang Chinese Medicines Company

Tongjitang Chinese Medicines Company, through its operating subsidiaries Tongjitang Pharmaceutical, Tongjitang Distribution, Tongjitang Chain Stores, Guizhou Long-Life Pharmaceutical Company Limited, Qinghai Pulante and Anhui Jingfang, is a vertically integrated specialty pharmaceutical company focused on the development, manufacturing, marketing and selling of modernized traditional Chinese medicine in China. Tongjitang's principal executive offices are located in Shenzhen, China.

Tongjitang's flagship product, Xianling Gubao, is the leading traditional Chinese medicine for the treatment of osteoporosis in China as measured by sales in Renminbi. In addition to Xianling Gubao, the Company manufactures and markets 36 other modernized traditional Chinese medicine products and 37 western medicines. Please visit http://www.tongjitang.com for more information.

Safe Harbor Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from those described in the forward-looking statements in this press release. The Company does not guarantee that the forward-looking statements will happen as described or that they will happen at all. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including the risks that the contemplated acquisition may be cancelled or terminated before closing, the Company may not achieve the expected benefits from this contemplated acquisition and the Company may face challenges managing the joint venture and/or integrating the acquired entity with its operations. Further information regarding these and other risks is and will be included in the Company's filings with the U.S. Securities and Exchange Commission, including the Company's annual report on Form 20-F. All information provided in this press release is as of the date of this press release, and the Company undertakes no duty to update such information, except as required under applicable law.

    For more information, please contact:

    ICR, Inc.
     Ashley M. Ammon or Christine Duan
     Tel: +1-203-682-8200 (Investor Relations)

SOURCE Tongjitang Chinese Medicines Company