The acquisition is expected to close on or before December 31, 2009. Pursuant to the Transfer Agreement, the Company will pay approximately $0.549 million of the cash purchase price and make a repayment of $7.3 million of LifeTech's debt upon the execution of the Transfer Agreement, and, upon approval of the transaction by the foreign trade bureau, the Company will pay an additional $3.7 million. The remaining balance of the purchase price will be made on or before June 30, 2010. The Company plans to finance the acquisition with existing cash and operating cash flow, and will explore opportunities for financing from commercial banks, if needed.

"This acquisition represents a strategic move in our evolution to a vertically integrated pharmaceutical company and we expect it will lay the foundation for a significant contribution to our profitability in the coming years," said Mr. Senshan Yang, Chairman and CEO of China Medicine. "Specifically, the acquisition of LifeTech allows us to enhance our product line with high margin pharmaceuticals and improve our manufacturing capabilities for existing propriety products."

Following the acquisition, based on the Company's preliminary review of LifeTech's unaudited historical financial statements and projections, the Company expects the acquisition to be accretive to earnings, generating revenues of between $10.0 million and $12.0 million and net profit margin of at least 40% in 2010.

SOURCE China Medicine Corporation