Attached files
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8-K - CHINA SKY ONE MEDICAL, INC. | v206489_8k.htm |
Investor
Relations Contact:
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China
Sky One Medical
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CCG
Investor Relations
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Yan-qing
Liu, CEO
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Crocker
Coulson, President
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Email:
ir@cski.com.cn
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Tel:
+1-646-213-1915
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Email:
crocker.coulson@ccgir.com
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Website:
www.ccgirasia.com
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Mabel
Zhang, Vice President
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Tel:
+1-310-954-1353
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Email:
mabel.zhang@ccgir.com
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China
Sky One Medical to Cultivate TCM Herbs in Northeast China
Harbin, China, December 27, 2010 —
China Sky One Medical, Inc. (“China Sky One Medical” or “the Company”) (NASDAQ:
CSKI), a leading fully integrated pharmaceutical company in the People’s
Republic of China (“PRC”), today announced that Harbin Tian Di Ren Medical
Science and Technology Company (“TDR”), its wholly owned subsidiary, has entered
an agreement (“the Agreement”) with Heilongjiang Tang Wang He Forest Bureau that
gives the Company the right to grow and harvest herbs, among other plants, on
30,000 hectares (approximately 74,000 acres) of forested land in the Xiao
Xing’an Mountain region (“the planting area”) for 30 years, commencing December
21, 2010. The Company intends to utilize the planting area to produce herbs
and other ingredients for use in traditional Chinese medicines (“TCM”) and
various health foods.
“TCM herb
prices have increased dramatically since the beginning of this year, mainly due
to natural disasters, including major flooding in Southwest China during the
first half of 2010. In August, prices of some rarer TCM herbs increased by
more than 70%, and the price of Radix Isatidis has tripled from its low level in
2009. While herb pricing in China has been impacted by temporary factors, we
expect a shortage of TCM herbs to continue over the long run as demand for raw
materials increases and supply of plant farmland remains limited. We believe
that self-sufficient, vertically-integrated TCM producers are best positioned to
compete in a climate of increasing herb raw material costs and this agreement
makes China Sky One Medical more competitive with the industry’s larger
producers, who typically have their own raw material sources,” said Mr.
Yan-Qing Liu, Chairman and CEO of China Sky One Medical.
The
planting area, located at a national park in Heilongjiang Province, meets
Good Agriculture Practice (“GAP”) standards for production of TCM raw
materials. It is suitable to grow Acanthopanax, Chinese Magnoliavine Fruit,
Astragalus, Ginseng, American Ginseng and Radix Isatidis, among other plants.
Pursuant to the agreement, the Company also has the right to grow plants within
the planting area that yield health food ingredients, such as blueberries, fungi
and pine needles. The Company intends to independently process and commercialize
health food products derived from these raw materials. TCM herb raw materials
produced from the planting area will be sold to third parties and also utilized
in the Company’s own products. The Company plans to build a factory near the
planting area to extract and prepare its raw materials for
decoction.
Under the
agreement, total rent for the term of 30-year period is approximately RMB 270
million (approximately $40 million), based on RMB 300 per hectare per
year (approximately $18 per acre per year), which is the lowest possible
rate as regulated by China local authorities. To receive a discount of the total
rent, and to avoid future rental increase, in accordance with the
agreement, the company is making an upfront full payment of RMB 240 million
(approximately $36 million). Pursuant to the agreement, this rental covers the
30-year renting period, and this agreement will not be affected by future
government regulations.
Over the
next three years, management expects to adjust plant assortment, such
as Honeysuckle, Panax Notoginseng, Gastrodia Elata, Coptis Chinensis and
Radix Isatidis, to meet its own raw material needs.
“We are
very pleased with our new planting area, which is an ideal location for growing
precious TCM plants. This new arrangement is intended to provide our TCM
business a hedge against fluctuations in raw material prices and also creates
new revenue streams for the Company. We now are planning the construction of
production facilities near the region and will update investors as we achieve
significant milestones on this front,” concluded Mr. Yan-Qing Liu, Chairman
and CEO of China Sky One Medical.
About
China Sky One Medical, Inc.
China Sky
One Medical, Inc., a Nevada corporation, is a holding company. The Company
engages in the manufacturing, marketing and distribution of pharmaceutical,
medicinal and diagnostic products. Through its wholly-owned subsidiaries, TDR,
Harbin First Bio-Engineering Company Limited, Heilongjiang Tianlong
Pharmaceutical, Inc., and Peng Lai Jin Chuang Pharmaceutical Company, the
Company manufactures and distributes over-the-counter pharmaceutical products,
which make up its major revenue source. For more information, visit http://www.cski.com.cn.
Safe
Harbor Statement
Certain
of the statements made in the press release constitute forward-looking
statements within the meaning 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," "may," "will," "should," "project,"
"plan," "seek," "intend," or "anticipate" or the negative thereof or comparable
terminology. Such statements typically involve risks and uncertainties and
may include financial projections or information regarding the Company’s
operation in the TCM herb growing field. Actual results could differ materially
from the expectations reflected in such forward-looking statements as a result
of a variety of 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, and other risk factors detailed in reports filed with the
Securities and Exchange Commission from time to time.
###