HARBIN, China, Dec. 27, 2010 /PRNewswire-Asia-FirstCall/ --
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. For example, in August 2010, the price of Radix Isatidis was
three times of its low level in 2009, and the price of Notoginseng
was 10 times higher than a year ago level. 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 to include herbs 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.
Investor
Relations Contact:
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China Sky One
Medical
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CCG Investor
Relations
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Yanqing
Liu, CEO
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Kalle
Ahl, CFA, Account
Manager
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Email: ir@cski.com.cn
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Tel:
+1-646-833-3417
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Email: kalle.ahl@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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SOURCE China Sky One Medical, Inc.