SOURCE: First China Pharmaceutical Group, Inc.

First China Pharmaceutical Group, Inc.

October 19, 2010 09:00 ET

First China Pharma Increases Market Share With Announcement of New Distribution Agreement at 3 Regional Hospitals in China

HONG KONG--(Marketwire - October 19, 2010) -  First China Pharmaceutical Group, Inc. (OTCBB: FCPG) ("First China" or the "Company") is pleased to announce it has recently signed agreements to distribute medicinal and pharmaceutical products to three district hospitals in Yunnan Province, thereby dramatically increasing its regional market share.

The agreement comes, in part, as a result of a proposal put forward in 2009 by the Ministry of Health during the National Health Conference that public hospitals should gradually phase out the existing 15% medicines and pharmaceutical products "cost plus" pricing system within 3 years. The government also advised that medical institutions should centralize their procurement and distribution of drug and pharmacare products.

These new guidelines identified that the previous system maintained high prices and commissions which have been deemed unsustainable and that these institutions should move towards agreements with large scale pharmaceutical distributors. This new methodology has been welcomed and is increasingly becoming popular as many leading hospitals and clinics move to this new system of procurement.

This news has been welcomed at First China and the results are just now coming to fruition with these new contracts now in place with the Yunnan No. 1 Peoples Hospital as well as the Kunming Yanan and Lin Cang Peoples Hospitals. The Company is perfectly positioned to take advantage of this Government approved purchasing directive and stands ready to be catapulted into the forefront of this rapidly growing market segment.

First China's combination of bulk purchasing, low prices and growing variety of product lines (both Chinese and Western) complements its high capacity supply chain and B2B operating system all of which fully utilizes and exploits the benefits of their exclusive government issued internet ordering and distribution license. As a result, the Company is daily increasing its differentiation from the rest of the competition in this region of over 45 million inhabitants. 

Currently any hospital or clinic in Yunnan Province can easily sign up to procure the medicines they need from First China, enjoying instant response, rapid fulfillment and secure services combined with excellent price points, allowing those institutions to recover increased margins while offering lower retail pricing in many instances.

First China Pharmaceutical Group plans to continue the growth of the company from its current position as a provider of approximately 5,000 drugs to more than 4,700 pharmacies, hospitals and clinics in China's Yunnan Province. The Company anticipates its business model will change to leverage the efficiencies of internet ordering and fulfillment and intends to rapidly expand its capacity to approximately 30,000 products. It is estimated that a broader product line will ensure customers will be able to order 80% to 90% of their product needs directly from the Company.

The Definitive Agreement contains customary representation and warranties, covenants and indemnification provisions and conditions. Details of the company's business, finances, appointments and agreements can be found as part of the Company's continuous public disclosure as a reporting issuer under the Securities Exchange Act of 1934 filed with the Securities and Exchange Commission's ("SEC") EDGAR database.

About First China Pharmaceutical Group, Inc. (OTCBB: FCPG)
First China Pharmaceutical Group, Inc. aims to develop a high growth pharmaceutical distribution company generating significant revenue from the sale of healthcare products in China. As part of its business strategy, the Company has acquired the assets of Kun Ming Xin Yuan Tang Pharmacies Co. Ltd. (XYT), which includes a strategic advantage over its competitors as it is the only pharmaceutical distribution company in Yunnan Province that has obtained government approval to fulfill orders over the internet. First China Pharmaceutical Group plans to continue the rapid growth of the company from its current position as a provider of approximately 5,000 drugs to more than 4,700 pharmacies, hospitals and clinics in China's Yunnan Province. For more information visit: www.firstchinapharma.com

Notice Regarding Forward-Looking Statements
This news release contains "forward-looking statements" as that term is defined in Section 27A of the United States Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements in this press release which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things, regulatory incentives, the development of new business opportunities, and projected costs, revenue, profits and results operations. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainties associated with new projects and development stage companies. These forward-looking statements are made as of the date of this news release, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although we believe that any beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that any such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our annual report on Form 10-K for the most recent fiscal year, our quarterly reports on Form 10-Q and other periodic reports filed from time-to-time with the Securities and Exchange Commission.

ON BEHALF OF THE BOARD
First China Pharmaceutical Group, Inc.
-------------------------------------------------
Zhen Jiang Wang
Chairman and CEO

Contact Information