China Health Labs & Diagnostics Ltd. announces agreement with Biosino Bio-Technology and Science Inc. to expand rural hospita...
November 05 2011 - 7:45AM
PR Newswire (Canada)
TSX-V: CHO OTCQX: CHLBF www.chinahealthlabs.com TORONTO,
Nov. 7, 2011 /CNW/ - China Health Labs & Diagnostics Ltd.
("China Health" or the "Company") is pleased to announce that it
has signed a five year agreement with Biosino Bio-Technology and
Science Inc. ("Biosino") to cooperate in expanding the rural
hospital total lab solution across China. The companies will
also cooperate to develop new proprietary products and
technologies, with the intellectual property to be owned on an
equal basis. In addition, the companies will jointly apply
for government research funds and grants. Biosino is a leading
domestic developer, manufacturer and distributor of in-vitro
diagnostic reagents in China, listed on the GEM Board of the Hong
Kong Stock Exchange (8247: HK). Biosino has established a
network of 600 distributors and retailers covering approximately
75% of China, as well as a manufacturing plant and research and
development center in Beijing, Haidian District. Biosino's
major stakeholders include the Chinese Academy of Sciences, Beijing
Municipal Government and Shanghai Municipal Government. Under the
terms of the agreement, Biosino will use its government affairs
resources to lobby the Chinese national government to support the
Company's national program to be named "Digital Clinlabs - Rural
Hospital Total Lab Solution" and to improve access to government
funding for research and development of new products and
technologies. Also under the agreement, Biosino will lead the
marketing of the rural lab total solution in Chinese provinces
where it has a strong presence, with the provinces to be allocated
among China Health and Biosino on a mutually agreed basis.
Biosino has agreed to a minimum annual average quota of 50
locations per year over the term of the five year agreement.
China Health is to provide training to the Biosino management and
technical teams, and support bids in provinces allocated to the
Biosino marketing team, including providing access to China
Health's existing rural lab network as reference labs. In
allocated provinces where Biosino leads a winning bid to install
locations, China Health will supply its rural hospital total lab
solution, including diagnostic equipment and the proprietary lab
management system, at a price that allows for profit sharing.
China Health will continue to independently market its rural
hospital total lab solution in provinces where it has installed
clinics and in provinces not allocated to Biosino. The agreement
sets out that Biosino will supply most of the biochemical reagents
to new and existing rural lab locations, with China Health
providing most of the other types of reagents including blood cell
counters, urine analysis analyzers, coagulation analyzers and
electrolyte analyzers. Also under the agreement, Biosino will
sell only China Health diagnostic equipment. "We have installed our
rural hospital total lab solution in four provinces that have room
for large expansion and we are actively marketing in three more
provinces. China is a very large country and we cannot cover all
provinces at this time. This agreement with Biosino will help China
Health accelerate the expansion of its network of rural labs in
provinces where we do not have coverage," said Wilson Yao, Chairman
and CEO of China Health. "Biosino has good working relationships
with decision makers in the Chinese central government healthcare
sector that are expected to enhance our lobby efforts for
supportive policies and research and development funding. In
addition, Biosino is a low cost producer of certain diagnostic
reagents. We believe that Biosino can help us maximize the value of
our first mover advantage by accelerating the process of entering
new areas with our rural hospital total lab solution in occupying
the China market." "We look forward to working with China Health to
establish a nation wide network of rural hospital diagnostic
clinics that can effectively provide ongoing diagnostic services to
China's rural people," said Lebin Wu, CEO of Biosino. "The rural
hospital total lab solution, with its ongoing service and supply
system, will provide us a new distribution channel for our existing
reagents and the confidence to invest more in developing new low
cost reagents for the China's rural market. The Chinese
government has the budget and policy to improve rural healthcare
and China Health is the first company to provide a solution that
delivers the ongoing support, training and reagents to effectively
deliver diagnostics to rural hospitals and clinics." As previously
announced, China Health completed installation of 587 BK Clinlabs
in Jilin Province, subsequent to the second quarter ended June 30,
2011. Jilin Province is located in Northeast China with a
population of approximately 25 million. After the completion
of the Jilin installations, China Health has installed in total 797
BK Clinlabs in rural hospitals and clinics in four provinces of
China (Jilin, Henan, Guizhou and Liaoning), compared to 210
locations at the end of 2010. The installation of the 587 BK
Clinlabs in Jilin generated initial revenue of approximately RMB 41
million ($6.2 million) in 2011. In addition, the Company is
negotiating an agreement to provide on-going service and
maintenance to the Jilin BK Clinlab network as part of its medical
diagnostics total lab solution. In 2010, China Health had revenues
of approximately $33.7 million, of which approximately $3 million
was generated from sales of the BK Clinlab total lab
solution. Accordingly, with the Jilin agreement, China Health
expects revenues from rural hospitals and clinics to grow by more
than 100% in 2011, compared to 2010. The BK Clinlab was developed
by China Health as a total lab solution comprising diagnostic
equipment, hardware and software, installation and training and an
ongoing supply of reagents and service for use in rural hospitals
and clinics. The Company believes that this approach provides
added value to the rural hospitals and builds strong customer
loyalty compared with selling individual products. The BK
Clinlab total lab solution includes basic in-vitro diagnostic
testing equipment (and complementary reagents) such as haematology
analyzers, coagulation analyzers, urine analyzers, biochemistry
analyzers, and electrolyte analyzers are mostly produced at the
Company's Beijing manufacturing plant. China Health has
developed and patented the Lab Management System ("LMS"), a
proprietary computer hardware and software system that connects the
diagnostic equipment facilitating ease of operation, quality
control, management of patient information and monitoring of
reagent inventory. As part of the BK Clinlab, a network of
service centres staffed with trained technicians has and is being
set up to provide support to rural labs within the service area and
to provide a dependable source of reagents. As rural
diagnostic facilities in China are typically underserviced and
often lack even basic diagnostic capabilities, China Health
believes that it is uniquely positioned to capitalize on this
opportunity, as they are the first company in China to identify and
create a medical laboratory solution specifically tailored to
service the more than 50,000 rural hospitals throughout China.
About China Health Labs & Diagnostics Ltd. China Health,
operating in China as the Biochem Group, is a leading diagnostic
lab solution provider for the public healthcare industry in China.
The Company develops and sells Biochem Group branded and
third-party medical diagnostic products and services to diagnostic
facilities in China. Customers include large urban hospitals, rural
hospitals, Chinese military and rescue operations, the Beijing
government and third-party distributors. In 2010, China Health had
revenues of approximately $33.7 million, and intends to expand its
business by focusing its efforts on expanding its sales network in
three areas where it provides proprietary solutions, has limited
competition and which are supported by Chinese government policies
and budgets: BK Clinlab total lab solutions for rural hospitals and
clinics, POCT solutions for military and emergency rescue services,
and food safety solutions for large cities in China. About Biosino
Bio-Technology and Science Incorporation Biosino Bio-Technology and
Science Incorporation, together with its subsidiaries, engages in
the manufacture, sale, and distribution of in-vitro diagnostic
reagent products and pharmaceutical products primarily in the
People's Republic of China. Its products include biochemistry
reagents, such as single reagents, liquid double reagents, dry
powder double reagents, calibration set, serum product series, and
cleaning agent; immunology reagents comprising immunoturbidimetric
assay kits, CLIA kits, and Elisa kits; and ZS/BK-L96C
chemiluminescence analyzer. The company's products also comprise
rapid tests, including cTnI test, FOB test, BV test, drug abuse
test (urine), and drug abuse test (saliva). The company
manufactures Lumbrokinase capsule, a Class II prescription drug,
which is used to treat cardio cerebrovascular diseases and also
exports its products to over 20 countries in Southeast Asia, the
Middle-east, North Africa, and South America. Biosino
Bio-Technology and Science Incorporation was founded in 1988 and is
based in Beijing, the People's Republic of China. In 2006, Biosino
successfully listed on the GEM board of the Hong Kong Stock
Exchange. Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. FORWARD LOOKING INFORMATION This press
release contains forward-looking statements and information that
are based on the beliefs of management and reflect China Health's
current expectations. When used in this press release, the
words "estimate", "project", "belief", "anticipate", "intend",
"expect", "plan", "predict", "may" or "should" and the negative of
these words or such variations thereon or comparable terminology
are intended to identify forward-looking statements and
information. The forward-looking statements and information
in this press release includes information relating to the benefits
arising from the agreement between the Company and Biosino,
including the acceleration of the expansion of the Company's
network of rural labs, the enhanced lobby efforts for supportive
policies and R&D funding, the maximization of the Company's
"first mover" advantage with its rural hospital total lab solution,
revenue generation from the Company's BK Clinlabs installed in
Jilin and the expansion of the Company's business through its sales
network in areas where it has proprietary products, limited
competition and strong government support. The
forward-looking information is based on certain assumptions, which
could change materially in the future, including the assumption
that the payments for the BK Clinlabs will be made within a
reasonable period of time and revenue recognized, the Company and
Biosino will perform all of their obligations under their agreement
and the Company will be able to expand its sales network and
business. Such statements and information reflect the current
view of China Health with respect to risks and uncertainties that
may cause actual results to differ materially from those
contemplated in those forward-looking statements and
information. By their nature, forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements, or
other future events, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among
others, the risks that the Company may not be able to generate the
expected revenue from its BK Clinlabs installed in Jilin, the
Company or Biosino may not perform all of their obligations under
the agreement or may terminate such agreement at any time, the
agreement may not produce the benefits expected, and the Company
may not expand its business as expected through its sales network
in any of the areas in which it has proprietary products, limited
competition and strong government support. China Health
cautions that the foregoing list of material factors is not
exhaustive. When relying on China Health's forward-looking
statements and information to make decisions, investors and others
should carefully consider the foregoing factors and other
uncertainties and potential events. China Health has assumed
a certain progression, which may not be realized. It has also
assumed that the material factors referred to above will not cause
such forward-looking statements and information to differ
materially from actual results or events. However, the list
of these factors is not exhaustive and is subject to change and
there can be no assurance that such assumptions will reflect the
actual outcome of such items or factors. THE FORWARD-LOOKING
INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE
EXPECTATIONS OF CHINA HEALTH AS OF THE DATE OF THIS PRESS RELEASE
AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE.
READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING
INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY
OTHER DATE. WHILE CHINA HEALTH MAY ELECT TO, IT DOES NOT
UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT
AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS. CHINA HEALTH LABS
& DIAGNOSTICS CONTACT: Judyanna ChenChief Financial
OfficerChina Health Labs & Diagnostics Ltd.T: (416)
865-3351Email: jchen@chinahealthlabs.comBabak PedramInvestor
RelationsTMX Equicom GroupT: (416) 815-0700 ext. 264Email:
bpedram@equicomgroup.com
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