Manufacturing activities of Sihuan Pharmaceutical are carried out by Beijing Sihuan, whose production facilities are located at Tongzhou District in Beijing, PRC. Currently, we own and operate production facilities occupying 25,300 sq.m. with a total gross floor area of approximately 14,412 sq.m.

The Group operates six production lines, two for producing small volume parenteral solutions, and one for producing lyophilised powder for injection and three oral solid medicines production lines including tablets, capsules and granules. We have obtained GMP certification for all our production facilities in Beijing Sihuan in accordance with the regulatory requirements in the PRC. Currently, our production capacities include 62.5 million vials of small volume parenteral solutions, three million vials of lyophilised powder for injection, 50 million pills of capsules, 560 million pieces of tablets and eight million packs of granules.

The Group plans to increase our production capacities and capabilities, to meet rising demand for our products and increase the production capacity of raw materials of the Group's products in order to maintain a stable supply.

The new production facilities of the group have been to commence production in February 2011. It is located in Langfang, Hebei province and is mainly for the manufacture of APIs and pharmaceutical intermediates, increasing our production capacity to 30 tons of APIs per year.

In order to reinforce the chemicals productivity and R&D strength, Sihuan Pharmaceutical will build a new manufacturing and R&D base, which covers an area of 150 acres in Zhangwan development zone of Tongzhou county of Peking. The new manufacturing base plans to build production lines at stage one, with annual productivity of 300 million vials of small volume parenteral solutions, 20 million vials of lyophilised powder for injection, and 20 million of Injection asepsis. All production lines meet the criterion of Chinese GMP, some of them achieve the FDA standard to the international level. We are expected to put all production lines into use in August 2013.

We will continue to develop new, or improve existing production techniques to enhance product quality and manufacturing efficiency. We believe that these efforts will increase our vertical integration, secure steady supply of APIs, reduce production costs and enhance our quality control.