SihuanPharmaceutical has a sales model which has proven to be highly successful andcost-efficient, and has enabled us to rapidly achieve deep market penetrationin an effective manner. Our marketing strategy and extensive sales anddistribution network are difficult to replicate and represent a significant competitive advantage.Our distributors are supported by our sales representatives, while our sales representatives are responsible for promoting the sale of or soliciting customers for our products. Our distribution network is managed and supported by an in-house team of 278 dedicated sales and product managers, the majority of whom hold professional qualifications in medicine and pharmacy. Our distributors and third-party sales representatives have a deep understanding of their local markets and have established sales channels with local hospitals and physicians, and therefore can effectively promote our products.
SihuanPharmaceutical has an extensive nationwide sales and distribution network ofover 2,000 distributors covering all 31 provinces, autonomous regions andcities throughout the PRC. So far, our distribution network has penetrated intoclose to 10,000 hospitals, including 890 or approximately 70% of all Class IIIhospitals, 3,600 or approximately 55% of all Class II hospitals and 5,400 ClassI and other hospitals and medical institutions in the PRC. Our distributionnetwork has penetrated into county-level markets in certain densely populatedprovinces, such as Zhejiang, Guangdong and Henan.