China Penny Stocks
Jul 28, 2008 8:00:00 AM
BEIJING, July 28 /Xinhua-PRNewswire-FirstCall/ -- Lotus Pharmaceuticals, Inc. (OTC Bulletin Board: LTUS) ("Lotus" or the "Company"), a pharmaceutical company in the People's Republic of China ("PRC"), today announced that on June 3, 2008 it entered into an agreement with the Cha You Qian Qi Economy Commission ("Cha You"), Inner Mongolia, to purchase land rights to property on which it plans to construct a facility for developing and manufacturing pharmaceutical products.
Details of this purchase were provided in an 8-K form filed with the SEC by the Company on July 17, 2008.
The property, located in Cha You's Cha Ha Er Industrial Garden District, is approximately 400,200 square meters. Plans call for construction of a 40,000 square meter manufacturing facility. The property was acquired for development by Liang Fang Pharmaceutical Co., Ltd. ("Liang Fang"), a PRC company fully controlled by Lotus. The cost of land rights was RMB 108 million (approximately $15.5 million), of which Liang Fang has paid RMB 39 million (approximately $5.8 million) to Cha You.
The agreement through which Liang Fang acquired land rights to the property stipulates that construction of a manufacturing facility on the property must start by September 3, 2008. The cost of construction is an estimated RMB 160 million (approximately $22.9 million). The cost of purchasing production machinery is an estimated RMB 182 million (approximately $26.0 million). Working capital for development of the project is an estimated RMB 50 million (approximately $7.1 million). Liang Fang plans to fund this project from its working capital, and looks to obtain bank loans and government loans and grants. Various local government agencies have agreed to waive user fees for this project, and a package of tax abatements may be available to Liang Fang. Plans call for the facility to be completed and equipped by December 2010, and production to start after receiving government Good Manufacturing Practices (GMP) approval.
Lotus intends on developing and manufacturing a number of pharmaceutical products at the facility. The first products planned for manufacture include saline for intravenous use and blood plasma substitutes. Manufacturing and distribution of each planned item will require separate government approvals. Lotus intends to produce prescription items for distribution to hospitals after enlarging its current distribution network.
"We are pleased with our agreement with Cha You through which we acquired land, and we look forward to developing a new facility," said Dr. Zhongyi Liu, Chairman, CEO and President of Lotus Pharmaceuticals, Inc. "We already have plans to manufacture a wide range of new pharmaceutical products in the new facility, and want to see the new facility become a place in which we develop and manufacture sophisticated new products."