ZHONGZHIPHARM: Teams up with Nepstar and Yifeng to Expand Modern Decoction Pieces Sales Network; Builds First Real-time Monitoring System for Chinese Medicine Process And Collaborates with American Ginseng Farm in Canada, Creating Integrated Value Chain f

[For Immediate Release]

Teams up with Nepstar and Yifeng to Expand Modern Decoction Pieces Sales Network;Builds First Real-time Monitoring System for Chinese Medicine Process And Collaborates with American Ginseng Farm in Canada, Creating Integrated Value Chain from Upstream to Downstream

(HONG KONG, 5 October 2015) - The patented modern decoction pieces granulation technique inventor, a leading modern decoction pieces and Chinese patent medicines manufacturer, Zhongzhi Pharmaceutical Holdings Limited ("Zhongzhi" or the "Company", together with its subsidiaries, the "Group"; Stock code: 3737) is pleased to announce the collaboration with Nepstar and Yifeng, two leading drugstore chains in China, to further expand its retail distribution network of modern decoction pieces. Also, in order to achieve the perfect "upstream plantation and downstream distribution" integrated pharmaceutical value chain, Zhongzhi cooperates with an American Ginseng farm in Canada and implements the first real-time field monitoring system for Chinese medicine process in China. Such new quality assurance initiative and workflow monitoring capability allow the Group to ensure upstream raw materials safety and quality control. The development of Chinese medicine traceability system through data synchronization and remote monitoring successfully promotes the migration of Zhongzhi's value chain onlineq, actively spurring the "Internet + Chinese medicine" development of the universal health industry.

Teams up with Nepstar and Yifeng to Expand Modern Decoction Pieces Sales Network Zhongzhi has entered into cooperation with China Nepstar Chain Drugstore Limited ("Nepstar"; NYSE:NPD) and Yifeng Pharmacy Chain Co., Ltd. ("Yifeng"; 603939.SH) and its core brand product, "Caojinghua" modern decoction pieces, has hit the shelves lately at more than 2,800 sales points of Nepstar and Yifeng collectively.

Listed on the New York Stock Exchange in 2007, Nepstar is one of the top 100 Chinese chain pharmacy enterprises with the largest number of directly operated stores in China. It ranked second among the "China Top 100 Chain Pharmacy - Self-Operating Stores Performance" in 2014-2015 (Yunnan Hongxiang Yixintang Pharmaceutical Co., Ltd ranked first ("Yixintang"; 002727.SZ)). As of 30 June 2015, Nepstar has a total of 1,948 stores in operations with market dominance in Guangdong Province, the Yangtze River Delta, the Bohai Rim and the Southwest District, and absolute market share in the affluent cities such as Shenzhen, Hangzhou, Ningbo, Shuzhou, Dalian and Weifang.

Yifeng, listed on the mainboard of the Shanghai Exchange in 2015, is a well-known large-scale supermarket-like drugstore chain enterprise in China and was one of the top 5 in "China Top 100 Chain Pharmacy - Integrated Performance" in 2014-2015. Being a market leader in Central China and Eastern China, Yifeng owns 903 self-operated drugstores in 6 cities, namely, Hunan, Hubei, Shanghai, Jiangsu, Zhejiang and Jiangxi as of 30 June 2015.

Zhongzhi has a proven track record of success cooperating with market leading pharmacy chains in China, including Yixintang and Laobaixing Pharmacy (603883.SH), which are Zhongzhi's key distributors of "Caojinghua" modern decoction pieces. Leveraging the dominant market position of its partners, Zhongzhi manages to swiftly enlarge the retail sales network coverage nationwide in a very cost-effective manner. Meanwhile, the store layout upgrade and expansion of its counterparts enable Zhongzhi to enjoy economies of scale and other benefits generated from the cross-district retail channels with regional market dominance. It not only paves the way for the long term growth of Zhongzhi's "Caojinghua" modern decoction pieces sales but also allows both parties to maximize their profits from the market expansion, teaming up to seize the domestic Chinese healthcare market.

Committed to Enhance the Pharmaceutical Value Chain from Plantation, R&D, Processing, Distribution to Retail Zhongzhi has entered into a strategic cooperation agreement with an American Ginseng farm in Canada to set a high standard of upstream raw materials safety and quality control, ensuring the ginsengs the Company used for its "Caojinghua" imported American Ginseng modern decoction pieces are sourced from the aforthmentioned farm. According to the agreement, every aspect of the growing process has been set above the industry standard, from ginsengs harvesters, drying equipment to warehouse conditions, enhancing the origin of the Company's pharmaceutical value chain.

Meanwhile, Zhongzhi has established the first real-time monitoring system for Chinese medicine process in China, making the plantation and process workflows of its collaborated Chrysanthemum farm visible and transparent. Zhongzhi's Chinese medicine traceability system is taking shape through the delicacy management on the plantation field from process workflows, data collection and integration to access-friendly remote monitoring of the field and harvesting sources. It helps grow consumers' product understanding of and trust in Zhongzhi's modern decoction pieces, and hence, greatly strengthens the Company's brand recognition and competitiveness in the market place.

Mr. Lai Zhi Tian, Chairman and Executive Director of Zhongzhi, said, "The collaboration with Nepstar and Yifeng, two China's leading drugstore chains with absolute market share in different districts and respective strengths, enables Zhongzhi to enjoy the advantages brought by the large-scale cross-district retail channels speedily. As a result of this cooperation, an end-to-end retail analysis is possible through the big data collected, helping us keep abreast of current market needs and industry trends, which essentially facilitate our targeted researches. The combined commitment will create sales synergy on one hand and achieve pharmaceutical industry resources allocation and integration for a win-win situation on the other."

To achieve high standard, safe and outstanding quality of Chinese medicine healthcare products, careful attention is always paid to the agricultural end.

"Zhongzhi is poised to achieve the perfect "upstream plantation and downstream distribution" integrated pharmaceutical value chain through the migration of its value chain online, echoing the "Thirteen Five" Development Plan for the Pharmaceutical Industry to promote medical informatics. We believe that the real-time field monitoring system, the Chinese medicines traceability system and the big data access from plantation to harvesting are essential tactics of our delicacy management on upstpream raw materials supply. Using big data analytics, we are actively engaged in the "Internet + Chinese Medicine" development of the universal health industry", Mr. Lai concluded.

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About Zhongzhi Pharmaceutical Holdings Limited (Stock code: 3737.HK) Founded in 1993, Zhongzhi is a leading modern decoction pieces and Chinese patent medicines manufacturer and the largest self-operated retail pharmacy chain in Zhongshan, Guangdong. It is principally engaged in the research and development, manufacturing, sales and marketing of "Caojinghua (草晶華)" Chinese modern decoction pieces, "Zeus (中智)" high-end patent medicines, "Liumian (六棉)" mass market patent medicines and healthcare food products. The Group sells and distributes its own-branded products through its 200 plus self-operated pharmacy chain in Zhongshan, Guangdong, and an extensive distribution network comprising more than 1,110 distributors and about 380 independent pharmacy chains across China.

Issued on behalf of Zhongzhi Pharmaceutical Holdings Limited by Investor Connect Advisory Ltd., for enquiries:

Investor Connect Advisory Ltd. Ms. Janice Wong +852 3953 3223 Janice.Wong@ICAdvisory.com.hk Ms. Sandy Lam +852 3953 3229 Sandy.Lam@ICAdvisory.com.hk