China Health Labs & Diagnostics Ltd. announces agreement with Biosino Bio-Technology and Science Inc. to expand rural hospita...

    




 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: [phone]Email: [e-mail] PedramInvestor RelationsTMX Equicom GroupT: [phone] ext. 264Email: [e-mail] 


    

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