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China National Pharmaceutical Group Corp., China's largest pharmaceutical products distributor by sales, is seeking to raise up to US$1.12 billion from an initial public offering in Hong Kong, people familiar with the situation said Friday.

The company, known as Sinopharm, plans to sell 545.7 million shares, or 25% of its enlarged share capital, in an indicative range of HK$12.25-HK$16.00 each, they said.

The price range translates to a price/earnings multiple of 19 to 25 times prospective 2010 earnings of CNY1.25 billion, analysts said.

Hong Kong-listed peer Guangzhou Pharmaceutical Co. (0874.HK) trades at a P/E ratio of 14 times. But analysts said Sinopharm is much bigger and has better growth prospects because of its state ownership.

Nine cornerstone investors have been guaranteed a combined US$195 million worth of shares, one of the people said.

They are: BOC International Holdings Ltd., CCB International (Holdings) Ltd., China Life Insurance Co. (LFC), Government of Singapore Investment Corp., Och-Ziff Capital Management LLC (OZM), Value Partners Group Ltd. (0806.HK), Martin Currie Investment Management Ltd., China Chengtong Development Group Ltd. (0217.HK) and Bank of East Asia Ltd.'s (BKEAY) chairman, David Li.

The company plans to use the proceeds from the IPO to expand its distribution coverage and retail network, acquire pharmaceutical products, and upgrade its logistics and information technology systems, another person said.

Bookbuilding starts Friday and Sinopharm aims to list on the Hong Kong stock exchange Sept. 23, the person added.

China International Capital Corp., Morgan Stanley (MS) and UBS AG (UBS) are joint bookrunners on the deal, he said.

-By Amy Or, Dow Jones Newswires; 852-2832 2335; amy.or@dowjones.com