History
Our Company was incorporated under the laws of Bermuda on 2 July 2003. It is the holding company of AsiaPharm Investments which owns 95.93% of the shareholdings of Shandong Luye. Shandong Luye owns 69% and 80% of the shareholdings of Luye (Natural) and Luye Drugs Trading respectively. Shandong Luye, formerly known as Yantai Luye Pharmaceutical Co. Ltd ("Yantai Luye"), was established by Yantai Bio-technology Co. Ltd ("Yantai Bio-tech") and Shengli Petroleum Administrative Bureau Yantai Sanatorium ("Shengli") on 8 June 1994 to engage in the manufacturing and sale of pharmaceutical drugs as well as active ingredients. Yantai Bio-tech, which owned 57.14% of the shareholdings of Yantai Luye, was a holding company established by our founding Shareholders, Messrs Liu Dianbo, Yuan Huixian and Yang Rongbing. The remaining 42.86% of the shareholdings of Yantai Luye was owned by Shengli, a state owned nursing home.
In December 1996, Shengli sold all of its investments to Yantai Bio-tech (equivalent to 40% of shareholdings) and Mdm Wang Cuilian (equivalent to 2.86% of shareholdings), the spouse of our Executive Chairman, Mr Liu Dianbo, at a consideration of RMB1.4 million and RMB0.1 million respectively, based on cost of investment. Mdm Wang Cuilian then in turn transferred her shareholdings to Mr Liu Dianbo for nil consideration. Concurrently, Messrs Liu Dianbo, Yuan Huixian and Yang Rongbing (the "Founding Shareholders") acquired 25.14%, 6% and 6% respectively of the shareholdings of Shandong Luye from Yantai Bio-tech for considerations of RMB0.88 million, RMB0.21 million and RMB0.21 million respectively, based on cost of investment.
On 3 July 1999, the Founding Shareholders transferred 26.46%, 5.66% and 5.66% of their respective shareholdings in Shandong Luye to Yantai Bio-tech which had changed its name to Luye Group in 1997. Transfers between the Founding Shareholders and Luye Group were at nil consideration because Luye Group is owned by the Founding Shareholders. On the same date, Mr Liu Dianbo sold 0.4% of his shareholdings in Shandong Luye to Mr Yuan Huixian for a negotiated consideration of RMB0.22 million and another 0.4% of his shareholdings to Mr Yang Rongbing for a negotiated consideration of RMB0.22 million. Additionally, Luye Group transferred 0.37% as an employee incentive to five individuals, Messrs Liu Ke, Fan Zhicheng, Li Zhongjie, Wang Miao and Cong Xiaodong for a negotiated consideration of RMB0.2 million each and 4.44% to Yantai Runbang Bio-technology Co. Ltd which is wholly-owned by Messrs Yu Qingzhou, Ma Lihui and Wang Qun, for a negotiated consideration of RMB2.4 million. In June 2003, Yantai Runbang Bio-technology Co. Ltd sold its 4.44% shareholdings in Shandong Luye back to Luye Group at par for a consideration of RMB2.2644 million. These transfers resulted in the shareholding structure of Shandong Luye prior to the Restructuring Exercise.
Soon after its establishment in June 1994, Yantai Luye commenced production and sale throughout the PRC of five lyophilised powders such as Urokinase for Injection . By the end of 1994, Yantai Luye received the production permits for six drugs and one natural active ingredient. On 27 December 1994, Yantai Luye was classified as a "High-advanced Technology Enterprise" by the Shandong Science and Technology Committee.
In May 1995, we commenced production of the natural active ingredient Sodium Aescinate which is manufactured from plant extracts and our main natural drug, Sodium Aescinate for Injection (Maitongna).
In 1996, we implemented the Corporate Image/Identity System (CIS) and the Objective Management System (OMS) which include mission identity statements and management guidelines to streamline our management system and improve our operational processes and marketing activities.
As part of our business expansion, we incorporated Luye Drugs Trading in March 1997 to distribute the products of other pharmaceutical manufacturers in the PRC.
In January 1998, we commenced construction of our current factory building at Yantai High-tech Industrial Development Zone (APEC Industrial Park). This new factory was designed to comply with the requirements of GMP.
Our R&D centre was established in July 1998 to focus on R&D of new natural active ingredients and drugs with new formulations. In June 1999, we commenced production at our new factory. Yantai Luye was also converted on 12 November 1999 from a limited liability company to a company limited by shares and changed its name to "Shandong Luye Pharmaceutical Co, Ltd". Later in the same year, we successfully launched Nuosen (Sodium Pantoprazole for Injection) , a newly formulated prescription drug used for the treatment of gastroenterological ailments, throughout the PRC.
As a testimony of our research capabilities, the State Personnel Ministry approved the establishment of Shandong Luye as a "Post-doctorate Scientific Research Work-station" in December 1999 and our R&D centre was recognised by the Shandong Science and Technology Committee as a "Shandong Natural Drug Engineering Research and Development Centre" in January 2000. Our production line and manufacturing process for tablets, capsules and granules obtained GMP certification in February 2000. In March 2000, we were awarded "State-Focused High-Advanced Technology Enterprise" under the State Torch Programme by the Ministry of Science and Technology . In July 2000, our lyophilized powder injection production line and manufacturing process obtained GMP certification.
In 1999, our low toxicity for anti-inflammatory and anti-exudation pharmaceutical composition of Sodium Aescinate for injection was named a First Grade Shandong Science and Technology Advancement Product by the Shandong Provincial Drug Administration. Thereafter, we obtained the patent for the same composition in 2001 from the State Intellectual Property Office of the PRC with effect from 29 March 1999 for 20 years. In the same year, the Ministry of Science and Technology nominated Shandong Luye as a production base to industrialise the results of the National High Tech Research and Development Programme ("State 863 Programme") . The State 863 Programme was launched with the aim of enhancing the PRC? international competitiveness and improving its overall high-technology R&D capabilities by awarding grants for R&D activities in areas of advanced technology.
On 5 November 2002, we obtained the patent for the composition with low toxicity for anti-inflammation and anti-exudation of Sodium Aescinate from the United States Patent and Trademark Office with effect from 30 December 1999 for 20 years. In the same year, we also launched another of our main product, Olai (Compound Sodium Aescinate Gel) which is also manufactured from the natural ingredient Sodium Aescinate . We restructured our R&D department in December 2002 by establishing Luye (Natural).
On 18 February 2003, we launched Lutingnuo (Reduced Glutathione for Injection) which is principally used for the treatment of liver ailments. In the same year, we also received GMP certification for our production line and manufacturing process for gel and raw material, Sodium Aescinate.