China Healthcare Business

Hutchison Healthcare engages in the research and development, manufacture and sale of Western and TCM health supplement products. Hutchison Healthcare is an equity joint venture based in Guangzhou, Guangdong Province, that is owned 85 per cent by Chi-Med and 15 per cent by Ningxia Dyne. Hutchison Healthcare's health supplement products are largely generic in nature and many of their formulations are based on the WHO's recommended daily intakes of various active ingredients.

Health supplement sales through our Hutchison Healthcare Limited (“HHL”) joint venture, on a continuing operations basis, almost doubled to $3.7 million in 2007 (2006: $1.9 million). Including sales of the discontinued NLT product line, HHL sales for 2007 dropped 7% to $8.3 million (2006: $8.9 million). In 2007, $5.1 million was incurred in costs that covered both operating losses and a one-off provision associated with the discontinuation of the NLT product line.

Our profitable Zhi Ling Tong ("ZLT") infant nutrition brand, we saw sales double to $3.7 million (2006: $1.9 million). This reflected good performance by the exclusive distributor of ZLT, He Hui Pharmaceuticals Limited, which is successful in developing a strong hospital and mother/baby store distribution model across China; and the marketing investment made by HHL behind the brand and its patented omega-3 product which is unique in the China market.

In mid-2007 registration approvals were received on ZLT probiotics, a toddler immunity product whose raw materials are imported from Denmark, to add to the already marketed omega-3 brain/retinal development product and calcium powder infant bone development product. The Group intends to further expand the ZLT range over the coming years to establish the brand as a leader in baby/infant health.

http://www.hhcl.com.cn