F-1

As filed with the Securities and Exchange Commission on January 19, 2007

Registration No. 333-          

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form F-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

3SBio Inc.

(Exact Name of Registrant as Specified in its Charter)

Cayman Islands	2834	Not Applicable
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

No. 3 A1, Road 10

Shenyang Economy & Technology Development Zone

Shenyang 110027

The People’s Republic of China

Tel: (86-24) 2581-1820

(Address, including zip code, and telephone number, including area code of registrant’s principal executive offices)

CT Corporation System,

111 Eighth Avenue,

New York, NY 10011

Tel: (212) 894-8940

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Gregory G. H. Miao Skadden, Arps, Slate, Meagher & Flom LLP 42/F Edinburgh Tower The Landmark 15 Queen’s Road Central Hong Kong (852) 3740-4700 Donald J. Murray Dewey Ballantine LLP 1301 Avenue of the Americas New York, NY 10019 (212) 259-8000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(2)(3)(4)		Amount of Registration Fee
Ordinary Shares, par value US$0.0001 per share(1)	US$	123,970,000	US$	13,265

(1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(2) American depositary shares evidenced by American depositary receipts issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6. Each American depositary share represents seven ordinary shares.

(3) Includes ordinary shares offered by the selling shareholders.

(4) Includes ordinary shares that the underwriters have the option to purchase to cover over-allotments, if any. Also includes shares initially offered and sold outside of the United States that may be resold from time to time in the United States. These ordinary shares are not being registered for the purpose of sales outside the United States.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS Subject to Completion January 19, 2007

7,700,000 American Depositary Shares

3SBio Inc.

Representing 53,900,000 Ordinary Shares

This is the initial public offering of our American Depositary Shares, or ADSs. Each ADS represents seven of our ordinary shares. We are offering 7,187,817 ADSs, representing 50,314,719 ordinary shares, and our selling shareholders are offering 512,183 ADSs, representing 3,585,281 ordinary shares. No public market currently exists for our ADSs or our ordinary shares. We expect the public offering price of our ADSs to be between US$12.00 and US$14.00 per ADS.

We have applied to list our ADSs on The Nasdaq Global Market under the symbol “SSRX.”

Investing in our ADSs involves a high degree of risk. Before buying any ADSs, you should carefully read the discussion of material risks of investing in our ADSs in “ Risk factors” beginning on page 11 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per ADS	Total
Public offering price	US$	US$
Underwriting discounts and commissions	US$	US$
Proceeds, before expenses, to us	US$	US$
Proceeds, before expenses, to the selling shareholders	US$	US$

The underwriters may also purchase up to an additional 1,155,000 ADSs from us and the selling shareholders at the public offering price, less the underwriting discounts and commissions payable by us and the selling shareholders, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be US$             and our total proceeds before expenses, will be US$            . We will not receive any proceeds from the sale of ADSs by the selling shareholders.

The underwriters are offering the ADSs as set forth under “Underwriting.” Delivery of the ADSs will be made on or about                     , 2007.

UBS Investment Bank

CIBC World Markets Pacific Growth Equities, LLC

You should rely only on the information contained in this prospectus. Neither we nor the selling shareholders have authorized anyone to provide you with information different from that contained in this prospectus. We and the selling shareholders are offering to sell, and seeking offers to buy, ADSs only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of ADSs.

TABLE OF CONTENTS

Prospectus summary	1
Summary consolidated financial data	9
Risk factors	11
Forward-looking statements	43
Use of proceeds	44
Dividend policy	45
Capitalization	46
Dilution	47
Exchange rate information	49
Selected consolidated financial data	50
Management’s discussion and analysis of financial condition and results of operations	53
Our corporate structure	76
Business	79
Management	108

Related party transactions	115
Principal and selling shareholders	116
Regulations	119
Description of share capital	130
Shares eligible for future sale	141
Description of American Depositary Receipts	143
Taxation	153
Enforceability of civil liabilities	157
Underwriting	159
Notice to investors	163
Expenses relating to this offering	167
Legal matters	168
Experts	168
Where you can find more information	169
Index to consolidated financial statements	F-1

EPIAO, , TPIAO, , INTEFEN, , INLEUSIN, and are our registered trademarks. All other trademarks or tradenames referred to in this prospectus are the property of their respective owners.

Through and including             , 2007, federal securities law requires all dealers that effect transactions in our ADSs, whether or not participating in this offering, to deliver a prospectus. This requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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Prospectus summary

This summary highlights selected information appearing elsewhere in this prospectus. You should read this entire prospectus, including the “Risk factors” and “Forward-looking statements” sections, and our consolidated financial statements and the notes appearing elsewhere in this prospectus. Unless otherwise indicated, references in this prospectus to “our company,” “we,” “us,” or “our,” or any like terms, are to 3SBio Inc. and its subsidiaries. References to “China” or “PRC” are to the People’s Republic of China, excluding Hong Kong, Taiwan and Macau, and references to “provinces” of China are to the provinces and provincial-level municipalities and autonomous regions of China. All references to “RMB” or “Renminbi” are to the legal currency of China, and all references to “U.S. dollars” or “US$” are to the legal currency of the United States of America.

OVERVIEW

We are a leading, fully integrated, profitable biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products primarily in China. Our recombinant, or genetically engineered, protein-based products and product candidates are designed to address large markets with significant unmet medical needs in nephrology, oncology, supportive cancer care, inflammation and infectious diseases. Our principal products are EPIAO ( ) and TPIAO ( ), and our legacy products are Intefen ( ) and Inleusin ( ).

Our predecessor and PRC operating subsidiary, Shenyang Sunshine Pharmaceutical Company Limited, or Shenyang Sunshine, began operations in 1993. We believe we are now one of the leading biopharmaceutical companies in China in terms of growth and profitability. Our net revenues were RMB72.8 million in 2003, RMB77.2 million in 2004, and RMB102.0 million in 2005, representing an increase of 32.1% from 2004 to 2005. Our net income was RMB0.5 million in 2003, RMB6.6 million in 2004 and RMB16.1 million in 2005, representing an increase of 142.9% from 2004 to 2005. For the nine months ended September 30, 2006, our net revenues were RMB92.6 million and our net income was RMB21.4 million, compared to net revenues of RMB76.1 million and net income of RMB12.9 million for the nine months ended September 30, 2005. In addition to domestic sales, we also export a small portion of our products to certain developing countries, consisting of Egypt, Pakistan, Thailand, Brazil, Mexico and Trinidad and Tobago.

Our principal marketed products

EPIAO ( )

EPIAO, our flagship product, is an injectable recombinant human erythropoietin, or EPO, that is used to stimulate the production of red blood cells in patients with anemia and to reduce the need for blood transfusions. Anemia is a condition in which insufficient oxygen is delivered to the body’s organs and tissues. EPIAO is a protein-based therapeutic comparable in structure and function to Amgen Inc.’s Epogen and Kirin Brewery Company Limited’s ESPO.

According to IMS Health, an independent research firm, revenues from all EPO drug sales in China were estimated at over RMB300 million (US$37.5 million) in 2005, representing a 20% compound annual growth rate from 2003. EPIAO, as tracked by IMS Health, has been ranked as the number one EPO drug since 2002 in terms of both units sold and revenues among the foreign and domestic biopharmaceutical companies marketing EPO drugs in China. We have sold over 6.9 million vials of EPIAO since 1999.

EPIAO is approved by the PRC State Food and Drug Administration, or the SFDA, for three distinct indications: anemia associated with chronic renal failure; red blood cell mobilization, which is the

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process in which red blood cells are stimulated to proliferate, before, during, and after surgery; and anemia associated with chemotherapy in cancer patients with non-myeloid malignancies, which are cancers that do not originate in the bone marrow or involve myeloid cells, or non-lymphocyte white blood cells found in the bone marrow. We believe we are the only pharmaceutical company in China that has obtained approval from the SFDA for three indications of EPO drugs. We have exclusivity for the manufacturing and marketing of EPIAO for anemia associated with chemotherapy in cancer patients with non-myeloid malignancies under an administrative protection period through September 2007, during which other pharmaceutical companies are prohibited from manufacturing EPO drugs for the same indication pursuant to the relevant Chinese regulations.

We plan to initiate in 2008 clinical trials for NuPIAO, our second-generation EPIAO product candidate. NuPIAO is designed to have a longer half-life relative to first-generation EPIAO. In addition, we are in late-stage clinical trials for a concentrated high dose (36,000 IU/vial) formulation of EPIAO, which is designed to allow for less frequent administration, benefiting both patients and doctors. We expect to apply for marketing approval of high-dose EPIAO in 2007. If approved, we believe it will be the highest EPO dosage formulation available in the Chinese market.

TPIAO ( )

We launched TPIAO, our newest internally developed protein-based therapeutic product, in January 2006. This product is a recombinant human thrombopoietin, or TPO, indicated for the treatment of chemotherapy-induced thrombocytopenia, a deficiency of platelets. Platelets are disc-shaped cells in the blood that assist in coagulation and the arrest of bleeding by repairing the walls of blood vessels. TPIAO represents the first TPO-based therapeutic approved by the SFDA for thrombocytopenia in China. We believe TPIAO is the only TPO-based therapeutic available in the Chinese market to date. In addition, the SFDA has granted us a five year monitoring period for TPIAO through 2010, during which other pharmaceutical companies are prohibited from manufacturing or importing a similar drug, except those whose applications for clinical trials were approved by the relevant Chinese authority prior to May 2005 at the commencement of TPIAO’s monitoring period. We are aware of at least one other Chinese pharmaceutical manufacturer whose application for clinical trials may have been approved by May 2005 and who may be in clinical trials for a TPO-based therapeutic. For the nine months ended September 30, 2006, our total revenues from TPIAO sales were RMB10.2 million, accounting for 11.0% of our overall revenues for this period. We are also conducting a late-stage clinical trial of TPIAO for the treatment of idiopathic thrombocytopenic purpura, or ITP, an immune system disorder in which the body perceives platelets as foreign and destroys them.

Our legacy products

In addition to EPIAO and TPIAO, we market two protein-based therapeutics that had historically been significant contributors to our overall revenues. Due to unfavorable pricing and increased competition, we refocused our sales and marketing efforts in early 2004, and our legacy products are now marketed primarily by distributors.

Intefen ( ).    Intefen is our recombinant interferon alpha-2a product. Intefen is indicated for the treatment of carcinomas of the lymphatic and hematopoietic systems, such as lymphoma and leukemia, and viral infectious diseases, such as hepatitis C. We launched Intefen in the Chinese market in 1995.

Inleusin ( ).    Inleusin is our recombinant human interleukin-2, or IL-2, product. Inleusin is indicated for the treatment of renal cell carcinoma, the most common form of kidney cancer, metastatic melanoma, a type of skin cancer, and thoratic fluid build-up caused by cancer and tuberculosis. Inleusin is designed to stimulate the immune system in order to fight cancer and infectious diseases. We launched Inleusin in the Chinese market in 1996.

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Our in-licensed products

Tietai Iron Sucrose Supplement ( ).    Tietai Iron Sucrose Supplement, an intravenously administered prescription drug that is designed to treat anemia associated with iron deficiency, is indicated for patients with end-stage renal disease requiring iron replacement therapy. We in-licensed five-year exclusive PRC distribution rights for this product from Shenyang Borui Pharmaceutical Company Limited in May 2006. Tietai Iron Sucrose Supplement was launched in China in 2005, and we believe it will be complementary to our EPIAO franchise.

Baolijin ( ).    Baolijin is our in-licensed recombinant granulocyte colony-stimulating factor, or G-CSF, product. G-CSF is a protein that stimulates production of white blood cells. For cancer patients undergoing chemotherapy, the ability to produce red blood cells, white blood cells and platelets is severely compromised. Baolijin is indicated for the treatment of neutropenia, a condition associated with chemotherapy and characterized by low levels of neutrophils, a type of white blood cell important for fighting infections. In August 2006, we in-licensed exclusive PRC distribution rights for Baolijin from Chengdu Biological Institute for a period of five years. We believe that the addition of Baolijin to our product portfolio will complement the marketing of EPIAO and TPIAO for treatment of cancer patients receiving chemotherapy.

Licenses to the Tietai Iron Sucrose Supplement and to Baolijin are held by Liaoning Bio-Pharmaceutical Company Limited, or Liaoning Sunshine, our variable interest entity.

Our product pipeline

We focus our research and development efforts on both novel and validated protein-based therapeutics for the treatment of diseases in the areas of nephrology, oncology, supportive cancer care, inflammation and infectious diseases. Our product pipeline, which we expect will be a key contributor to our future growth, consists of six product candidates in various stages of development. We employ a market-driven approach to our research and development efforts, and our team utilizes the latest molecular biology and biochemical techniques and technologies to develop promising product candidates. Our diversified product pipeline includes a number of next-generation protein-based therapeutics including NuPIAO, our second-generation EPIAO product candidate; NuLeusin, our next-generation Inleusin product candidate; TPIAO for the treatment of ITP; a human papilloma virus, or HPV, vaccine for the prevention of cervical cancer; and an anti-TNF humanized monoclonal antibody product candidate for the treatment of rheumatoid arthritis and other autoimmune diseases. We believe that each of these product candidates, if successfully developed and approved, would address significant market opportunities.

Our sales and marketing team

We maintain a sales and marketing force in 18 provinces and major cities in China, including the municipalities of Beijing and Shanghai and the city of Guangzhou. Our principal products are marketed by our 143 sales and marketing professionals and sold by our network of approximately 80 distributors to healthcare providers including, based on our internal estimates, approximately 800 hospitals, clinics and dialysis centers. Our internal sales and marketing staff details our principal products to physicians and hospital administrators and, as required by PRC laws, our distributors are engaged to contract with our customers for the sale of our principal products to physicians and hospitals. In addition, our legacy products Intefen and Inleusin are marketed, as well as sold, by distributors. Our sales force in China benefits from over ten years of experience in marketing protein-based therapeutics. As a result of our history as a provider of therapeutics to the Chinese market, we believe our Shenyang Sunshine brand is widely recognized throughout the PRC for quality and reliability.

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Our manufacturing operations

We conduct on-site bulk manufacturing activities for EPIAO, TPIAO, Intefen and Inleusin at our 3,000 square meter Shenyang, China facility. We also manufacture our product candidates for clinical trials at this facility. All fill, finish and packaging activities in relation to our domestic sales are conducted at our Shenyang facility. A portion of our exported products are packaged in Shenyang and the rest is shipped overseas in bulk format as concentrated solutions of recombinant human erythropoietin, interferon alpha-2a or interleukin-2 for packaging. Our Shenyang facility was re-certified in 2005 in accordance with Chinese current Good Manufacturing Practices, or cGMP, and our cGMP certificate is valid for five years, until 2010. We plan to expand our plant in Shenyang to increase our manufacturing capacity, improve our production yields and take further advantage of our relatively low cost of labor and raw materials.

OUR COMPETITIVE STRENGTHS

We believe that our principal competitive strengths include the following:

Ø Leading market share for EPO in China;

Ø Diverse portfolio of marketed products and product candidates targeting the nephrology and oncology markets;

Ø Proven research and development capabilities;

Ø Nationwide sales and marketing network;

Ø High-quality proprietary manufacturing processes with significant cost advantages;

Ø Operational efficiency and a track record of growth and profitability; and

Ø Experienced and market-oriented management team.

OUR STRATEGY

Our goal is to become the leader in the research, development, manufacture and commercialization of protein-based therapeutics in China and to continue to advance our drugs into international markets. The key elements of our strategy are to:

Ø Maximize sales of our flagship product, EPIAO, in the Chinese market;

Ø Maximize sales of our other existing products in the nephrology and oncology markets in China;

Ø Develop and commercialize candidates in our product pipeline and new products that address unmet medical needs in commercially attractive markets;

Ø Expand our sales and marketing network;

Ø Continue to expand beyond the Chinese domestic market; and

Ø Acquire or in-license new technologies, products or companies.

RISK FACTORS

Our business is subject to numerous risks, including:

Ø our dependence on our flagship product, EPIAO;

Ø limitations in our ability to successfully maintain the selling prices of our established products or to develop and commercialize new products;

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Ø our ability to maintain and enhance the Shenyang Sunshine and EPIAO brands;

Ø our reliance on a limited number of suppliers and distributors;

Ø our dependence on senior management and key research and development personnel;

Ø our ability to access adequate working capital;

Ø our ability to protect our intellectual property;

Ø our ability to comply with U.S. public reporting requirements, including maintenance of an effective system of internal controls over financial reporting; and

Ø because of our reliance on revenues from sales in the PRC, adverse changes in political, economic and other policies of the Chinese government could materially harm our business.

You should refer to “Risk factors,” beginning on page 11, for a more detailed discussion of the risks involved in investing in our ADSs.

OUR CORPORATE STRUCTURE AND OTHER CORPORATE INFORMATION

3SBio Inc. was incorporated in the Cayman Islands in August 2006 as an exempted company with limited liability. We conduct our manufacturing and marketing activities through Shenyang Sunshine, a PRC wholly foreign owned enterprise. Shenyang Sunshine commenced business operations in 1993 and became our wholly owned subsidiary in September 2006. We conduct our distribution and logistics activities primarily through Liaoning Bio-Pharmaceutical Company Limited, or Liaoning Sunshine, and Beijing Sunshine Bio-product Sales Company, or Beijing Sunshine, both of which are variable interest entities, or VIEs, whose results are consolidated in our financial statements. Liaoning Sunshine and Beijing Sunshine are considered our VIEs because we, through contractual arrangements, bear the economic risks with respect to, and derive the economic benefits normally associated with, ownership of these entities. While we maintain contractual relationships with both Liaoning Sunshine and Beijing Sunshine, we do not hold any ownership stake in either of the entities. Please refer to “Our corporate structure—Our contractual arrangements with Liaoning Sunshine and Beijing Sunshine” for a more detailed description of our relationships with Liaoning Sunshine and Beijing Sunshine.

Our principal executive offices are located at No. 3 A1, Road 10, Shenyang Economy & Technology Development Zone, Shenyang 110027, the People’s Republic of China, and our telephone number at that address is (86-24) 2581-1820.

Investor inquiries should be directed to us at the address and telephone number of our principal executive offices set forth above. Our website is www.3sbio.com. The information on our website is not a part of this prospectus. Our agent for service of process in the United States is CT Corporation System located at 111 Eighth Avenue, New York, New York 10011.

RECENT PRC REGULATORY DEVELOPMENTS

On September 8, 2006, a new PRC regulation jointly promulgated by six PRC regulatory agencies became effective. See “Risk factors—The approval of the China Securities Regulatory Commission, or the CSRC, may be required in connection with this offering under a recently adopted PRC regulation; any requirement to obtain CSRC approval could significantly delay this offering or could have a material adverse effect on our business, operating results, reputation and trading price of our ADSs, and may also create uncertainties for this offering. The regulation also establishes more complex procedures for acquisitions by foreign investors, which could make it more difficult to pursue growth through acquisitions” and “Regulations—Regulation on overseas listings” for more information regarding this new PRC regulation.

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CERTAIN CONVENTIONS THAT APPLY TO THIS PROSPECTUS

Unless otherwise indicated, all translations from Renminbi to US dollars for financial data have been made at a rate of RMB7.904 to US$1.00, the noon buying rate as certified for customs purposes by the Federal Reserve Bank of New York on September 29, 2006, the last business day in September 2006.

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The offering

ADSs offered by us 7,187,817 ADSs, representing 50,314,719 ordinary shares

ADSs offered by the selling shareholders 512,183 ADSs, representing 3,585,281 ordinary shares

Total 7,700,000 ADSs, representing 53,900,000 ordinary shares

Offering price The initial public offering price per ADS is expected to be between US$12.00 and US$14.00.

The ADSs Each ADS represents seven ordinary shares, par value US$0.0001 per share. The ADSs will be evidenced by American Depository Receipts, or ADRs.

· The depositary, JPMorgan Chase Bank, N.A., will be the holder of the ordinary shares underlying your ADSs.

· If we declare dividends on our ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares, after deducting its fees and expenses.

· You may turn in your ADSs to the depositary in exchange for ordinary shares underlying your ADSs. The depositary will charge you fees for exchanges.

· We may amend or terminate the deposit agreement without your consent, and if you continue to hold your ADSs, you agree to be bound by the deposit agreement as amended.

To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled “Description of American Depositary Shares.” We also encourage you to read the deposit agreement, which is filed as an exhibit to the registration statement of which this prospectus is a part.

ADSs outstanding immediately after this offering 7,700,000 ADSs

Ordinary shares outstanding after the offering 150,315,717 ordinary shares, including 53,900,000 shares represented by ADSs

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Over-allotment option The underwriters have an option, exercisable within 30 days from the date of this prospectus, to purchase a maximum of 387,949 ADSs from us and 767,051 ADSs from the selling shareholders to cover over-allotments of ADSs.

Use of proceeds We estimate that the net proceeds to us of this offering will be approximately US$81.9 million, or approximately US$86.6 million if the underwriters exercise the over-allotment option in full, assuming an initial public offering price of US$13.00 per ADS, the midpoint of the initial public offering price range as shown on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and expenses payable by us. We expect to use the net proceeds from this offering for general corporate purposes, including funding clinical trials, research and development and expanding and enhancing our manufacturing facilities and our sales and marketing network. We will not receive any of the proceeds from the sale of our ADSs by the selling shareholders.

Dividend policy We do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future.

Risk factors You should carefully read and consider the information set forth under “Risk factors” and all other information set forth in this prospectus before investing in our ADSs.

Listing We have applied to have our ADSs included for quotation on The Nasdaq Global Market. Our ordinary shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system.

Proposed Nasdaq Global Market symbol SSRX

Depositary JPMorgan Chase Bank, N.A.

The number of ordinary shares outstanding after this offering is based on the 100,000,998 shares outstanding as of January 19, 2007 and does not include:

Ø 1,060,000 ordinary shares issuable upon the exercise of options outstanding as of January 19, 2007, having an exercise price of US$1.60 per share;

Ø 15,000 unvested shares granted to an executive of the Company on August 1, 2006; and

Ø 10,000,000 additional ordinary shares that are reserved for issuance under our 2006 Stock Incentive Plan. See “Management—Stock Option Plan.”

Depending on market conditions at the time of pricing of this offering and other considerations, we may sell fewer or more ADSs than the number set forth on the cover page of this prospectus. We will inform investors at or prior to the time of pricing of any change in the number of ADSs being sold.

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Summary consolidated financial data

The following summary consolidated financial data should be read in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated financial data presented below for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2005 and 2006, other than the net income per ADS data, are derived from our audited consolidated financial statements included elsewhere in this prospectus, which are prepared in accordance with U.S. GAAP. Results for the nine months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the full year. The historical results presented below are not necessarily indicative of results to be expected in any future period.

	Year ended December 31,								Nine months ended September 30,
Statement of income data:	2003		2004		2005		2005		2005		2006		2006
	RMB		RMB		RMB		US$		RMB		RMB		US$
	(in thousands, except per share, share, per ADS and ADS data)
Net revenues(1):
EPIAO	44,787		64,937		84,804		10,729		64,625		72,852		9,217
TPIAO	—		—		2,795		354		844		10,176		1,287
Intefen	22,820		7,680		6,827		864		5,326		3,468		439
Inleusin	4,264		2,738		1,606		203		1,378		822		104
Export	896		1,736		4,990		631		3,187		4,669		591
Others	73		157		991		126		770		585		74
Total	72,840		77,248		102,013		12,907		76,130		92,572		11,712
Cost of revenues	(12,653	)	(15,027	)	(15,497	)	(1,961	)	(12,664	)	(8,779	)	(1,111	)
Gross profit	60,187		62,221		86,516		10,946		63,466		83,793		10,601
Operating expenses:
Research and development	(3,073	)	(3,699	)	(3,196	)	(404	)	(2,311	)	(3,754	)	(475	)
Sales, marketing and distribution	(37,021	)	(38,762	)	(49,205	)	(6,225	)	(35,133	)	(43,448	)	(5,497	)
General and administrative	(15,789	)	(13,600	)	(13,956	)	(1,766	)	(9,378	)	(10,729	)	(1,358	)
Total operating expenses	(55,883	)	(56,061	)	(66,357	)	(8,395	)	(46,822	)	(57,931	)	(7,330	)
Operating income	4,304		6,160		20,159		2,551		16,644		25,862		3,271
Other income/(expense), net
Interest expense, net	(5,748	)	(5,948	)	(5,407	)	(684	)	(4,164	)	(3,078	)	(389	)
Grant income	2,518		6,442		3,771		477		2,763		2,414		305
Others	288		—		(850	)	(108	)	(832	)	(183	)	(23	)
Total other income/(expense), net	(2,942	)	494		(2,486	)	(315	)	(2,233	)	(847	)	(107	)
Income before income tax expense and minority interests	1,362		6,654		17,673		2,236		14,411		25,015		3,164
Income tax expense	(1,201	)	(226	)	(1,762	)	(223	)	(1,668	)	(3,574	)	(452	)
Income before minority interests	161		6,428		15,911		2,013		12,743		21,441		2,712
Minority interests, net of tax	349		182		144		18		153		1		—
Net income	510		6,610		16,055		2,031		12,896		21,442		2,712
Net income per share, basic and diluted	0.01		0.07		0.16		0.02		0.13		0.21		0.03
Weighted average number of shares outstanding	100,000,998		100,000,998		100,000,998		100,000,998		100,000,998		100,000,998		100,000,998
Net income per ADS, basic and diluted (unaudited)	0.04		0.46		1.12		0.14		0.90		1.50		0.19
Weighted average number of ADSs outstanding (unaudited)	14,285,857		14,285,857		14,285,857		14,285,857		14,285,857		14,285,857		14,285,857

9

The table below sets forth revenues from the sales of our products expressed as a percentage of our net revenues for the periods indicated:

	For the year ended December 31,						For the nine months ended September 30,
Net Revenues	2003		2004		2005		2005		2006
EPIAO	61.5	%	84.1	%	83.1	%	84.9	%	78.7	%
TPIAO	—		—		2.7		1.1		11.0
Intefen	31.3		10.0		6.7		7.0		3.7
Inleusin	5.9		3.5		1.6		1.8		0.9
Export	1.2		2.2		4.9		4.2		5.0
Others	0.1		0.2		1.0		1.0		0.7
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

	As of September 30, 2006
Balance Sheet Data:	Actual	Actual	As adjusted(3)	As adjusted(3)
	RMB	US$	RMB	US$
	(in thousands)
Cash and cash equivalents	42,813	5,416	690,157	87,317
Working capital(2)	37,141	4,698	684,485	86,599
Total assets	155,971	19,733	803,315	101,634
Total bank loans	69,000	8,730	69,000	8,730
Total liabilities	93,328	11,808	93,328	11,808
Minority interests	501	63	501	63
Total shareholders’ equity	62,142	7,862	709,486	89,763

(1) Net revenues consist of the invoiced value of goods sold, net of value-added taxes, or VAT, discretionary sales returns, trade discounts and allowances.

(2) Working capital is calculated as current assets minus current liabilities.

(3) As adjusted to give effect to the sale of 7,187,817 ADSs by us in this offering, assuming an initial public offering price of US$13.00 per ADS, the midpoint of the initial public offering price range as shown on the cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses to be paid by us. We will not receive any of the proceeds from the sale of our ADSs by the selling shareholders.

10

Risk factors

Investment in our ADSs involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus, including our consolidated financial statements and related notes, before you decide to buy our ADSs. In particular, because we conduct our operations principally in China, there are risks associated with investing in our ADSs that are not typical with investments in shares of U.S. issuers. If any of the following risks actually occurs, our business, financial condition and results of operations would likely suffer. In such case, the trading price of our ADSs may decline, and you could lose all or part of your investment.

RISKS RELATED TO OUR COMPANY

We are currently dependent on our flagship product, EPIAO. A reduction in revenues of EPIAO would cause our revenues to decline and could materially harm our business.

We are largely dependent on sales of our erythropoietin, or EPO, product, which we market under the name of EPIAO. We began marketing and selling EPIAO in 1998, and it has been our top-selling product since 2002. Revenues from sales of EPIAO accounted for 83.1% of our total revenues for the year ended December 31, 2005 and 78.7% for the nine months ended September 30, 2006. We plan to expand our EPO franchise to include a higher dosage form of EPIAO and a second-generation version with enhanced half life. If developed and commercially launched, these products would increase our reliance on EPO-based products. We expect that sales of EPIAO will continue to comprise a substantial portion of our revenues in the future.

Any reduction in revenues from EPIAO will have a direct negative impact on our business, financial condition and results of operations. Our EPO franchise and associated revenues could be adversely affected by a variety of factors, including:

Ø increased competition;

Ø new product introductions;

Ø government-imposed pricing constraints;

Ø intellectual property issues;

Ø problems with raw materials supply;

Ø disruptions in manufacturing or distribution; and

Ø newly discovered safety issues.

Due to our relative lack of product diversification, an investment in our company may entail more risk than investments in companies that offer a wider variety of products or services. Despite our efforts, we may be unable to develop or acquire new products that would enable us to diversify our business and reduce our dependence on EPIAO products.

The commercial success of our products depends upon the degree of market acceptance among the medical community. Failure to attain market acceptance among the medical community would have an adverse impact on our operations and profitability.

The commercial success of our products depends upon the degree of market acceptance they achieve among the PRC medical community, particularly physicians and hospitals. Physicians may not prescribe

11

Risk factors

or recommend our products to patients, and procurement departments of hospitals may not purchase our products. The acceptance of any of our products among the medical community will depend upon several factors, including:

Ø the safety and effectiveness of the product;

Ø the effectiveness of our efforts to market our products to hospitals and physicians;

Ø the product’s cost effectiveness;

Ø the product’s perceived advantages and disadvantages relative to competing products or treatments; and

Ø the prevalence and severity of side effects.

If our products fail to attain market acceptance among the medical community, our operations and profitability would be adversely affected.

The selling prices of our products tend to decline over time. Our success depends on our ability to successfully develop and commercialize additional pharmaceutical products. Our product development efforts may not result in commercially viable products.

As is typical in the Chinese pharmaceutical industry, the average selling prices of our products tend to decline significantly over the life of the product. These declines principally result from increased competition. For example, from 2004 to 2005 the average selling price of Intefen declined by 20%. Historically we have sought to mitigate downward pricing pressure by introducing new products or enhanced versions of existing products with higher margins. For example, in 2006 we launched TPIAO, which has quickly become our second largest revenue generator and accounted for approximately 11.0% of our total revenues for the nine months ended September 30, 2006.

We must therefore constantly identify product candidates that can be developed into cost-effective therapeutic products. We plan to devote substantial resources to our research and development efforts; however, successful product development in our industry is highly uncertain, and relatively few research and development projects produce commercially viable products. If we cannot offset any decline in revenues and margins of our marketed products with new product introductions, our overall results of operations will suffer.

Our products face substantial competition. Other companies may discover, develop, acquire or commercialize products before or more successfully than we do.

We operate in a highly competitive environment. Our products compete with other products or treatments for diseases for which our products may be indicated. EPIAO competes with both existing EPO drugs and potential new drug candidates. In China, EPO drugs are offered by established international companies such as Kirin Brewery Company Limited, or Kirin, and F. Hoffmann-La Roche, Ltd., or Roche, and domestic pharmaceutical companies such as Di’ao Group Chengdu Diao Jiuhong Pharmaceutical Factory. Competitors for interferon alpha-2 drugs include Schering-Plough (Brinny) Co. and Beijing Tri-Prime Genetic Engineering Co., Ltd., and competitors for interleukin-2 include Beijing SL Pharmaceutical Co., Ltd. and Beijing Four Rings Biopharmaceutical Co., Ltd. Competitors for Tietai Iron Sucrose Supplement include Beijing Novartis Pharmaceutical Co., Ltd. and Nanjing Hencer Pharmaceutical Co., Ltd. and competitors for Baolijin include Kirin, Hangzhou Jiuyuan Gene Engineering Co., Ltd. and Qilu Pharmaceutical Co., Ltd. In addition, while we believe TPIAO is the only TPO-based therapeutic available in the Chinese market to date, we are aware of another Chinese

12

Risk factors

pharmaceutical company, Shanghai CP Guojian Pharmaceutical Company Limited, or CP Guojian, which we believe may be conducting clinical trials for a TPO-based therapeutic in China. If CP Guojian obtained the approval for any clinical trials prior to the commencement of the monitoring period for TPIAO, CP Guojian may not be prohibited from manufacturing and marketing its TPO product during TPIAO’s monitoring period. We have no information on when CP Guojian plans to bring their product to market, nor are we aware of any other company that is developing a similar product. Our products may compete against products that have lower prices, superior performance, greater ease of administration or other advantages compared to our products. We do not have patents of any commercial significance covering EPIAO, our legacy products, or many of our product candidates with which to protect these products from direct competition. Our inability to compete effectively could reduce sales or margins, which could have a material adverse effect on our results of operations.

Certain of our competitors, including biotechnology and pharmaceutical companies, market products or are actively engaged in research and development in areas where we have products or where we are developing product candidates or new indications for existing products. In the future, we expect that our products will compete with new drugs currently in development, drugs approved for other indications that may be approved for the same indications as those of our products and drugs approved for other indications that are used off-label. If less invasive or less expensive alternatives to our products are dispensed or prescribed to patients, our sales could be negatively impacted. An increasing number of foreign pharmaceutical companies have introduced their pharmaceutical products into the Chinese market.

As we expand our product portfolio by adding new products and indications, as well as developing second-generation versions of existing products with the same or overlapping labels, certain of our products may be used as a substitute for our other products in the same end markets. For instance, although EPIAO and TPIAO are targeted towards patients with different indications and TPIAO is not intended to replace EPIAO in the oncology market, some doctors may prescribe TPIAO for their patients when they would have otherwise prescribed EPIAO. Consequently, the introduction of TPIAO may adversely impact sales of EPIAO.

Large Chinese state-owned and privately-owned pharmaceutical companies and foreign pharmaceutical companies may have greater clinical, research, regulatory, manufacturing, marketing, financial and human resources than we do. In addition, some of our competitors may have technical or competitive advantages over us for the development of technologies and processes. These resources may make it difficult for us to compete with them to successfully discover, develop and market new products and for our current products to compete with new products or new product indications that these competitors may bring to market. There may also be significant consolidation in the pharmaceutical industry among our competitors, alliances may develop among competitors and these alliances may rapidly acquire significant market share.

Furthermore, in order to gain market share in China, competitors may significantly increase their advertising expenditures and promotional activities or engage in irrational or predatory pricing behavior. In addition, our competitors may engage in illegal acts, such as bribery. Third parties may actively engage in activities designed to undermine our brand name and product quality or to influence customer confidence in our products. Increased competition may result in price reductions, reduced margins and loss of market share, any of which could materially adversely affect our profit margins. We may not be able to compete effectively against current and future competitors.

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Risk factors

Our competitors may have the ability to manufacture pharmaceutical products substantially similar to ours.

Our ability to compete against our competitors is, to a significant extent, dependent upon our ability to distinguish our products from those of our competitors by providing high quality products at reasonable

prices that appeal to our consumers. Many of our competitors may have been in business longer than we have, may have substantially greater financial and other resources than we have and may be better established in our markets. Our competitors in any particular market may also benefit from raw material

sources or production facilities that are closer to such markets, which may provide them with competitive advantages in terms of cost and proximity to consumers.

We have exclusivity for the manufacturing and marketing of one indication of EPIAO under an administrative protection period through 2007. We also have a monitoring period for TPIAO through May 2010. Upon expiration of the protection period or the monitoring period, other manufacturers in China may apply for approval by the State Food and Drug Administration, or the SFDA, to manufacture such products using similar formulae or production techniques. If other manufacturers introduce the same products or products substantially similar to ours, we will face more competitive pressure in the market and our sales and profit margin may be adversely affected.

The approval of the China Securities Regulatory Commission, or the CSRC, may be required in connection with this offering under a recently adopted PRC regulation; any requirement to obtain CSRC approval could significantly delay this offering or could have a material adverse effect on our business, operating results, reputation and trading price of our ADSs, and may also create uncertainties for this offering. The regulation also establishes more complex procedures for acquisitions by foreign investors, which could make it more difficult to pursue growth through acquisitions.

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, or the MOFCOM, and the CSRC, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006. The New M&A Rule, among other things, purports to require an offshore special purpose vehicle, or SPV, formed for the purpose of listing the SPV’s securities on an offshore securities exchange and controlled directly or indirectly by PRC companies or individuals, to obtain the approval of the CSRC prior to such offshore listing and trading. On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. However, substantial uncertainty remains regarding the scope and applicability of the New M&A Rule to overseas listing of offshore SPVs.

Our PRC counsel, Jingtian & Gongcheng, has advised us that, based on their understanding of the current PRC laws, regulations and rules, it is not necessary for us to obtain the CSRC’s approval for this offering because we obtained approval from the Shenyang branch of MOFCOM for the acquisition of Shenyang Sunshine, our wholly owned subsidiary in the PRC, before September 8, 2006, the effective date of the new regulation.

A copy of Jingtian & Gongcheng’s legal opinion regarding this new PRC regulation is filed as an exhibit to our registration statement on Form F-1.

However, we cannot assure you that the relevant PRC government agency, including the CSRC, would reach the same conclusion as our PRC counsel. If the CSRC or another PRC regulatory body subsequently determines that we need to obtain the CSRC’s approval for this offering, we may face

14

Risk factors

regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from this offering into the PRC or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. The CSRC or other PRC

regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur.

Also, if the CSRC later requires that we obtain its approval, we may be unable to obtain a waiver of the CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our ADSs.

The New M&A Rule also established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex, including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. In the future, we may grow our business in part by acquiring complementary businesses, although we do not have any plans to do so at this time. Complying with the requirements of the New M&A Rule to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

Our business depends on our Shenyang Sunshine and EPIAO brands, and if we are not able to maintain and enhance our brands to maintain our competitive advantage, our reputation, business and operating results may be harmed.

We believe that market awareness of our Shenyang Sunshine and EPIAO brands has contributed significantly to the success of our business. We also believe that maintaining and enhancing the Shenyang Sunshine and EPIAO brands is critical to maintaining our competitive advantage. In order to further penetrate our markets and launch new products, we must expand our manufacturing and sales and marketing efforts. Maintaining quality and cost-effectiveness may be more difficult to achieve.

While our sales and marketing staff will continue to further promote our brand to remain competitive, we may not be successful. If we are unable to further enhance our brand recognition and increase awareness of our products, or if we incur excessive marketing and promotion expenses, our business and results of operations may be materially and adversely affected.

Certain of our raw materials, medical devices and components are single-sourced from third parties; third-party supply failures could adversely affect our ability to supply our products.

Certain raw materials necessary for commercial manufacturing and formulation of our products are provided by single-source unaffiliated third-party suppliers. Also, certain medical devices and components necessary for formulation, fill, and finish of our products are provided by single-source unaffiliated third-party suppliers, including the EPO Elisa Kit by R&D Systems Inc., the GIBCO cell culture medium by Invitrogen Inc., the Pharmacia EPO chromatography purification medium by GE Healthcare, a division of GE, and Disc, a microcarrier for cell cultures, by New Brunswick Scientific Inc.

15

Risk factors

For more details, see “Business—Manufacturing.” Certain of these raw materials, medical devices, and components are the proprietary products of these unaffiliated third-party suppliers.

We would be unable to obtain these raw materials, medical devices, or components for an indeterminate period of time if these third-party single-source suppliers were to cease or interrupt production or otherwise fail to supply these materials or products to us for any reason, including due to regulatory requirements or action, due to adverse financial developments at or affecting the supplier, and/or due to unexpected demand, labor shortages or disputes. We would also be unable to obtain these materials, devices and components for an indeterminate period of time if such supply was subsequently found to not be in compliance with our quality standards or resulted in quality failures or product contamination and/or recall when used to manufacture, formulate, fill, or finish our products. These events could adversely affect our ability to satisfy demand for our products, which could adversely affect our product sales and operating results materially.

For example, we have occasionally experienced shortages in certain components necessary for the formulation, fill, and finish of certain of our products in our Shenyang facility without impact on our ability to supply these products. However, we may experience the shortages in the future resulting in delayed shipments, supply constraints, stock-outs and/or recalls of our products, which could result in interruptions to our production.

We depend on our distributors for sales of our products.

We rely on our network of approximately 80 distributors to distribute our own and our in-licensed products. Our distributors do not sell our products on an exclusive basis. As a result, our products face competition from similar products sold by our distributors.

Our success will depend in part on our ability to form relationships with and manage an increasing number of distributors. If our distribution network in China suffers a disruption, our financial condition and results of operations may be adversely affected.

While we have long-standing business relationships with most of our distributors and we have not, in the past three years, lost any significant distributors, we do not have long-term contracts with any distributor. Moreover, a significant amount of our revenue is generated by product sales to relatively few distributors, whose mix changes from year to year. The tables below set forth the aggregate sales to our top five distributors, expressed in RMB and as a percentage of our total sales, for the periods indicated.

Sales to top five distributors	For the year ended December 31, 2003
	Sales revenue (RMB in thousands)	% of sales revenues
Xiamen International Economic & Trading Co., Ltd.	25,836	35	%
Beijing Tianxingpuxin Bio-Med Co., Ltd.	6,118	8	%
Wuhan Pharmaceutical Group Co., Ltd.	1,738	2	%
Wuhan Ruipu Pharmaceutical Co., Ltd.	1,381	2	%
Liaoning Pharmaceutical Foreign Trade Corp.	1,183	2	%
Total	36,256	49	%

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Risk factors

Sales to top five distributors	For the year ended December 31, 2004
	Sales revenue (RMB in thousands)	% of sales revenues
Beijing Tianxingpuxin Bio-Med Co., Ltd.	7,662	10	%
Xiamen International Economic & Trading Co., Ltd.	5,844	8	%
Shanghai Pharmaceutical Co., Ltd.	5,450	7	%
Shanghai Siful Medicine Co., Ltd.	2,951	4	%
Nanjing Medical Co., Ltd.	2,734	3	%
Total	24,641	32	%

Sales to top five distributors	For the year ended December 31, 2005
	Sales revenue (RMB in thousands)	% of sales revenues
Beijing Tianxingpuxin Bio-Med Co., Ltd.	13,333	13	%
Shanghai Pharmaceutical Co., Ltd.	8,867	9	%
Shanghai Siful Medicine Co., Ltd.	4,831	5	%
Nanjing Medical Co., Ltd.	4,359	4	%
Guangdong Xiaoqiling Pharmacy Co., Ltd.	4,308	4	%
Total	35,698	35	%

Sales to top five distributors	For the nine months ended September 30, 2006
	Sales revenue (RMB in thousands)	% of sales revenues
Beijing Tianxingpuxin Bio-Med Co., Ltd.	11,574	13	%
Shanghai Pharmaceutical Co., Ltd.	7,769	8	%
Shanghai Siful Medicine Co., Ltd.	6,144	7	%
Sinopharm Medicine Holding Guangzhou Co., Ltd.	6,082	7	%
Nanjing Medical Co., Ltd.	4,055	4	%
Total	35,624	39	%

If any one of these distributors were to voluntarily or involuntarily suspend or terminate product purchases from us, we would need to divert product sales to other distributors, which could cause short-term disruptions to our revenues and profitability.

If we fail to achieve specified sales goals with respect to an in-licensed product, the license agreement relating to that product may be terminated and our results of operations may suffer.

We have recently begun to distribute third-party products pursuant to in-licensing agreements with domestic pharmaceutical corporations. For example, we currently in-license Tietai Iron Sucrose Supplement and Baolijin. We anticipate that an increasing portion of our revenues during the next several years will be generated from in-licensed products. However, if we fail to achieve certain sales targets, our licensing agreement in relation to Tietai Iron Sucrose Supplement with Shenyang Borui

17

Pharmaceutical Company Limited will become terminable on short notice and our deposit in the amount of RMB1 million will be partially or fully forfeited. Given these risks, there is a great deal of uncertainty regarding the success of our current and future collaborative efforts.

We are highly dependent on senior management and key research and development personnel.

We are highly dependent on our senior management to manage our business and operations and our key research and development personnel for the development of new technologies and applications and the enhancement of our existing products. In particular, we rely substantially on our chief executive officer, Dr. Jing Lou, to manage our operations. We also depend on our key research personnel such as Ms. Dongmei Su. In addition, we also rely on sales personnel, and other personnel with industry knowledge, to market and sell our products. We do not maintain key man life insurance on any of our senior management or key personnel. The loss of any one of them, in particular Dr. Lou, would have a material adverse effect on our business and operations. Although Dr. Lou and Ms. Su have each signed a non-competition agreement with us, we cannot assure you that we will be able to successfully enforce these provisions in the event of a dispute.

Competition for senior management and research and development personnel is intense, and the pool of suitable candidates is limited. We may be unable to locate a suitable replacement for any senior management or key research and development personnel that we lose. We compete for qualified personnel with other pharmaceutical companies, universities and research institutions. Intense competition for these personnel could cause our compensation costs to increase significantly, which could have a material adverse effect on our results of operations. Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals.

Our future capital needs are uncertain. As a result, we may need to raise additional funds in the future.

We may require additional cash resources in the future. Our future cash needs will depend upon:

Ø the extent to which our products are accepted in the market and generate cash flows;

Ø the resources we devote to developing, marketing and producing our products;

Ø the receipt of, and the time and expenses required to obtain and maintain, regulatory clearances and approvals;

Ø our ability to identify and our desire or need to pursue acquisitions or other investments; and

Ø changed business conditions or other future developments.

Our revenues may not be sufficient to meet our operational needs and capital requirements, and needed financing may not be available in amounts or on terms acceptable to us, if at all. Our future capital needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations or our ability to pay dividends to our shareholders. Moreover, credit arrangements in the PRC subject to government restrictions and may not be available to us on commercially reasonable terms or at all.

18

Risk factors

Risk factors

We may not achieve our projected development goals in the time frames we announce and expect.

We set goals for, and made disclosures in this prospectus regarding, timing of the accomplishment of objectives material to our success, such as the commencement and completion of clinical trials, anticipated regulatory submission and approval dates and timing of product launches. As a public U.S.-listed company, we anticipate that we will make additional announcements in our public reports and in press releases regarding these events. The actual timing of these events can vary dramatically due to factors beyond our control, such as delays or failures in our clinical trials, the uncertainties inherent in the regulatory approval process and delays in achieving manufacturing or marketing arrangements sufficient to commercialize our products. There can be no assurance that our clinical trials will be completed, that we will make regulatory submissions or receive regulatory approvals as planned or that we will be able to adhere to our current schedule for the launch of any of our products. If we fail to achieve one or more of these milestones as planned, the price of our shares could decline.

If we are unable to protect our products through intellectual property rights, our competitors may compete directly against us.

Our success depends, in part, on our ability to protect our products from competition by establishing, maintaining and enforcing intellectual property rights. We try to protect the products and technology that we consider important to our business by filing PRC patent applications, relying on trade secrets or pharmaceutical regulatory protection or employing a combination of these methods. We do not have any patent protection of commercial significance relating to EPIAO. We have patents and patent applications relating to TPIAO and certain of our other products, product candidates and technologies. For more details, see “Business—Intellectual Property.” However, the process of seeking patent protection in the PRC can be lengthy and expensive, and we cannot assure you that these patent applications, or any patent applications we may make in the future in respect of other products, will result in patents being issued, or that any patents issued in the future will be able to provide us with meaningful protection or commercial advantage. Our patent applications may be challenged, invalidated or circumvented in the future. For more details on the process for applying for and obtaining intellectual property protection in the PRC, see “Regulations—Patent and trademark protection.”

In addition to patents, we rely on trade secrets and proprietary know-how to protect our intellectual property. We have entered into confidentiality agreements with many of our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors. These agreements may not provide meaningful protection or adequate remedies in the event of unauthorized use or disclosure of our proprietary information. In addition, it is possible that third parties could independently develop proprietary information and techniques substantially similar to ours or otherwise gain access to our trade secrets.

We may become involved in patent litigation against third parties to enforce our patent rights, to invalidate patents held by such third parties, or to defend against such claims. The cost to us of any patent litigation or similar proceeding could be substantial, and it may absorb significant management time. We do not maintain insurance to cover intellectual property infringement.

Intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries, due to, among other reasons, lack of procedural rules for discovery and evidence, low damage awards, and lack of judicial independence. Implementation and enforcement of PRC intellectual property-related laws have historically been deficient and ineffective and may be hampered by corruption and local protectionism. Policing unauthorized use of proprietary technology is

19

Risk factors

difficult and expensive, and we might need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. The experience and capabilities of PRC courts in handling intellectual property litigation varies, and outcomes are unpredictable. Further, such litigation may require significant expenditure of cash and management efforts and could harm our business, financial condition and results of operations. An adverse determination in any such litigation could materially impair our intellectual property rights and may harm our business, prospects and reputation.

We depend on administrative protection and monitoring periods for certain of our products, which afford us less protection than patents.

Prior to the 1990s, Chinese pharmaceutical companies were not capable of producing innovative drugs due to financial and technical obstacles. Under China’s first patent law enacted in March 1984, drugs were not eligible for patent protection. This law, however, provided patent protection for the manufacturing methods of pharmaceuticals. The Drug Administration Law of 1984 specified that pharmaceutical products that had never been manufactured in China were classified as new drugs, and allowed Chinese pharmaceutical companies to produce drugs that are similar in structure and function to foreign drugs so long as the foreign drugs had not been manufactured inside China. To further protect the domestic pharmaceutical industry, in 1999 the SFDA’s predecessor, the State Drug Administration, issued the Regulation on New Drug Protection and Related Technology Transfer, or the 1999 Regulations, which provided a six to twelve year administrative protection period for five categories of new drugs. In December 2002, the 1999 Regulations were replaced by the Administrative Measures on the Registration of Pharmaceutical Products, or the 2002 Regulations, which were later revised in February 2005. According to the 2002 Regulations, with a view to protecting public health, the SFDA may provide for administrative monitoring periods of up to five years for new drugs approved to be manufactured, to continually monitor the safety of those new drugs. The key element in determining the availability and duration of the monitoring period is the safety of the new drug. The SFDA will consider, among other things, whether the new drug has been previously launched domestically or overseas, what type of new drug it is and what process and technology are involved in the production of the new drug. For example, for a biochemical product that has never been launched domestically or overseas, a five-year monitoring period will be granted; for a biochemical product that has been launched overseas but not domestically, only a four-year monitoring period will be granted.

We have administrative protection for one indication of EPIAO through 2007 under a six-year protection period pursuant to the 1999 Regulations, during which other pharmaceutical companies are prohibited from manufacturing EPO drugs for the same indication. We also have administrative protection for TPIAO through 2010 under a five-year monitoring period pursuant to the 2002 Regulations, during which other pharmaceutical companies are prohibited from manufacturing or importing similar drugs, except those whose applications for clinical trials were approved by the SFDA prior to May 2005, the commencement of TPIAO’s monitoring period. For a detailed discussion of the mechanism for administrative protection under the relevant Chinese regulations, please refer to “Regulations—Administrative protection and monitoring periods for new drugs”.

The period of administrative protection under these Chinese pharmaceutical regulations is considerably shorter than the exclusivity period afforded by patent protection, which, in the case of invention patents, may last up to 20 years from the national filing date of the patent directed to the product, its use or method of manufacture. Once the monitoring period expires, all third parties will be free to compete with us, unless we can exclude them from the market through patents or other intellectual property rights.

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Risk factors

In addition, the administrative protection for EPIAO in relation to the indication of anemia associated with chemotherapy in cancer patients with non-myeloid malignancies cannot always prevent off label use of other EPO drugs for this indication. If physicians substitute similar or less expensive drugs for EPIAO, our revenues and financial condition will be adversely affected.

In addition, the PRC government has in the past and may, in the future, change the duration of the monitoring period. If this occurs, we may lose the administrative protection for our new products or the protection period may be shortened, and we may lose advantage over our competitors with respect to our new products.

If our products infringe the intellectual property rights of third parties, we may incur substantial liabilities, and we may be unable to sell these products.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Under the PRC Patent Law promulgated by the People’s Congress in March 1984 and later revised in September 1992 and August 2000, patent applications are maintained in confidence until their publication 18 months from the filing date. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications are filed. China adopts the first-to-file system under which whoever first files a patent application (instead of the one who makes first actual discoveries) will be awarded the patent. By contrast, U.S. patent law endorses the first-to-invent system under which whoever makes the first actual discovery will be awarded the patent. Under the first-to-file system, even after reasonable investigation we may not know with certainty whether we have infringed a third party’s patent because such third party may have filed a patent application without our knowledge while we are still developing that product. We are aware of intellectual property rights held by third parties that relate to products or technologies we are developing. For example, we are aware of a patent held by a third party that may relate to our TPIAO product. We believe, as to each claim in this patent, that we either do not infringe the claim of the patent or that the claim is invalid. While the validity of issued patents, patentability of pending patent applications and applicability of any of them to our programs are uncertain, if asserted against us, any related patent rights could adversely affect our ability to commercialize our products.

If a third party claims that we infringe its proprietary rights, any of the following may occur:

Ø we may become involved in time-consuming and expensive litigation, even if the claim is without merit;

Ø we may become liable for substantial damages for past infringement if a court decides that our technology infringes a third party’s patent;

Ø a court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available on commercially acceptable terms, if at all, or which may require us to pay substantial royalties or grant cross licenses to our patents; and

Ø we may have to reformulate our product so that it does not infringe patent rights of others, which may not be possible or could be very expensive and time-consuming.

Although to date we have not experienced any of the circumstances listed above, if any of these events occurs, our business will suffer and the market price of our ADSs could decline.

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Risk factors

Failure to implement our growth and expansion strategy could result in deterioration in our results of operations and financial condition.

In order to achieve our internal forecasts, we must successfully implement our growth and expansion strategy. To do so, we must:

Ø expand our capacity by further process optimization and new facility construction;

Ø continue our research and development efforts to introduce new and more advanced products;

Ø promote domestic marketing and sales development and growth;

Ø expand the number, and enhance the expertise in U.S. GAAP financial reporting, of our finance staff;

Ø implement our strategy to bifurcate our sales force in the nephrology and oncology areas;

Ø maintain and further improve our manufacturing process and proprietary technologies to manufacture products with high quality and competitive prices; and

Ø integrate any new businesses, technologies and products that we acquire by way of in-licensing, acquisitions or investments into our operations.

If we do not successfully implement this strategy, we may not be able to maintain our growth in revenues and profitability, and the market price for our ADSs will suffer.

We have grown steadily since our establishment in 1993. This expansion presented, and our anticipated growth in the future will continue to present, a significant challenge to our management and administrative systems and resources. If we do not adequately manage this challenge, our results of operations and financial condition could suffer.

Power shortages, natural disasters, terrorist acts or other calamities could disrupt our production and have a material adverse effect on our business, financial position and results of operations.

EPIAO, TPIAO and our legacy products are produced at our manufacturing facility in Shenyang. A significant disruption at that facility, even on a short-term basis, could impair our ability to produce and ship products on a timely basis, which could have a material adverse effect on our business, financial position and results of operations.

Our Shenyang manufacturing operations are vulnerable to interruption and damage from natural and other types of disasters, including earthquake, fire, floods, environmental accidents, power loss, communications failures and similar events. If any disaster were to occur, our ability to operate our business at our facilities would be seriously impaired. In addition, the nature of our production and research activities could cause significant delays in our programs and make it difficult for us to recover from a disaster. We do not maintain any insurance other than insurance for some of our properties. Accordingly, unexpected business interruptions resulting from disasters could disrupt our operations and thereby result in substantial costs and diversion of resources.

In addition, our production process requires a continuous supply of electricity. We have encountered power shortages twice historically due to restricted power supply to industrial users during summers when the usage of electricity is high and supply is limited or as a result of damage to the electricity supply network. Because the duration of those power shortages was brief, they had no material impact on our operations. Interruptions of electricity supply could result in lengthy production shutdowns, increased costs associated with restarting production and the loss of production in progress. Any major suspension or termination of

22

Risk factors

electricity or other unexpected business interruptions could have a material adverse impact on our business, financial condition and results of operations.

We may experience significant period-to-period quarterly and annual fluctuations in our revenues and operating results, which may result in volatility in our stock price.

We typically generate higher levels of revenues during the third and fourth quarters of the year, primarily because of the tendency of hospitals to place more orders prior to the year-end holiday season and the fact that more people visit hospitals in the second half of the year, resulting in more prescriptions by physicians during this period. We may in the future experience significant period-to-period fluctuations in our revenues and operating results. Upon the consummation of this offering, it is possible that our revenues and operating results in some quarters may fall below the estimates of securities research analysts, which may cause the value of our ordinary shares and ADSs to decline. Our quarterly and annual operating results are affected by a number of factors, such as:

Ø seasonal spending patterns of Chinese consumers, including hospitals, dialysis centers and clinics;

Ø changes in pricing policies by us, our competitors or the government, an example of which is the one-time downward adjustment by the government of the price ceiling for all interferon products in China in 1999;

Ø the timing and market acceptance of new products and product enhancements by us or our competitors;

Ø the loss of key sales personnel or distributors;

Ø our involvement in litigation;

Ø changes in government policies or regulations; and

Ø a downturn in general economic conditions in China.

While certain of the factors identified above, including seasonal spending patterns, changes in pricing policies, market acceptance of new products and changes in government policies, have in the past caused fluctuations in our quarterly financial results, we have not suffered any material and adverse consequences from these fluctuations in the last three years. However, many of these factors are beyond our control, and you should not rely on our results of operations for prior quarters as an indication of our results in any future period. As our revenues vary significantly from quarter to quarter, our business could be difficult to predict and manage and our quarterly results could fall below investor expectations, which could cause our ADS price to decline.

We have previously operated as a private Chinese company and have no experience in complying with U.S. public company requirements. In addition, we only recently began to prepare our financial statements in accordance with U.S. GAAP. Attempting to comply with these requirements will increase our costs and require additional management resources, and we still may fail to comply.

As a private PRC company, we have maintained a small finance and accounting staff. In addition, in the past we have only prepared unaudited financial statements in accordance with PRC GAAP for the purpose of tax reporting and determining the level of statutory reserves. Only our CFO has significant prior experience applying U.S. GAAP. While we plan to expand our staff if we become public, we expect to encounter substantial difficulty attracting qualified staff with requisite experience due to the high level of competition for experienced financial professionals. In the short term, we are providing training for our current staff with respect to U.S. GAAP. Our training may not be sufficient or effective.

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Risk factors

We will face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company. Compliance with the U.S. Sarbanes-Oxley Act of 2002, as well as other rules of the SEC, the Public Company Accounting Oversight Board and The Nasdaq Global Market, will result in a significant initial cost to us as well as an ongoing increase in our legal, audit and financial compliance costs. As a public company, we will be required by Section 404 of the Sarbanes-Oxley Act of 2002 to include a report of management on the company’s internal controls over financial reporting that contains our management’s assessment of the effectiveness of the company’s internal controls and an auditor’s attestation report on our internal control over financial reporting in our Annual Report on Form 20-F for the fiscal year ending December 31, 2008. We have begun to implement certain measures to make overall improvements to our financial reporting system, such as rolling out a computerized management information system for inventories to ensure simultaneous recording of inventory movements in both the warehouse and finance department records. Such a system would also allow up-to-date inventory ageing information to be automatically generated on a continuous basis. If we cannot successfully implement these measures in a timely manner, our ability to issue timely and accurate financial reports may be adversely affected. We have only recently begun a formal process to evaluate our internal controls for purposes of Section 404, and we cannot be sure that our internal control over financial reporting will prove to be effective.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our ADSs.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Deficiencies in our internal controls may adversely affect our management’s ability to record, process, summarize, and report financial data on a timely basis, and to prevent fraud. As a public company, we will be required by Section 404 of the Sarbanes-Oxley Act of 2002 to include a report of management on our internal control over financial reporting that contains our management’s assessment of the effectiveness of the company’s internal controls and an auditor’s attestation report on our internal control over financial reporting in our annual report on Form 20-F for the fiscal year ending December 31, 2008. We have only recently begun a formal process to evaluate our internal control over financial reporting. Given the status of our efforts, coupled with the fact that guidance from regulatory authorities in the area of internal controls continues to evolve, substantial uncertainty exists regarding our ability to comply by applicable deadlines. Delay in meeting these deadlines or failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations, and result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our ADSs, or limit or suspend our continued listing on, or cause us to delist from, The Nasdaq Global Market. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ADSs.

Our business benefits from certain tax and other government incentives. Expiration of, or changes to, these incentives could have a material adverse effect on our operating results.

The PRC government has provided various incentives to high technology companies in order to encourage development of the high technology industry and investments by foreigners. Such incentives include reduced tax rates and other measures. For example, as a high technology company operating in an approved economic-technological development area, Shenyang Sunshine Pharmaceutical Company

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Risk factors

Limited, or Shenyang Sunshine, our main PRC operating subsidiary, is entitled to an enterprise income tax, or EIT, rate of 15%, compared to an EIT rate of 33% applicable to most domestically owned PRC companies. As a “foreign-invested advanced technology enterprise” certified by the relevant Chinese authorities, Shenyang Sunshine was entitled to a reduced EIT rate of 10% for the year ended December 31, 2005. The 10% EIT rate expired after the taxable year ended December 31, 2005 and Shenyang Sunshine’s EIT was 15% for the year ended December 31, 2006.

Additionally, certain changes to the PRC’s Corporate Income Tax Law are in discussion and could, if passed into law, adversely affect the taxation of Shenyang Sunshine and/or remittances by Shenyang Sunshine to us. To date, the PRC government has not disclosed any details as to the changes in the tax law slated for consideration. However, it is believed that among the possible changes are elimination of tax holidays and other incentives, increases in tax rates and imposition of a dividend withholding tax.

Historically, we have benefited from tax holidays and incentives. The extent and timing of any such changes in the PRC’s tax laws is uncertain. It is not known whether any transitional or other relief will be granted to companies such as Shenyang Sunshine that have already established operations in China. If adopted, these changes could significantly increase our tax expense.

In addition, we have historically received various government grants for our research and development programs. We recorded grant income of RMB2.5 million in 2003, RMB6.4 million in 2004 and RMB3.8 million in 2005. The grants in 2003 and 2004 primarily relate to our research and development efforts on EPIAO and TPIAO. Even though we plan to continue to apply for grants and subsidies from the PRC government for our ongoing and future research and development programs, there is no assurance that we will successfully obtain any level of grants and subsidies in future periods.

We may be classified as a passive foreign investment company for United States federal income tax purposes, which could subject United States investors in the ADSs or ordinary shares to significant adverse tax consequences.

We may be classified as a passive foreign investment company, or a PFIC, for United States federal income tax purposes for the current or any future taxable year.

PFIC status is a factual determination made for each taxable year ending December 31, after the close of such year, on the basis of the composition of our income and our “active” versus “passive” assets for such year. Under the PFIC rules, we will generally be classified as a PFIC if, in the case of any particular taxable year, 75% or more of our gross income consists of certain types of “passive income” or 50% or more of the value of our assets consists of “passive assets”. For this purpose, cash and other liquid assets are generally classified as passive and goodwill and other unbooked intangibles may generally be classified as active. The overall level of our passive assets will be significantly affected by the amount and time-frame within which we disperse the cash raised in this offering, and other liquid assets that we presently hold, for the purpose of the capital expenditures described in this prospectus. In addition, the overall level of our active assets will depend, in great measure, on the valuation of our goodwill and other unbooked intangibles as implied by our market capitalization which may decline.

If we were to be or become classified as a PFIC, United States investors in our ADSs or ordinary shares may incur a significantly increased United States income tax liability on gain recognized on the sale or other disposition of our ADSs or ordinary shares and on the receipt of distributions on our ADSs or ordinary shares. See the section entitled “Taxation—United States Federal Income Tax Considerations—PFIC Considerations”.

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Risk factors

We have guaranteed certain loans from banks in China to a shareholder. Should the borrower default on its loans, we would be entirely responsible for this outstanding debt. Given our limited resources, such a default would have a severe adverse impact on our company.

In 2006, in connection with our loans from the Industrial and Commercial Bank of China, we were obligated to enter into an arrangement by which we and our then shareholder, China Transport Resources Northeast Co., Ltd. or China Transport, cross guaranteed certain of each other’s loans. We provided a guarantee to China Transport in relation to loans in the aggregate principal amount of RMB10.0 million.

Should China Transport default on its loans, we would be solely responsible to the lending bank for the outstanding principal amount plus accrued interest. Given our limited resources, its default on this loan and our assumption of its debt would adversely affect our financial condition.

RISKS RELATED TO OUR INDUSTRY

The pharmaceutical industry in China is highly regulated, and future government regulation may place additional burdens on our business.

The pharmaceutical industry in China is subject to extensive government regulation and supervision. The regulatory framework addresses all aspects of operating in the pharmaceutical industry, including approval, production, licensing and certification requirements and procedures, periodic renewal and reassessment processes, registration of new drugs and environmental protection. Violation of applicable laws and regulations may materially adversely affect our business. In order to manufacture pharmaceutical products in China, we are required to apply for and obtain a pharmaceutical manufacturing permit from the provincial level food and drug administrative authority. In addition, in order to manufacture and market any drug in China, we are required to apply for and obtain permits and certificates from the SFDA, including the new drug certificate, drug registration certificate (which includes the issuance of a drug approval number) and GMP certificate. We are required to renew the pharmaceutical manufacturing permits, drug registration certificates and GMP certificates permits every five years. If we are unable to obtain or renew such permits or any other permits or licenses required for our operation, we will not be able to engage in the manufacture of our products and our business may be adversely affected.

The regulatory framework regarding the pharmaceutical industry in China is subject to change and amendment from time to time. Any such change or amendment may have an adverse effect on our business. Changes to the regulatory framework could materially and adversely impact our business, financial condition and results of operations.

For further information regarding government regulation in China, see “Regulations.”

New product development in the pharmaceutical industry is both costly and labor-intensive and has a low rate of successful commercialization.

Our success will depend in part on our ability to enhance our existing products and to develop new products. The development process for pharmaceutical products is complex and uncertain, as well as time-consuming and costly. Relatively few research and development programs produce a commercial product. A product candidate that appears promising in the early phases of development may fail to reach the market for a number of reasons, such as:

Ø the failure to demonstrate safety and efficacy in preclinical and clinical trials;

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Risk factors

Ø the failure to obtain approvals for intended use from relevant regulatory bodies, such as the SFDA;

Ø our inability to manufacture and commercialize sufficient quantities of the product economically; and

Ø proprietary rights, such as patent rights, held by others to our product candidate and their refusal to sell or license such rights to us on reasonable terms, or at all.

In addition, product development requires the accurate assessment of market trends. We cannot assure you that:

Ø our new product research and development efforts will be successfully and timely completed;

Ø our clinical trials on humans for our product candidate will be successful;

Ø SFDA or other regulatory bodies will grant necessary regulatory clearances or approvals on a timely basis, or at all; or

Ø any product we develop will be commercialized or achieve market acceptance.

Delays in any part of the development process or our inability to obtain regulatory approval of our products could adversely affect our operating results by restricting or delaying our introduction of new products. Even if we successfully commercialize new products, these products may address markets that are currently being served by the off-label use of others of our mature products and inadvertently result in a reduction in the sales volume of our mature product or vice versa. Failure to develop, obtain necessary regulatory clearances or approvals for or successfully commercialize or market potential new products or technologies could have a material adverse effect on our financial condition and results of operations.

We will not be able to commercialize our product candidates if our preclinical studies do not produce successful results or our clinical trials do not demonstrate safety and efficacy in humans.

Before obtaining regulatory approvals for the manufacturing and sale of our product candidates, we must conduct, at our own expense, extensive preclinical tests and clinical trials to demonstrate the safety and efficacy in humans of our product candidates. Preclinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and interim results of a clinical trial do not necessarily predict final results. A failure of one or more of our clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, preclinical testing and the clinical trial process that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including:

Ø our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical testing or clinical trials, or we may abandon projects that we expect to be promising;

Ø we might have to suspend or terminate our clinical trials if the participating patients are being exposed to unacceptable health risks;

Ø regulators may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or safety concerns;

Ø the time or cost of our clinical trials may be greater than we currently anticipate;

Ø any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the product not commercially viable; and

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Risk factors

Ø our product candidates may produce undesirable side effects or may have other unexpected characteristics.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete our clinical trials or other testing or if the results of these trials or tests are not positive or are only modestly positive, we may:

Ø be delayed in obtaining marketing approval for our product candidates;

Ø not be able to obtain marketing approval; or

Ø obtain approval for indications that are not as broad as intended.

Our product development costs will also increase if we experience delays in testing or approvals. We do not know whether planned clinical trials will begin as planned, will need to be restructured or will be completed on schedule, if at all. Significant clinical trial delays also could allow our competitors to bring products to market before we do and impair our ability to commercialize our products or product candidates.

Rapid changes in the pharmaceutical industry may render our products obsolete.

The pharmaceutical industry is characterized by rapid changes in technology, constant enhancement of industrial know-how and frequent emergence of new products. Future technological improvements and continual product developments in the pharmaceutical market may render our existing products obsolete or affect our viability and competitiveness. Therefore, our future success will largely depend on our ability to:

Ø improve our existing products;

Ø diversify our product portfolio; and

Ø develop new and competitively priced products which meet the requirements of the constantly changing market.

If we fail to respond to this environment by improving our existing products or developing new products in a timely fashion, or if our new or improved products do not achieve adequate market acceptance, our business and profitability may be materially and adversely affected.

The pharmaceutical industry is extremely competitive.

Our business is subject to competition from other pharmaceutical manufacturers. In China, EPO drugs are offered by established international companies such as Kirin Brewery Company Limited, or Kirin, and F. Hoffmann-La Roche, Ltd., or Roche, and domestic pharmaceutical companies such as Di’ao Group Chengdu Diao Jiuhong Pharmaceutical Factory. Competitors for interferon alpha-2 drugs in China include Schering-Plough (Brinny) Co. and Beijing Tri-Prime Genetic Engineering Co., Ltd., and competitors for interleukin-2 in China include Beijing SL Pharmaceutical Co., Ltd. and Beijing Four Rings Biopharmaceutical Co., Ltd. Competitors for Tietai Iron Sucrose Supplement in China include Beijing Novartis Pharmaceutical Co., Ltd and Nanjing Hencer Pharmaceutical Co., Ltd. and competitors for Baolijin in China include Kirin, Hangzhou Jiuyuan Gene Engineering Co., Ltd. and Qilu Pharmaceutical Co., Ltd. Local and overseas pharmaceutical manufacturers engaged in the manufacture and sale of similar products to ours in China may have more capital resources, better research and development capabilities and more experience in manufacturing and marketing their products. Many of our competitors, including large pharmaceutical companies and other generic drug manufacturers, have

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Risk factors

employed various strategies intended to maximize their market share for previously-patented products. Competition is likely to intensify if:

Ø the number of manufacturers or distributors of substitute or similar products increases due to increased market demand or increased prices;

Ø competitors drastically reduce prices due to oversupply of products; or

Ø competitors develop new products or substitute products having comparable medicinal applications or therapeutic effects that may be used as direct substitutes for our products and such new products or substitute products are more effective with prices comparable to or lower than our products.

If any of the above occurs, our profitability may be adversely affected.

There have been recent incidents in which patients have experienced severe adverse reactions following the use of pharmaceutical products manufactured in China.

There have been recent incidents reported in the Chinese media of a significant number of patients experiencing severe adverse health consequences following their use of pharmaceutical products manufactured by certain pharmaceutical companies in China. A number of patients have become ill and a number of fatalities have been reported. For example, several deaths were caused by drugs sold by the Second Pharmaceutical Factory of Qiqihaér, a PRC drug manufacturer, in May 2006. Concerns over the safety of pharmaceutical products manufactured in China could have an adverse effect on the sale of such products, including products manufactured by us.

We have not, to date, experienced any significant quality control or safety problems. If in the future we become involved in incidents of the type described above, such problems could severely and adversely impact our product sales and reputation.

Anti-corruption measures taken by the government to correct corruptive practices in the pharmaceutical industry could adversely affect our sales and reputation.

The government has recently taken anti-corruption measures to correct corrupt practices. In the pharmaceutical industry, such practices include, among others, acceptance of kickbacks, bribery or other illegal gains or benefits by the hospitals and medical practitioners from pharmaceutical distributors in connection with the prescription of a certain drug. Substantially all of our sales to our ultimate customers are conducted through third-party distributors. We have no control over our third-party distributors, who may engage in corrupt practices to promote our products. While we maintain strict anti-corruption policies applicable to our internal sales force and third-party distributors, these policies may not be effective. If Liaoning Sunshine or any of our third-party distributors engage in such practices and the government takes enforcement action, our products may be seized and our own practices, and involvement in the distributors’ practices, investigated. If this occurs, our sales and reputation may be materially and adversely affected.

In addition, government-sponsored anti-corruption campaigns from time to time could have a chilling effect on our efforts to reach new hospital customers. Our sales representatives primarily rely on hospital visits to better educate physicians on our products and promote our brand awareness. Recently, there have been occasions on which our sales representatives were denied access to hospitals in order to avoid the perception of corruption. If this attitude becomes widespread among our potential customers, our ability to promote our products will be adversely affected.

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Risk factors

We are subject to environmental regulations and may be exposed to liability and potential costs for environmental compliance.

We are subject to PRC laws and regulations concerning the discharge of effluent water and solid waste during our manufacturing processes. We are required to obtain clearances and authorizations from government authorities for the treatment and disposal of such discharge. We may not at all times comply fully with environmental regulations. Any violation of these regulations may result in substantial fines, criminal sanctions, revocations of operating permits, shutdown of our facilities and obligation to take corrective measures. Our cost of complying with current and future environmental protection laws and regulations and our liabilities which may potentially arise from the discharge of effluent water and solid waste may materially adversely affect our business, financial condition and results of operations.

The government may take steps towards the adoption of more stringent environmental regulations. Due to the possibility of unanticipated regulatory or other developments, the amount and timing of future environmental expenditures may vary substantially from those currently anticipated. If there is any unanticipated change in the environmental regulations, we may need to incur substantial capital expenditures to install, replace, upgrade or supplement our pollution control equipment or make operational changes to limit any adverse impact or potential adverse impact on the environment in order to comply with new environmental protection laws and regulations. If such costs become prohibitively expensive, we may be forced to cease certain of our business operations.

We may be required to defend lawsuits or pay damages for product liability claims. We do not have any liability or business disruption insurance, and a claim against us, or an interruption in our business, could adversely offset our reputation and our financial results.

The development and commercialization of pharmaceutical products entails an inherent risk of harm to the patient and, therefore, product liability. Even though there are no punitive damages under the PRC law, if a product liability claim is brought against us, it may, regardless of merit or eventual outcome, result in damage to our reputation, breach of contract with our customers, decreased demand for our products, costly litigation, product recalls, loss of revenue, and the inability to commercialize some products. We currently are not aware of any existing or anticipated product liability claims with respect to our products.

Existing PRC laws and regulations do not require us to nor do we maintain liability insurance to cover product liability claims. The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products. As a result, we do not have business liability, or in particular, product liability, or disruption insurance coverage for our operations. Any business disruption, litigation or natural disaster might result in substantial costs and diversion of resources. When and if we attempt to obtain product liability insurance for clinical trials, this insurance may be prohibitively expensive, or may not fully cover our potential liabilities. Inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the commercialization of products that we or our collaborators develop.

Pricing of all of our products are subject to government approval. Changes in government control on prices of our products may limit our profitability or cause us to stop manufacturing certain products.

Pursuant to the implementing rules of the Drug Administration Law, we are required to seek pricing approval for all our products from The National Development and Reform Commission of the PRC, or

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Risk factors

the NDRC, and the price administration bureaus of the relevant provinces of the PRC in which our pharmaceutical products are manufactured. We have in the past been able to successfully obtain pricing-related approvals. In addition, in order to access certain local or provincial-level markets, we enter into government-sponsored competitive bidding processes for EPIAO and our legacy products every year or every other year with a pre-defined price range. The competitive bidding in effect sets price ceilings for our products, thereby limiting our profitability. In some instances, if the price range designated by the provincial government falls below production costs, we may stop manufacturing certain products.

China’s accession to the WTO may intensify competition in the pharmaceutical industry in China.

China acceded to the WTO in December 2001. Following the accession, China lowered tariffs on certain imported pharmaceutical products as part of its obligation under the WTO framework. The reduction or removal of tariffs on imported pharmaceutical products had made such products more competitive with domestic pharmaceutical products. In addition, an increasing number of foreign-invested pharmaceutical manufacturers may establish operations to engage in the manufacture or distribution of pharmaceutical products in China, which would increase the number of suppliers of pharmaceutical products in the market and intensify the competition with domestic manufacturers. If the domestic pharmaceutical manufacturers are unable to distinguish their products from imported products or products produced domestically by foreign-invested pharmaceutical manufacturers, they may lose market share to imported products or products produced domestically by foreign-invested pharmaceutical manufacturers which may be of higher quality and are sold at competitive prices. Furthermore, due to the lack of capital for the research and development of new medicines, most of the domestic pharmaceuticals are imitations of foreign products. Following China’s accession to the WTO, many more companies in Europe and the U.S. have applied for patents in the PRC, thereby increasing the likelihood of litigation for Chinese domestic pharmaceutical companies.

RISKS RELATED TO DOING BUSINESS IN CHINA

Adverse changes in political, economic and other policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and materially and adversely affect our competitive position.

All of our operations are located in China, and substantially all of our sales are made in China. Accordingly, our business, financial condition, results of operations and prospects are affected significantly by economic, political and legal developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including:

Ø the extent of government involvement;

Ø the level of development;

Ø the growth rate;

Ø the control of foreign exchange;

Ø the allocation of resources;

Ø an evolving regulatory system; and

Ø lack of sufficient transparency in the regulatory process.

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Risk factors

While the Chinese economy has experienced significant growth in the past 20 years, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures, including potential investments in competing biopharmaceutical companies, may benefit the overall Chinese economy, but may also have a negative effect on us. Although we do not currently expect such measures to directly affect our use of proceeds from this offering, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. Further, any adverse change in the economic conditions or government policies in China could have a material adverse effect on overall economic growth and the level of healthcare investments and expenditures in China, which in turn could lead to a reduction in demand for our products and consequently have a material adverse effect on our businesses.

The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in China is still owned by the Chinese government. The continued control of these assets and other aspects of the national economy by the Chinese government could materially and adversely affect our business. The Chinese government also exercises significant control over Chinese economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. One recent example is certain measures implemented by the Chinese government in 2006 to restrict foreign investment and speculation in the real estate sector. Although the government policies have in recent years been encouraging of the growth of the healthcare sector, future attempts by the Chinese government to slow the pace of growth of the healthcare sector or the overall Chinese economy could result in decreased capital expenditure by hospitals, which in turn could reduce demand for our products.

Moreover, the political relationship between the United States, Europe, or other Asian nations and China is subject to sudden fluctuation and periodic tension. Changes in political conditions in China and changes in the state of foreign relations are difficult to predict and could adversely affect our operations. This could lead to a decline in our profitability.

Future changes in laws, regulations or enforcement policies in China could adversely affect our business.

Laws, regulations or enforcement policies in China, including those regulating healthcare and the pharmaceutical industry, are evolving and subject to frequent changes. Further, regulatory agencies in China may periodically, and sometimes abruptly, change their enforcement practices. Therefore, prior enforcement activity, or lack of enforcement activity, is not necessarily predictive of future actions. Any enforcement actions against us could have a material and adverse effect on us and the market price of our ADSs. In addition, any litigation or governmental investigation or enforcement proceedings in China may be protracted and may result in substantial cost and diversion of resources and management attention, negative publicity, damage to our reputation and decline in the price of our ADSs.

Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.

We receive all of our revenues in Renminbi, which currently is not a freely convertible currency. A portion of our revenues may be converted into other currencies to meet our foreign currency obligations,

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Risk factors

including, among others, payment of dividends declared, if any, in respect of our ordinary shares. Under China’s existing foreign exchange regulations, we are able to pay dividends in foreign currencies without prior approval from the State Administration of Foreign Exchange, or the SAFE, by complying with certain procedural requirements. However, the PRC government may take measures to restrict access to foreign currencies for current account transactions.

Our ability to obtain foreign exchange is subject to significant foreign exchange controls and, in the case of amounts under the capital account, requires the approval of and/or registration with PRC government authorities, including the SAFE. In particular, if Shenyang Sunshine, our wholly-owned PRC subsidiary, borrows foreign currency loans from foreign lenders, it must do so within approved limits that satisfy its approval documentation and PRC debt to equity ratio requirements. Further, such loans must be registered with the SAFE. These limitations could affect the ability of Shenyang Sunshine to obtain capital through offshore debt or equity financing.

We face risks related to health epidemics and outbreaks of contagious diseases, including avian influenza and Severe Acute Respiratory Syndrome, or SARS.

Our business could be adversely affected by the effects of avian influenza, SARS or other epidemics or outbreaks of contagious diseases. There have been recent reports of outbreaks of a highly pathogenic avian influenza, or avian flu, caused by the H5N1 virus in certain regions of Asia and Europe. In 2005 and 2006, there have been reports on the occurrences of avian flu in various parts of China, including some confirmed human cases. A major outbreak of avian flu in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, particularly in Asia. Additionally, a recurrence of SARS, a highly contagious form of atypical pneumonia, similar to the occurrence in 2003 which affected China, Hong Kong, Taiwan, Singapore, Vietnam and certain other countries, would also have similar adverse effects. Since all of our operations and substantially all of our customers and suppliers are based in Asia, an outbreak of avian flu, SARS or other contagious diseases in China, other places in Asia or elsewhere, or the perception that such outbreak could occur, and the measures taken by the governments of countries affected, would adversely affect our business, financial condition or results of operations. We have not adopted any written preventive measures or contingency plans to combat any future outbreaks of avian flu, SARS or any other epidemics.

Our revenues are denominated in Renminbi, which is not freely convertible for capital account transactions and may be subject to exchange rate volatility.

We require foreign currency to purchase imported equipment and raw materials and pay dividends to our shareholders. However, we generate revenues in Renminbi. Under PRC foreign exchange rules and regulations, payments of current account items, including profit distributions and operation-related expenditures, may be made in foreign currencies without prior approval but are subject to procedural requirements. Strict foreign exchange control continues to apply to capital account transactions. These transactions must be approved by and/or registered with SAFE, and repayment of loan principal, distribution of return on direct capital investment and investments in negotiable instruments are also subject to restrictions. There is no assurance that we will be able to meet all of our foreign currency obligations or to remit profits out of China.

Prior to 1994, the Renminbi experienced a significant net devaluation against most major currencies, and there was significant volatility in the market-based exchange rate during certain periods. Since 1994, the Renminbi to U.S. dollar exchange rate has largely stabilized. On July 21, 2005, People’s Bank of China, or PBOC, announced that the exchange rate of U.S. dollar to Renminbi would be adjusted from US$1 to

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Risk factors

RMB8.27 to US$1 to RMB8.11, and it ceased to peg the Renminbi to the U.S. dollar. Instead, the Renminbi will be pegged to a basket of currencies, which components will be adjusted based on changes in market demand and supply under a set of systematic principles. On September 23, 2005, the Chinese government widened the daily trading band for Renminbi against non-US dollar currencies from 1.5% to 3.0% to improve the flexibility of the new foreign exchange system. The Renminbi may be revalued further against the U.S. dollar or other currencies, or may be permitted to enter into a full or limited free float, which may result in an appreciation or depreciation in the value of the Renminbi against the U.S. dollar or other currencies, any of which could give rise to uncertainties in our financial condition and results of operations. Any appreciation of Renminbi may subject us to increased competition from imports, and any devaluation of Renminbi may adversely affect the value of our net assets, earnings and declared dividends in foreign currency terms, as well as our ability to service our foreign currency obligations. For example, to the extent that we need to convert U.S. dollars we receive from this offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs, purchasing equipment and raw materials from overseas, or other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us.

Our operations are subject to the uncertainty associated with the legal system in China which could limit the legal protection available to potential investors.

We conduct our business through our operating subsidiaries in China, which are governed by PRC law. China is a civil law jurisdiction based on written codes and statutes. Unlike common law jurisdictions, prior court decisions may be cited as persuasive authority but do not have legally binding force. The PRC government has promulgated laws and regulations in relation to economic matters in general, such as foreign investment, corporate organization and governance, commerce, taxation and trade, with a view to establishing a comprehensive legal system conducive to investment activities. However, the implementation, interpretation and enforcement of these laws and regulations may involve greater uncertainty compared to those in the common law jurisdictions due to a relatively short legislative history, limited volume of court cases and their non-binding nature. Furthermore, many laws, regulations and legal requirements have only recently been adopted by the central or local government agencies, and their implementation, interpretation and enforcement may involve uncertainty due to the lack of established practice available for reference. Depending on the government agency or how an application or a case is presented to such agency, we may receive less favorable interpretations of law than our competitors. In addition, any litigation in China may be protracted and result in substantial legal costs and diversion of resources and management attention. Similarly, legal uncertainty in China may limit the legal protection available to potential investors. We cannot predict the effect of future legal developments in China, including promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national law. As a result, there is substantial uncertainty as to the legal protection available to potential investors.

There may be difficulties in seeking recognition and enforcement of foreign judgments in China.

Substantially all of our assets are located in China, and most of our senior management members and directors reside in China. However, China has not entered into treaties or arrangements providing for the recognition and enforcement of judgments made by the courts of the United States or most other jurisdictions. As a result, it may be difficult or impossible for investors to effect service of process or enforce court judgments against our PRC subsidiaries, our assets, senior management members or directors in China.

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Risk factors

Changes in PRC government policy on foreign investment in China may adversely affect our business and results of operations.

As a foreign invested enterprise, Shenyang Sunshine is subject to restrictions on foreign investment imposed by the PRC law from time to time. For instance, under the Foreign Investment Industrial Guidance Catalogue, some industries are categorized as sectors which are encouraged, restricted or prohibited for foreign investment.

According to the latest version of this Catalogue, which became effective on January 1, 2005, our business does not belong to the prohibited or the restricted category. As this Catalogue is updated every few years, there can be no assurance that the PRC government will not change its policies in a manner that would cause part or all of our businesses to fall within the restricted or prohibited categories. If any of our businesses becomes prohibited or if we cannot obtain approval from relevant approval authorities to engage in businesses which become restricted for foreign investors, we may be forced to sell or restructure our businesses which have become restricted or prohibited for foreign investment. If we are forced to adjust our corporate structure or business line as a result of changes in government policy on foreign investment, our business, financial condition and results of operations may be materially adversely affected.

We rely principally on dividends and other distributions on equity paid by our wholly owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries and affiliated entities to make payments to us could have a material adverse effect on our ability to conduct our business.

We are a holding company, and we rely solely on dividends from our wholly owned subsidiaries in China for our cash requirements, including any debt we may incur. Current PRC regulations permit our subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital, and each of our subsidiaries may be required to further set aside a portion of its after-tax profits to fund the employee welfare fund at the discretion of the board. These reserves are not distributable as cash dividends. Furthermore, if our subsidiaries in China incur additional debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements we currently have in place in a manner that would materially and adversely affect our subsidiaries’ ability to pay dividends and other distributions to us. Any limitation on the ability of our subsidiaries and affiliated entities to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business.

PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC operating subsidiaries and affiliated entities, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

In utilizing the proceeds of this offering in the manner described in “Use of proceeds,” as an offshore holding company of our PRC operating subsidiaries we may make loans to our PRC subsidiaries or we may make additional capital contributions to our PRC subsidiaries. Any loans to our PRC subsidiaries

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Risk factors

are subject to PRC regulations and approvals. For example, loans by us to Shenyang Sunshine to finance its activities cannot exceed statutory limits and must be approved by the PRC State Administration of Foreign Exchange, or SAFE, or its local counterpart.

We may also decide to finance our wholly owned subsidiaries by means of capital contributions. These capital contributions must be approved by the Ministry of Commerce, or MOFCOM, or its local counterpart. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all, with respect to future loans or capital contributions by us to our subsidiaries. If we fail to receive such registrations or approvals, our ability to use the proceeds of this offering and to capitalize our PRC operations may be negatively affected, which could adversely and materially affect our liquidity and our ability to fund and expand our business.

RISKS RELATED TO OUR CORPORATE STRUCTURE

Our contractual arrangements with Beijing Sunshine Bio-product Sales Company, or Beijing Sunshine, and Liaoning Bio-Pharmaceutical Company Limited, or Liaoning Sunshine, and their respective shareholders may not be as effective in providing control over these entities as direct ownership.

Each of Beijing Sunshine and Liaoning Sunshine was established in 2000 to engage in the distribution of pharmaceutical products, primarily those which we manufacture. As part of our corporate reorganization in anticipation of this offering, we transferred our equity ownership in Liaoning Sunshine to Mr. Dan Lou, our chairman, and our equity ownership in Beijing Sunshine to Ms. Dongmei Su, our chief technology officer, as a result of which we no longer have equity ownership interests in Beijing Sunshine or Liaoning Sunshine.

We rely on contractual arrangements to maintain control over the business and operations of these two entities. These contractual arrangements may not be as effective in providing control over these entities as direct ownership. For example, we do not have control over the day-to-day operations of either Beijing Sunshine or Liaoning Sunshine, and either Beijing Sunshine or Liaoning Sunshine could fail to take actions required for our business despite their respective contractual obligation to do so. Substantially all of our sales, including sales of our own and our in-licensed products, are conducted through Liaoning Sunshine, which was the direct contracting party with most of our key distributors. If Liaoning Sunshine or its sole shareholder, Mr. Dan Lou, refuse to make payments or otherwise refuse to perform their contractual obligations necessary for us to realize these sales contracts, our financial condition and results of operations will be materially and adversely affected. Beginning in January 2007, we plan to start directly contracting with third-party distributors for the sale of the products we manufacture.

If Beijing Sunshine, Liaoning Sunshine or their respective shareholders fail to perform under their agreements with us, we may have to rely on legal remedies under PRC law, which may not be effective. In addition, we cannot assure you that the shareholders of either Beijing Sunshine or Liaoning Sunshine will always act in our best interests.

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Risk factors

We currently conduct our sales activities through Liaoning Sunshine and Beijing Sunshine by means of contractual arrangements. If the PRC government determines that these contractual arrangements do not comply with applicable regulations, our business could be adversely affected.

We conduct our sales activities through contractual arrangements with Liaoning Sunshine and Beijing Sunshine, each of which holds the licenses and approvals, including Pharmaceutical Trading Permits, as described in “Regulations—Distribution of pharmaceutical products”, that are essential for the distribution of our own and in-licensed products. We have contractual arrangements with Liaoning Sunshine, Beijing Sunshine and their respective shareholders that allow us to substantially control these entities. These contracts include business cooperation agreements, which impose certain restrictions on the conduct of the Liaoning Sunshine’s and Beijing Sunshine’s businesses. For more details, see “Our corporate structure—Our contractual arrangements with Liaoning Sunshine and Beijing Sunshine.” We cannot assure you that we will be able to enforce these contracts.

Although we believe we comply with current PRC regulations, we cannot assure you that the PRC government would agree that our arrangements with Liaoning Sunshine and Beijing Sunshine comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. If the PRC government determines that we are not in compliance with applicable law, it could revoke our business and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenues, require us to restructure our operations, impose additional conditions or requirements with which we may not be able to comply, impose restrictions on our business operations or take other regulatory or enforcement actions against us that could be harmful to our business.

The principal shareholder of Liaoning Sunshine has potential conflicts of interest with us, which may adversely affect our business.

Liaoning Sunshine is 100% owned by Mr. Dan Lou, our chairman. While Mr. Dan Lou has a duty of loyalty and care to us under Cayman Islands law, the potential exists for conflicts of interests between his duties to us and his ownership interests in Liaoning Sunshine. In particular, Mr. Lou may be able to cause our agreements with Liaoning Sunshine to be performed or amended in a manner adverse to us by, among other things, failing to remit payments to us on a timely basis or operating Liaoning Sunshine so as to cause harm to our business. We can provide no assurance that if potential conflicts of interests arise, these conflicts will not result in a significant loss in corporate opportunities for us or a diversion of our resources to Liaoning Sunshine, which may not be in the best interest of our company and our other shareholders.

Liaoning Sunshine and Beijing Sunshine were previously engaged in activities without the necessary approvals. This could subject them to fines and other penalties, which could have a material adverse effect on our business.

Liaoning Sunshine and Beijing Sunshine were historically engaged in business activities without requisite approvals. For example, in order to distribute pharmaceuticals as a subsidiary or investee of a foreign invested enterprise, Liaoning Sunshine and Beijing Sunshine were required to obtain approval from the Ministry of Foreign Trade and Economic Co-operation, or the MOFTEC, which was the predecessor of MOFCOM. While Liaoning Sunshine and Beijing Sunshine had the proper permits from the SFDA, neither of them obtained this MOFTEC approval. In connection with our reorganization in anticipation of this offering, we have disposed of our respective equity ownerships in Liaoning Sunshine and Beijing Sunshine. Beijing Sunshine and Liaoning Sunshine are no longer required to obtain the MOFCOM approval, as each of them is a domestic Chinese company that is currently operating within its

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Risk factors

authorized scope of business and in the process of obtaining relevant licenses. However, the relevant PRC authorities have the authority to impose penalties for their past violations. These authorities may revoke business licenses or the permits granted by the SFDA. Due to the discretionary nature of regulatory enforcements in the PRC, we cannot assure you that Liaoning Sunshine or Beijing Sunshine will not be subject to such type of penalties for its past violations, or that such type of penalties will not have a material adverse effect on our business.

We must receive the approval of the PRC MOFCOM before we may purchase the equity interests in Liaoning Sunshine or Beijing Sunshine. We may not receive MOFCOM approval for such purchase on a timely basis, or at all.

We are party to two purchase agreements, pursuant to which we may acquire 100% of the equity interests in Liaoning Sunshine from Dan Lou, our Chairman and 100% of the equity interest in Beijing Sunshine from Dongmei Su, our chief technology officer, and Shenyang Keweier, a company owned by our employees and former employees. For more details, see “Our corporate structure—Our contractual arrangements with Liaoning Sunshine and Beijing Sunshine—Purchase agreements for the acquisition of equity interest in Liaoning Sunshine and Beijing Sunshine.” In order to complete the acquisition of Liaoning Sunshine or Beijing Sunshine, we must obtain the approval of the MOFCOM. While we anticipate filing for approval of the acquisition in the near future, we expect that we will not obtain the approval of the MOFCOM for several months, if at all.

RISKS RELATED TO THIS OFFERING

There has been no public market for our ordinary shares or ADSs prior to this offering, and you may not be able to resell our ADSs at or above the price you paid, or at all.

Prior to this initial public offering, there has been no public market for our ordinary shares or ADSs. We have applied to have our ADSs included for quotation on The Nasdaq Global Market. Our ordinary shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system. If an active trading market for our ADSs does not develop after this offering, the market price and liquidity of our ADSs will be materially and adversely affected.

The initial public offering price for our ADSs will be determined by negotiations between us, the selling shareholders and the underwriters and may bear no relationship to the market price for our ADSs after this initial public offering. We cannot assure you that an active trading market for our ADSs will develop or that the market price of our ADSs will not decline below the initial public offering price.

The market price for our ADSs may be volatile.

The market price for our ADSs is likely to be highly volatile and subject to wide fluctuations in response to factors including the following:

Ø actual or anticipated fluctuations in our quarterly operating results and changes or revisions of our expected results;

Ø changes in financial estimates by securities research analysts;

Ø announcements of studies and reports relating to the effectiveness or safety of our products or those of our competitors;

Ø announcements of technological or competitive developments;

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Risk factors

Ø any litigation, governmental investigation or enforcement proceedings brought against us by authorities and industry regulators in China or elsewhere;

Ø announcements regarding patent litigation or the issuance of patents to us or our competitors;

Ø addition or departure of our senior management and key research and development personnel;

Ø changes in the economic performance or market valuations of other pharmaceutical or health care companies;

Ø economic, regulatory or political developments in China;

Ø release or expiration of lock-up or other transfer restrictions on our outstanding ordinary shares or ADSs; and

Ø sales of additional ordinary shares or ADSs, or the perception that such sales might occur.

In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also have a material adverse effect on the market price of our ADSs.

Because the initial public offering price is substantially higher than our net tangible book value per share, you will incur immediate and substantial dilution.

If you purchase ADSs in this offering, you will pay more for your ADSs than the amount paid by our existing shareholders for their ordinary shares on a per ADS basis. Also, you will experience immediate and substantial dilution of approximately US$8.820 per ADS (assuming no exercise by the underwriters of their over-allotment option to acquire additional ADSs), representing the difference between the purchase price per ADS in this offering (assumed for these purposes to be US$13.00) and our net tangible book value per ADS as of September 30, 2006, after giving effect to this offering. In addition, you may experience further dilution to the extent that our ordinary shares are issued upon the exercise of stock options.

Substantial future sales of our ADSs in the public market, or the perception that such sales might occur, could cause the price of our ADSs to decline.

Sales of our ADSs or ordinary shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Immediately upon completion of this offering, we will have 150,315,717 ordinary shares outstanding, including 53,900,000 ordinary shares represented by 7,700,000 ADSs. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the U.S. Securities Act of 1933, as amended, or the Securities Act, except to the extent acquired by persons deemed to be our “affiliates.” In connection with this offering, we, our shareholders, and our directors and executive officers have agreed not to sell any ordinary shares or ADSs until the expiration of 180 days after the date of this prospectus, subject to certain exceptions. Any or all of these shares may be released without notice prior to expiration of the applicable lock-up period at the discretion of UBS. To the extent shares are released before the expiration of the applicable lock-up period and sold into the market, the market price of our ADSs could decline.

Dan Lou, our Chairman, and his son, Dr. Jing Lou, our Chief Executive Officer, control a number of shares sufficient to influence corporate actions.

Dan Lou, the Chairman of our Board of Directors, and his son, Dr. Jing Lou, our Chief Executive Officer, together will own or control approximately 11.9% of our outstanding ordinary shares after this offering. The interests of the Lou family may differ from those of our other shareholders, and they may

39

Risk factors

take actions that advance their interests to the detriment of our other shareholders. Acting together, they would have sufficient voting power to influence the outcome of corporate actions submitted to the shareholders for approval and to influence our management and affairs, including the election of our Board of Directors. Chairman Lou is not required to stand for election at any meeting of our shareholders, and therefore serves for an undetermined period of time. In addition, this concentration of ownership may prevent attempts to remove or replace senior management.

Our articles of association contain anti-takeover provisions that could adversely affect the rights of holders of our ordinary shares and ADSs.

Our amended and restated memorandum and articles of association include provisions that could limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. These provisions could also serve to entrench our existing board of directors and management. For example, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares, in the form of ADS or otherwise. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors issues preferred shares, the market price of our ordinary shares or ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be adversely affected. In addition, our articles of association provide that only a third of our board must stand for re-election at any annual meeting.

Holders of ADSs have fewer rights than shareholders and must act through the depositary to exercise those rights.

Holders of ADSs do not have the same rights as holders of our ordinary shares and ADS holders only have such rights as are specified in the deposit agreement, which generally are more restricted than the rights of holders of ordinary shares. Under the deposit agreement, if the vote is by show of hands, the depositary will vote the deposited securities in accordance with the voting instructions received from a majority of holders of ADSs that provided timely voting instructions. If the vote is by poll, the depositary will vote the deposited securities in accordance with the voting instructions it timely receives from ADS holders. In the event of poll voting, deposited securities for which no instructions are received will not be voted. Under our articles of association, the minimum notice period required to convene a general meeting is seven days. When a general meeting is convened, you may not receive sufficient notice of a shareholders’ meeting to permit you to withdraw your ordinary shares to allow you to cast your vote with respect to any specific matter. In addition, the depositary and its agents may not be able to send voting instructions to you or carry out your voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if your ordinary shares are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to call a shareholder meeting.

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Risk factors

You may be subject to limitations on transfers of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings, and you may not receive cash dividends if it is impractical to make them available to you.

We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available to you in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. Also, under the deposit agreement, the depositary will not make rights available to you unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act, or exempted from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.

In addition, the depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary may, at its discretion, decide that it is inequitable or impractical to make a distribution available to any holders of ADSs. For example, the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may decide not to distribute such property, in which event you would not receive such distribution.

We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, you may have less protection of your shareholder rights than you would under U.S. law.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Cayman Islands Companies Law and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, the rights of minority shareholders to institute actions, and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the latter of which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. In addition, some U.S. states, such as Delaware, have more developed and judicially interpreted bodies of corporate law than the Cayman Islands.

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Risk factors

There is uncertainty regarding whether Cayman Islands courts would:

Ø recognize or enforce against us or our directors or officers judgments of courts of the United States predicated upon certain civil liability provisions of U.S. securities laws; and

Ø impose liability against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws or laws of any state in the U.S.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, directors or major shareholders than they would as public shareholders of a U.S. company.

Your ability to bring an action against us or against our directors and officers, or to enforce a judgment against us or them, will be limited because we are incorporated in the Cayman Islands, because we conduct substantially all of our operations in China and because the majority of our directors and officers reside outside of the United States.

We are incorporated in the Cayman Islands, and we conduct substantially all of our operations in China through our PRC subsidiaries. Most of our directors and officers reside, and substantially all of the assets of those persons are located, outside the United States. As a result, it may be difficult or impossible for you to bring an action in the United States against us or against these individuals in the event that you believe that your rights have been violated under U.S. securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands or China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and China, see “Enforceability of civil liabilities.”

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Forward-looking statements

This prospectus contains forward-looking statements. Forward-looking statements convey our current expectations or forecasts of future events. These statements involve known and unknown risks, uncertainties and other factors, including those listed under “Risk factors”, which may cause our actual results, performance or achievements to differ materially from the forward-looking statements that we make.

Forward-looking statements typically are identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions or the negative of these words or expressions. Any or all of our forward-looking statements in this prospectus may turn out to be inaccurate. Our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including:

Ø competition from other domestic and foreign pharmaceutical companies;

Ø our ability to enhance existing products and develop, obtain government approvals for, and market future generations of our existing products and other new products;

Ø the expected market growth for pharmaceutical products in China;

Ø market acceptance of our products;

Ø our expectations regarding hospital or patient demand for our products;

Ø our ability to expand our production, sales and distribution network and other aspects of our operations;

Ø our ability to diversify our product range;

Ø with regard to TPIAO and our proprietary product candidates, our ability to effectively protect our intellectual property;

Ø our ability to identify and acquire new medical technologies, pharmaceutical products and product candidates;

Ø changes in the healthcare industry in China, including changes in the healthcare policies and regulations of the PRC government and changes in the healthcare insurance sector in the PRC; and

Ø fluctuations in general economic and business conditions in China.

The forward-looking statements in this prospectus represent our expectations and forecasts as of the date of this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus. You should read this prospectus and the documents filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different from what we expect.

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Use of proceeds

We estimate that the net proceeds to us from this offering will be approximately US$81.9 million, or US$86.6 million if the underwriters exercise their over-allotment option in full, assuming a public offering price of US$13.00 per ADS, the midpoint of the initial public offering price range as shown on the cover of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

We expect to use the net proceeds from this offering as follows:

Ø approximately US$20 million, which we currently anticipate to be sufficient for the construction of a new GMP-certified manufacturing plant with planned capacity to meet increasing market demand for our products and for certification of the new plant by the European Agency for the Evaluation of Medical Products, or EMEA;

Ø approximately US$5 million, which we currently anticipate to be sufficient for improvements to our existing facilities, primarily relating to process development and optimization, to achieve EMEA certification and improved production yield, which involves the introduction of new production procedures and modifications to our existing quality control procedures, such as adding virus clearance and testing procedures;

Ø approximately US$10 million for conducting clinical trials for our product candidates, of which approximately US$3.4 million is expected to be used to develop our anti-TNF humanized monoclonal antibody product candidate (SSS07), US$1.7 million to develop NuPIAO, US$1.6 million to develop our HPV vaccine (SSS08), US$0.7 million to develop TPIAO for the treatment of ITP, US$0.4 million to develop high dosage EPIAO, US$0.4 million to develop NuLeusin, and approximately US$1.5 million for clinical trials necessary for the EMEA registration of EPIAO. For a detailed description of our product candidates and their clinical trial status, see “Business—Our product portfolio—Our product candidates.” With the exception of SSS08 and SSS07, we expect that the proceeds from this offering will be sufficient to bring these product candidates to market. In addition, we expect the portion of proceeds allocated to SSS07 and SSS08 to be sufficient to fund their research and development costs through phase III of clinical trials. The aggregate additional expenses in relation to the development of these two product candidates, currently estimated to be approximately US$3.0 million to US$5.0 million, are expected to be funded by cash flows from operations or through additional placements of our securities in the future; and

Ø approximately US$10 million for the expansion and enhancement of our sales and marketing network, including the addition of personnel to our oncology-focused marketing team, further penetration in our existing geographical markets and expansion into new target areas in China.

The remainder of the proceeds will be used for in-licensing products, working capital and general corporate purposes.

Accordingly, our management will have broad discretion in applying the net proceeds of this offering. Until we apply the net proceeds of this offering to the above purposes, we intend to invest them in short-term, interest bearing, investment-grade obligations. These investments may have a material adverse effect on the US federal income tax consequences of your investment in our ADSs. In particular, it is possible that we may become a passive foreign investment company for United States federal income tax purposes, which could result in negative tax consequences for you. See “Risk factors—Risks relating to our company—We may be classified as a passive foreign investment company for United States federal income tax purposes, which could subject United States investors in the ADSs or ordinary shares to significant adverse tax consequences” and “Taxation—United States Federal Income Tax Considerations—PFIC Considerations.”

Depending on market conditions at the time of pricing of this offering and other considerations, we may sell fewer or more ADSs than the number set forth on the cover page of this prospectus.

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Dividend policy

We have never declared or paid any dividends on our ordinary shares. We do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance our operations and to expand our business.

Our ability to pay dividends to our shareholders depends substantially on the payment of dividends to us by Shenyang Sunshine. Shenyang Sunshine may pay dividends only out of its accumulated distributable profits, if any, determined in accordance with its articles of association and the accounting standards and regulations in China. In addition, Shenyang Sunshine, as a wholly foreign owned enterprise, is required to provide for a statutory reserve fund by setting aside at least 10% of its after-tax profits each year until such reserve reaches 50% of its registered capital. Allocations to the statutory reserve can only be used for specific purposes and are not distributable to us in the form of loans, advances or cash dividends. Any distributable profits that are not distributed in a given year are retained and available for distribution in subsequent years.

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Capitalization

The following table sets forth our capitalization as of September 30, 2006:

Ø on an actual basis; and

Ø as adjusted to reflect our sale of 7,187,817 ADSs in this offering at an assumed offering price of US$13.00, the midpoint of the initial public offering price range as shown on the cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Please read this information together with:

Ø the section of this prospectus entitled “Management’s discussion and analysis of financial condition and results of operations”; and

Ø the consolidated financial statements and related notes included elsewhere in this prospectus.

	As of September 30, 2006
	Actual				As adjusted
	RMB		US$		RMB(1)		US$
	(in thousands except share data)
Short-term bank loans	44,000		5,567		44,000		5,567
Long-term bank loans	25,000		3,163		25,000		3,163
Shareholders’ equity:
Ordinary shares, US$0.0001 par value per share; 500,000,000 ordinary shares authorized, 100,000,998 shares issued and outstanding(2); 150,315,717 shares issued and outstanding, as adjusted	80		10		119		15
Additional paid-in capital	78,141		9,886		725,446		91,782
Statutory reserves	2,266		287		2,266		287
Accumulated losses	(18,345	)	(2,321	)	(18,345	)	(2,321	)
Total shareholders’ equity(3)	62,142		7,862		709,486		89,763
Total capitalization(3)	131,142		16,592		778,486		98,493

(1) Translations of the net proceeds from US dollars have been made of a rate of RMB7.904 to US$1.00, the noon buying rate as certified for customs purposes by the Federal Reserve Bank of New York on September 29, 2006, the last business day in September 2006. If the translation of net proceeds to Renminbi would have been made at the January 17, 2007 exchange rate of RMB7.771 to US$1.00, net proceeds in Renminbi would have decreased by approximately RMB10.9 million.

(2) Excludes 1,060,000 ordinary shares issuable upon exercise of options granted in October 2006, 15,000 unvested shares granted to an executive of the Company in August 2006 and 10,000,000 ordinary shares reserved for future issuance under our stock option plan.

(3) A US$1.00 increase (decrease) in the assumed initial public offering price of US$13.00 per ADS, the midpoint of the initial public offering price range as shown on the cover of this prospectus, would increase (decrease) each of additional paid-in capital, total shareholders’ equity and total capitalization by approximately US$6.7 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions. In addition, depending on market conditions at the time of pricing of this offering and other considerations, we may sell fewer or more ADSs than the number set forth on the cover page of this prospectus.

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Dilution

If you invest in our ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and the net tangible book value per ADS after the offering. Dilution results from the fact that the per share offering price of our ADSs is substantially in excess of the book value per share after the offering. Our net tangible book value as of September 30, 2006 was US$7.9 million, or US$0.079 per ordinary share and US$0.55 per ADS. Net tangible book value per ordinary share represents total tangible assets less total liabilities, divided by the number of ordinary shares outstanding as of September 30, 2006.

After giving effect to our sale of 7,187,817 ADSs in this offering at the assumed initial public offering price of US$13.00 per ADS and after deducting the underwriting discounts and commissions and estimated offering expenses, our net tangible book value as of September 30, 2006 would have been US$89.8 million, or US$0.597 per ordinary share and US$4.180 per ADS. This represents an immediate increase in net tangible book value of US$0.518 per ordinary share, or US$3.630 per ADS, to existing shareholders and an immediate dilution of US$1.26 per ordinary share, or US$8.820 per ADS, to investors purchasing ADSs in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per ordinary share	US$	1.857
Net tangible book value per ordinary share as of September 30, 2006		0.079
Increase in net tangible book value per ordinary share attributable to this offering		0.518
Net tangible book value per ordinary share after this offering		0.597
Dilution per ordinary share to new investors in this offering	US$	1.260
Dilution per ADS to new investors in this offering	US$	8.820

If the underwriters exercise their over-allotment option to purchase additional ADSs from us in this offering, our net tangible book value per share will increase to US$0.617 per ordinary share, or US$4.320 per ADS, representing an immediate increase to existing shareholders of US$0.538 per ordinary share, or US$3.770 per ADS, and an immediate dilution of US$1.240 per ordinary share, or US$8.680 per ADS, to new investors.

The following table summarizes, as of September 30, 2006, the differences between existing shareholders and the new investors with respect to the number of ordinary shares purchased from us, the total consideration paid and the average price per ordinary share and the average price per ADS, each paid before deducting the underwriting discounts and commissions and our estimated offering expenses.

	Shares purchased			Total capital contribution				Average price per share		Average price per ADS
	Number	Percent		Amount		Percent
	(thousands, except per share and per ADS data)
Existing holders of ordinary shares	100,001	67	%	US$	9,896	9.6	%	US$	0.099	US$	0.693
Investors purchasing ADSs in this offering from our company	50,315	33			93,442	90.4	%		1.857		13.00
Total	150,316	100.0	%	US$	103,338	100.0	%

The discussion and tables above assume no exercise of outstanding stock options. Subsequent to September 30, we granted options to purchase up to 1,060,000 ordinary shares at an exercise price of US$1.60 per share. To the extent that any of these stock options are exercised, there will be further dilution to new investors.

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Dilution

If the underwriters’ over-allotment option is exercised in full, investors purchasing ADSs in this offering from us will hold 34.7% of the total number of our ordinary shares outstanding after this offering.

Each US$1.00 increase (decrease) in the assumed public offering price of US$13.00 per ADS would increase (decrease) our as adjusted net tangible book value by approximately US$6.7 million (changing the dilution in net tangible book value per ADS to investors in this offering), assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same. Depending on market conditions at the time of pricing of this offering and other considerations, we may sell fewer or more ADSs than the number set forth on the cover page of this prospectus.

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Exchange rate information

Our business is primarily conducted in China, and all of our revenues and expenses are denominated in Renminbi. However, for the convenience of the readers, periodic reports made to shareholders will include current period amounts translated into U.S. dollars using a current exchange rate. Unless otherwise indicated, all translations from Renminbi to U.S. dollars for financial data have been made at a rate of RMB7.9040 to US$1.00, the noon buying rate as certified for customs purposes by the Federal Reserve Bank of New York on September 29, 2006, the last business day in September 2006.

The following table sets forth, for the periods indicated, information concerning exchange rates between the Renminbi and the U.S. dollar based on the noon buying rate in the City of New York for cable transfers of Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. The column titled “Average” in the table below is the average of the noon buying rates on the last business day of each month during the year.

	Noon buying rate
	Period End	Average	Low	High
2002	8.2800	8.2770	8.2700	8.2800
2003	8.2767	8.2772	8.2765	8.2800
2004	8.2765	8.2768	8.2764	8.2774
2005	8.0702	8.1940	8.0702	8.2765
2006	7.8041	7.9723	7.8041	8.0702

Source:  Federal Reserve Bank of New York.

The following table sets forth the high and low exchange rates for the periods indicated based on the noon buying rate in the City of New York for cable transfers of Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.

	Low	High
July 2006	7.9690	8.0018
August 2006	7.9538	8.0000
September 2006	7.8965	7.9545
October 2006	7.8728	7.9168
November 2006	7.8303	7.8750
December 2006	7.8041	7.8350
January (through January 17)	7.7752	7.8127

Source:  Federal Reserve Bank of New York.

We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated above, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade.

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Selected consolidated financial data

The following selected consolidated financial data should be read in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and related notes included elsewhere in this prospectus. The selected consolidated financial data presented below for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2005 and 2006, other than the net income per ADS data, are derived from our audited consolidated financial statements included elsewhere in this prospectus, which are prepared in accordance with U.S. GAAP. Results for the nine months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the full year. The historical results are not necessarily indicative of results to be expected in any future period.

Selected consolidated financial data as of December 31, 2001 and 2002 and for the years ended December 31, 2001 and 2002 were omitted because the presentation of such data would require us to incur significant expense and devote extraordinary time.

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Selected consolidated financial data

	Year ended December 31,								Nine months ended September 30,
Statement of income data:	2003		2004		2005		2005		2005		2006		2006
	RMB		RMB		RMB		US$		RMB		RMB		US$
	(in thousands, except per share, share, per ADS and ADS data)
Net revenues(1):
EPIAO	44,787		64,937		84,804		10,729		64,625		72,852		9,217
TPIAO	—		—		2,795		354		844		10,176		1,287
Intefen	22,820		7,680		6,827		864		5,326		3,468		439
Inleusin	4,264		2,738		1,606		203		1,378		822		104
Export	896		1,736		4,990		631		3,187		4,669		591
Others	73		157		991		126		770		585		74
Total	72,840		77,248		102,013		12,907		76,130		92,572		11,712
Cost of revenues	(12,653	)	(15,027	)	(15,497	)	(1,961	)	(12,664	)	(8,779	)	(1,111	)
Gross profit	60,187		62,221		86,516		10,946		63,466		83,793		10,601
Operating expenses:
Research and development	(3,073	)	(3,699	)	(3,196	)	(404	)	(2,311	)	(3,754	)	(475	)
Sales, marketing and distribution	(37,021	)	(38,762	)	(49,205	)	(6,225	)	(35,133	)	(43,448	)	(5,497	)
General and administrative	(15,789	)	(13,600	)	(13,956	)	(1,766	)	(9,378	)	(10,729	)	(1,358	)
Total operating expenses	(55,883	)	(56,061	)	(66,357	)	(8,395	)	(46,822	)	(57,931	)	(7,330	)
Operating income	4,304		6,160		20,159		2,551		16,644		25,862		3,271
Other income/(expense), net
Interest expense, net	(5,748	)	(5,948	)	(5,407	)	(684	)	(4,164	)	(3,078	)	(389	)
Grant income	2,518		6,442		3,771		477		2,763		2,414		305
Others	288		—		(850	)	(108	)	(832	)	(183	)	(23	)
Total other income/(expense), net	(2,942	)	494		(2,486	)	(315	)	(2,233	)	(847	)	(107	)
Income before income tax expense and minority interests	1,362		6,654		17,673		2,236		14,411		25,015		3,164
Income tax expense	(1,201	)	(226	)	(1,762	)	(223	)	(1,668	)	(3,574	)	(452	)
Income before minority interests	161		6,428		15,911		2,013		12,743		21,441		2,712
Minority interests, net of tax	349		182		144		18		153		1		—
Net income	510		6,610		16,055		2,031		12,896		21,442		2,712
Net income per share, basic and diluted	0.01		0.07		0.16		0.02		0.13		0.21		0.03
Weighted average number of shares outstanding	100,000,998		100,000,998		100,000,998		100,000,998		100,000,998		100,000,998		100,000,998
Net income per ADS, basic and diluted (unaudited)	0.04		0.46		1.12		0.14		0.90		1.50		0.19
Weighted average number of ADSs outstanding (unaudited)	14,285,857		14,285,857		14,285,857		14,285,857		14,285,857		14,285,857		14,285,857

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Selected consolidated financial data

	As of December 31							As of September 30,
Balance Sheet Data:	2003		2004	2005		2005		2006
	RMB		RMB	RMB		US$		RMB	US$
	(in thousands)
	(unaudited)
Cash and cash equivalents	10,691		20,151	25,746		3,257		42,813	5,416
Working capital(2)	(1,887	)	11,851	(8,239	)	(1,043	)	37,141	4,698
Total assets	138,220		146,249	150,561		19,049		155,971	19,733
Total bank loans	99,000		99,000	89,000		11,260		69,000	8,730
Total liabilities	119,436		121,038	109,439		13,847		93,328	11,808
Minority interests	829		646	502		63		501	63
Total shareholders’ equity	17,955		24,565	40,620		5,139		62,142	7,862

(1) Net revenues consist of the invoiced value of goods sold, net of value-added taxes, or VAT, discretionary sales returns, trade discounts and allowances.

(2) Working capital is calculated as current assets minus current liabilities.

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Management’s discussion and analysis of financial condition and results of operations

You should read the following management’s discussion and analysis in conjunction with our audited consolidated financial statements for the years ended December 31, 2003, 2004 and 2005 and for the nine months ended September 30, 2005 and 2006, and “Selected consolidated financial data”, in each case together with the accompanying notes, all included elsewhere in this document. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption “Risk factors” beginning on page 11 of this document.

OVERVIEW

We are a leading, fully integrated, profitable biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products primarily in China. Our recombinant, or genetically engineered, protein-based products and product candidates are designed to address large markets with significant unmet medical needs in nephrology, oncology, supportive cancer care, inflammation and infectious diseases. We began operations in 1993. Our principal products are EPIAO ( ) and TPIAO ( ), and our legacy products are Intefen ( ) and Inleusin ( ). Our newest internally developed product, TPIAO, was launched in January 2006. Substantially all of our net revenues and profits have been derived from these four existing products. We conduct our manufacturing and marketing activities through our wholly owned subsidiary, Shenyang Sunshine Pharmaceutical Company Limited, or Shenyang Sunshine.

We conduct our distribution and logistics activities through Beijing Sunshine Bio-product Sales Company, or Beijing Sunshine, and Liaoning Bio-Pharmaceutical Company Limited, or Liaoning Sunshine. Liaoning Sunshine is a PRC limited liability company that is wholly owned by Dan Lou, our chairman. Beijing Sunshine is a PRC limited liability company that is 55% owned by Shenyang Keweier, a company owned by our employees and former employees, and 45% owned by Dongmei Su, our chief technology officer. Liaoning Sunshine holds the licenses to the Tietai Iron Sucrose Supplement and to Baolijin. Beijing Sunshine and Liaoning Sunshine are variable interest entities whose results are consolidated in our financial statements. For more details, see “Financial overview—Consolidation of variable interest entities.”

For the two years ended December 31, 2004 and 2005, EPIAO generated approximately 84.1% and 83.1% of our overall net revenues, respectively. Revenues from EPIAO accounted for 84.9% of our overall net revenues in the nine months ended September 30, 2005, compared to 78.7% for the same period in 2006. The decrease resulted from the launch in early 2006 of our TPIAO, which has rapidly become our second largest revenue contributor.

In 2004 and 2005, approximately 13.5% and 8.3% of overall net revenues were generated by sales of our legacy products Inleusin and Intefen. Beginning in 2004, we began to reduce focus on these products due to increased competition and pricing pressure.

We in-licensed exclusive distribution rights for a prescription iron sucrose supplement product, Tietai, which we began to market in August 2006. Also, in August 2006, we in-licensed exclusive distribution rights for Baolijin, a recombinant human granulocyte colony-stimulating factor, a protein that stimulates

53

production of white blood cells. We are actively pursuing six product candidates in late-, mid- and early-stage clinical and pre-clinical development, including a high dosage EPIAO and a second-generation EPIAO. We also have development programs for a new indication for our TPIAO to treat ITP, a new version of IL-2 for the treatment of metastatic melanoma, a type of skin cancer, and metastatic renal cell carcinoma, a type of kidney cancer, a HPV vaccine for the prevention of cervical cancer and an anti-TNF monoclonal antibody product candidate for treating rheumatoid arthritis, psoriasis, and potentially other inflammatory diseases.

We primarily sell our products in China. We also export a small portion of our products to certain developing countries, consisting of Egypt, Pakistan, Thailand, Brazil, Mexico, and Trinidad and Tobago, where we have been approved to sell these products in compliance with local laws and regulations.

FINANCING HISTORY

Shenyang Sunshine, our predecessor and now our operating subsidiary, was formed in 1993. Since our inception, we have focused our activities on research and product development by funding our research and development projects and business expansion with cash generated from operations, debt financing, equity issuances and various government grants. Our initial capital was contributed by our majority shareholder, Shenyang Keweier Advanced Technology Co., Ltd., or Shenyang Keweier, in form of assets and technology transfer with a small amount of cash funding from our strategic investor, Montgomery Bio-Medicine Inc. in the subsequent few years. In 1995, we began marketing Intefen and initiated the research and development of TPIAO. In 1998, we began marketing EPIAO. From 1997 to 2004, we obtained government grants for a total of approximately RMB15 million and RMB10 million to fund the manufacturing capacity expansion for EPIAO and TPIAO research and development, respectively. We expect that we will be able to fund our growing operations and capital expenditures with our working capital and the proceeds of this offering for the next 24 months.

TRENDS AFFECTING OUR RESULTS OF OPERATIONS

The following trends have historically affected, and we believe will continue to affect, our results of operations.

Continuing pricing pressure

The selling prices of some of our products have declined over time due to increased pricing pressure from industry peers and the price control bidding process in China. For example, the average selling prices of our legacy products and lower dosage EPIAO products have declined over time. We have been able to maintain stable overall average selling prices for higher dosage EPIAO products over the past few years. The stable average prices of our high dosage products, combined with steady demand and the launch of TPIAO have allowed us to maintain net revenue and net income growth, despite intense pricing pressure. We believe our ability to continue to grow our revenues and remain profitable in the face of downward pricing pressure is dependent on the following factors:

Reliance on EPIAO Sales.    Throughout the three years ended December 31, 2005, our net revenue growth has been primarily driven by increased sales of EPIAO. During these periods we have established a market leadership position in China of EPIAO sales, with a market share, according to IMS Health data, of 36% in terms of sales revenue in 2005. In January 2006, we launched our new recombinant human thrombopoietin, or TPO, product, which has become our second largest revenue contributor, with net sales revenue of RMB10.2 million, accounting for 11.0% of our overall sales for the nine months ended September 30, 2006.

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Management’s discussion and analysis of financial condition and results of operations

Management’s discussion and analysis of financial condition and results of operations

Exclusivity.    In some instances, we rely on exclusivity under administrative protection periods to provide us with a competitive advantage. TPIAO for the treatment of chemotherapy-induced thrombocytopenia enjoys exclusivity under an administrative protection period through 2010 and EPIAO for anemia associated with chemotherapy in cancer patients with non-myeloid malignancies enjoys exclusivity under an administrative protection period through 2007.

Competitive bidding.    In each province where we market our products, we participate in a government-sponsored competitive bidding process every year or every few years, during which we and our competitors submit pricing and other product information to local pricing bureaus. The local pricing bureau will, based on the bidding price, quality and market share of the particular product and the reputation of the bidder, select a limited number of products in each product category, which will be the only products of its category permitted for sale in the relevant province or local district.

Product mix.    Our strategy is to alter our product mix to respond to pricing pressures by focusing our sales and marketing resources on our more profitable products. For example, as our legacy product became less profitable, our sales and marketing force focused on improving the sales volumes of our higher dosage forms of EPIAO, such as our 4,000 IU/vial and 10,000 IU/vial EPIAO formulations. We also shift our product mix through the introduction of new products. Launched in January 2006, TPIAO was our second largest revenue generator for the nine months ended September 30, 2006. In addition, we began out-sourcing the marketing efforts of our legacy products, Intefen and Inleusin, to distributors in 2005, thereby improving our overall product mix and sales force efficiency.

Export sales.    In addition to our domestic sales, we also export certain of our products to certain developing countries, consisting of Egypt, Pakistan, Thailand, Brazil, Mexico, and Trinidad and Tobago, where we have been approved to sell these products in compliance with local laws and regulations. We initiated our export business in 2003 to a country in the Middle East through an export company in China. Increasingly in subsequent years, we have worked with local agents in countries in the Middle East, South America and in Southeast Asia. Our export sales primarily consist of sales of EPIAO, Intefen and Inleusin, in the form of raw material in bulk format as concentrated solutions or as finished products. Export sales accounted for 1.2%, 2.2%, 4.9% and 5.0% of our total revenues in 2003, 2004, 2005 and the nine months ended September 30, 2006. While export sales accounted for a small percentage of our net revenues in past periods, we believe, in the long term, growth in export sales may assist us in offsetting pricing pressures in our domestic market.

Different sales channel for different products.    Our internal sales and marketing force consists of 143 marketing and sales representatives focused on hospitals, clinics and dialysis centers in 18 Chinese provinces and major cities including the municipalities of Beijing and Shanghai and the city of Guangzhou. As pricing pressures drive down the average selling price of a product, we may focus our internal sales force on other, more profitable products. For example, since 2004 we have devoted a decreasing amount of resources to the marketing of our two legacy products, Intefen and Inleusin, which had historically been significant contributors to our overall net revenues, as we strategically realigned our internal focus on EPIAO and TPIAO. At the same time, we began outsourcing the sales efforts for the two legacy products to distributors who manage their own sales forces while we reimburse their related costs of selling based on pre-determined percentages of sales and timeliness of collection.

For accounting purposes, we account for the net revenues generated from these indirect selling arrangements on a net basis in our statements of income, in accordance with Emerging Issues Task Force Issue No. 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products), or EITF Issue No. 01-9. Accruals for reimbursement of the related selling costs

55

Management’s discussion and analysis of financial condition and results of operations

to these distributors, based on pre-determined percentages of sales, are recorded as a reduction to net revenues. Therefore, if we primarily utilize distributors to market a product that is experiencing pricing pressures, the decline in revenues from this product will be exacerbated, even though the effect of using primarily distributors will not have a comparable effect on our net income from that product. Accordingly, the aggregate net revenues from sales of our legacy products were approximately RMB27.1 million in 2003 representing 37.2% of the overall net revenues in 2003; RMB10.4 million in 2004, representing 13.5% of the overall net revenues in 2004; RMB8.4 million in 2005, representing 8.3% of the overall net revenues in 2005. The net revenues of the related sales were RMB6.7 million and RMB4.3 million, representing 8.8% and 4.6%, respectively, of the overall net revenues for the nine months ended September 30, 2005 and 2006.

Taxes and incentives

Under the current laws of the Cayman Islands, we are not subject to tax on our income or capital gains. In addition, no Cayman Islands withholding tax will be imposed on payments of dividends by us to our shareholders.

Under the current PRC laws, Shenyang Sunshine is subject to enterprise income tax, or EIT and value-added tax, or VAT. The PRC government has provided various incentives to high technology companies in order to encourage development of the high technology industry. Such incentives include reduced tax rates and other measures. For example, as a high technology company operating in an approved economic-technological development area, Shenyang Sunshine is entitled to an EIT rate of 15%, compared to an EIT rate of 33% applicable to most domestically owned PRC companies. As a “foreign-invested advanced technology enterprise” certified by the relevant Chinese authorities, Shenyang Sunshine was entitled to a further reduced EIT rate of 10% for the year ended December 31, 2005. The reduced EIT rate expired after the year ended December 31, 2005 and Shenyang Sunshine’s EIT was 15% for the year ended December 31, 2006. See “Risk factors—Risks related to our company—Our business benefits from certain government incentives. Expiration of, or changes to, these incentives could have a material adverse effect on our operating results.”

VAT

Our revenues are recorded net of VAT. VAT is charged based on the selling price of our products at a general rate of 17%. In China, pharmaceutical companies are accustomed to having the market sales data referenced to the gross revenues, inclusive of the VAT. For example, the data quoted by IMS Health throughout this document are quoted on gross revenues.

Customer and supplier concentration

Sales to our top ten distributors accounted for approximately 44% of our overall net revenues in 2004, 50% of our overall net revenues in 2005 and 53% of our overall net revenues in the nine months ended September 30, 2006.

Our top five suppliers and the single largest supplier as percentages of our overall cost of revenues were 38.8% and 16.3%, respectively, for the nine months ended September 30, 2006. We primarily source our raw materials from a variety of international suppliers through their local distributors. We do not anticipate any significant fluctuations in price or any significant disruptions in the supply of our raw materials in the near future. We believe that our switching cost for our suppliers is not high because alternative suppliers are readily available.

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Management’s discussion and analysis of financial condition and results of operations

FINANCIAL OVERVIEW

Net revenues and collection cycle

Net revenues consist of the invoiced value of goods sold, net of VAT, trade discounts and allowances, and, in very rare circumstances, discretionary sales returns. In the PRC, VAT on the invoice amount is collected on behalf of tax authorities in respect of the sales of goods. Revenue is stated net of VAT. VAT collected from customers is set off by VAT paid for purchases, with the net amount recorded as a liability in the consolidated balance sheet until it is paid to the authorities.

We sell our products primarily to distributors, who resell them to healthcare providers, including hospitals and dialysis centers. With respect to our principal products, EPIAO and TPIAO, we rely on our own sales force to promote them to the hospitals and other customers. Because of PRC regulations governing the distribution of pharmaceuticals by manufacturers, we direct our customers to purchase our products from designated distributors. We generally sell our products to these distributors at a discount of approximately 8% off the wholesale prices to healthcare providers such as hospitals and dialysis centers. With respect to legacy products, Intefen and Inleusin, we primarily rely on distributors to market, as well as sell, our products with their own sales force. We reimburse the related costs of these distributors’ sales efforts in the form of a negotiated discount. For accounting purposes, we account for the net revenues generated from these indirect selling arrangements on a net basis in our statements of income, in accordance with Emerging Issues Task Force Issue No. 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products), or EITF Issue No. 01-9. Accruals for reimbursement of the related selling costs to these distributors, based on pre-determined percentages of sales, are recorded as a reduction to net revenues.

We generally recognize revenues at the time our products are delivered and the customers take ownership and assume risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed. We are a party to binding purchase agreements with our distributors or with our hospital customers each time we make a sale of our products. Under these purchase agreements, our distributors or hospital customers agree to pay a non-refundable, fixed amount of money per unit of our products over a period of time. Our distributors take ownership of our products when either they themselves or the hospitals designated by them under contracts accept our products.

Allowance for doubtful accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the failure of our customers to make required payments. We review the accounts receivable on a periodic basis and make general and specific allowances when there is doubt as to the collectibility of individual balances. In evaluating the collectibility of our customers’ balances, we consider many factors, including the aging of the receivables, the customers’ past payment history and current credit-worthiness. We are subject to stringent requirements mandated by scrutiny of the local Chinese tax authorities on write-offs of bad debts. For example, bad debts must be aged over three years and sufficient evidence must be provided to prove customers’ inability to make payments. As a result, this creates a substantial time lag between the time when our bad debt provision is made and the removal of such doubtful debt from our books. A substantial portion of the actual write-offs in both 2003 and 2004 were related to doubtful accounts that arose prior to 2002. Substantially all of the accumulated bad debts from earlier periods have now been written off. In recent years we have increased our collection efforts, thereby reducing our bad debt expense. As a result of the increased collection efforts and reduced incidence of bad debts, we consider that no additional allowance for doubtful accounts is needed for the nine months ended September 30, 2006. There was no additional write-off of bad debts during the period as the criteria for write-offs

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Management’s discussion and analysis of financial condition and results of operations

mandated by the local Chinese tax authorities have not yet been met. Our attempt to better control our credit and collection could limit the pace of our expansion into new hospitals, new distributors and sales to second- and third-tier cities. As of December 31, 2003, 2004 and 2005, and September 30, 2006, there were no material amounts of receivables outstanding for more than one year that were not reserved.

Cost of net revenues

Our cost of net revenues includes costs of raw materials, packaging, labor costs and manufacturing overhead. Our manufacturing overhead is primarily comprised of factory staff costs, allocated utilities and depreciation of our production facilities. We expect our per unit manufacturing costs will continue to decrease to the extent that our production yields improve. Labor costs are primarily related to the production of our products. We believe the relatively low cost of labor in the PRC provides us with a significant competitive advantage versus international competitors who are not producing products in the PRC. In the event that we commence operations of the planned new cGMP-certified facility, depreciation charges would increase on a per unit basis in early years before the full deployment of our new plant capacity.

Operating expenses

Our operating expenses include: research and development expenses, sales, marketing and distribution expenses and general and administrative expenses. The key components of our operating expenses are described below.

Research and development expenses.    Our research and development expenses are related to activities such as preclinical studies and clinical trials and consist primarily of:

Ø Direct and allocated salaries and related expenses for personnel;

Ø Fees paid to consultants and clinical research organizations in conjunction with their monitoring our clinical trials and acquiring and evaluating data in conjunction with our clinical trials;

Ø Direct cost of materials used in research and development;

Ø Direct cost of equipment that lacks an alternative future use;

Ø Fees paid to independent research organizations in conjunction with preclinical animal studies;

Ø Allocated depreciation of research equipment and laboratory facilities;

Ø Manufacturing costs of our clinical trial supply quantities for our product candidates;

Ø Costs associated with other clinical development such as seminar hosting and process optimization; and

Ø Costs for seeking European Agency for the Evaluation of Medicinal Products, or EMEA, approval to market our products under the new regulations for biosimilar products.

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Management’s discussion and analysis of financial condition and results of operations

In accordance with U.S. GAAP, we expense both internal and external research and development costs as incurred, other than laboratory equipment with alternative future uses, which we capitalize. Due to the fact that the tax incentive for recording research and development costs in China is minimal, we do not track our internal research and development costs by program in detail and cannot state precisely the costs incurred for each of our research and development programs in the past. However, the following table shows our estimate of the total costs that have been incurred for our two principal products, EPIAO and TPIAO, and others during each of the periods indicated:

	Year ended December 31,			Nine months ended September 30,	Total
Product Name	2003	2004	2005	2006
	(RMB in thousands)
EPIAO	185	531	1,159	1,741	3,616
TPIAO	1,193	1,849	967	719	4,728
Others	1,695	1,319	1,070	1,294	5,378
	3,073	3,699	3,196	3,754	13,722

The table above contains research and development costs attributable to the ongoing clinical trials for expanded indications of our marketed products, as well as preclinical and clinical trials for our product candidates.

Sales, marketing and distribution expenses.    Our sales, marketing and distribution expenses primarily consist of salaries, employee benefits, bonuses and related expenses for our sales and marketing staff. They also include the direct costs attributable to our sales and marketing activities, such as conference and seminar hosting and attendance, travel, entertainment and advertising expenses. We expect our sales, marketing and distribution expenses to increase in absolute dollar amounts in the future as we continue to expand the portfolio of our products. In future periods, we will seek to maintain a relatively stable or moderate improvement in terms of percentage of the sales, marketing and distribution expenses relative to our overall net revenues.

General and administrative expenses.    Our general and administrative expenses primarily consist of salaries and employee benefits, including share-based compensation, as well as depreciation charges of office premises and equipment. We expect our general and administrative expenses to increase in absolute dollar amounts in connection with our continued growth.

Other income/(expense), net

We record our other income net of interest expense and foreign currency exchange losses. Our other income principally comprises interest income, grant income and various non-recurring items.

Government grants

At various stages during the period from 1997 to 2004, we obtained a total of approximately RMB15 million to fund capacity expansion at our Shenyang manufacturing facility to accommodate production of clinical quantities of EPIAO and RMB10 million to fund our research and development efforts relating to our TPIAO program. We do not expect to receive significant additional government grant income for the near future.

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Management’s discussion and analysis of financial condition and results of operations

Grants for the acquisition of property, plant and equipment are reflected as deferred income on our consolidated balance sheet when there is reasonable assurance they will be received and the deferred income is amortized to the statement of income over the useful life of the acquired asset. Grants that compensate us for expenses incurred are recognized as other income in our consolidated statements of income upon the later of award of the grant or in the same period in which the related expenses are incurred.

Consolidation of variable interest entities

Variable interest entities, or VIEs, are those entities in which a company, through contractual and/or other arrangements, bears the risks of, and enjoys the rewards normally associated with ownership of the entities, and therefore the company is the primary beneficiary of these entities. We have adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51, or FIN 46R effective from January 1, 2006. FIN 46R requires certain VIEs to be consolidated by the primary beneficiary of the VIE if equity investors in the VIE do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without subordinated financial support from other parties. The results of VIEs are consolidated in a company’s financial statements from the date the company became the primary beneficiary of the VIE.

The following is a summary of our VIEs:

Beijing Sunshine is a domestic limited liability company which was incorporated in 2000 under the PRC laws. Beijing Sunshine is primarily engaged in the distribution of products manufactured by Shenyang Sunshine. Prior to our reorganization in anticipation of this offering, Shenyang Sunshine held 45% equity interest in Beijing Sunshine while Shenyang Sunshine’s majority shareholder prior to the reorganization, Shenyang Keweier Advanced Technology Co., Ltd., or Shenyang Keweier, held the remaining 55% equity interest in Beijing Sunshine. The registered capital of Beijing Sunshine is RMB1,010,000. Liaoning Sunshine is a domestic limited liability company incorporated in 2000 under the PRC laws. Liaoning Sunshine is primarily engaged in the distribution of products manufactured by Shenyang Sunshine and in-licensed products. Prior to our reorganization in anticipation of this offering, Shenyang Sunshine held 90% equity interest in Liaoning Sunshine and Shenyang Keweier held the remaining 10% equity interest in Liaoning Sunshine. The registered capital of Liaoning Sunshine is RMB15.0 million.

In connection with our corporate reorganization, we transferred our 45% equity interest in Beijing Sunshine to Ms. Dongmei Su, our chief technology officer, in October 2006 and our 90% equity interest in Liaoning Sunshine to Mr. Dan Lou, our chairman, in November 2006. Upon the consummation of these transfers, we also entered into a series of contractual arrangements with Beijing Sunshine and Liaoning Sunshine, through which we bear economic risks with respect to, and derive economic benefits from, their operations. For more details, see “Our corporate structure—Our contractual arrangements with Liaoning Sunshine and Beijing Sunshine.”

The total equity investment at risk is not sufficient to permit either Beijing Sunshine or Liaoning Sunshine to finance its activities without additional subordinated financial support provided by Shenyang Sunshine. Shenyang Sunshine finances each of Beijing Sunshine and Liaoning Sunshine in the form of subordinated trade payables arising from the sales of products from Shenyang Sunshine to Beijing Sunshine or Liaoning Sunshine.

As variable interests in each of Beijing Sunshine and Liaoning Sunshine are predominately held by Shenyang Sunshine, Shenyang Sunshine is deemed to be the primary beneficiary of each of Beijing

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Management’s discussion and analysis of financial condition and results of operations

Sunshine and Liaoning Sunshine under FIN 46R. Accordingly, the financial statements of Beijing Sunshine and Liaoning Sunshine are consolidated in Shenyang Sunshine’s financial statements from the respective dates Shenyang Sunshine became involved with each of Beijing Sunshine and Liaoning Sunshine.

The transfers of our equity interest in Beijing Sunshine and Liaoning Sunshine did not change our requirement to consolidate Beijing Sunshine and Liaoning Sunshine under FIN 46R.

RESULTS OF OPERATIONS

The table below sets forth selected results of operations data expressed as a percentage of net revenues, for the periods indicated. Our historical results of operations are not necessarily indicative of the results for any future period.

	For the year ended December 31,						For the nine months ended September 30,
Statement of Income Data:	2003		2004		2005		2005		2006
	%		%		%		%		%
Net revenues:
EPIAO	61.5		84.1		83.1		84.9		78.7
TPIAO	—		—		2.7		1.1		11.0
Intefen	31.3		10.0		6.7		7.0		3.7
Inleusin	5.9		3.5		1.6		1.8		0.9
Export	1.2		2.2		4.9		4.2		5.0
Others	0.1		0.2		1.0		1.0		0.7
Total	100.0		100.0		100.0		100.0		100.0
Cost of revenues	(17.4	)	(19.5	)	(15.2	)	(16.6	)	(9.5	)
Gross margin	82.6		80.5		84.8		83.4		90.5
Operating expenses:
Research and development	(4.2	)	(4.8	)	(3.1	)	(3.0	)	(4.1	)
Sales, marketing and distribution	(50.8	)	(50.1	)	(48.2	)	(46.2	)	(46.9	)
General and administrative	(21.7	)	(17.6	)	(13.7	)	(12.3	)	(11.6	)
Subtotal	(76.7	)	(72.5	)	(65.0	)	(61.5	)	(62.6	)
Operating margin	5.9		8.0		19.8		21.9		27.9
Other income/(expense), net
Interest income	0.1		0.1		0.1		0.1		0.3
Interest expense	(8.0	)	(7.8	)	(5.5	)	(5.6	)	(3.6	)
Grant income	3.5		8.3		3.7		3.6		2.6
Others	0.4		—		(0.8	)	(1.1	)	(0.2	)
Total other income/(expense), net	(4.0	)	0.6		(2.5	)	(3.0	)	(0.9	)
Income before income tax expense and minority interests	1.9		8.6		17.3		18.9		27
Income tax	(1.7	)	(0.2	)	(1.7	)	(2.2	)	(3.8	)
Income before minority interests	0.2		8.4		15.6		16.7		23.2
Minority interests, net of tax	0.5		0.2		0.1		0.2		—
Net margin	0.7		8.6		15.7		16.9		23.2

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Management’s discussion and analysis of financial condition and results of operations

Nine months ended September 30, 2005 and 2006

Net revenues.    Our net revenues increased by RMB16.4 million, or 21.6%, from RMB76.1 million for the nine months ended September 30, 2005 to RMB92.6 million for the nine months ended September 30, 2006. This increase was primarily attributable to an increase in net revenues of RMB9.3 million from TPIAO, our new product launched in January 2006, which has now become our second

largest revenue contributor. In addition to the revenue contribution from TPIAO, net revenues for the nine months ended September 30, 2006 increased due to greater sales of our leading EPIAO products of RMB8.2 million, or 12.7%, to RMB72.8 million. Our export sales also increased by RMB1.5 million, or 46.5%, to RMB4.7 million for the nine months ended September 30, 2006 compared to the prior period in 2005. The rate of our overall revenue growth was slightly lower in the nine months ended September 30, 2006, compared to 2005, primarily because a government sponsored anti-corruption campaign temporarily limited our ability to expand into new hospitals during the nine months ended September 30, 2006. In the long run, we believe government-imposed reforms will be positive for the pharmaceutical industry and our business.

Cost of net revenues.    Our costs of net revenues were RMB12.7 million and RMB8.8 million for the nine months ended September 30, 2005 and September 30, 2006. The cost reduction of RMB3.9 million, or 30.7%, in the first nine months of 2006 resulted in part from provisions and charges for the first nine months in 2005 such as inventory write-offs and remaining portion of amortization on the intangibles for a total of approximately RMB2.7 million, as compared to the total inventory write-off of RMB1.9 million for the same period in 2006. Another key factor contributing to the cost reduction for the first nine months of 2006 was related to the increased production yield for our EPIAO in 2006. Also, we incurred a higher consumption of raw materials used in a pilot run in the first nine months of 2005 for the purpose of improving the manufacturing process for our EPIAO.

Operating expenses.    Our total operating expenses were RMB46.8 million and RMB57.9 million for the nine months ended September 30, 2005 and 2006. The increase of RMB11.1 million, or 23.7%, in the first nine months of 2006 was primarily due to increased staff costs and bonuses, inclusive of the share-based compensation of RMB2.9 million, for a total of approximately RMB7.1 million as compared to the prior period. In addition, an increase in related advertising, marketing and promotion costs was primarily related to the launch of our TPIAO product and an increase in sales activities in general. Our administrative costs as a percentage of net revenues have remained stable for the nine months ended September 30, 2006 as compared to the same period of the prior year.

Each major category of our operating expenses is further explained below:

Ø Sales, marketing and distribution expenses.    Sales, marketing and distribution expenses were RMB35.1 million and RMB43.4 million for the nine months ended September 30, 2005 and 2006 respectively. The increase of RMB8.3 million, or 23.7%, was primarily attributable to higher staff costs and bonuses in addition to the increase in related advertising, marketing and promotion costs for our TPIAO and higher sales activities in general. However, the sales, marketing and distribution expenses as a percentage of net revenues remained stable at around 47%, generally in line with our overall revenue growth.

Ø General and administrative expenses.    Our general and administrative expenses increased by RMB1.4 million, or 14.4%, from RMB9.4 million for the prior period to RMB10.7 million for the nine months ended September 30, 2006. For the reporting period ended September 30, 2006, the increase was primarily attributed to the one-time share-based compensation of RMB2.9 million which was partly offset by the reduced need for bad debt provision of RMB0.9 million. As a percentage of net revenues, general and administrative expenses decreased from 12.3% for the first nine months in 2005 to 11.6%

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for the first nine months in 2006. Staff costs and depreciation charges were the two largest expense categories and accounted for over 50% of the general and administrative expenses in both periods.

Ø Research and development expenses.    Research and development expenses increased by RMB1.4 million, or 62.4%, from RMB2.3 million for the nine months ended September 30, 2005 to RMB3.8 million for the nine months ended September 30, 2006. Approximately half of the research and development expenses for the first nine months in 2006 were related to EPIAO. The remainder relates to the increased efforts for TPIAO’s Phase IV clinical tests, a one-time licensing fee for the licensing and co-development of anti-TNF alpha monoclonal antibody therapeutics during the third quarter this year and other pipeline products.

Other expense, net.    The decrease in net other expense of RMB1.4 million, or 62.1%, from RMB2.2 million for the nine months ended September 30, 2005 to RMB0.8 million for the nine months ended September 30, 2006 was primarily due to lower interest expense resulting from a decrease in outstanding bank loans of RMB20 million during the first nine months of the year which was partially offset by a small decrease in grant income.

Income before income tax expense and minority interests.    As a result of the foregoing, our income before income tax expense and minority interest increased by RMB10.6 million, or 73.6%, from RMB14.4 million for the nine months ended September 30, 2005 to RMB25.0 million for the nine months ended September 30, 2006 because of the operating leverage previously discussed.

Income tax expense.    Our income tax expense increased by RMB1.9 million, or 114.3%, from RMB1.7 million for the nine months ended September 30, 2005 to RMB3.6 million for the nine months ended September 30, 2006, reflecting (i) our increased income before income tax expense and minority interests and (ii) the increase in non-deductible share-based compensation expenses. Our effective tax rate was 14.3% for the nine months ended September 30, 2006, compared to 11.6% for the nine months ended September 30, 2005.

Net income.    As a result of the foregoing, our net income increased by RMB8.5 million or 66.3%, from RMB12.9 million for the nine months ended September 30, 2005 to RMB21.4 million for the nine months ended September 30, 2006.

Year ended December 31, 2005 compared to year ended December 31, 2004

Net revenues.    Our net revenues increased by RMB24.8 million, or 32.1%, from RMB77.2 million in 2004 to RMB102.0 million in 2005. This increase was primarily attributable to an increase of RMB19.9 million, or 30.6%, in net revenues from EPIAO sales, and to a lesser extent, an increase of RMB4.1 million, or 216%, in our export and other sales in addition to increased net revenues from TPIAO of RMB2.8 million from our pre-launch marketing effort. EPIAO is available in four dosage forms: 2,000 IU/vial, 3,000 IU/vial, 4,000 IU/vial and 10,000 IU/vial. The increase in our EPIAO net revenues was principally attributable to the growth of sales of higher dosage forms. For example, aggregate net revenues from 4,000 IU/vial and 10,000 IU/vial EPIAO increased by approximately 42% from 2004 to 2005. Our revenue growth from sales of the higher dosage forms was partially offset by declines in the average selling prices of our lower-dosage forms of EPIAO.

The decline of RMB2.0 million in aggregate net revenues from our legacy products, Intefen and Inleusin, partially offset our overall revenue growth. Since 2004, we focused our marketing efforts on EPIAO using our self-managed sales and marketing network. For Intefen and Inleusin, which increasingly became subject to intense price competition in the Chinese market, we relied in part on distributors.

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Management’s discussion and analysis of financial condition and results of operations

Under our arrangements with distributors we charge whole-sale prices and reimburse the distributors for sales, marketing and distribution costs incurred. Our net revenues from products sold under agency arrangements were recorded on a net basis after deducting the reimbursements for selling expenses. As a result, net revenues declined from RMB10.4 million in 2004 to RMB8.4 million in 2005 when the sales of these Intefen and Inleusin products were accounted for on net of selling costs basis.

Cost of net revenues.    Our costs of net revenues were RMB15.0 million and RMB15.5 million for the years ended December 31, 2004 and 2005. The cost of net revenues as a percentage of net revenues was higher at 19.5% in 2004, as compared to 15.2% in 2005, primarily caused by two factors: (i) one time inventory write-off in the amount of RMB2.7 million in 2004, relating primarily to the obsolescence of Intefen and Inleusin; and (ii) reduced amortization charges on intangibles in 2005 as compared to the prior year. Discounting the impact of these items, our costs of sales would have remained constant at approximately 13% of net revenues in 2004 and 2005. In general, the direct cost portion of our cost of net revenues, including direct materials, direct labor and other direct costs, accounted for approximately half of the total cost of sales, with the remaining in allocated overhead and depreciation charges.

Operating expenses.    Our total operating expenses were RMB56.1 million and RMB66.4 million for the years ended December 31, 2004 and 2005. The increase of RMB10.3 million, or 18.4%, in 2005 was primarily due to higher sales and marketing costs associated with the overall growth for our EPIAO and the introduction for our TPIAO. Our administrative costs remained stable for both years in absolute dollar terms while represented in terms of the percentage of net revenues decreased from 17.6% in 2004 to 13.7% in 2005. Each major category of our operating expenses is further explained below:

Ø Sales, marketing and distribution expenses.    Sales, marketing and distribution expenses were RMB38.8 million and RMB49.2 million for the years ended December 31, 2004 and 2005 respectively. The increase of RMB10.4 million, or 26.9%, was primarily attributable to costs of seminars and hosting of conferences, as well as a substantially greater advertising effort for our EPIAO and TPIAO.

Ø General and administrative expenses.    Our general and administrative expenses were RMB13.6 million in 2004 and RMB14.0 million in 2005. Our administrative costs were relatively stable for both years in absolute dollar terms while representing a decrease of 17.6% in 2004 to 13.7% in 2005 in terms of the percentage of net revenues.

Ø Research and development expenses.    Research and development expenses were RMB3.7 million in 2004 and RMB3.2 million in 2005. Our research and development expenditures was driven by two major product categories, EPIAO and TPIAO, the latter of which was associated with supporting our clinical development programs, apart from our continued research efforts for other pipeline products.

Other income/(expense), net.    Our other income/(expense), net decreased by RMB3.0 million, from a net income of RMB0.5 million in 2004 to net loss of RMB2.5 million in 2005. The decrease was primarily due to a decrease of RMB2.7 million, or 41.5%, in grant income, from RMB6.4 million in 2004 to RMB3.8 million in 2005, which was caused by a decline of RMB2.4 million in government subsidies for TPIAO and other pipeline products. The decline in grant income was partially offset by a decrease in net interest expenses of RMB0.5 million, or 9.1%, from RMB5.9 million in 2004 to RMB5.4 million in 2005, due to a decrease in the amount of bank loans outstanding.

Income before income tax expense and minority interests.    As a result of the foregoing, our income before income tax expense and minority interest increased by RMB11.0 million, or 165.6%, from RMB6.7 million in 2004 to RMB17.7 million in 2005.

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Income tax expense.    Our income tax expense increased by RMB1.5 million, or 679.6%, from RMB0.2 million in 2004 to RMB1.8 million in 2005, principally reflecting our increased income before income tax expense and minority interests in 2005 compared to 2004. Because Shenyang Sunshine was qualified as a “Hi-Tech Enterprise” in Shenyang Economic and Technology Development Zone, our income was taxed at a 15% rate in 2004. For the year ended December 31, 2005, Shenyang Sunshine received further tax relief as a “foreign-invested advanced technology enterprise”, resulting in an applicable tax rate of 10.0%. Our effective tax rate was 10.0% for the year ended December 31, 2005 and 3.4% for the year ended December 31, 2004. Our effective tax rate in 2004 was much lower than the statutory rate because we had a higher level of non-taxable grant income in 2004.

Minority interests, net of tax.    Our minority interests decreased from RMB0.2 million in 2004 to RMB0.1 million in 2005.

Net income.    As a result of the foregoing, our net income increased by RMB9.4 million or 142.9%, from RMB6.6 million in 2004 to RMB16.1 million in 2005.

Year ended December 31, 2004 compared to year ended December 31, 2003

Net revenues.    Our net revenues increased by RMB4.4 million, or 6.1%, from RMB72.8 million in 2003 to RMB77.2 million in 2004. This increase was primarily attributable to an increase of RMB20.2 million, or 45.0%, in net revenues from EPIAO sales, and to a lesser extent, an increase of RMB0.9 million, or 95.4%, for our export and other category. The increases in our EPIAO sales as well as export sales were substantially offset by the negative impact from the realignment of sales efforts for our two legacy products, Intefen and Inleusin.

Cost of net revenues.    Our costs of net revenues were RMB12.7 million and RMB15.0 million for the years ended December 31, 2003 and 2004. The cost of net revenues increased by RMB2.4 million or 18.8% in 2004, as compared to that in 2003, primarily reflecting a one-time inventory write-off of RMB2.7 million in 2004 relating to the obsolescence of Intefen and Inleusin. Discounting the impact of the inventory write-off, our cost of net revenues would have remained stable at around 14% of our overall net revenues in 2003 and 2004.

Operating expenses.    Our total operating expenses were RMB55.9 million and RMB56.1 million for the years ended December 31, 2003 and 2004. The minor increase of RMB0.2 million, or less than 1%, in 2004 was related to two offsetting factors: (i) a decrease in doubtful accounts of approximately RMB1.2 million included in administrative expenses in 2004; and (ii) an increase in sales, marketing and distribution costs resulted from intense clinical research efforts such as hosting seminars and conference required for clinical trials in 2004.

Both of our sales, marketing and distribution expenses as well as general and administrative costs as a percentage of our overall sales have marginally decreased by 0.6% and 4.1% respectively in 2004 while our general and administrative costs were lower both in terms of absolute dollars as well as for the percentage of total net sales from 21.7% in 2003 to 17.6% in 2004.

Research and development expenses.    Our research and development costs increased by RMB0.6 million, or 20.4%, from RMB3.1 million in 2003 to RMB3.7 million in 2004.

Other income/(expense), net.    Our other income/(expense), net, increased by RMB3.4 million, from a net expense of RMB2.9 million in 2003 to net income of RMB0.5 million in 2004. This increase was primarily attributable to an increase of RMB3.9 million, or 155.8%, from RMB2.5 million in 2003 to

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RMB6.4 million in 2004, in our grant income, principally reflecting increased levels of ad hoc government subsidies we received.

Income before income tax expense and minority interests.    As a result of the foregoing, our income before income tax expense and minority interest increased by RMB5.3 million, or 388.5%, from RMB1.4 million in 2003 to RMB6.7 million in 2004.

Income tax expense.    Our tax expense decreased by RMB1.0 million, or 81.2%, from RMB1.2 million in 2003 to RMB0.2 million in 2004. Due to the absorption of salaries and entertainment by Shenyang Sunshine which are non-deductible for Liaoning Sunshine and Beijing Sunshine, we revamped our overall organization structure to become more tax effective, thereby reducing our income tax expenses in 2004.

Net income.    As a result of the foregoing, our net income increased by RMB6.1 million or 1,196.1%, from RMB0.5 million in 2003 to RMB6.6 million in 2004.

LIQUIDITY AND CAPITAL RESOURCES

Overview

As of September 30, 2006, we had cash and cash equivalents of RMB42.8 million and working capital of RMB37.1 million. For the nine months ended September 30, 2006, our primary sources of funding for both our working capital and our longer-term funding needs have been provided by cash flow from operating activities. Our primary uses of funds during this period have been for the repayment of bank loans for a net amount of RMB20 million using the cash received from a repayment of RMB19.7 million loan to the majority shareholder during the nine-month reporting period. We made purchases of plant and equipment during the nine months ended September 30, 2006 in the amount of RMB2.1 million, a substantial portion of which were related to production equipment.

For the years ended December 31, 2004 and 2005, we funded our working capital and our longer-term capital expenditure needs from the cash flow provided by our operating activities. Our primary uses of funds in 2005 have been for the repayment of bank loans for a net amount of RMB10.0 million and prepayment for the lease of land reserved for our new plant at a cost of RMB9.9 million.

Our capital expenditures declined significantly in 2004 from the amounts spent in 2003 but increased again in 2005 due to increased spending on equipment purchase, renovation costs for our office in Beijing, and to a lesser extent, a settlement payment in relation to the purchase of our office space in Beijing. As a result of our improved operating cash flow, we were able to increase our net cash and cash equivalents for the years ended December 31, 2004 and 2005 and the nine months ended September 30, 2006, despite our loan repayments and investment in our planned new facility.

We had a net working capital deficit, calculated as current liabilities less current assets, in the amount of RMB8.2 million as of December 31, 2005, as compared to net working capital asset of RMB11.9 million as of December 31, 2004. This decrease was mainly due to a reclassification of the remaining principal of a long-term bank loan of RMB30 million, after the repayment of RMB10 million, to short-term bank loan in 2005. Our net working capital increased to RMB37.1 million as of September 30, 2006 from a working capital deficit of RMB8.2 million as of December 31, 2005, of which the increase in working capital of RMB25 million was a result of refinancing short term loans to long term loans. In addition, we continued to generate strong cash flow from our operating activities and a repayment of loan by a shareholder of RMB19.7 million. We expect to continue to generate cash flow from operating activities in the near term.

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The following table summarizes the sources of our cash flows for the periods indicated:

	For the Year Ended December 31,							For the nine months ended September 30,
	2003		2004	2005		2005		2005		2006		2006
	RMB		RMB	RMB		US$		RMB		RMB		US$
	(RMB and US$ expressed in thousands)
Net cash (used in)/provided by operating activities	(16,115	)	7,192	24,839		3,143		14,520		19,419		2,456
Net cash (used in)/provided by investing activities	(24,557	)	2,268	(9,244	)	(1,170	)	(6,790	)	17,648		2,233
Net cash provided by/(used in) financing activities	34,000		—	(10,000	)	(1,265	)	(10,000	)	(20,000	)	(2,530	)

Net cash provided by/(used in) operating activities

Our net cash used in operating activities was RMB16.1 million in 2003 compared to net cash provided by operating activities of RMB7.2 million in 2004 and RMB24.8 million in 2005. Our net cash provided by operating activities was RMB19.4 million in the nine months ended September 30, 2006 compared to RMB14.5 million in the nine months ended September 30, 2005.

The slight increase of RMB4.9 million in cash provided by operating activities from September 30, 2005 to September 30, 2006 reflects an increase in net income of RMB8.5 million and an increase in accured expenses of RMB5.5 million, which was partially offset by increased levels of account receivables, inventories and prepaid expenses and other receivables.

The RMB17.6 million improvement in operating cash flow from 2004 to 2005 reflects an increased level of our net income of RMB9.4 million and an improved collection effort for RMB16.3 million, which were partly offset by payment of RMB9.9 million for the land lease prepayment. The lease prepayment was classified as an operating activity in accordance with U.S. GAAP.

The increase of RMB23.3 million operating cash flow from 2003 to 2004 reflects (i) an improved net income of RMB6.1 million, (ii) a net increase in operating cash flow of approximately RMB23.5 million due to improved payable and accruals turnover which was partly offset by the increase in accounts receivables by RMB11.7 million and (iii) improved inventory turnover.

Net cash provided by/(used in) investing activities

Our net cash used in investing activities was RMB24.6 million in 2003 and RMB9.2 million in 2005, compared to net cash provided by investing activities of RMB2.3 million in 2004. Our net cash provided by investing activities was RMB17.6 million in the nine months ended September 30, 2006 compared to net cash used in investing activities of RMB6.8 million in the nine months ended September 30, 2005.

The fluctuation was primarily due to a RMB22.0 million loan advanced to shareholder Shenyang Keweier in 2003 which was paid down by RMB2.5 million in 2004, with the remaining balance repaid in the nine months ended September 30, 2006. Also, the increased cash outlay in investing activities in 2005 for an amount of RMB9.2 million was for the final payment and renovation for our office in Beijing and purchase of equipment. The improved level of cash flow from investing activities in the nine months ended September 30, 2006 primarily resulted from repayment of a loan by a shareholder and reduced level of capital spending on property, plant and equipment.

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Management’s discussion and analysis of financial condition and results of operations

Our capital expenditure amounted to RMB2.8 million in 2003, RMB0.9 million in 2004, RMB9.2 million in 2005, and RMB2.1 million in the nine months ended September 30, 2006. For more details, see “—Capital Expenditures” below.

Net cash provided by/(used in) financing activities

Net cash used in financing activities was RMB10 million in the nine months ended September 30, 2005, compared to RMB20 million used in financing activities in the nine months ended September 30, 2006 due to continued efforts of paying down our bank loans. In the year 2003, net cash of RMB33 million was provided by net bank borrowing, of which RMB22.0 million was for the purpose of loan to shareholder. The bank borrowings were subsequently repaid in 2005 for RMB10 million and the nine months ended September 30, 2006 for RMB20 million.

We believe that our current cash and cash equivalents, anticipated cash flow from operations and the proceeds from this offering will be sufficient to meet our anticipated cash needs, including planned capital expenditure for our new plant and upgrading existing facilities in Shenyang, other working capital needs for investing in research and development and increasing sales and marketing efforts for our new growth areas at least for the next two years.

Our indebtedness as of the dates indicated was as follows:

	As of December 31,		As of September 30,
	2004	2005	2006
	(RMB in thousands)
Short-term bank loans	69,000	89,000	44,000
Long-term bank loans	30,000	—	25,000
Total debt	99,000	89,000	69,000

As of September 30, 2006, we had outstanding bank loans for a total of RMB69 million. These loans were secured by (1) our land lease right and factory building in Shenyang, office premises in Beijing and the land reserved for our new factory covering RMB35.0 million of our bank loans; (2) a corporate guarantee provided by China Transport Resources Northeast Co., Ltd., or China Transport, for the outstanding portion of RMB25.0 million; and (3) a corporate guarantee provided by third party for the remaining RMB9.0 million.

We do not currently have access to any unused lines of credit or other committed sources of financing.

All of our operations are conducted directly through our wholly foreign-owned subsidiary Shenyang Sunshine. We do not expect to pay dividends in the near future as we plan to use our resources for our growth. However, should we decide to pay dividends, our wholly-owned subsidiary’s ability to pay dividends to us is subject to various restrictions, including legal restriction in the PRC, which permits payment of dividends only out of net income determined in accordance with PRC accounting standards and regulations. In addition, under PRC law, our subsidiary is required to set aside 10% of its net income as reserve funds, until such reserves have reached at least 50% of its respective registered capital. These reserves are not distributable as cash dividends to us for use by us to satisfy our obligations, such as debt incurred at the holding company level.

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CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table sets forth our contractual obligations and commercial commitments as of September 30, 2006:

	Payment due by period
	Total	less than 1 year	1-3 years	3-5 years	after 5 years
	(RMB in thousands)
Short-term bank loans(1)	44,732	44,732	—	—	—
Long-term bank loans(2)	27,566	1,733	25,833	—	—
Guarantees provided on bank loans to a shareholder	10,000	10,000	—	—	—
Guarantee provided on bank loans to a third party(3)	40,000	40,000	—	—	—
Capital Commitments	495	495	—	—	—
Purchase obligations(4)	26,279	9,284	16,995	28,722	—
Total contingent liabilities	149,071	106,244	42,828	28,722	—

(1) Includes interest payable of RMB732,000.

(2) Includes interest payable of RMB2,566,000.

(3) The loan underlying this obligation has been repaid by the borrower.

(4) Represents purchase obligations for Tietai Iron Sucrose Supplement and Baolijin. For more details, see “Business—Our product portfolio—Our principal products—In-licensed products.”

OFF-BALANCE SHEET ARRANGEMENTS

Other than financial guarantees provided to a former shareholder and a third party, we do not have any outstanding derivative financial instruments, interest rate swap transactions, foreign currency forward contracts, or other off-balance sheet arrangements.

CAPITAL EXPENDITURES

The following sets forth our actual and planned total capital expenditure requirements for the periods indicated.

	(RMB in thousands)	(US$ in thousands)
2003	2,816	356
2004	901	114
2005	9,151	1,158
2006 (Planned)	3,000	380
2007 (Planned)	33,300	4,213

Historically, most of our capital expenditures were incurred for purchases of production and office equipment, research laboratory, upgrade for our plant and office renovation. In the nine months ended September 30, 2006, our capital expenditures of RMB2.1 million related primarily to purchases of office and production equipment for our TPIAO and EPIAO products and, to a lesser extent, purchase of automobiles.

The level of our capital expenditure was substantially higher in 2003 and 2005, as compared to 2004. Capital expenditures in 2005 totaled RMB9.2 million, compared to RMB0.9 million in 2004. Approximately half of the increase in 2005 was related to equipment acquired for the production of TPIAO, with the remaining attributable to general office equipment, final payment and renovation cost for our Beijing office and purchases of automobiles.

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Management’s discussion and analysis of financial condition and results of operations

Our future capital requirements include, but are not limited to, upgrading our existing facilities for our research and development and production. Although we are not obligated to meet any absolute minimum dollar spending requirements, our future capital requirements will depend on many factors, including the scope and progress made in building out our new plant in the next two years. The major components of our planned capital expenditures for 2006 include further procurement of production equipment such as a new power generator and quality control machineries, in addition to further upgrading our plant facilities.

We expect to fund our capital expenditure needs with a combination of cash generated from operating activities and proceeds from the global offering in the foreseeable future periods without much need for debt financing. Therefore, we believe that the anticipated higher depreciation charges could be offset to a certain extent by the expected reduction in interest costs.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our operating results and financial condition are based on our audited financial statements of Shenyang Sunshine, which have been prepared in accordance with U.S. GAAP. Our operating results and financial condition are sensitive to accounting methods, assumptions and estimates that underlie the preparation of our financial statements. We base our assumptions and estimates on historical experience and on various other assumptions that we believe to be reasonable and which form the basis for making judgments about matters that are not readily apparent from other sources. Our management evaluates these estimates on an ongoing basis. Actual results may differ from these estimates as facts, circumstances and conditions change or as a result of different assumptions.

Our management considers the following factors in reviewing our financial statements:

Ø the selection of critical accounting policies; and

Ø the judgments and other uncertainties affecting the application of those critical accounting policies.

The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing our financial statements. Our principal accounting policies are set forth in detail in Note 2 to our financial statements included elsewhere in this prospectus. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.

Revenue recognition

Sales of our pharmaceutical products represent the invoiced value of goods sold, net of VAT, trade discounts and allowances and, in very rare circumstances, discretionary sales returns. Revenues from these sales transactions are generally recognized upon delivery, which is considered to have occurred when the customer has taken risks and awards associated with the ownership of delivered products.

For the two legacy products Intefen and Inleusin which we market using third parties sales efforts and reimburse expenses incurred by the agency distributors based on a predetermined percentage of sales and timeliness of collection, we account for revenues from this type of sales channel in accordance with EITF Issue No. 01-9. Under EITF Issue No. 01-9, our cost reimbursement offered to distributors is classified as a reduction in sales revenue. Based on the terms and conditions agreed with the distributors, we accrued and recorded the reimbursements of expenses to the distributors as reduction in revenue, which reduced net sales by RMB493,000 in 2003, RMB2,263,000 in 2004, RMB1,675,000 in 2005 and RMB957,000 in the nine months ended September 30, 2006.

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Research and development costs

We expense research and development costs except for equipment that has alternative future uses in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 2 Accounting for Research and Development Costs. We critically identify any research and development activities that could be objectively measured and recognized research and development activities aimed at the discovery of new products, indications, or betterment of processes. We capitalize the costs of materials and equipment that have alternative uses and amortize them over their useful life. Elements of research and development costs may include direct materials, direct labor and overhead allocation including other related personnel engaged in research and development activities. Expenses relating to new products are charged to the statement of income until such time that we obtain the new medicine certificate. The costs of research and development services such as pre-clinical tests outsourced or contract consulting services for upgrading our facilities are also included. The determination of alternative use requires judgment about the application of developed processes and know-how as well as market acceptance of related products. Different judgments regarding alternative uses could result in a change in the timing and amount of costs capitalized as materials and equipment.

Stock-based compensation expenses

Effective from January 1, 2006, we adopted SFAS No. 123 (revised in 2004), Share-Based Payment, or SFAS 123R. Share-based payment transactions within the scope of SFAS 123R include grants of stock

options, restricted stock, performance-based awards and stock appreciation rights, as well as purchases under employee share purchase plans. These transactions are viewed generally as non-cash compensation awarded to employees, directors and advisors in lieu of cash compensation.

Share-based compensation expenses arose from restricted shares awarded by a principal shareholder in June 2006. For purposes of recording compensation expense, we have treated this grant as if it was made by us. The shares vest upon the earlier of (i) December 1, 2007 or (ii) on the date of our initial public offering. If our initial public offering does not occur by December 1, 2007, the number of vested shares to be granted to each of the grantees will be 156,252. If our initial public offering occurs by December 1, 2007, the number of vested shares to be granted to each of the grantees will be calculated by dividing US$277,778 by the fair value of the initial public offering price per share, and subject to further adjustments based on our market capitalization as of the date of our initial public offering. For more details, see footnote 16 to our consolidated financial statements included elsewhere in this prospectus.

In accordance with SFAS 123R, since the stock awards contain vesting and exercisability conditions other than those based on service, performance or market criteria, the awards have been classified as a liability and included in accrued expenses and other payables in our balance sheet as of September 30, 2006. Accordingly the awards were initially recorded at the estimated fair value on June 1, 2006 and will be remeasured at each future financial reporting date until the number of shares granted are settled. We have estimated the fair value of the awards at approximately RMB4,391,000 (US$556,000) as of September 30, 2006 and have recorded stock-based compensation expense of RMB2,927,000 (US$370,000) in the nine months ended September 30, 2006. We estimated that our initial public offering would take place by December 31, 2006 and the estimated value of our share-based compensation is amortized accordingly. On October 15, 2006, the stock awards were modified and settled with Achieve Well granting a total number of 312,504 fully vested ordinary shares to the two individuals. The stock awards ceased to be liability-classified and were reclassified as equity upon settlement. We plan to reverse the previously recorded stock-based compensation expense of approximately RMB1,050,000 in October 2006 based on the difference between the estimated fair value of the modified awards as of the settlement date and the cumulative compensation expense recognized

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Management’s discussion and analysis of financial condition and results of operations

through September 30, 2006. The fair value of the modified awards as of the settlement date is estimated based on a sale in October 2006 of our ordinary shares by a former shareholder of our company to third-party investors.

In August 2006, we granted 15,000 shares to a senior executive with a one year vesting period. The effect of such award on our financial results is immaterial.

Estimated useful lives and impairment of long-lived assets

We make estimates of the useful lives of property, plant and equipment and intangibles with finite useful lives, in order to determine the amount of depreciation and amortization expense to be recorded during any reporting period. Our total depreciation and amortization expenses in the year ended December 31, 2005 were RMB8.3 million. The useful lives are estimated at the time the assets are acquired and are based on historical experience with similar assets as well as anticipated technological or other changes. If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased depreciation and amortization expense in future periods.

Long-lived assets, including property, plant and equipment and intangible assets with finite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is measured by the asset’s discounted cash flows or market value, if readily determinable. There have been no impairment charges recognized for the three years ended December 31, 2005 and the nine months ended September 30, 2006.

Allowance for doubtful accounts

We evaluate the recoverability of our account receivables based on a combination of factors. We regularly analyze our significant customer accounts, and, when we become aware of a specific customer’s inability to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position, we record a specific reserve for bad debt to reduce the related receivable to the amount we reasonably believe is collectible. We also record reserves for bad debt for all other customers based on a variety of factors, including the length of time the receivables are past due, the financial health of the customer and historical experience. If circumstances related to specific customers change, our estimates of the recoverability of receivables could be further adjusted. In the event that our trade receivables become uncollectible, we record additional adjustments to receivables to reflect the amounts at net realizable value. The accounting effect of this entry would be a charge to income. We believe that the current charges to income are sufficient to reflect the recoverability of our accounts receivable.

Inventories and allowance for obsolescence

We state all inventories at the lower of cost or market value, determined using the weighted average cost method. We provide inventory allowances when conditions indicate that the selling price could be less than cost due to physical deterioration, usage, obsolescence and reductions in estimated future demand. We balance the need to maintain strategic inventory levels with the risk of obsolescence due to varying customer demand levels and changing technology, although this rarely happens. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact our

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Management’s discussion and analysis of financial condition and results of operations

gross margins. Conversely, favorable changes in demand could result in higher gross margins when we sell products.

RECENTLY ISSUED ACCOUNTING STANDARDS

SFAS No. 123 (revised 2004)

In December 2004, FASB issued SFAS No. 123R, Share-Based Payment, which requires companies to measure and recognize compensation expenses for all stock-based payments at fair value. This Statement replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees. This Statement is effective for all interim and annual periods beginning after June 15, 2005. In April 2005, the U.S. Securities and Exchange Commission issued a new rule that amended the compliance dates for SFAS No. 123R until the beginning of their first annual period beginning after June 15, 2005. We have adopted this pronouncement effective from January 1, 2006. The adoption of SFAS 123R on January 1, 2006 did not have any impact on the Company’s financial position as the Company did not have any share-based compensation arrangements at that time.

SFAS No. 151

In November 2004, the FASB issued SFAS No. 151, Inventory Costs—an amendment of ARB No. 43. This Statement requires amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) be recognized as current-period charges. In addition, the Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not expect that the adoption of this statement would have a material effect on our consolidated financial statements.

SFAS No. 153

In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets, and amendment of APB Opinion No. 29. The guidance in APB Opinion No. 29, Accounting for Non-monetary Transactions, is based on the principle that exchanges of non-monetary assets should be measured based on the fair value of the assets exchanged. The guidance in that opinion, however, included certain exceptions to that principle. This Statement amends APB Opinion No. 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This Statement will be effective for non-monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We do not expect that the adoption of this Statement would have a material effect on our consolidated financial statements.

SFAS No. 154

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”. SFAS No. 154 replaces APB Opinion No. 20 “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements”. SFAS No. 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. We do not expect the adoption of SFAS No. 154 to have a material impact on our consolidated financial statements.

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FASB Interpretation No. 48 (“FIN 48”)

In July 2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on the recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective in fiscal years beginning after December 15, 2006. The provisions of FIN 48 are to be applied to all tax positions upon initial adoption, with the cumulative effect adjustment reported as an adjustment to the opening balance of retained earnings. We do not expect the adoption of FIN 48 will have a material effect on our consolidated financial statements.

Securities and Exchange Commission Staff Accounting Bulletin No. 108 (“SAB 108”)

In September 2006, the Securities and Exchange Commission issued SAB 108. This Bulletin prescribes that misstatements in current year financial statements should be quantified based on both the “rollover” approach, which quantifies a misstatement based on the amount of the error originating in the current year income statement, and the “iron curtain” approach, which quantifies a misstatement based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year. This Bulletin requires a misstatement to be adjusted in the current year financial statements if the misstatement quantified using either the rollover approach or the iron curtain approach is material. This Bulletin further requires that, if correcting an error in the current year materially misstates the current year’s income statement, the prior year financial statements should be corrected. This Bulletin is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. The Company does not expect the adoption of this Bulletin to have a material effect on the Company’s consolidated financial statements.

INFLATION

According to the China Statistical Bureau, China’s overall national inflation rate, as represented by the general consumer price index, was approximately 1.2% in 2003, 3.9% in 2004 and 1.8% in 2005. Inflation or deflation has not had a significant impact on our results of operations in recent years.

MARKET RISK AND RISK MANAGEMENT

Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. In the normal course of business, we are routinely subject to a variety of risks, including market risk associated with interest rate movements and currency rate movements on non-U.S. dollar denominated assets and liabilities.

Foreign exchange rate risk

We conduct our business primarily in Renminbi, which is also our functional and reporting currency. The Renminbi is not a fully convertible currency. Although the Renminbi to United States dollar exchange rate has been relatively stable since 1994, fluctuations in exchange rates may adversely affect the value, translated or converted into United States dollars, of our net assets, earnings and any declared dividends.

We are exposed to foreign currency risk primarily as a result of purchases of certain raw materials and equipment from overseas, and export sales.

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Management’s discussion and analysis of financial condition and results of operations

Interest rate risk

The People’s Bank of China has the sole authority in China to establish the official interest rates for Renminbi-denominated loans. Financial institutions in China set their effective interest rates within the range established by the People’s Bank of China. Interest rates and payment methods on loans denominated in foreign currencies are set by financial institutions based on interest rate changes in the international financial market, cost of funds, risk levels and other factors.

We are subject to market risks due to fluctuations in interest rates on our debt. Increases in interest rates will increase the cost of new borrowing. Accordingly, fluctuations in interest rates can lead to significant fluctuations in the fair value of these debt instruments.

75

Our corporate structure

CORPORATE HISTORY

We commenced business operations in 1993 through Shenyang Sunshine Pharmaceutical Co., Ltd., or Shenyang Sunshine, a limited liability company established in China. In anticipation of this initial public offering, we established a holding company structure through the following series of corporate reorganization transactions:

Ø we formed Collected Mind Limited, a British Virgin Islands company, in July 2006;

Ø Collected Mind Limited acquired 100% of the equity interests of Shenyang Sunshine, which was reorganized as a wholly foreign owned enterprise, or WFOE, in July 2006; and

Ø we incorporated 3SBio Inc., an exempted company in the Cayman Islands, which acquired 100% equity interest in Collected Mind in September 2006.

The following diagram illustrates our current corporate structure and jurisdiction of incorporation of each of our affiliated entities:

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Our corporate structure

OUR CONTRACTUAL ARRANGEMENTS WITH LIAONING SUNSHINE AND BEIJING SUNSHINE

Historically, we conducted our manufacturing and marketing activities through our wholly-owned subsidiary, Shenyang Sunshine, and our distribution and logistics activities through Beijing Sunshine Bio-product Sales Company, or Beijing Sunshine, and Liaoning Bio-Pharmaceutical Company Limited, or Liaoning Sunshine. Prior to our reorganization in anticipation of this offering, Beijing Sunshine and Liaoning Sunshine, as investees of a foreign invested enterprise, engaged in distribution of pharmaceutical products without the requisite MOFCOM approvals. For more details, see “Risk factors—Risks related to our corporate structure—Liaoning Sunshine and Beijing Sunshine were previously engaged in activities without the necessary approvals. This could subject them to fines and other penalties, which could have a material adverse effect on our business.” As part of our corporate reorganization, Shenyang Sunshine sold 45% of the equity interest in Beijing Sunshine to Ms. Dongmei Su, our chief technology officer, in October 2006, and 90% of the equity interest in Liaoning Sunshine to Mr. Dan Lou, our chairman, in November 2006. Beijing Sunshine and Liaoning Sunshine are no longer required to obtain the MOFCOM approval, as each of them is a domestic Chinese company that is currently operating within its authorized scope of business and in the process of obtaining relevant licenses. In December 2006 and January 2007, Shenyang Sunshine entered into the following contractual arrangements with Beijing Sunshine and Liaoning Sunshine, respectively, to enable us to maintain control in these two entities:

Business cooperation agreements

Pursuant to the business cooperation agreement among Shenyang Sunshine, Liaoning Sunshine and us, Shenyang Sunshine provides technology support services and market development and consulting services to Liaoning Sunshine, and, as consideration, receives 70% of Liaoning Sunshine’s annual sales revenues as service fees. In addition, Liaoning Sunshine agrees that, without the prior written consent of a majority of our independent directors, it will not increase or decrease its registered capital, declare dividends or make similar payments, make any investment, incur any indebtedness, mortgage or dispose of its material assets, or consolidate or merge with any other entity. Liaoning Sunshine further agrees to distribute only those products that are produced by Shenyang Sunshine, except as otherwise agreed to by a majority of our independent directors. Shenyang Sunshine will be entitled to any intellectual property developed during the term of this contract. Similarly, Beijing Sunshine, Shenyang Sunshine and us entered into a business cooperation agreement on the same terms.

Purchase agreements for the acquisition of equity interests in Liaoning Sunshine and Beijing Sunshine

Pursuant to the purchase agreement between Shenyang Sunshine and Mr. Dan Lou, Mr. Dan Lou granted Shenyang Sunshine an exclusive right to purchase, to the extent permissible under PRC law, his 100% equity interest in Liaoning Sunshine for a purchase price of RMB15 million, an amount equivalent to the registered capital of Liaoning Sunshine, immediately after Shenyang Sunshine obtains the requisite PRC government approval for it to acquire Liaoning Sunshine.

RMB13.5 million of the purchase price pursuant to the purchase agreement was prepaid by Shenyang Sunshine to Mr. Lou shortly after the signing of this agreement in December 2006. The remaining RMB1.5 million will be paid to Dr. Lou at closing. If Shenyang Sunshine fails to obtain the requisite government approval for Shenyang Sunshine to complete the acquisition within ten years, Shenyang Sunshine shall have the right to terminate the agreement and Mr. Dan Lou shall return the prepayment of RMB13.5 million to Shenyang Sunshine.

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Our corporate structure

Similarly, Beijing Sunshine, Shenyang Keweier and Shenyang Sunshine entered into a purchase agreement on the same terms, except that each of Beijing Sunshine and Shenyang Keweier granted Shenyang Sunshine an exclusive right to purchase their respective equity interests in Beijing Sunshine for a purchase price equivalent to their proportionate registered capital in Beijing Sunshine.

Voting Agreements

Pursuant to the voting agreement among Shenyang Sunshine, Mr. Dan Lou and Liaoning Sunshine, Mr. Dan Lou is required to consult with and follow any lawful instruction of Shenyang Sunshine whenever he exercises his rights as Liaoning Sunshine’s shareholder.

Pursuant to the voting agreement among Shenyang Sunshine, Ms. Dongmei Su, Shenyang Keweier and Beijing Sunshine, Ms. Dongmei Su and Shenyang Keweier are required to consult with and follow any lawful instruction of Shenyang Sunshine whenever they exercise their rights as Beijing Sunshine’s shareholders.

Equity Pledge Agreements

Pursuant to the equity pledge agreement between Shenyang Sunshine and Mr. Dan Lou, Mr. Dan Lou pledged all of his equity interests in Liaoning Sunshine to Shenyang Sunshine to guarantee his obligations under the purchase agreement and the voting agreement. If Mr. Dan Lou breaches his contractual obligations, Shenyang Sunshine, as pledgee, will be entitled to certain rights, including the right to purchase the pledged equity interests or sell the same to any third party. Mr. Dan Lou agreed not to dispose of the pledged equity interests or take any actions that would prejudice Shenyang Sunshine’s interest.

Ms. Dongmei Su and Shenyang Keweier entered into a similar agreement with Shenyang Sunshine to pledge their respective equity interests in Beijing Sunshine to Shenyang Sunshine.

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OVERVIEW

We are a leading, fully integrated, profitable biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products primarily in China. Our recombinant, or genetically engineered, protein-based products and product candidates are designed to address large markets with significant unmet medical needs in nephrology, oncology, supportive cancer care, inflammation and infectious diseases. Our principal products are EPIAO ( ) and TPIAO ( ), and our legacy products are Intefen ( ) and Inleusin ( ).

We began operations in 1993 and we believe we are now one of the leading biopharmaceutical companies in China in terms of growth and profitability. Our net revenues were RMB72.8 million in 2003, RMB77.2 million in 2004 and RMB102.0 million in 2005, representing an increase of 32.1% from 2004 to 2005. Our net income was RMB0.5 million in 2003, RMB6.6 million in 2004 and RMB16.1 million in 2005, representing an increase of 142.9% from 2004 to 2005. For the nine months ended September 30, 2006, our net revenues were RMB92.6 million and our net income was RMB21.4 million, compared to net revenues of RMB76.1 million and net income of RMB12.9 million for the nine months ended September 30, 2005.

Our principal marketed products

EPIAO ( )

Launched in 1998, EPIAO is an injectable recombinant human erythropoietin, or EPO, that is used to stimulate the production of red blood cells in patients with anemia and to reduce the need for blood transfusions. Anemia is a condition in which insufficient oxygen is delivered to the body’s organs and tissues. EPIAO is a protein-based therapeutic comparable in structure and function to Amgen Inc.’s Epogen and Kirin Brewery Company Limited’s ESPO.

According to IMS Health, an independent research firm, revenues from all EPO drug sales in China were estimated at over RMB300 million (US$37.5 million) in 2005, representing a 20% compound annual growth rate from 2003. EPIAO, as tracked by IMS Health, has been ranked as the number one EPO drug since 2002 in terms of both units sold and revenues among the foreign and domestic biopharmaceutical companies marketing EPO drugs in China. We have sold over 6.9 million vials of EPIAO since 1999.

EPIAO is approved by the SFDA for three distinct indications: anemia associated with chronic renal failure; red blood cell mobilization, which is the process in which red blood cells are stimulated to proliferate, before, during, and after surgery; and anemia associated with chemotherapy in cancer patients with non-myeloid malignancies, which are cancers that do not originate in the bone marrow or involve myeloid cells, or non-lymphocyte white blood cells found in the bone marrow. We have been granted exclusivity by the SFDA for the manufacturing and marketing of EPIAO for anemia associated with chemotherapy in cancer patients with non-myeloid malignancies under an administrative protection period through September 2007.

We plan to initiate in 2008 clinical trials for NuPIAO, our second-generation EPIAO product candidate. NuPIAO is designed to have a longer half-life relative to our first-generation EPIAO. In addition, we are in late-stage clinical trials for a concentrated high dose (36,000 IU/vial) formulation of EPIAO, which is designed to allow for less frequent administration, benefiting both patients and doctors. We expect to apply for marketing approval of high-dose EPIAO in 2007. If approved, we believe it will be the highest dosage formulation available in the Chinese market.

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TPIAO ( )

We launched TPIAO, our newest internally developed protein-based therapeutic product, in January 2006. This product is a recombinant human thrombopoietin, or TPO, indicated for the treatment of chemotherapy-induced thrombocytopenia, a deficiency of platelets. Platelets are disc-shaped cells in the blood that assist in coagulation and the arrest of bleeding by repairing the walls of blood vessels. TPIAO represents the first protein-based therapeutic of its type approved for thrombocytopenia in China. We have a monitoring period for TPIAO through 2010, during which other pharmaceutical companies are prohibited from manufacturing or importing a similar drug, except those whose applications for clinical trials were approved by the relevant Chinese authority prior to May 2005, the commencement of TPIAO’s monitoring period. We are aware of at least one other Chinese pharmaceutical manufacturer whose application for clinical trials may have been approved by May 2005 and which may be in clinical trials for a TPO-based therapeutic. For the nine months ended September 30, 2006, our total revenues from TPIAO sales were RMB10.2 million, accounting for 11.0% of our overall revenues for this period. We are also conducting a late-stage clinical trial of TPIAO for the treatment of idiopathic thrombocytopenic purpura, or ITP, an immune system disorder in which the body perceives platelets as foreign and destroys them.

Our legacy products

In addition to EPIAO and TPIAO, we market two other protein-based therapeutics that had historically been significant contributors to our overall revenues. Due to unfavorable pricing and increased competition, we refocused our sales and marketing efforts in early 2004, and our legacy products are now marketed primarily by distributors.

Intefen ( ).    Intefen is our recombinant interferon alpha-2a product. Intefen is indicated for the treatment of carcinomas of the lymphatic or hematopoietic system, such as lymphoma and leukemia, and viral infectious diseases, such as hepatitis C. We launched Intefen in the Chinese market in 1995.

Inleusin ( ).    Inleusin is our recombinant human interleukin-2, or IL-2, product. Inleusin is indicated for the treatment of renal cell carcinoma, the most common form of kidney cancer, metastatic melanoma, a type of skin cancer, and thoratic fluid build-up caused by cancer and tuberculosis. Inleusin is designed to stimulate the immune system in order to fight cancer and infectious diseases. We launched Inleusin in the Chinese market in 1996.

Our in-licensed products

Tietai Iron Sucrose Supplement ( ).    Tietai Iron Sucrose Supplement, an intravenously administered prescription drug that is designed to treat anemia associated with iron deficiency, is indicated for patients with end-stage renal disease requiring iron replacement therapy. We in-licensed five-year exclusive PRC distribution rights for this product from Shenyang Borui Pharmaceutical Company Limited in May 2006. Tietai Iron Sucrose Supplement was launched in China in 2005, and we believe it will be complementary to our EPIAO franchise.

Baolijin ( ).    Baolijin is our in-licensed recombinant human granulocyte colony-stimulating factor, or G-CSF, product. G-CSF is a protein that stimulates production of white blood cells. For cancer patients undergoing chemotherapy, the ability to produce red blood cells, white blood cells and platelets is severely compromised. Baolijin is indicated for the treatment of neutropenia, a condition associated with chemotherapy and characterized by low levels of neutrophils, a type of white blood cell important for fighting infections. In August 2006, we in-licensed exclusive PRC distribution rights for Baolijin from

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Chengdu Biological Institute for a period of five years. We believe that the addition of Baolijin to our product portfolio will complement the marketing of EPIAO and TPIAO for treatment of cancer patients receiving chemotherapy.

Licenses to Tietai Iron Sucrose Supplement and to Baolijin are held by Liaoning Bio-Pharmaceutical Company Limited, or Liaoning Sunshine, our variable interest entity.

Export sales

We currently market our products through distribution agreements with local agents in several developing countries, consisting of Egypt, Pakistan, Thailand, Brazil, Mexico and Trinidad and Tobago. Export sales accounted for 1.2% in 2003, 2.2% in 2004, 4.9% in 2005 and 5.0% in the nine months ended September 30, 2006, of our total net revenues.

Our product pipeline

We focus our research and development efforts on both novel and validated protein-based therapeutics for the treatment of diseases in the areas of nephrology, oncology, supportive cancer care, inflammation and infectious diseases. Our product pipeline, which we expect will be a key contributor to our future growth, consists of six product candidates in various stages of development. We employ a market-driven approach to our research and development efforts, and our team utilizes the latest molecular biology and biochemical techniques and technologies to develop promising product candidates. Our diversified product pipeline includes a number of next-generation protein-based therapeutics including NuPIAO, our second-generation EPIAO product candidate; NuLeusin, our next-generation Inleusin product candidate; TPIAO for the treatment of ITP; a human papilloma virus, or HPV, vaccine for the prevention of cervical cancer; and an anti-TNF humanized monoclonal antibody product candidate for the treatment of rheumatoid arthritis and other autoimmune diseases. We believe that each of these product candidates, if successfully developed and approved, would address significant market opportunities. We are required to conduct extensive preclinical and clinical trials in order to generate safety and efficacy data to support a filing for approval by the SFDA.

According to Kalorama Information, a third-party independent research firm, the total worldwide market for protein-based therapeutics increased from US$25 billion in 2001 to US$51 billion in 2005, and is expected to reach US$87 billion in 2010. Kalorama Information also estimates that, in 2005, sales in the U.S., the largest European markets (including the UK, Germany, France, Italy and Spain) and Japan accounted for 61%, 20% and 7%, respectively, of the worldwide sales of protein-based therapeutics. This implies that 2005 sales of protein-based therapeutic products from the rest of the world, including China, Brazil, India and Russia, accounted for 12% of the worldwide market.

We maintain a sales and marketing force in 18 provinces and major cities in China, including the municipalities of Beijing and Shanghai and the city of Guangzhou. Our principal products are marketed by our 143 sales and marketing professionals and sold by our network of approximately 80 distributors to healthcare providers including, based on our internal estimates, approximately 800 hospitals, clinics and dialysis centers. Our internal sales and marketing staff details our principal products to physicians and hospital administrators and, as required by PRC laws, our distributors are engaged to contract with our customers for the sale of our principal products to physicians and hospitals. In addition, our legacy products Intefen and Inleusin are marketed, as well as sold, by distributors. Our sales force in China benefits from over ten years of experience in marketing protein-based therapeutics. As a result of our history as a provider of therapeutics to the Chinese market, we believe our Shenyang Sunshine brand is widely recognized throughout the PRC for quality and reliability.

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We conduct on-site, bulk manufacturing, finishing and packaging activities for EPIAO, TPIAO, Intefen and Inleusin at our 3,000 square meter Shenyang, China facility. We also manufacture our products and product candidates for clinical trials at this facility. Our Shenyang facility was re-certified in 2005 in accordance with Chinese current Good Manufacturing Practices, or cGMP, and our cGMP certificate is valid for five years until 2010. We plan to expand our plant in Shenyang to increase our manufacturing capacity, and further take advantage of our favorable cost structure.

OUR COMPETITIVE STRENGTHS

We believe that our principal competitive strengths include the following:

Leading market share for EPO in China

According to IMS Health, our flagship product, EPIAO, accounted for 37% of the Chinese EPO market in terms of sales revenue and 28% in terms of units sold in the six months ended June 30, 2006, with sales primarily generated from our initially approved renal indication. Additionally, EPIAO has ranked number one in the Chinese EPO market in terms of units sold and revenues since 2002. We believe that EPIAO’s leading market position is attributable to a high level of quality, efficacy, and reliability. We have more than eight years of post-marketing experience to date with EPIAO and have sold approximately 6.9 million vials from 1999 to September 30, 2006, enabling us to generate a brand that we believe is well-recognized by the medical community. We have been marketing EPO in the oncology and surgical settings in China longer than any other market participant.

Diverse portfolio of marketed products and product candidates targeting the nephrology and oncology markets

We market a diverse portfolio of internally developed protein-based therapeutics, consisting of EPIAO, TPIAO, Intefen and Inleusin. In addition, we market Tietai Iron Sucrose Supplement and Baolijin, our G-CSF product, both of which we in-license. EPIAO, TPIAO and Baolijin address the oncology market in China and represent a significant commercial opportunity for us. In addition to these marketed products, we have a diversified late-, mid-, and early-stage pipeline of product candidates that include expanded indications and enhanced second generation versions of our existing products, as well as product candidates which address other market opportunities, such as cervical cancer and rheumatoid arthritis.

Proven research and development capabilities

We have developed and commercialized four protein-based therapeutics in China. As of September 30, 2006 our research and development team consisted of 20 research personnel and medical professionals, seven of whom have extensive experience in the healthcare and biotechnology research fields, including experience working in research institutions and hospitals. We have had a productive working relationship with the SFDA to date, which we feel is important when seeking regulatory approvals for therapeutics in China.

Nationwide sales and marketing network

Over the years, our sales force and high quality products have allowed us to establish our Shenyang Sunshine brand and enabled us to become one of the leading biotech companies in China. We maintain sales and marketing forces in 18 provinces and major cities in China including the municipalities of Beijing and Shanghai and the city of Guangzhou. Our network of 143 sales and marketing professionals and approximately 80 distributors market our principal products to healthcare providers including, based on our internal estimates, approximately 800 hospitals, clinics and dialysis centers. We rely on the efforts of our sales and marketing professionals to build and strengthen our relationships with healthcare

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providers such as hospitals and rely on our relationships with China’s leading pharmaceutical distributors to make sure the product reaches our customers on time. Our sales force has formed strong relationships in our key target markets. We believe we have an established reputation that is synonymous with quality and reliability.

High-quality proprietary manufacturing processes with significant cost advantages

Since our inception, we have established a base of proprietary manufacturing expertise, trade secrets and know-how for producing recombinant proteins expressed either in E. Coli or mammalian cells, especially for Chinese Hamster Ovary, or CHO, cell-based manufacturing. In September 2001, we were certified as the “Model Manufacturing Base for Achievement under the National Advanced Technology Research and Development plan” by the Ministry of Science and Technology of the PRC. We believe our Chinese cGMP-certified manufacturing facility as well as our voluntary decision to apply European Pharmacopoeia standards, an authoritative collection of manufacturing standards for medicines, have enabled us to produce high-quality products while our optimized manufacturing processes have allowed us to establish significant cost advantages, enabling us to price our products competitively while maintaining favorable margins. The significantly lower costs of raw materials and wages in China relative to other countries allow us to maintain our cost of operations at a level that we believe gives us a competitive advantage over overseas-based companies.

Operational efficiency and a track record of growth and profitability

Our low cost base translates into greater operational efficiency and higher profit margins as we increase sales volumes of our products. We have experienced rapid growth in our recent history. In 2004, our gross margin was 80.5% and net profit margin was 8.6%. In 2005, our gross margin was 84.8% and net profit margin was 15.7%. For the nine months ended September 30, 2006, our gross margin was 90.5% and net profit margin was 23.2%.

Experienced and market-oriented management team

Our management team has extensive experience in China’s biopharmaceutical industry and a solid understanding of Chinese and international industry best practices. Certain members of our senior management have in-depth knowledge relating to the regulatory framework in China, as well as the international market, and are experienced in managing fast-growing and entrepreneurial enterprises. The 17 members of our research team have in the aggregate approximately 63 years of service at our company and 121 years of industry experience. The members of our marketing team have in the aggregate approximately 39 years of service at our company and 95 years of industry experience.

OUR STRATEGY

Our goal is to become the leader in the research, development, manufacture and commercialization of protein-based therapeutics in China and to continue to advance our drugs to international markets. The key elements of our strategy are to:

Maximize sales of our lead product, EPIAO, in the Chinese market

We plan to continue to utilize our established sales, marketing and distribution platform to maintain our leadership in the EPO nephrology market and to further penetrate the markets for our other approved indications in oncology and surgery, to which we only recently began marketing. These indications currently represent a small portion of our sales, but we believe they could be a strong contributor to our future growth. We believe that our efforts to educate oncologists and surgeons on the applications of EPIAO in these end markets will allow us to grow sales of our flagship product.

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Maximize sales of our other existing products in the nephrology and oncology markets in China

We believe that there is significant opportunity to maximize sales of our other approved products, including TPIAO, and our in-licensed products, including Tietai Iron Sucrose Supplement and Baolijin,

within our specialized focus on nephrology and oncology. We were the first to market TPO in China, launching TPIAO during the first half of 2006 by utilizing the strengths of the Shenyang Sunshine brand and our existing sales and marketing network. We plan to continue to increase brand awareness and the market penetration of our existing products in China by expanding our marketing efforts and our distribution network, continuing to build relationships with hospitals and physicians and potentially entering into additional in-licensing arrangements.

Develop and commercialize candidates in our product pipeline and new products that address unmet medical needs in commercially attractive markets

We are developing a diversified portfolio of late-, mid- and early-stage protein-based product candidates. Our pipeline includes novel product candidates in addition to new enhanced versions of our existing products, and expanded indications for our currently marketed products. Our early stage programs are focused on significant commercial opportunities, including rheumatoid arthritis and HPV infection. We have a strong track record of successful product approvals and extensive knowledge of the SFDA approval process. With relatively rapid regulatory approval processes and our low manufacturing costs, we have been able to bring many of our products to market in a more cost-effective manner in China than in the United States or in the European Union. In addition, we intend to continue to evaluate and develop additional product candidates to expand our pipeline where we perceive a significant unmet medical need and attractive commercial potential. Having had four protein-based therapeutics successfully approved to address the nephrology, oncology and surgical markets, we may also expand into other attractive areas such as immunosuppression and metabolism, and the development of additional monoclonal antibodies.

Expand our sales and marketing network

We believe that there is significant market potential for our products and that our historical product sales represent only a limited penetration of the overall potential market in China. We plan to continue to increase the footprint of our sales and marketing presence in China by selectively expanding into targeted areas such as the Provinces of Hebei, Shanxi and Anhui, and the Municipality of Tianjin and further penetrate leading hospitals both within and outside our existing network to benefit from positive trends in the PRC government’s new health insurance policies as well as increased per capita healthcare spending. We also plan to create focused sales forces in the nephrology and oncology areas to increase penetration of our key products in their respective end markets.

Continue to expand beyond the Chinese domestic market

We intend to continue to develop and expand our manufacturing capabilities in a cost-effective manner to meet growing demand for our products initially in China and gradually abroad. While we believe we currently have the capacity to meet our near-term anticipated production needs, we expect to augment our manufacturing facilities to comply with European current GMP standards in order to meet our anticipated growth and demand from our non-domestic business. Additionally, we intend to use our expertise in protein-based therapeutics to establish processes for the production of monoclonal antibody drugs.

We currently market our products through distribution agreements with local agents in several developing countries, consisting of Egypt, Pakistan, Thailand, Brazil, Mexico and Trinidad and Tobago,

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where we have obtained marketing approvals in compliance with local laws. The procedure to obtain such marketing approvals in most of these countries involves, among other things, conducting clinical trials and obtaining the local GMP certification. We plan to seek approval from the European Agency for the Evaluation of Medicinal Products, or EMEA, to market our products under the new regulations for biosimilar products and continue to expand our international presence opportunistically, initially with a focus on the European Union and additional countries where we feel there is sufficient commercial opportunity. We plan to continue to establish relationships with distribution partners in these foreign markets to sell our products. Presently we do not anticipate building a global sales and marketing infrastructure.

Acquire or in-license new technologies, products or companies

We continuously seek attractive product candidates and innovative technologies to in-license or acquire. We intend to focus on product candidates that would be marketed through our existing sales infrastructure and that represent large potential market opportunities. We believe that by pursuing selective acquisitions of companies or technologies in businesses that complement our own, we will be able to enhance our competitiveness and strengthen our market position. We believe that our relationships with many industry participants and our knowledge of, and experience in, the biotechnology industry in China allow us to better understand industry trends, technological developments and practical applications. We believe that this expertise will assist us in making acquisition decisions and position us to be a more desirable partner to companies whose products we may add to our portfolio.

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OUR PRODUCT PORTFOLIO

Our principal products target large markets with significant unmet medical needs in nephrology, oncology, supportive cancer care, inflammation and infectious disease. We are currently focused on expanding the indication for our marketed products, developing next generation, enhanced versions of our marketed products, and bringing novel protein-based therapeutics to market.

The table below summarizes our products and product candidates:

Product Name	Indication (s)	Status					Upcoming Milestone*
		Preclinical	Phase I	Phase II	Phase III	Marketed
EPIAO (EPO)	Anemia associated with renal failure or chemotherapy, peri-operative blood cell mobilization
NuPIAO (EPO)							Initiate clinical trials in 2008
High dosage EPIAO (EPO)							Phase III data in 2007
TPIAO (TPO)	Thrombocytopenia
TPIAO (TPO)	ITP						Phase III data in 2008
Intefen (Interferon alpha-2a, IFN)	Cancer, Viral infectious diseases
Inleusin (IL-2)	Renal cell carcinoma, Metastatic melanoma, Tuberculosis
Nuleusin (IL-2)	Renal cell carcinoma, Metastatic melanoma						Phase III data in 2007
HPV vaccine (SSS08)	Cervical cancer
Anti-TNF mAb (SSS07)	Rheumatoid arthritis
Tietai (Iron Sucrose Supplement)	Iron-deficiency associated with anemia
Baolijin (G-CSF)	Neutropenia

* The development and commercialization of our product candidates are subject to numerous risks and uncertainties, as noted in “Risk factors.” As a result, the actual timing of the indicated milestones could be very different than that indicated in the table.

Phases I, II and III described in the table above are comparable to the similar phases of clinical trials involved in obtaining marketing approval from the U.S. Food and Drug Administration. Under the Administrative Measures on the Registration of Pharmaceutical Products promulgated by the SFDA, the three phases refer to:

“Phase I”: Evaluation of safety.

“Phase II”: Evaluation of safety, dosing and efficacy.

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“Phase III”: Larger scale evaluation of safety and efficacy.

Our principal products

EPIAO ( )

EPIAO, our flagship product, is an injectable recombinant human EPO that stimulates the production of red blood cells, cells that transport oxygen from the lungs to all cells of the body. EPO is a naturally occurring growth factor that is normally produced in healthy kidneys and regulates production of red blood cells. Adequate amounts of EPO are required to produce a sufficient number of red blood cells. A significant reduction in the number of circulating red blood cells results in anemia, a condition in which insufficient oxygen is delivered to the body’s organs and tissues. For example, patients with chronic renal failure suffer from anemia because they do not produce sufficient amounts of EPO. Anemia can also be a side effect of chemotherapy treatments for patients, sometimes forcing patients to discontinue chemotherapy.

Kalorama Information estimated the worldwide market for EPO reached approximately US$10.8 billion in 2005. Kalorama estimated that in 2005, sales in the U.S., certain European countries including the UK, Germany, France, Italy and Spain, and Japan accounted for 61%, 20% and 7%, respectively, of the worldwide sales of protein-based therapeutics. According to IMS Health, revenues from all EPO drug sales in China were estimated at over RMB300 million (US$37.5 million) in 2005, representing a 20% compound annual growth rate, or CAGR, from 2003 to 2005.

EPIAO is utilized as a replacement protein therapy to restore EPO to normal, or physiological levels, stimulate red blood cell production and relieve the symptoms of anemia, thereby improving the quality of life for patients with renal disease and cancer in addition to reducing the need for continuous blood transfusions. Our EPIAO products are available in four different strengths (2,000 IU/vial, 3,000 IU/vial, 4,000 IU/vial and 10,000 IU/vial) and approved for three distinct medical indications. To date, no other EPO product has been approved in China for all three indications.

Ø In 1998, we received approval for the first indication, anemia associated with chronic renal failure;

Ø In 2000, we received approval for the use of EPIAO to mobilize red blood cell in patients before, during and after surgery to facilitate a quicker recovery and reduce the need for blood transfusion; and

Ø In 2001, we received approval for anemia associated with chemotherapy in cancer patients with non-myeloid malignancies. These patients become anemic as a side effect of chemotherapy and as a general complication associated with cancer. For this indication, on September 6, 2001 we were also granted a six-year exclusivity under an administrative protection period ending in September 2007 during which other pharmaceutical companies are prohibited from importing or marketing a similar product.

We were among the first biotechnology companies to introduce a recombinant form of EPO in China. According to IMS Health, our EPIAO was the most widely used recombinant EPO in China in each of the seventeen quarters ending with the second quarter of 2006. EPIAO is on the National Reimbursement List for the treatment of anemia associated with chronic renal failure and for the treatment of anemia associated with chemotheraphy in non-myeloid malignancies in certain provinces and cities such as Hubei Province and Shanghai Municipality. According to IMS Health, our EPIAO has ranked number one in the Chinese EPO product market in terms of units sold and revenues since 2002. In the six months ended June 30, 2006, EPIAO accounted for 37% of the Chinese EPO market in terms of sales revenue and 28% in terms of units sold, with sales primarily generated from our initially approved renal indication. Since 1999, 6.9 million vials of EPIAO have been administered to patients.

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We are in the process of conducting a Phase III clinical trial for our high dose 36,000 IU/vial formulation of our first generation EPIAO, which we expect to be the first of its kind in China. In addition, we plan to initiate in 2007 clinical trials for our second-generation EPIAO. We have designed this product candidate to have a longer half-life versus our first generation EPIAO that is, in this aspect, comparable to Amgen’s Aranesp. We plan to file a patent application in China for our second-generation EPIAO.

We believe our competitive advantages in marketing our EPIAO lie in the following areas:

Focus on quality.    We implemented our proprietary process technology and developed quality assurance and quantity control system in compliance with the Chinese GMP standards. Since 2004, we have applied the European Pharmacopoeia (2002 version) standards, which we believe are higher production quality standards than those required for domestic pharmaceutical manufacturers.

Broadest applications and specifications.    Since 2002, our EPIAO products have been the only EPO products approved for each of the following three indications: anemia associated with chronic renal failure; red blood cell mobilization; and anemia associated with chemotherapy in cancer patients. We also provide our EPIAO products in four dosage forms to meet the needs of our patients and their doctors. We expect to apply for marketing approval of an additional high dosage form in 2007 which we believe, if approved, will be the highest approved dosage formulation of an EPO drug on the Chinese market.

Competitive pricing.    Our economy of scale, favorable cost structure and experience in manufacturing afford us the opportunity to competitively price EPIAO while still maintaining attractive margins. In order to secure and maintain a large customer base, we have been pricing our EPIAO products at a level less than one-third of their comparables produced overseas.

Strong brand awareness.    We believe our sustained marketing efforts with medical practitioners and our focus on pre-sale and post-sale services have established EPIAO and Shenyang Sunshine as well-recognized and well-received brands. We have been implementing a focused marketing strategy since launching the product in 1998. As part of this strategy, our sales representatives promote our products to doctors by visiting hospitals to better educate physicians and develop brand awareness. In 2007, we plan to create distinct sales forces in the nephrology and oncology areas to increase penetration in these end markets.

Clinical Trials

In 1997, we completed a multicenter, randomized clinical trial with EPIAO in 194 end-stage renal disease patients. This trial compared the efficacy of our product to that of Epogen, Amgen’s recombinant EPO. The data demonstrated that our product was biologically equivalent to Epogen, as demonstrated by comparable restoration of hematocrit and hemoglobin levels, indicators of red blood cell reemergence. Additionally we did not observe any severe adverse reactions. We obtained approval from a branch of the Ministry of Health, or the MOH, a predecessor of the SFDA, in November 1997 and launched EPIAO in China in August 1998.

In 2001, we completed a multicenter, randomized, double blind, placebo-controlled clinical extension trial to evaluate the efficacy of EPIAO in 121 cancer patients with anemia resulting from their chemotherapy regimens. The primary endpoint of this clinical trial was restoration of hemoglobin and hematocrit levels. Patients received either EPIAO or a placebo three times a week for 12 weeks. The results demonstrated that EPIAO was effective in restoring hemoglobin and hematocrit levels in this patient setting. We obtained SFDA approval for this indication in September 2001 and launched EPIAO

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for this indication in December 2002. When we obtained the SFDA approval in September 2001, we were also granted a six-year administrative protection period for this indication of EPIAO. During the protection period, other pharmaceutical companies are prohibited from manufacturing EPO drugs for the same indication or adding the same indication on the label of any existing drugs, pursuant to the Regulations for New Drug Protection and Related Technology Transfer.

In 2000 we completed a multicenter, randomized placebo controlled extension trial in 105 patients undergoing major orthopedic surgery to evaluate the efficacy of EPIAO in mobilization of red blood cells in patients undergoing surgery. Typically, these patients require allogeneic blood transfusion, where blood comes from a donor instead of the patient himself, thereby exposing the patients to the risk of contracting blood-borne diseases. The primary endpoint of this clinical trial was also restoration of hemoglobin and hematocrit levels. Compared with placebo-controlled patients, patients who received EPIAO before, during and after the surgery had higher levels of hemoglobin and hematocrit. We received SFDA approval for this indication in 2000 and launched EPIAO for this indication in December 2002.

TPIAO ( )

Launched in January 2006, TPIAO is our recombinant human thrombopoietin product, for the treatment of chemotherapy-induced thrombocytopenia, or platelet deficiency, and represents the first such protein-based therapeutic approved and launched for this indication in China. TPO is a hemopoietic, or blood or blood cell-related, growth factor protein found in plasma. TPO naturally stimulates production of megakaryoctyes, cells with a mutilobed nucleus in the bone marrow and liver, thereby releasing mature platelets and raising the circulating platelet count. Patients undergoing blood stem cell transplantation or cancer chemotherapy, or with late-stage liver diseases, or for unknown pathological reasons may suffer from platelet deficiency. We market TPIAO in two strengths: 7,500 IU/vial and 15,000 IU/vial. We began marketing our TPIAO products at the end of 2005 on a trial basis and recorded revenues of RMB2.8 million in 2005 and RMB10.2 million for the nine months ended September 30, 2006.

We began our research and development efforts on TPIAO in 1995 as part of the national “863” scientific program. After successful discovery and pre-clinical studies, we initiated clinical trials in 1999. Phase I and Phase II clinical trials were completed in 2001 and 2002, respectively, which indicated TPIAO’s safety and efficacy.

In 2003, we completed a multicenter, randomized, double-blind placebo self-controlled Phase III trial in 305 patients, 223 of whom were cancer patients receiving chemotherapy and 82 of whom were ITP patients who had failed to respond to any other form of treatment. Patients were treated with TPIAO within six to 24 hours after the first chemotherapy cycle daily for 14 days. The primary endpoints were platelet counts and reduction in the number of transfusions. In this trial, TPIAO treatment resulted in a higher platelet count in approximately 78% of the cancer patients and approximately 85% of the ITP patients. There were 18 cases of mild adverse reactions relating to TPIAO treatment, including transient flu-like symptoms, but patients spontaneously recovered without discontinuing treatment.

Although we obtained SFDA approval for TPIAO in May 2005, the SFDA has required us to conduct a Phase IV post-marketing trial on TPIAO as a supportive cancer care product. We expect that the three-arm trial will include approximately 1,000 cancer patients being treated with chemotherapy. The primary endpoint will be time to recovery of platelet count to normal levels. We plan to initiate this trial in the fourth quarter of 2006 and release clinical data for the Phase IV trial in 2009.

TPIAO was approved in May 2005 with a monitoring period of five years, which will expire in May 2010. During the monitoring period other pharmaceutical companies are prohibited from manufacturing

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or importing a similar drug except those whose application for clinical trial were approved by the SFDA prior to May 2005, the commencement of TPIAO’s monitoring period, pursuant to the PRC Administrative Measures for the Registration of Medicine. Although we believe TPIAO is the only TPO-based therapeutic available in the Chinese market to date, we are aware of another Chinese pharmaceutical company, CP Guojian, which we believe may be conducting clinical trials for a TPO-based therapeutic in China. If CP Guojian obtained the approval for any clinical trials prior to commencement of the monitoring period for TPIAO, CP Guojian may not be prohibited from manufacturing and marketing its TPO product during TPIAO’s monitoring period. We have no information on when CP Guojian plans to bring their product to market, nor are we aware of any other company that is developing a similar product. We have two issued patents in relation to TPIAO. We obtained authorization to introduce TPIAO into the Chinese market for treatment of chemotherapy-induced thrombocytopenia in 2005.

Legacy products

In addition to EPIAO and TPIAO, we market two protein-based therapeutics that have historically been significant contributors to our overall revenues. Due to unfavorable pricing and increased competition, we refocused our sales and marketing efforts since early 2004 and no longer heavily market these products with our own sales force.

Intefen ( ).    Intefen is our recombinant human interferon alpha-2a product for the treatment of carcinoma of the lymphatic or hematopoietic system, and viral infectious diseases, including adult chronic hepatitis B, acute and chronic hepatitis C, and genital warts. Interferon is a protein that occurs naturally in the body in very small amounts and comes in three main types: alpha, beta and gamma. When exposed to viruses, certain cells produce interferon, which is released into the bloodstream or intercellular fluid to induce healthy cells to produce enzymes and proteins that counter and combat the infection. The anti-cellular or immuno-regulatory functions of IFN can enable interferon products to play a central role against certain tumor and auto-immune diseases. Interferon alpha has been manufactured by pharmaceutical companies for therapeutic use against hairy-cell leukemia, hepatitis C and hepatitis B, as well as for treatment of genital warts and some rare cancers of blood and bone marrow.

We obtained SFDA approval to market Intefen in April 1995 and launched the product in December 1995. Our Intefen is available in lyophilized powder and injectable solution. Both the powder and solution come in three strengths: 1 MIU/vial, 3 MIU/vial and 5 MIU/vial. Revenues from our Intefen products were RMB6.8 million in 2005, representing a decrease of 11% over 2004 revenues. Revenues from our Intefen products were RMB3.5 million in the nine months ended September 30, 2006, representing a decrease of 35% over the corresponding period in 2005.

In 1994, we completed a multicenter, randomized Phase III clinical trial with Intefen in 127 patients with hepatitis C virus, or HCV. The primary endpoints of the trial were the change in ALT, or Alanine Amino Transferase recovery rates, a measurement of liver function and HCV RNA clearance rates, a measure of the number of viruses present in the patient. The data indicated that Intefen was comparable to Schering Plough’s Intron A when measured with these two tests. The observed side effects were flu-like symptoms that were relatively minor and reversed upon discontinuation of the therapy.

Inleusin ( ).    Inleusin is our recombinant human interleukin-2, or IL-2, product that is structurally and functionally the same to naturally occurring IL-2, a body immune regulator. Inleusin is indicated for treatment of renal cell carcinoma, melanoma, thoratic fluid build-up caused by cancer, and tuberculosis. IL-2 is a natural part of the body’s immune response to microbial infection. IL-2 promotes the proliferation and maturation of, among others, T-cells and natural killer cells, both of which are capable

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of destroying cancer cells directly. IL-2 plays a role in the development of white blood cells or lymphocytes, and anti-inflammatory reactions which are part of the regulation of the immune response.

We obtained SFDA approval to market Inleusin in the Chinese market in June 1995 and launched the product in March 1996. It was the first interleukin product introduced into the Chinese market. Our Inleusin products come in four strengths: 0.1 MIU/vial, 0.2 MIU/vial, 0.5 MIU/vial and 1 MIU/vial. Revenues from our Inleusin products were RMB1.6 million in 2005, representing a decrease of 41% over 2004 revenues. Revenues from our Inleusin products were RMB0.8 million the nine months ended September 30, 2006, representing a decrease of 40% over the corresponding period in 2005.

In 2002, we completed a multicenter, randomized, placebo-controlled extension study in 209 patients with tuberculosis. The primary endpoint was the reduction of severity of infection as measured by thoracic X-Ray imaging the reduction in the number of tuberculosis bacilli, an infectious organism, in a sputum smear. The data demonstrated that Inleusin effectively reduced the severity of tuberculosis in these patients.

In-licensed products

Tietai Iron Sucrose Supplement ( ).    Tietai Iron Sucrose Supplement is a complex of polynuclear iron (III)-hydroxide, a bioavailable form of iron, in a sucrose solution for intravenous use. It is indicated for the treatment of iron deficiency anemia in patients with end-stage renal disease and generally considered to have a superior safety profile compared to other forms of iron supplements. Tietai Iron Sucrose Supplement was launched in China in 2005, and we believe it will be complementary to our EPIAO franchise.

In May 2006, we entered into an agency agreement with Shenyang Borui Pharmaceutical Co., Ltd, or Borui, to in-license nationwide exclusive rights in China to market and distribute Tietai Iron Sucrose Supplement from June 1, 2006 to August 31, 2011. Pursuant to this agreement, we purchase Tietai Iron Sucrose Supplement from Borui at a fixed price and are subject to certain minimum purchase requirements, sales and market share targets for every twelve-month period starting from September 2006. As long as we achieve the sales targets during the term of the agreement, we shall have the priority right to renew the agreement upon its expiry and obtain the agency right of any other new product developed by Borui. Our rights under the agreement will be subject to Borui’s ability to renew both its business license, which currently expires in 2008, and its license from Chengdu Tiantaishan, Tietai’s manufacturer, to distribute Tietai.

Baolijin ( ).    Baolijin is our recombinant human granulocyte colony-stimulating factor, or G-CSF product. G-CSF is a protein that stimulates production of white blood cells. For cancer patients undergoing chemotherapy, the ability to produce red blood cells, white blood cells and platelets is severely compromised. Baolijin is indicated for the treatment of neutropenia, a condition associated with chemotherapy and characterized by low levels of neutrophils, a type of white blood cell important for fighting infections. The addition of Baolijin to our product portfolio enhances our capability to meet the unmet medical needs in supportive cancer care. According to IMS Health, the annual sales for G-CSF products in China were estimated at RMB900 million in 2005. According to ASInsights Strategic Consulting Report, or ASInsights, the worldwide market for colony stimulating factors was estimated at US$3.6 billion as of December 31, 2005. ASInsights estimates that as of December 2004, the world market for colony stimulating factors (CSFs) was US$3.6 billion with the U.S. representing 67%, Europe representing 15%, Japan representing 11% and the rest of the world representing 7%.

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In August 2006, we entered into an exclusive promotion and distribution agreement with Chengdu Institute of Biological Products, or the CIBP, to in-license nationwide exclusive rights to market and distribute Baolijin in China from August 1, 2006 to December 31, 2011. Pursuant to this agreement, we purchase Baolijin from CIBP at certain established prices and are subject to a minimum volume requirement of 150,000 units from August 1, 2006 to December 31, 2007. For each calendar year thereafter during the term of the agreement, minimum volume requirement increases by 30% incrementally. If we achieve the minimum purchase requirements during the term of the agreement, we shall have the priority right to renew the agreement upon its expiry and obtain the agency right of any other new product developed by CIBP.

Our product candidates

NuPIAO

In 2008, we expect to complete pre-clinical testing for NuPIAO, a second-generation EPIAO that is designed to have a longer half life and is expected to be comparable in structure to Amgen’s Aranesp. Aranesp (darbepoietin alpha) is a novel erythropoiesis-stimulating protein with a longer circulating half-life than EPO and is currently the only second-generation EPO product approved by the U.S. Food and Drug Administration. By using molecular biology and recombinant DNA techniques, we synthesized a series of novel erythropoiesis-stimulating proteins and identified NuPIAO through an activity screening assay. Preliminary testing of NuPIAO has demonstrated an enhanced half-life comparable to the half-life of darbepoietin alpha.

The effect of extended half-life and increased biologic activity as compared with EPIAO would allow for less frequent administration, which is more convenient for both patient and caregiver. We plan to file a patent application in China for second-generation EPIAO.

High-Dose EPIAO

In 2007, we plan to complete a clinical trial for our 36,000 IU/vial formulation of EPIAO. This product is designed for rapid restoration of hemoglobin to normal levels among cancer patients. If our clinical trial results are positive, we plan to file an application for SFDA approval of this product in 2007. There currently is no dosage form of this kind on the market. In 2006 we initiated a randomized placebo- controlled clinical trial in 200 cancer patients undergoing chemotherapy. In this trial, 100 patients are administered with a 36,000 IU/vial EPIAO once a week for eight weeks. The control group are administered the 10,000 IU/vial EPIAO once every other day. The primary endpoint is the restoration of hemoglobin levels.

TPIAO for the treatment of ITP

Idiopathic thrombocytopenic purpura, or ITP, is characterized by thrombocytopenia that results in bruising and bleeding that can be severe. In certain ITP patients, the immune system malfunctions, perceiving the body’s platelets as foreign and destroying them, potentially resulting in dangerously low platelet counts. Platelets are disc-shaped cells in blood that assist in the clotting process to stop bleeding. TPIAO is being investigated as a new approach to treat ITP by stimulating the TPO receptor, directly increasing platelet production to outpace platelet destruction by the immune system.

We have designed a Phase III clinical trial to study TPIAO for the treatment of ITP. The Phase III trial will be a multicenter, randomized, placebo-controlled study in 120 ITP patients. All patients will be administered Danazol, a synthetic steroid hormone drug routinely used to treat ITP. The treatment group will be administered an additional 1.0 µg/kg TPIAO once daily for 14 days. The primary endpoint of this

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trial is the measurement of platelet counts during the 14 day treatment. We expect to release Phase III clinical trial data in 2008.

NuLeusin (IL-2)

NuLeusin, our second-generation IL-2, is a genetically modified form of IL-2 possessing the same properties as naturally occurring IL-2. It is capable of activating the immune system to recognize and

eliminate certain kinds of cancer cells. The genetic modification enabled us to produce a high dosage form of IL-2 that has increased stability, which we believe has superior efficacy and tolerable therapeutic reactions profile. We believe NuLeusin is comparable to Chiron’s Proleukin, which received U.S. FDA approval for treatment of metastatic renal cell carcinoma in 1992, and for treatment of metastatic melanoma in 1998.

In 2005, we completed an open-label, nonrandomized Phase II trial of Nuleusin in 22 patients with metastatic renal cell carcinoma. Patients were treated subcutaneously with Nuleusin every 12 hours for the first five days and then daily for five weeks. The primary endpoints were whether the patients respond to the treatment in terms of the reduction in size of their tumors after receiving treatment. The data demonstrated that Nuleusin effectively reduced the size of the tumors in these patients. There were no serious adverse events reported in this study.

We are currently conducting a multicenter, open-label Phase III clinical study for NuLeusin for the treatment of metastatic melanoma and metastatic renal cell carcinoma.

SSS08 (HPV Vaccine)

HPV is a common virus that is often passed on through genital contact, typically during sexual contact. At least 50% of sexually active people will get HPV at some time in their lives. About 40 types of HPV can infect the genital areas of men and women. While most strains of HPV cause no symptoms and resolve without treatment, some strains of HPV can cause cervical cancer in women.

Worldwide, cervical cancer is the second most common cancer in women; and according to the U.S. Food and Drug Administration, it is estimated to cause, on average, over 470,000 new cases and 233,000 deaths each year. In the majority of developing countries, cervical cancer remains the number one cause of cancer-related deaths among women, with women in developing countries accounting for approximately 85% of both the yearly cases and deaths from cervical cancer worldwide.

In 1995, scientists from Merck & Co., Inc. and MedImmune Inc., separately, demonstrated that expression of the papilloma virus major capsid gene L1 alone, or together with the minor capsid protein L2, is sufficient for the generation of virus-like particles, or VLPs. VLPs mimic in some aspects the infection with virions and induce virus-neutralizing antibodies, making them an attractive candidate for developing a prophylactic vaccine against HPV infections. In June 2006, Merck received approval from the U.S. FDA for its vaccine targeting four strains of HPV that cause approximately 70% of cervical cancers and approximately 90 percent of genital warts. Our HPV vaccine candidate also targets VLPs of HPV-16 and HPV-18 and we expect to start the preclinical study in 2007.

SSS07 (Rheumatoid arthritis and other autoimmune diseases)

SSS07 is our anti-TNF monoclonal antibody product candidate that we plan to develop in collaboration with Epitomics, Inc., a US-based biotechnology company. Tumor necrosis factor a (TNF) is one of the key chemical messengers that help regulate the inflammatory process and plays an important role in the underlying mechanisms of conditions such as rheumatoid arthritis, psoriasis, and many other

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inflammatory disorders. When the body produces too much TNF, it overwhelms the immune system’s ability to control inflammation of the joints or of psoriasis-affected skin areas. The TNF inhibitors are molecules that disrupt the TNF function by blocking the binding of TNF to the TNF receptors. Blockage of these receptors can result in a significant reduction in inflammatory activity and reduce symptoms, inhibit the progression of structural damage, and improve physical function in patients with moderate to severe rheumatoid arthritis. SSS07 is a genetically engineered anti-TNF humanized monoclonal antibody designed to bind and deactivate certain TNF molecules. By binding to the native TNF molecule. SSS07 is designed to prevent activating of the inflammation signalling cascade. Several TNF inhibitors have been approved by US FDA, including Enbrel (entanercept), Remicade (infliximab) and Humira (adalimumab). According to Evaluate Pharma, the total worldwide sales for this product category in 2005 were approximately US$8.2 billion, significant majority of which came from US and European markets.

We plan to develop our anti-TNF monoclonal antibody product candidate in collaboration with Epitomics, Inc., an US-based biotechnology company that is recognized for its proprietary high-affinity rabbit monoclonal antibody technology. The antibody we selected demonstrated that it is able to neutralize TNF activity in specific assays more effectively than Remicade and Humira, two approved anti-TNF antibodies.

In March 2006, we entered into a collaboration agreement with Epitomics Inc. under which we were granted an exclusive, royalty bearing, non-transferable and perpetual license in the field of therapeutic usage in order to develop and conduct clinical trials to obtain SFDA approval for the rabbit anti-TNF alpha monoclonal antibody compounds. Under the agreement, we were also granted the right to manufacture, sell, market and distribute (including distributions by engaging third parties) in China anti-TNF alpha monoclonal antibody therapeutics covered under the intellectual property rights owned by Epitomics. We were required to pay an upfront lump sum fee and a royalty payment equivalent to a certain percentage of the net sales of therapeutic products should they reach market. Under the agreement, we granted Epitomics the right to use all intellectual property generated during the development of the therapeutic product. However, if Epitomics uses this intellectual property for the development of the same therapeutic product outside of China, Epitomics shall pay us a royalty equivalent to a certain percentage of the financial benefit from licenses and product sales. If any new developments or agents are created as a result of the collaboration agreement, we will grant to Epitomics a “right of first refusal” with regard to the commercialization of such agents. The details of a development program to commercialize the therapeutic products and the mechanism for calculating the royalties will be determined between Epitomics and us at a later date.

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CHINESE PHARMACEUTICAL MARKET OVERVIEW

World expenditure on health care

According to information from the WHO and national statistics the total expenditure on health care by the WHO’s 192 member nations amounted to approximately US$3,536 billion in 2004. In that year, expenditures by the largest (the US) and the top ten nations amounted to approximately US$1,689 billion and US$2,887 billion respectively, accounting for approximately 48% and 82% of total members’ expenditures respectively. China ranked seventh among the listed nations in terms of expenditures on health care in 2004:

(US$ in millions)

Per capita total expenditures on health care

The following table illustrates the per capita total expenditures on health care of the top four spending countries and Europe in 2004:

	Per capita total expenditure on health		CAGR of per capita total expenditure on health from
Countries	2000	2004	2000 to 2004
	US$	US$	%
US	4,538	5,941	7.0	%
Japan	2,827	2,369	(4.3	)%
Europe1	1,755	2,142	5.1	%
China	48	73	11.1	%
Canada	2,064	2,411	4.0	%

1. Average of UK, Germany, Italy, France and Spain.

Source: Euromonitor

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Notwithstanding its high total expenditure among WHO member nations, China’s per capita expenditure on health care remained low but is growing quickly. According to the data from the WHO, Euromonitor, and China 2005 Statistical Book, the PRC ranked the lowest in terms of per capita expenditure on health care among the top ten spending countries listed above and 107th among all listed nations in 2004. However, in terms of growth rate in per capita expenditure on health care between 2000 and 2004, China ranked the highest among the top ten spending nations listed. Per capita total expenditure on health care in the PRC grew from approximately US$48 in 2000 to approximately US$73 in 2004, representing a CAGR of approximately 11.1%, outpacing the CAGR for per capita GDP in China between 2000 and 2004 of approximately 10.5%. As a percentage of GDP, China’s expenditure on health care was also the lowest among the top ten spending countries, amounting to approximately 5.6% in 2003, compared to the second lowest of 7.7% for Spain and the highest of 15.2% for the U.S. in 2003.

Pharmaceutical Market in China

Expenditure on medicine

The pharmaceutical market in China has grown rapidly in recent years. According to Access Asia from trade sources and National Statistics, expenditure on medicine, including western pharmaceuticals and traditional Chinese medicine, or TCM, is expected to reach approximately RMB300 billion, equivalent to approximately US$36.4 billion, by the end of 2005, representing a growth rate of 142.7% since 1998. Expenditure on western pharmaceuticals remains higher than those from TCM due to the higher prices western pharmaceuticals tend to command. For the year ended December 31, 2005, expenditure on western pharmaceuticals are expected to reach RMB179.5 billion, representing 59.6% of total expenditure on medicine. During the same period, expenditure on TCM is expected to reach RMB121.8 billion, representing 40.4% of total expenditure on medicine.

The following table sets forth the total expenditure on medicine with a breakdown in western pharmaceuticals and TCM in China from 1998 to 2005:

	2000	2001	2002	2003	2004	2005E
	(RMB in billions)
Western pharmaceuticals	91.5	105.5	127.1	152.5	166.2	179.5
TCM	65.5	76.5	86.8	102.2	112.4	121.8
Total	157.0	182.0	213.9	254.7	278.6	301.3

Source:  Access Asia

Total expenditure on medicine consists of expenditure on prescription drugs and expenditure on OTC drugs.

Expenditure on prescription drugs

Expenditure on prescription drugs by medical institutions such as hospitals and health clinics remains the dominant source of revenues from sales of medicine. For the year ended December 31, 2005, expenditure on prescription drugs is expected to amount to RMB251.4 billion, representing 83.5% of total expenditure on medicine and a growth rate of 131.3% since 1998.

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The following table sets forth expenditure on prescription drugs with a breakdown in western pharmaceuticals and TCM in China from 1998 to 2005:

	2000	2001	2002	2003	2004	2005E
Western pharmaceuticals	79,062	90,410	108,330	129,079	139,728	149,791
TCM	56,602	65,629	74,020	86,519	94,457	101,686
Total	135,664	156,039	182,350	215,598	234,185	251,477

Source:  Access Asia

China’s total GDP increased from approximately RMB8,947 billion in 2000 to approximately RMB13,688 billion in 2004. Growth in sales of TCM and western medicines in the PRC outpaced growth in GDP between 2000 and 2004, with aggregate sales increasing at a CAGR of approximately 15.4%, which is higher than the CAGR of approximately 11.2% for GDP over the same period. Sales of western pharmaceuticals and TCM increased from approximately RMB157.0 billion (equivalent to approximately 1.8% of GDP) in 2000 to approximately RMB278.6 billion (equivalent to approximately 2.0% of GDP) in 2004.

Over the same period, sales of western pharmaceuticals and TCM grew from approximately RMB91.5 billion to RMB166.2 billion, and from approximately RMB65.5 billion to RMB112.4 billion respectively, representing a CAGR of approximately 16.1% for western pharmaceuticals and 14.5% for TCM.

Expenditure structure

Government and private expenditure on health care

Expenditure on health care generally comes from two main sources; government expenditure, including in the form of government health care services and hospitals, and private health care expenditure, including on medicines in pharmacies and other retail outlets. The following table shows the respective proportions of total expenditure on health care contributed by government and private expenditure in the top ten member nations of the WHO in terms of expenditure on health care in 2003:

Countries	Government expenditure on health as % of total expenditure	Private expenditure on health as % of total expenditure
	%	%
	(Note 1)	(Note 2)
US	44.6	55.4
Japan	81.0	19.0
Europe3	77.3	22.7
China	36.2	63.8
Canada	69.9	30.1

Source:  WHO

(1) Government expenditure on health care is the sum of outlays on health care paid for by taxes, social security contributions and external resources (without double-counting the government transfers to social security and extra-budgetary funds).

(2) Private expenditure on health care comprises the outlays of insurers and third-party payers other than social security, mandated employer health care services and other enterprise provided health care services, non-profit institutions and non-governmental organizations financed health care care, private investments in medical care facilities and household out-of-pocket spending.

(3) Europe includes Germany, France, UK, Italy, and Spain

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As illustrated in the above table, health care expenditure in China is more dependent on private expenditure than the other top ten spending countries listed, with government expenditure on health care making up only 36.2% of total health care expenditure in China in 2003. According to WHO, the proportion of spending on health care contributed by government in China has declined from 40.9% in 1999 to 38.3% in 2000, which further declined to 35.6% in 2001 but has been increasing slightly to 35.8% in 2002 and 36.2% in 2003. We believe that the high reliance on private expenditure implies that the development of the pharmaceutical industry in China primarily depends on consumption capability and consumer preference.

Growth of the Chinese pharmaceutical industry

The pharmaceutical industry in the PRC has experienced significant growth in the past few years. The rapid growth of the Chinese pharmaceutical industry is driven by the following factors:

Ø Improving standard of living in the PRC.    According to the China Statistical Yearbook 2005, from 1998 to 2004, average per capita annual disposable income of China’s urban residents increased from approximately RMB5,425 to RMB9,421, representing a CAGR of approximately 9.6%. For rural households, average per capita annual net income increased at a CAGR of approximately 5.2% from approximately RMB2,162 in 1998 to RMB2,936 in 2004. Households in both urban and rural areas of the PRC have been spending an increasing proportion of their household expenditure on medicines and medical services. According to the China Statistical Yearbook 2005, from 1995 to 2004, average spending on medicines and medical services increased from approximately 3.1% to 7.4% of household expenditures, for urban households and from approximately 3.2% to 6.0% of household expenditures for rural households. This illustrates growing health care awareness in China.

Ø Population growth and aging of population in PRC.    China has the world’s largest population, which was officially estimated at 1.3 billion in 2004. In addition, China also has an increasingly large aging population. According to the China Statistical Yearbook 2005, the proportion of population aged 65 or above in the PRC has been on the rise, with members of the population aged 65 or above making up approximately 4.91%, 5.57% and 6.96% of the total population in 1982, 1990 and 2000 respectively. Assuming that the prevailing birth control policies in the PRC will continue, the senior population, as a proportion of total population, is expected to grow. In addition, the life expectancy of the PRC residents has been on the rise. According to the China Statistical Yearbook 2005, the national life expectancy had risen from approximately 68.6 years in 1990 to approximately 71.4 years in 2000. The aging population in the PRC will increase the demand for medicines for treatment of illnesses commonly found among the elderly.

Ø Increasing participation in the State Basic Medical Insurance System.    Participants of the State Basic Medical Insurance System are entitled to reimbursement from the social medical fund of a proportion of the cost of medicines included in the Insurance Catalogue in accordance with the relevant regulations of the PRC. According to the China Statistical Yearbook 2005, between 2000 and 2004, the urban population in China grew from approximately 36.2% to 41.8% of the total population, increasing the number of persons eligible to participate in the State Basic Medical Insurance System. The number of people joining the State Basic Medical Insurance System in the PRC has been increasing, with approximately 37.9 million people joining the system in 2000 and 124.0 million people joining in 2004, according to the China Statistical Yearbook 2005. We believe that the historic increases in the number of participants in the State Basic Medical Insurance System have contributed to the continued increase in the consumption of medicines in the PRC. This trend is anticipated to continue as the Eleventh Five Year Plan of the PRC projects that the urban population of the PRC will increase from 43% to 47% between 2005 and 2010.

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Ø Increasing government spending on public health care.    In recent years, the PRC government has been allocating more resources on public health care, including the consumption of pharmaceutical products for public health care. According to the China Statistical Yearbook 2005, the PRC government budgetary expenditure for public health care had increased from approximately RMB52 billion in 1997 to approximately RMB85 billion in 2004, representing a CAGR of 7.3%.

Industry participants

Healthcare institutions in the PRC include hospitals, clinics, community healthcare centers, emergency care centers, disease prevention centers, blood centers, women and children healthcare centers, research institutions and other healthcare institutions. According to the China Medical Statistical Yearbook 2005, there are a total of approximately 297,540 healthcare institutions in the PRC as of December 31, 2004, representing an increase of approximately 6,000 from the number in 2003. There are approximately 288,844 registered healthcare institutions in the PRC, among which 134,801 are non-profit healthcare institutions and 152,475 are for-profit healthcare institutions.

According to Espicom Business Intelligence, sales to hospitals account for 80% to 85% of the total pharmaceutical sales in China. This number is expected to grow considerably over the coming years. In addition to hospitals, pharmaceutical manufacturers, either state-owned or foreign invested are the other major participants in the Chinese pharmaceutical industry. According to the China Statistical Yearbook 2005, there were 4,397 state-owned and state-controlled enterprises engaged in the manufacture of medicines and 743 foreign-invested enterprises in China as of December 31, 2004.

Competition and barriers to entry

Competition in the pharmaceutical industry is ameliorated by barriers to entry. A company wishing to enter the industry must comply with the standards and regulations set forth by the government. In the PRC, the SFDA is the authority that monitors and supervises the administration of the pharmaceutical industry, including pharmaceutical products, medical appliances, and equipment. Pharmaceutical manufacturing enterprises need to obtain a Pharmaceutical Manufacturing Permit issued by the relevant pharmaceutical administrative authorities at the provincial level where the enterprise is located. All pharmaceutical products manufactured in the PRC, with the exception of Chinese herbal medicines in soluble form, must bear a registered number approved by the appropriate governmental authorities in the PRC. Furthermore, the PRC government requires compliance with the Good Manufacturing Practice Guidelines, as amended in 1998, or the GMP Guidelines, for the manufacture of pharmaceuticals in China. As the regulatory approval process becomes more stringent, it also increases the barriers to entering the market. For more information, please see “Regulations—Regulations for Pharmaceutical Industry in China.”

China’s entry into the WTO and the impact on pharmaceutical and biotechnology industry

As a result of China’s accession to the WTO, the PRC government has agreed to gradually open up various service types of the pharmaceutical industry in China to foreign investors by carrying out the following measures:

Ø to protect intellectual rights of pharmaceutical products;

Ø to lower the tariff of imported pharmaceutical products;

Ø to rescind the administrative restriction on importing large-scale medical equipments on January 1, 2003;

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Ø opening the distribution business of pharmaceutical products to foreign investment beginning on December 11, 2004 and allowing foreign enterprises to carry out pharmaceuticals-related merchandising, storage, transportation, distribution, wholesale, retail and after-sale services in the PRC; and

Ø allowing foreign investment in medical treatment services and to allow foreign enterprises to establish joint venture or cooperative hospitals.

China’s WTO commitments pose the following new challenges to Chinese pharmaceutical companies such as ourselves:

Ø Increasing competition from imported biopharmaceutical products.    Prior to China’s entry into the WTO, the import duty applicable to medicine dosage was 20.0%. The import duty is expected to be gradually lowered to 6.5%, which will adversely affect the competitiveness of domestic biopharmaceutical manufacturers.

Ø Increasing competition from foreign-invested enterprises.    Many foreign pharmaceutical companies have directly or indirectly entered into the Chinese market. Not only have they obtained approval for registration of their products in the PRC, they have also established production lines in the PRC. Some enterprises have carried out the clinical testing of their newly developed medicines in the PRC.

Ø Challenge from the development of new medicines by foreign companies.    The pharmaceutical industry, especially the biopharmaceutical industry, requires heavy capital investments. The level of capital investments in the research and development of biopharmaceutical products in China is low compared to the levels in developed countries, thereby slowing down the development process of new medicines. If a foreign competitor successfully registers a patent covering a new pharmaceutical product we are developing, all investment in the early stages of research and development will be lost.

Ø Marketing edge of overseas companies.    It is extremely time- and money-consuming to explore the market of a new biopharmaceutical. Compared to us, certain biopharmaceutical companies in Europe and the U.S. with a stronger financial position may be in a better position to invest substantially in marketing and product promotion. Unlike us, these companies may still survive the early stages of product development without making a profit for a long time.

Ø Disputes on intellectual property rights.    Due to the lack of capital for the research and development of new medicines, most of the domestic pharmaceuticals are imitations of foreign products. Since 2001, many more companies in Europe and the U.S. have applied for patents in the PRC than in previous years, thereby increasing the likelihood of litigation for Chinese domestic pharmaceutical companies.

The development of biopharmaceutical industry worldwide and in China

The discovery of recombinant DNA and monoclonal antibody technologies in the 1970s marked the birth of the biopharmaceutical industry. Biopharmaceuticals are pharmaceuticals inherently biological in nature and manufactured with biotechnology involving the use of live organisms. They are complex macromolecules derived from recombinant DNA technology, cell fusion, or processes involving genetic manipulation. They include recombinant proteins, genetically engineered vaccines, therapeutic monoclonal antibodies and nucleic acid based therapeutics. Unlike orally delivered small molecule drugs that underpin the traditional pharmaceutical industry, biopharmaceuticals are usually administered by subcutaneous, intravenous or intramuscular injection.

The application of biotechnology in pharmaceutical science has brought a series of breakthroughs in the development of new drugs. The development and application of biotechnology have contributed and will

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continue to contribute to the discovery and development of new pharmaceutical products. The advantages of applying biotechnology in the research and development of pharmaceutical products are as follows:

Ø biotechnology can create substances that cannot be found in nature and can avoid the use of blood-born products; and

Ø biotechnology may be able to increase the quantity of some biological products at substantially lower production costs.

In 1982, human insulin, the world’s first genetic engineering pharmaceutical product, was released to the market. Ever since then there have been over 254 biotechnology drugs that have been approved for 385 indications by December 2005 based on the data from Biotechnology Industry Organization (http://www.bio.org/speeches/pubs/er/approveddrugs.asp).

The table below sets forth the actual and estimated global combined market sizes for sales of key first-generation biologic product types (assuming no biogenerics) for 2004 through 2010:

	2004 ($m)	2006 ($m)	2008 ($m)	2010 ($m)	CAGR 2004-10 (%)
Epoetin	8,413	8,289	7,758	7,133	(2.7	)
Insulin	3,774	3,190	2,456	2,101	(9.3	)
Interferon beta	3,527	4,608	4,996	4,894	5.6
Growth hormone	2,255	2,532	2,738	2,850	4.0
CSFs	1,822	1,537	1,450	1,441	(3.8	)
Interferon alpha	417	304	231	212	(10.7	)
Total	20,208	20,459	19,710	18,791	(1.3	)
All other biologics(1)	35,881	53,143	70,870	86,425	15.8
Total Market Size	56,089	73,602	90,580	105,216	11.1

(1) Include sales of second generation EPO.

Source:  Datamonitor

As shown in the table above, even though the global market size of the major biopharmaceuticals, including epoetin, insulin, interferon beta, growth hormone, CSFs and interferon alpha, is expected to decline from US$20.2 billion in 2004 to US$18.8 billion in 2010, the overall global market size including all other biologics is expected to grow to US$105.2 billion in 2010, from US$56.1 billion in 2004, representing a CAGR of 11.1%.

The rapid growth of the biopharmaceutical industry is attributable to:

Ø significant developments in biotechnology;

Ø a growing number of biopharmaceuticals that are licensed for marketing, the growth of which is much higher than that of traditional pharmaceutical products;

Ø the relatively little side effect and well-defined clinical effectiveness of biopharmaceutical products; and

Ø the high added value of biopharmaceutical products.

The Chinese bio-technology industry has developed very rapidly in the past 20 years as well. There have been many new biotechnological products commercialized through the development of bioprocess

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engineering. These products include medical products (for example, monoclonal antibody, diagnostic kits, drugs and vaccines), bio-pesticides, bio-fertilizers, recombinant DNA products, nutraceuticals and

functional food ingredients. According to Datamonitor: Biotechnology in China, the annual sales of bio-pharmaceutical products in China amounted to US$3.2 billion in 2004.

Recombinant DNA proteins developed and manufactured in China

Recombinant DNA technology has now been applied to the various bioprocesses to enhance productivity and expand the range of biotechnological products. The major impact of recombinant DNA technology is in the pharmaceutical industry, although it has also been applied to the food and agriculture fields. In 1989, the first recombinant DNA protein, recombinant human interferon alpha-1b (rHuIFN a-1b) was developed and marketed in China. According to NDRC’s website, 27 protein-based therapeutics have been developed in China with recombinant DNA technology and the estimated annual sales of biopharmaceutical industry is approximately RMB35 billion, for the year ended December 31, 2005.

MARKETING, SALES AND DISTRIBUTION

We maintain a sales and marketing force in 18 provinces and major cities in China, including the municipalities of Beijing and Shanghai and the city of Guangzhou. Our principal products EPIAO and TPIAO are marketed by our 143 sales and marketing professionals and sold by our network of approximately 80 distributors to healthcare providers including, based on our internal estimates, approximately 800 hospitals, clinics and dialysis centers. Our internal sales and marketing staff details our principal products to physicians and hospital administrators and as required by PRC laws, our distributors are engaged to contract with our customers for the sale of our principal products to physicians and hospitals. In addition, our legacy products Intefen and Inleusin are marketed, as well as sold, by distributors.

We select our distributors based on their reputation, market coverage, sales experience and the size of their sales force. We conduct credit assessments of each of our distributors or hospital customers before we enter into a purchase agreement. We do not have an exclusive distribution arrangement with any of our distributors and some of our distributors market competing brands. For every calendar year, we enter into a distribution agreement with each distributor which provides general terms for the distribution arrangement, such as the designated sales area, place and method for delivery, targets for annual sales volume and receivable collection. Under our standard distribution agreement, a distributor cannot sell our products outside the designated geographical area without first obtaining our written consent. The term of a distributor contract is typically for one year, reflecting the prevailing pricing arrangement under the local competitive bidding process. The price under the agreement may be adjusted by a number of factors, such as the outcome of the competitive bidding process, or regulatory changes during the calendar year.

Hospitals in China typically purchase medical products on credit and sometimes do not make payment until more than a year after the purchase. By contrast, the average credit terms that we give to our distributors range from 60 days to 180 days, with the majority averaging around 90 days from the date of our delivery, regardless of whether payments from the hospital to the distributors are received. We believe by selling our products through distributors, we achieve an improved collection rate on our accounts receivable and reduce bad debt expense.

We have a sales department centered in Beijing. We also have a marketing department located in Shanghai, with nine full-time professionals responsible for product development. In our headquarters in

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Shenyang, we have 17 employees responsible for product distribution, shipment and handling, and the management of account receivables.

We have established relationships with many hospital administrators at prominent hospitals and other leading medical institutions, many of whom we believe are advocates for our products. We believe our relationships with these major hospitals and medical institutions raise our profile, enhance awareness of our products in the medical community, medical equipment and supplies industry and among patients, provide us with valuable clinical data to improve our products and keep us abreast of industry trends and developments, all of which in turn helps us market and sell our products.

RESEARCH AND DEVELOPMENT

As of September 30, 2006, our research and development team consisted of 20 research personnel and medical professionals, which accounted for 6.5% of our employees. Our research and development staff consists of medical and biotechnology professionals, including two PhDs, two MDs and three holders of master’s degrees, many of whom have experience in the healthcare and biotechnology research fields, including experience working in research institutions and hospitals and in proceeding through the SFDA drug approval process.

We conduct our research and development activities in our facilities in Shenyang. To date, our primary sources of new clinical products have been our internal research and development activities and the licensing of compounds from third parties. We believe by complementing our internal research and development efforts with a disciplined strategy of entering into collaborative relationships, we can build a pipeline of diversified pharmaceuticals to drive sustainable revenue growth. For a detailed description of our product pipeline, see “—Our product pipeline” above.

Our R&D expenses for the years ended December 31, 2003, 2004 and 2005 and for the nine months ended September 30, 2006 were RMB3.1 million, RMB3.7 million, RMB3.2 million and RMB3.8 million, respectively.

INTELLECTUAL PROPERTY

We expect that we will, in the future, rely on patents to protect our proprietary technology. While we currently expect to seek patent protection only in China, we may opportunistically seek patents to protect our innovations in other jurisdictions in the future. In China, patents relating to pharmaceutical inventions are effective for 20 years from the initial date the patent application was filed.

We currently own five issued PRC patents relating to:

Ø the composition of matter of TPIAO, expiring in 2015;

Ø a method of manufacturing TPIAO, expiring in 2020;

Ø a method and application thereof relating to our manufacturing processes, expiring in 2021;

Ø a formulation of Interferon-alpha that does not relate to our marketed products, expiring in 2022; and

Ø a formulation of EPIAO, expiring in 2023.

We do not believe our patents relating to EPIAO provide us with a meaningful competitive advantage. We have also filed two pending PRC patent applications relating to a method for producing recombinant Interferon-alpha and manufacturing of interleukin analogues. We do not own any foreign patents or patent applications. In addition, we own 11 registered trademarks relating to EPIAO, TPIAO, Intefen and Inleusin.

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We are aware of intellectual property rights held by third parties that relate to products or technologies we are developing. For example, we are aware of a patent held by a third party that may relate to our TPIAO product. We believe, as to each claim in this patent, that we either do not infringe the claim of the patent or that the claim is invalid. While the validity of issued patents, patentability of pending patent applications and applicability of any of them to our programs are uncertain, if asserted against us, any related patent rights could adversely affect our ability to commercialize our products.

We also rely on trade secrets, proprietary know-how and continuing technological innovation to develop and maintain a competitive position in our product areas. We generally require our employees, consultants and advisors to enter into confidentiality agreements. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except under specific circumstances. In the case of our employees, the agreements provide that all of the technology which is conceived by the individual during the course of employment is our exclusive property. The development of our technology and many of our processes are dependent upon the knowledge, experience and skills of key scientific and technical personnel. Further, as a matter of company policy, all scientific and technical employees have entered into agreements that generally require disclosure and assignment to us of ideas, developments, discoveries and inventions made by them. However, these agreements may not effectively prevent disclosure of our confidential information or provide meaningful protection for our confidential information if there is unauthorized use or disclosure.

Despite any measures we take to protect our intellectual property, no assurance can be made that unauthorized parties will not attempt to copy aspects of our products, manufacturing processes or our proprietary technology or to otherwise obtain and use information that we regard as proprietary.

The research, development and commercialization of a biopharmaceutical often involve alternative development and optimization routes, which are presented at various stages in the development process. The preferred routes cannot be predicted at the outset of a research and development program because they will depend upon subsequent discoveries and test results. There are numerous third-party patents in our field, and it is possible that to pursue the preferred development route of one or more of our products we will need to obtain a license to a patent, which would decrease the ultimate profitability of the applicable product. If we cannot negotiate a license, we might have to pursue a less desirable development route or terminate the program altogether. PRC patent and trademark laws are discussed in greater detail in “Regulations—Patent and trademark protection.”

The protection of intellectual property rights and proprietary information in China may not be as effective as in the United States or other countries. For example, implementation and enforcement of PRC intellectual property-related laws have historically been deficient and ineffective and may be hampered by corruption and local protectionism. Policing unauthorized use of proprietary technology is difficult and expensive, and we might need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. The experience and capabilities of PRC courts in handling intellectual property litigation varies, and outcomes are unpredictable. Further, such litigation may require significant expenditure of cash and management efforts and could harm our business, financial condition and results of operations.

To date we have not been involved in any significant intellectual property disputes, or encountered major difficulties in enforcing our intellectual property rights in China.

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MANUFACTURING

Our Shenyang-based manufacturing operations consist of bulk manufacturing, and formulation, fill, and finish activities which produce EPIAO, TPIAO, Intefen, Inleusin and other product candidates for both clinical and commercial purposes. We also manufacture our product candidates for clinical trials at this

facility. All fill, finish and packaging activities in relation to our domestic sales are conducted at our Shenyang facility. A portion of our exported products are packaged in our Shenyang facility and the rest is shipped overseas in bulk format as concentrated solutions of recombinant human erythropoietin, interferon alpha-2a or interleukin-2 and finished and packaged locally. Our Shenyang facility is re-certified in accordance with Chinese current Good Manufacturing Practices, or cGMP, and our cGMP certificate is valid for five years, until 2010. We specialize in manufacturing protein with mammalian expression systems, although we are capable of manufacturing with bacterial expression systems. Our facilities gives us the capability to manufacture products at up to 105-grams scale using bacterial production systems for our legacy products and up to 270-grams scale using mammalian cell expression systems for EPIAO and TPIAO. We generally produce our products based on quarterly forecasts orders and anticipated additional

orders that we are reasonably confident will be obtained. Lead times for raw materials and components vary and depend on the specific supplier and the availability and demand for the raw materials. Raw materials and supplies are generally available from various suppliers in quantities adequate to meet our needs. However, we have single-source suppliers for some components and value-added steps, including EPO Elisa Kit by R&D systems Inc, GIBCO cell culture medium by Invitrogen Inc., Pharmacia chromatography purification medium by GE Healthcare, a division of GE, and Disc, a microcarrier for cell cultures, by New Brunswick Scientific Inc. We have not experienced any disruptions in the supply of these raw materials in the past. Unlike in the United States, we do not need SFDA approval to change suppliers. In the event that any one of these supply arrangements or agreements is terminated or the ability of any one of these suppliers to perform under our agreements were to be materially adversely affected, we believe that we will be able to locate, qualify and enter into an agreement with a new supplier on a timely basis. We maintain long-term relationships with most of our suppliers and place orders from these suppliers from time to time on an as-needed basis. We expect that our existing manufacturing facilities and outside sources will allow us to meet near-term manufacturing needs for our commercial products and other products that are in clinical trials.

We have long-term relationships with certain of our sole suppliers and periodically place orders to specify the price, specifications, quantity and time of delivery for raw materials on an as-needed basis. For example, Invitrogen Inc. is our single largest raw material supplier of BPT-6N medium. On December 6, 2004, we entered into a one-time purchase agreement with Invitrogen (GIBCO) Shanghai Representative Office to purchase customer-made BPT-6N media with a 30% down payment and 70% payment upon delivery of the total purchase price. On March 8, 2006, we entered into another one-time purchase agreement with Invitrogen Hong Kong Co., Ltd. to purchase customer-made BPT-6 culture medium with a 30% down payment and 70% payment upon delivery of the total purchase price. Under the March 8, 2006 agreement, we agreed not to resell such product to any third party. Shanghai Weike Biochemical Reagent Co. Ltd., or Weike, is our third largest raw material supplier of fetal calf serum, or FCS. On April 12, 2005, we entered into a one-time purchase agreement to purchase FCS with payment to be made within 30 days upon delivery of each bulk of the products.

As part of our overall strategy to increase our manufacturing capacity, we plan to expand our plant in Shenyang and have acquired the land and drafted the plans to execute on this strategy.

QUALITY CONTROL AND ASSURANCE

We have our own independent quality control system and devote significant attention to quality control for the designing, manufacturing and testing of our products. We have established a quality control

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system in accordance with SFDA regulations. Our four laboratories fully comply with the Chinese GMP Guidelines and are staffed with highly educated and skilled technicians to ensure quality of all batches of product release. European Pharmacopoeia 2002 version on quality control has been implemented by us since 2004.

Our quality assurance team is also responsible for ensuring that we are in compliance with all applicable regulations, standards and internal policies. Our senior management team is actively involved in setting quality policies and managing internal and external quality performance.

CERTIFICATES AND PERMITS

Our pharmaceutical manufacturing enterprise permit was issued by Liaoning Food and Drug Administration, or Liaoning FDA, on January 1, 2006 and will expire on December 31, 2010. Liaoning Sunshine’s pharmaceutical distribution enterprise permit was issued by Liaoning FDA on January 1, 2005 and will expire on December 31, 2009. Our cGMP certificate in relation to TPIAO was issued by the SFDA on July 29, 2005 and will expire on July 28, 2010. Our cGMP certificate in relation to EPIAO and our legacy products was issued by the SFDA on April 14, 2005 and will expire on April 14, 2010.

COMPETITION

The market for protein therapeutics is competitive and rapidly evolving on a global basis. Increased competition has resulted in industry-wide price reductions or reduced margins. In particular, we face competition from domestic and foreign pharmaceutical companies in each of our potential product areas. Certain of these companies have substantially greater capital resources, research and development staff, facilities and experience at conducting clinical trials and obtaining regulatory approvals, and greater experience and expertise in developing and commercializing products. In China, our EPIAO competes primarily with Kirin’s ESPO, Roche’s Recormon and “Yi Pei” by Di’ao Group Chengdu Diao Jiuhong Pharmaceutical Factory. Competitors for interleukin-2 in China include Beijing SL Pharmaceutical Co., Ltd. and Beijing Four Rings Biopharmaceutical Co., Ltd. Competitors for Tietai Iron Sucrose Supplement in China include Beijing Novartis Pharmaceutical Co., Ltd. and Nanjing Hencer Pharmaceutical Co., Ltd. and competitors for Baolijin in China include Kirin, Hangzhou Jiuyuan Gene Engineering Co., Ltd. and Qilu Pharmaceutical Co., Ltd.

We believe that competition and leadership in our industry are based on managerial and technological superiority, and the ability to identify and exploit commercially viable products. Other factors affecting our competitive position include time to market, patent position, product efficacy, safety, convenience, reliability, availability and pricing. We believe we are well positioned to compete in the fast-developing Chinese protein-based market with our strong Shenyang Sunshine brand, diverse product portfolio, proven R&D capabilities, established sales and marketing network and favorable cost structure.

FACILITIES

Our state-of-art manufacturing facilities are located in Shenyang Economy & Technology Development Zone, where we own three buildings with an aggregate of approximately 3,000 square meters of office, research and development and manufacturing spaces, including cleanrooms of approximately 1,600 square meters. Our facilities in Shenyang consist of three separate divisions capable of producing bulk products, including bacterial expressed proteins and manufacturing expressed proteins, and formulating final products. Our manufacturing facilities are equipped with state-of-art and top-line branded equipment, such as bioreactors, centrifuges, chromatography systems and lyophilizers. We own all of our manufacturing facilities in Shenyang. We believe that our existing facilities are adequate to meet our current and foreseeable future requirements. We also plan to build new manufacturing facilities in Shenyang.

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EMPLOYEES

We had 243, 235 and 272 employees as of December 31, 2003, 2004 and 2005, respectively. As of September 30, 2006, we had 308 employees. The following table sets forth the number of our employees categorized by function as of September 30, 2006:

	As of September 30, 2006
Manufacturing and services	75
Research and development	20
General and administration	70
Marketing and sales	143
Total	308

From time to time, we also employ independent contractors to support our marketing and sales and clinical support and research. We plan to hire additional employees for marketing and sales, customer service and manufacturing and assembly as we grow our business. None of our employees is represented by a labor union and we consider our relationship with our employees to be good.

In accordance with applicable regulations in the PRC, we participate in a pension contribution plan, a medical insurance plan, an unemployment insurance plan and a personal injury insurance plan for our employees. We have made adequate provisions in accordance with applicable regulations, which require us to contribute amounts equal to 11.0%, 14.4%, 17.7% and 16.8%, respectively, of our employees’ aggregate base salaries to these statutory plans for the years ended December 31, 2003, 2004 and 2005 and for the nine months ended September 30, 2006.

Also, in accordance with PRC regulations, we contribute amounts equal to 2.2%, 2.9%, 3.8% and 3.6% of our employees’ aggregate base salaries towards a housing fund, a supplemental medical insurance fund and a maternity fund, respectively, for the years ended December 31, 2003, 2004 and 2005 and for the nine months ended September 30, 2006.

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EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth our executive officers and directors, their ages as of January 19, 2007 and the positions held by them. The business address for each of our executive officers and directors is c/o Shenyang Sunshine Pharmaceutical Co. Ltd., No. 3 A1, Road 10, Economic & Technology Development Zone, Shenyang 110027, the People’s Republic of China.

Name	Age	Position
Dan Lou	71	Chairman of Board of Directors
Dr. Jing Lou	44	Chief Executive Officer, Director
Liping Xu	52	Vice President, Director
Bin Huang	45	Vice President of Human Resources, Director
Lawrence S. Wizel(1)	63	Independent Director
Guanjin Hu(1)	51	Independent Director
Moujia Qi(1)	73	Independent Director
Clara Mak	45	Chief Financial Officer (principal financial and accounting officer)
Dr. Yingfei Wei	45	Chief Scientific Officer, Vice President of Business Development
Dongmei Su	36	Chief Technology Officer
Yongfu Chen	49	Controller
Ke Li	39	Corporate Secretary

(1) Member of the audit committee.

Dan Lou is our co-founder and chairman. Mr. Lou established Shenyang Sunshine in 1993 and served as president and chief engineer until 2003. From 1961 to 1993, Mr. Lou served several positions in Shenhou Institute of Military Medicine, including assistant military doctor, military doctor, deputy director and director of Department of Microbiology and Immunology. Currently Mr. Lou also serves as an executive director at China Medicinal Biotech Association. Mr. Lou graduated from the Third Military Medical University in 1955.

Dr. Jing Lou is our co-founder, chief executive officer and director. He has served as the chief executive officer of Shenyang Sunshine since 2000. He joined Shenyang Sunshine as director of research and development in 1995. Prior to joining us, Dr. Lou founded Lifegen, Inc., a Maryland Corporation and an investee company of Shenyang Sunshine, to optimize the manufacturing processes for EPIAO and TPIAO in the U.S. Dr. Lou completed his post-doctoral study at the U.S. National Institutes of Health in 1995. He received his Ph.D. in Molecular and Cell Biology in 1993 from Fordham University, where he researched interferon signal transduction of gene regulation, and received his medical doctor degree in 1985 from Shanghai 2^nd Military Medical University.

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Liping Xu is one of our directors. Ms. Xu has served as the executive director of Shenyang Sunshine from 1993 to 2002. Prior to joining Shenyang Sunshine, she worked at Shenhou Institute of Military Medicine. Ms. Xu is a senior engineer. She graduated from Shenyang Pharmaceutical University with a master’s degree in microbiology and pharmacology in 1996.

Bin Huang is our vice president of human resources and a director. Mr. Huang has served as vice president in charge of human resources and legal matters since joining Shenyang Sunshine in 1993. Before that he acted as office manager for Shenyang Army Medical Research Center from 1976 to 1993. He received his MBA from Qinghua University in 2002 and a bachelor’s degree in engineering from the Northeast University in 1987.

Lawrence S. Wizel has served as a director since September 2006. He was a partner at Deloitte & Touche LLP from 1980 to June 2006. He also served as deputy professional practice director and northeast region China service group leader of Deloitte & Touche LLP from 2002 to 2006. He has extensive experience serving a diverse client base of both publicly-held and private companies and has also assisted numerous Chinese companies with their US filings with the Securities and Exchange Commission. He is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. He also serves as the Chairman of Board of Trustees of Helen Keller Services for the Blind. He received his bachelor’s degree in science from Michigan State University.

Guanjin Hu has served as one of our directors since August 2006. He has also served as the President of Huaxi Securities Co. Ltd. since 2004. Prior to joining us he served as the Chairman and President of Guoxin Securities Co. Ltd. from 1996 to 2004. Currently Mr. Hu is a vice-chairman of the Securities Association of China and a director member of the Investment Bank Committee of the Securities Association of China. Mr. Hu possesses twelve years of experience in the securities industry in China. He received his bachelor’s degree in economics from Hangzhou University in 1982.

Moujia Qi has served as one of our directors since August 2006. He has also served as the Chairman of the China Starch Industry Association for the past five years. He was the deputy director and chief engineer of Huabei Pharmaceutical Factory and has held several management positions in various state-owned companies in the pharmaceutical industry. He has also served as the deputy director and chief director of Administration, before he retired in 1994.

Clara Mak has been our principal financial and accounting officer since June 2006. From April 1998 to December 2004, Ms. Mak was an investment fund manager for Suez Asia Holdings (Hong Kong) Ltd., a leading private equity firm in Asia. Before that, she worked as a financial auditor with Arthur Andersen LLP and Deloitte & Touche LLP in Toronto, Canada and PricewaterhouseCoopers LLP in Hong Kong. Prior to joining the Company, she served as senior financial advisor for a Nasdaq listed company. Ms. Mak is a qualified chartered accountant in Canada and a certified public accountant in the U.S. She received her MBA from the University of Toronto in 1994.

Dr. Yingfei Wei, our chief scientific officer and vice president for Business Development, joined us in August 2006. She has over fifteen years of research and development experience in the biotechnology and pharmaceutical sectors. Before joining us, she was the co-founder, president and chief executive officer of Elixirin Corporation from 2004 to 2005, responsible for overseeing contract research, manufacturing, regulatory approvals and marketing of anti-aging products in the U.S. and China. Before that, she was director of biotechnology research at Bayer HealthCare Global from 1998 to 2004 and group leader at the discovery research department of Human Genome Sciences Inc. from 1993 to 1998. Dr. Wei is

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named inventor for 37 patents and has authored several publications, primarily in the areas of protein and antibody drug discovery and genomics. Dr. Wei was a postdoctoral fellow at Harvard University’s School of Public Health in 1993. She received her Ph.D. in biochemistry from the University of California in 1990 and a bachelor’s degree in biochemistry from Beijing University in 1983.

Dongmei Su is our chief technology officer responsible for research and development and manufacturing process engineering. She is the named co-inventor for four of our patents. Ms. Su joined Shenyang

Sunshine in 1993 where she served as director of research and development and manufacturing since 1997. She received her bachelor’s degree in biochemical engineering from Jilin University in 1992, and her master’s degree in microbiology and pharmacology from Shenyang Pharmaceutical University in 2001.

Yongfu Chen, our controller, has served as the chief accounting officer of Shenyang Sunshine since he joined us in 2003. Before then, he served as the chief financial officer of Shenyang Northern Transportation Engineering Co. Ltd. in 2002 and as the auditing manager of Shenyang Beitai Group Co. Ltd. from 1999 to 2001. Mr. Chen has over twenty years of accounting experience. He received his bachelor’s degree in industrial accounting from Liaoning University in 1983.

Ke Li, our corporate secretary, is responsible for all corporate and government regulatory matters. Mr. Li has served as the corporate secretary of Shenyang Sunshine since 1996. He joined us in 1993 and held various administrative positions at Shenyang Sunshine before he was appointed corporate secretary. Mr. Li received his MBA from Liaoning University in 2001 and his bachelor’s degree in engineering from Jilin University in 1988.

EMPLOYMENT AGREEMENTS

We have entered into employment agreements with all of our executive officers and employees. Under these agreements, each of our executive officers is employed for a specified time period. We may terminate his or her employment for cause at any time, without notice or remuneration, for certain acts of the employee, including but not limited to a conviction or plea of guilty to a felony or to an act of fraud, misappropriation or embezzlement, negligence or dishonest act to the detriment of the company, or misconduct of the employee and failure to perform his or her agreed-to duties after a reasonable opportunity to cure the failure. Furthermore, we may terminate the employment without cause at any time, in which case we will pay the employee a compensation equal to one month of his or her salary for each year of his or her service for our company. An executive officer may terminate the employment at any time upon one month, written notice.

Each executive officer has agreed to hold, both during and subsequent to the term of the employment agreement, our confidential information in strict confidence and not to disclose such information to anyone except our other employees who have a need to know such information in connection with our business. The executive officers have also agreed to assign to us all rights, titles and interests to or in any inventions that they may conceive or develop during the period of employment, including any copyrights, patents, mark work rights, trade secrets or other intellectual property rights pertaining to such inventions. Specifically, each executive officer has agreed not to, while employed by us and for a period of three years following the termination or expiration of the employment agreement, (i) approach our clients, customers or contacts or other persons or entities introduced to the executive officer for the purposes of doing business with such persons or entities, and will not interfere with the business relationship between us and such persons and/or entities; (ii) assume employment with or provide services as a director or otherwise for any of our competitors, or engage, whether as principal, partner, licensor or otherwise, in any business which is in direct or indirect competition with our business; or

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(iii) seek directly or indirectly, to solicit the services of any of our employees employed by us at or after the date of the executive officer’s termination, or in the year preceding such termination.

BOARD OF DIRECTORS

Our board of directors currently consists of seven members, including Mr. Lawrence S. Wizel, Mr. Huanjin Hu, and Mr. Moujia Qi, all of whom are independent directors within the meaning of Rule 4200(a)(15) of the Nasdaq Marketplace Rules, as amended from time to time. Mr. Dan Lou, our chairman, is the father of Dr. Jing Lou, our chief executive officer.

Our audit committee of the board of directors, consisting of Mr. Lawrence S. Wizel, Mr. Huanjin Hu and Mr. Moujia Qi, was established on October 7, 2006. Since there are no specific requirements under Cayman Islands law on the composition of our audit committee, our practice was established by our board of directors by reference to similarly situated issuers. Our practice is in line with Rule 4350(d) of the Nasdaq Marketplace Rules that requires the audit committees of U.S. companies to have a minimum of three independent directors. All members of our audit committee satisfy the “independence” requirements of each of the Nasdaq Marketplace Rules and 10A(m)(3)(B)(i) of the Exchange Act. The audit committee is responsible for overseeing the accounting and financial reporting processes of our company and audits of our financial statements, including the appointment, compensation and oversight of the work of our independent auditors. Mr. Wizel is the Chairman of the audit committee.

We do not have a compensation committee or nominations committee, nor is independent director involvement required in the selection of director nominees or in the determination of executive compensation. This home country practice of ours differs from Rule 4350(c) of the Nasdaq Marketplace Rules regarding independent directors’ involvement in these areas, because there are no specific requirements under Cayman Islands law on the establishment of compensation committees or nominations committees, and neither are there any requirements on independent directors’ involvement in the selection of director nominees nor in the determination of executive compensation.

DUTIES OF DIRECTORS

Under Cayman Islands law, our directors have a fiduciary duty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended from time to time.

The functions and powers of our board of directors include, among others:

Ø convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;

Ø declaring dividends and distributions;

Ø appointing officers and determining the term of office of officers;

Ø exercising the borrowing powers of our company and mortgaging the property of our company; and

Ø approving the transfer of shares of our company, including the registering of such shares in our share register.

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TERMS OF DIRECTORS AND EXECUTIVE OFFICERS

Our articles of association provide for a staggered board of directors. At each annual general meeting of our shareholders, one third of our directors (or, if their number is not a multiple of three, the number nearest to but not greater than one-third) are required to stand for reelection. The Chairman shall not be required to stand for reelection at any annual meeting, and will serve for an indefinite term. In addition, the Chairman will not be taken into account in determining the number of directors who must stand for reelection in each year.

The particular directors that must stand for reelection at each annual general meeting is determined according to a rotation. Should a director choose not to offer himself or herself for reelection at an annual meeting, the number of directors who must stand for reelection at that meeting is reduced accordingly. Directors who have been longest in office since their last re-election or appointment shall stand for reelection at the annual meeting, provided that, in the case of directors who were last elected on the same day, which director must stand for reelection shall (unless they otherwise agree among themselves) be determined by lot.

Any director appointed to fill a vacancy shall serve only until the next annual meeting, and shall not be taken into account in determining which particular directors or the number of directors who are stand for reelection at such annual meeting.

Our executive officers are appointed by and serve at the discretion of our board of directors.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers receive compensation in the form of annual salaries and bonuses. While we do not have a specific bonus plan setting the calculation of our annual bonuses, each director and executive officer is entitled to receive an annual discretionary bonus based upon his or her performance of such amount as shall be determined by the board of directors.

In 2005, the aggregate cash compensation we paid to our executive officers, including all the directors, was approximately US$220,399. If we terminate an employment agreement with an executive officer without cause, we are required to pay compensation equal to one month of his or her salary for each year of his or her service to our company.

STOCK OPTION PLAN

We adopted our 2006 stock incentive plan on September 5, 2006, which provides for the grant of incentive stock options, non-qualified stock options, restricted stock and restricted stock units, each of which we referred to as “awards.” The 2006 stock incentive plan is administered by the board of directors. The purpose of the plan is to provide additional incentive to those officers, employees, directors, consultants and other service providers whose contributions are essential to the growth and success of our business, in order to strengthen the commitment of such persons to us and motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts will result in our long-term growth and profitability.

We are authorized under the 2006 stock incentive plan to issue direct awards, to sell shares or grant options to purchase shares for up to cumulatively 10% of the issued shares outstanding from time to time. The 2006 stock incentive plan provides for the grant to our employees, directors, and consultants or any other participants that the board of directors shall decide in good faith. The board of directors has

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complete discretion to select the grantees and to establish the terms and conditions of the grants, subject to the provisions of the 2006 stock incentive plan.

Plan Administration.    Our 2006 stock incentive plan is administered by our board of directors or a committee or subcommittee appointed by our board of directors. In each case, our board of directors or the committee will determine the provisions and terms and conditions of each award grant, including, but not limited to, the exercise price for the options, vesting schedule, form of payment of exercise price and other applicable terms.

Award Agreement.    Awards to be granted under our 2006 stock incentive plan are evidenced by an award agreement that sets forth the terms and conditions for each award grant, which include, among other things, the vesting schedule, exercise price, type of option and expiration date of each award grant.

Eligibility.    We may grant awards to an officer, director, employee, consultant, advisor or another service provider of our company or any of our parent or subsidiaries, provided that directors of our company or any of our parent or subsidiary who are not also employees of our company or any of our parent or subsidiaries, and consultants or advisors to our company or any of our parent or subsidiaries may not be granted incentive stock options.

Option Term.    The term of each option to be granted under the 2006 stock incentive plan may not exceed five years from the date of grant.

Exercise Price.    In the case of non-qualified stock options, the per share exercise price of shares purchasable under an option shall be determined by the plan administrator in his or her sole discretion at the time of grant. In the case of incentive stock options, the per share exercise price of shares purchasable under an option shall not be less than 100% of the fair market value per share at the time of grant. However, if we grant an incentive stock option to an employee, who at the time of that grant owns shares representing more than 10% of the voting power of all classes of our share capital, the exercise price cannot be less than 110% of the fair market value of our ordinary shares on the date of that grant.

Amendment and Termination.    Our board of directors may at any time amend, alter or discontinue the plan, provided that no amendment, alteration or discontinuation shall be made that would impair the rights of a participant under any award theretofore granted without such participant’s consent. Unless terminated earlier, our 2006 stock incentive plan shall continue in effect for a term of five years from the effective date of the plan.

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The following table summarizes, as of the date of this prospectus, options that we granted to several of our directors and executive officers and to other individuals as a group under our 2006 stock incentive plan:

Name	Number of shares to be issued upon exercise of options	Per share exercise price (US$)	Grant date	Date of Expiration
Dr. Jing Lou	185,400	1.60	October 1, 2006	October 1, 2009
Bin Huang	30,000	1.60	October 1, 2006	October 1, 2009
Lawrence S. Wizel	15,000	1.60	October 1, 2006	October 1, 2009
Guanjin Hu	15,000	1.60	October 1, 2006	October 1, 2009
Moujia Qi	15,000	1.60	October 1, 2006	October 1, 2009
Clara Mak	*	1.60	October 1, 2006	October 1, 2009
Dr. Yingfei Wei	*	1.60	October 1, 2006	October 1, 2009
Yongfu Chen	*	1.60	October 1, 2006	October 1, 2009
Dongmei Su	50,000	1.60	October 1, 2006	October 1, 2009
Ke Li	30,000	1.60	October 1, 2006	October 1, 2009
Other individuals as a group	531,000	1.60	October 1, 2006	October 1, 2009

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Related party transactions

Corporate guarantees

In 2006, we entered into an arrangement by which we and one of our shareholders, China Transport, cross guaranteed certain of each other’s loans. As of September 30, 2006, China Transport had outstanding loans in the aggregate principal amount of RMB10 million (US$1.3 million) guaranteed by us.

These arrangements were a result of the long established cross guaranteed banking relationship with China Transport in which China Transport also provided guarantees for our bank loans. In anticipation of this offering, we managed to reduce a significant portion of the cross guaranteed loan for China Transport by RMB27 million compared to the amount as of December 31, 2005. The ultimate beneficiary of China Transport is committed to using the proceeds from selling his 0.94% pre-IPO equity interest at the initial public offering for repaying loans in the aggregate principal amount of RMB10 million to the bank, which will become due in February 2007.

We believe that it is probable that China Transport will be able to make all scheduled payments in relation to these loans and that the estimated fair value of our stand-by commitment is not material. Therefore, no liability representing the estimated fair value of these financial guarantees has been recorded in our consolidated balance sheet.

In addition, we owed LifeGen, Inc., an investee company founded by our CEO, Dr. Jing Lou, research and development expenses in the amount of RMB1.8 million (US$0.2 million) as of December 31, 2005. The balance was settled during the nine months ended September 30, 2006. We no longer have any outstanding payment obligations toward LifeGen, Inc.

Disposal of interest in Beijing Sunshine and Liaoning Sunshine

In October 2006, in connection with our corporate reorganization, we transferred our 45% equity interest in Beijing Sunshine to Ms. Dongmei Su, our chief technology officer, for a cash consideration of RMB454,500, representing 45% of the initial registered capital of Beijing Sunshine.

In November 2006, in connection with our corporate reorganization, we transferred our 90% equity interest in Liaoning Sunshine to Mr. Dan Lou, our chairman, for a payment of RMB13,500,000 from Mr. Lou, representing 90% of the initial registered capital of Liaoning Sunshine. In December 2006, we paid RMB13,500,000 to Mr. Lou as prepayment of the purchase price to buy back Mr. Lou’s equity interest in Liaoning Sunshine. For more details on these contractual arrangements, see “Our corporate structure—Contractual arrangements with Liaoning Sunshine and Beijing Sunshine.”

Stock-based compensation

On October 15, 2006, Achieve Well granted an aggregate number of 312,504 ordinary shares to a director and a senior executive as compensation for their on-going services rendered to us. For more details, see “—Critical accounting policies and estimates—Stock-based compensation expenses” and footnote 16 to our consolidated financial statements included elsewhere in this prospectus.

On October 1, 2006, we granted options to purchase our ordinary shares to our executive officers and directors, is described in “Management—Stock Option Plan.”

Miscellaneous

In 2005, we paid RMB800,000 (US$101,000) for the purchase of motor vehicles from Shenyang Keweier, a shareholder.

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Principal and selling shareholders

The following table sets forth information with respect to beneficial ownership of our ordinary shares as of the date hereof and as adjusted to reflect the sale of ADSs offered by us in this offering, by:

Ø each of our executive officers and directors;

Ø each person known by us to beneficially own 5% or more of our ordinary shares; and

Ø each other selling shareholder who will participate in this offering.

	Shares beneficially owned prior to offering(1)(2)			Shares being sold in this offering (assuming no exercise of the over-allotment option)		Shares beneficially owned after this offering (assuming no exercise of the over-allotment option)		Shares being sold in this offering (assuming full exercise of the over- allotment option)(1)(2)		Shares beneficially owned after this offering (assuming full exercise of the over-allotment option)
Name	Number		%	Number	%	Number	%	Number	%	Number	%
Directors and executive officers:
Dan Lou(3)	13,070,053		13.07	—	—	13,070,053	8.70	1,322,627	0.86	11,747,426	7.68
Dr. Jing Lou(4)	4,856,252		4.86	—	—	4,856,252	3.23	—	—	4,856,252	3.17
Liping Xu(5)	9,588,301		9.59	—	—	9,588,301	6.38	3,674,452	2.40	5,913,849	3.86
Clara Mak	*		*	—	—	*	*	—	—	*	*
Dr. Yingfei Wei	*		*	—	—	*	*	—	—	*	*
Yongfu Chen	*		*	—	—	*	*	—	—	*	*
Lawrence S. Wizel	*		*	—	—	*	*	—	—	*	*
Guanjin Hu	*		*	—	—	*	*	—	—	*	*
Moujia Qi	*		*	—	—	*	*	—	—	*	*
Bin Huang(6)	1,770,860		1.77	—	—	1,770,860	1.18	177,086	0.12	1,593,774	1.04
Dongmei Su(7)	1,053,742		1.05	—	—	1,053,742	0.70	105,371	0.07	948,371	0.62
Ke Li(8)		*	*	—	—	*	*	*	*	*	*
Principal and Selling Shareholders:
Achieve Well International Limited(9)	29,035,123		29.03	1,145,291	0.76	27,889,832	18.55	1,769,362	1.16	26,120,470	17.07
Happyview Finance Limited(10)	16,024,392		16.02	999,999	0.67	15,024,393	10.00	—	—	15,024,393	9.82
Lan’s Holdings Limited(11)	12,232,215		12.23	499,996	0.33	11,732,219	7.81	—	—	11,732,219	7.67
Pacven Walden Ventures VI, LP(12)	10,353,142		10.35	—	—	10,353,142	6.89	—	—	10,353,142	6.77
Starry Investments Limited(13)	9,400,001		9.40	939,995	0.63	8,460,006	5.63	—	—	8,460,006	5.53
W&W International Investments Limited(14)	7,732,074		7.73	—	—	7,732,074	5.14	—	—	7,732,074	5.05
Witty Mind International Limited(15)	6,000,000		6.00	—	—	6,000,000	3.99	599,998	0.39	5,400,002	3.53
Precious Winwin Limited(16)	3,000,000		3.00	—	—	3,000,000	2.00	2,999,997	1.96	*	*

* Beneficially owns less than 1% of our outstanding ordinary shares.

(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, and includes voting or investment power with respect to the ordinary shares.

(2) The number of our ordinary shares outstanding in calculating the percentage for each listed person is based on 100,000,998 ordinary shares outstanding as of the date hereof, 150,315,717 ordinary shares outstanding after completion of this offering (assuming no exercise of the over-allotment option) and 153,031,360 ordinary shares outstanding after the completion of this offering (assuming full exercise of the over-allotment option).

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Principal and selling shareholders

(3) Mr. Dan Lou, our chairman, beneficially owns 7,070,053 ordinary shares, which are held in trust on his behalf by Achieve Well International Limited. In addition, he holds 6,000,000 ordinary shares indirectly through his wholly-owned company, Witty Mind International Limited.

(4) In addition, Dr. Jing Lou, our chief executive officer, beneficially owns 4,856,252 ordinary shares, which are held in trust on his behalf by Achieve Well International Limited and which number of ordinary shares includes 156,252 ordinary shares granted to Dr. Jing Lou as stock-based compensation.

(5) Ms. Liping Xu, our director and vice president, beneficially owns 6,588,301 ordinary shares, which are held in trust on her behalf by Achieve Well International Limited. In addition, she holds 3,000,000 ordinary shares indirectly through her wholly-owned company, Precious Winwin Limited.

(6) Mr. Bin Huang, our director and vice president of human resources, beneficially owns 1,770,860 ordinary shares, which are held in trust on his behalf by Achieve Well International Limited.

(7) Ms. Dongmei Su, our chief technology officer, beneficially owns 1,053,742 ordinary shares, which are held in trust on her behalf by Achieve Well International Limited.

(8) Mr. Ke Li, our corporate secretary, beneficially owns 898,205 ordinary shares, which are held in trust on his behalf by Achieve Well International Limited.

(9) Achieve Well International Limited is a British Virgin Islands international business company for investment purpose with its business address at No.3 A1, Road 10, Shenyang Economy & Technology Development Zone, Shenyang, P.R. China. Achieve Well International Limited is beneficially owned by Mr. Dan Lou (approximately 24.3%), Ms. Liping Xu (approximately 22.7%), Mr. Jing Lou (approximately 16.7%), Mr. Bin Huang (approximately 6.1%), Ms. Dongmei Su (approximately 3.6%), Mr. Ke Li (approximately 3.1%), Ms. Clara Mak and certain other individuals. Each beneficial owner of Achieve Well International Limited has the voting rights with respect to the securities beneficially owned by him or her.

(10) Happyview Finance Limited is a British Virgin Islands international business company solely owned by Mr. Ou Su, who has both investment and voting authority with respect to the voting securities of such company. Its business address is at Room 608, Block Q, Hui Yuan Gong Yu, Ya Yun Cun, Chaoyang District, Beijing, P.R. China and Mr. Ou Su is its sole director.

(11) Lan’s Holdings Limited is a British Virgin Islands international business company owned by Mr. Xiaobing Liu (49%) and Ms. Ying Luan (51%), who each have both investment and voting authority with respect to the voting securities held by him or her. Its business address is at Room 22B, No.969 Beijing Road West, Jianan District, Shanghai, P.R. China.

(12) Pacven Walden Ventures VI, LP is a Cayman Islands limited partnership of which the beneficial owner is Pacven Walden Management VI Co., Ltd. Its business address is at 2806A Central Plaza, 18 Harbour Road, Wanchai, Hong Kong. It acquired 10,353,142 shares from Fullcity International Limited, a former shareholder of our company and the predecessor of which is Montgomery Bio-Medicine Inc., on October 10, 2006.

(13) Starry Investments Limited is a Samoan international business company solely owned by Ms. Lili Liu, who has both investment and voting authority with respect to the voting securities of such company. Its business address is at 4 Zhong Xing Street, Heping District, Shenyang, Liaoning, P.R. China and Ms. Lili Liu is its sole director.

(14) W&W International Investments Limited is a British Virgin Islands international business company solely owned by Ms. Lisha Zhang, who has both investment and voting authority with respect to the voting securities of such company. Its business address is at 9B1 Hexiang Yuan, No.12, Hexiang West Road, Kaiyuan District, Xiamen, P.R. China and Ms. Lisha Zhang is its sole director.

(15) Witty Mind International Limited is a British Virgin Islands international business company solely owned by Mr. Dan Lou, who has both investment and voting authority with respect to the voting securities of such company. Its business address is at No.3 A1, Road 10, Shenyang Economy & Technology Development Zone, Shenyang, P.R. China.

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Principal and selling shareholders

(16) Excludes 4,463,392 shares sold to Remose Enterprises Limited, a British Virgin Islands company organized for investment purpose in November 2006. Precious Winwin Limited is a British Virgin Islands international business company solely owned by Ms. Liping Xu, who has both investment and voting authority with respect to the voting securities of such company. Its business address is at No.3 A1, Road 10, Shenyang Economy & Technology Development Zone, Shenyang, P.R. China. Remose Enterprises Limited is a British Virgin Islands international business company solely owned by Mr. Xuechuan Xu for investment purpose. Its business address is 3301, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong and Mr. Xuechuan Xu is its sole director.

The selling shareholders named above acquired their ordinary shares (or preferred shares which will be converted into ordinary shares prior to or concurrently with the completion of this offering) in offerings which were exempt from registration under the Securities Act because they were made in either private placements or offshore sales to non-U.S. persons.

The discussions and table above do not reflect (i) the 1,060,000 ordinary shares underlying options granted to several of our directors, officers and employees on October 1, 2006, none of which will vest within 60 days from the date of this prospectus; or (ii) the 15,000 ordinary shares granted to a senior executive in August 2006 with a one-year vesting period.

As of the date of this prospectus, none of our outstanding ordinary shares are held of record by any person in the United States. None of our shareholders has informed us that it is affiliated with a registered broker-dealer, or is in the business of underwriting securities. None of our existing shareholders has different voting rights from other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

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Regulations

The pharmaceutical industry is heavily regulated in the PRC. This section summarizes the principal PRC regulations relating to our business.

REGULATIONS FOR PHARMACEUTICAL INDUSTRY IN CHINA

Regulatory authorities

In the PRC, the State Food and Drug Administration, or the SFDA, is the authority that monitors and supervises the administration of pharmaceutical products and medical appliances and equipment as well as food, health food and cosmetics. The SFDA’s predecessor, the State Drug Administration, or the SDA, was established on August 19, 1998 as an organization under the State Council to assume the responsibilities previously handled by the Ministry of Health of the PRC, or the MOH, the State Pharmaceutical Administration Bureau of the PRC and the State Administration of Traditional Chinese Medicine of the PRC. The SFDA was founded in March 2003 to replace the SDA.

The primary responsibilities of the SFDA include:

Ø monitoring and supervising the administration of pharmaceutical products, medical appliances and equipment as well as food, health food and cosmetics in the PRC;

Ø formulating administrative rules and policies concerning the supervision and administration of food, health food, cosmetics and the pharmaceutical industry;

Ø evaluating, registering and approving of new drugs, generic drugs, imported drugs and traditional Chinese medicine, or TCM;

Ø approving and issuing permits for the manufacture and export/import of pharmaceutical products and medical appliances and equipment and approving the establishment of enterprises to be engaged in the manufacture and distribution of pharmaceutical products; and

Ø examining and evaluating the safety of food, health food and cosmetics and handling significant accidents involving these products.

The MOH is an authority at the ministerial level under the State Council and is primarily responsible for national public health. Following the establishment of the SFDA in 2003, the MOH was put in charge of the overall administration of the national health in the PRC excluding the pharmaceutical industry. The MOH performs a variety of tasks in relation to the health industry such as establishing social medical institutes and producing professional codes of ethics for public medical personnel. The MOH is also responsible for overseas affairs, such as dealings with overseas companies and governments.

Drug administration laws and regulations

The PRC Drug Administration Law as promulgated by the Standing Committee of the National People’s Congress in 1984 and the Implementing Measures of the PRC Drug Administration Law as promulgated by the MOH in 1989 have laid down the legal framework for the establishment of pharmaceutical manufacturing enterprises, pharmaceutical trading enterprises and for the administration of pharmaceutical products including the development and manufacturing of new drugs and medicinal preparations by medical institutions. The PRC Drug Administration Law also regulates the packaging, trademarks and the advertisements of pharmaceutical products in the PRC.

Certain revisions to the PRC Drug Administration Law took effect on December 1, 2001. They were formulated to strengthen the supervision and administration of pharmaceutical products, and to ensure

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the quality of pharmaceutical products and the safety of pharmaceutical products for human use. The revised PRC Drug Administration Law applies to entities and individuals engaged in the development, production, trade, application, supervision and administration of pharmaceutical products. It regulates and prescribes a framework for the administration of pharmaceutical manufacturers, pharmaceutical trading companies, medicinal preparations of medical institutions and the development, research, manufacturing, distribution, packaging, pricing and advertisements of pharmaceutical products.

The PRC Drug Administration Implementation Regulations promulgated by the State Council took effect on September 15, 2002 to provide detailed implementation regulations for the revised PRC Drug Administration Law.

Examination and approval of new medicines

In October 2002, the SFDA announced the Administrative Measures on the Registration of Pharmaceutical Products, which were later revised on February 28, 2005. Under the current applicable regulations, new medicines generally refer to those medicines that have not yet been marketed in the PRC. In addition, certain marketed medicines may also be treated as new medicines if the type or application method of such medicines has been changed or new therapeutic functions have been added to such medicines. According to the Administrative Measures on the Registration of Pharmaceutical Products, the approval of new medicines requires the following steps:

Ø Upon completion of the pre-clinical research of the new medicine, application for registration of the new medicine shall be submitted to the drug regulatory authorities at the provincial level for review. After completion of its review the drug regulatory authorities at the provincial level shall submit their opinion and report to the SFDA for review;

Ø if all the requirements are complied with, the SFDA will issue a notice of acceptance of application and proceed with its assessment on whether or not to grant the approval for conducting the clinical research on the new medicine;

Ø after obtaining the SFDA’s approval for conducting the clinical research, the applicant may proceed with the relevant clinical research (which is generally conducted in three phases for a new medicine under the Medicine Registration Measures) at institutions with appropriate qualification:

- Phase I refers to the preliminary clinical trial for clinical pharmacology and body safety. It is conducted to observe the human body tolerance for new medicine and pharmacokinetics, so as to provide a basis for determining the prescription plan.

- Phase II refers to the stage of preliminary evolution of clinical effectiveness. The purpose is to preliminarily evaluate the clinical effectiveness and safety of the medicine used on patients with targeted indication, as well as to provide a basis for determining the Phase III clinical trial research plan and the volume under the prescription plan.

- Phase III is a clinical trial stage to verify the clinical effectiveness. The purpose is to test and determine the clinical effectiveness and safety of the medicine used on patients with targeted indication, to evaluate the benefits and risks thereof, and, eventually, to provide sufficient basis for review of the medicine registration application.

Ø after completion of the relevant clinical research, the applicant shall submit its clinical research report together with the relevant supporting documents to the drug regulatory authorities at the provincial level and shall provide raw materials of the standard products to the PRC National Institute for the Control of Pharmaceutical and Biological Products;

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Ø the drug regulatory authorities at the provincial level shall then review the relevant documents, conduct site inspections and sample examinations and thereafter submit their opinion, inspection report and other application materials to the SFDA for review;

Ø the PRC National Institute for the Control of Pharmaceutical and Biological Products will arrange for the examination of the sample new drug supplied by the relevant medicine examination institutes and will then issue the examination result report to the SFDA; and

Ø if all the regulatory requirements are satisfied, the SFDA will grant a new drug certificate and a pharmaceutical approval number (assuming the applicant has a valid Pharmaceutical Manufacturing Permit and the requisite production conditions for the new medicine have been met).

Permits and licenses for manufacturing and registration of drugs

Production License.    To manufacture pharmaceutical products in the PRC, a pharmaceutical manufacturing enterprise must first obtain a Pharmaceutical Manufacturing Permit issued by the relevant pharmaceutical administrative authorities at the provincial level where the enterprise is located. Among other things, such a permit must set forth the permit number, the name, legal representative and registered address of the enterprise, the site and scope of production, issuing institution, date of issuance and effective period.

Each Pharmaceutical Manufacturing Permit issued to a pharmaceutical manufacturing enterprise is effective for a period of five years. Any enterprise holding a Pharmaceutical Manufacturing Permit is subject to review by the relevant regulatory authorities on an annual basis. The enterprise is required to apply for renewal of such permit within six months prior to its expiry and will be subject to reassessment by the issuing authorities in accordance with then prevailing legal and regulatory requirements for the purposes of such renewal.

Business Licenses.    In addition to a Pharmaceutical Manufacturing permit, the manufacturing enterprise must also obtain a business license from the administrative bureau of industry and commerce at the local level after it has obtained the requisite Pharmaceutical Manufacturing Permit. The name, legal representative and registered address of the enterprise specified in the business license must be identical to that set forth in the Pharmaceutical Manufacturing Permit.

Registration of Pharmaceutical Products.    All pharmaceutical products that are produced in the PRC must bear a registered number issued by the SFDA in the PRC, with the exception of Chinese herbs and Chinese herbal medicines in soluble form. The medicine manufacturing enterprises must obtain the medicine registration number before manufacturing any medicine.

GMP Certificates.    The World Health Organization encourages the adoption of good manufacturing practice, or GMP, standards in pharmaceutical production in order to minimize the risks involved in any pharmaceutical production that cannot be eliminated through testing the final products.

The Guidelines on Good Manufacturing Practices, as amended in 1998, or the Guidelines, took effect on August 1, 1999 and set the basic standards for the manufacture of pharmaceuticals. These Guidelines cover issues such as the production facilities, the qualification of the staff at the management level, production plant and facilities, documentation, material packaging and labeling, inspection, production management, sales and return of products and customers’ complaints. On October 23, 2003, the SFDA issued the Notice on the Overall Implementation and Supervision of Accreditation of Good Manufacturing Practice Certificates for Pharmaceuticals, which required all pharmaceutical manufacturers to apply for the GMP certificates by June 30, 2004. Those enterprises that failed to obtain

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the GMP certificates by December 31, 2004 would have their Pharmaceutical Manufacturing Permit revoked by the drug administrative authorities at the provincial level. The GMP certificate is valid for a term of five years and application for renewal must be submitted six months prior to its expiration date.

Administrative protection and monitoring periods for new drugs

In April 1999, the SFDA promulgated the Regulations for New Drug Protection and Related Technology Transfer, or the 1999 Regulations, which provided a six to twelve year administrative protection period for different categories of new drugs. During the protection period of a new drug manufactured by a specific pharmaceutical company, other enterprises or individuals are prohibited from manufacturing a similar drug or expanding the label of any existing drug to include the same indication. In December 2002, the 1999 Regulations were replaced by the Administrative Measures on the Registration of Pharmaceutical Products, or the 2002 Regulations, which were later revised in February 2005. However, according to an official notice of the SFDA, administrative protection periods granted prior to September 2002 pursuant to the 1999 Regulations will stay valid until their respective expiration dates.

According to the 2002 Regulations, with a view to protecting public health, the SFDA may provide for administrative monitoring periods of up to five years for new drugs approved to be manufactured, to continually monitor the safety of those new drugs. The key element in determining the availability and duration of the monitoring period is the safety of the new drug. The SFDA will consider, among other things, whether the new drug has been previously launched domestically or overseas, what type of new drug it is and what process and technology are involved in the production of the new drug. For example, for a biochemical product that has never been launched domestically or overseas, a five-year monitoring period will be granted; for a biochemical product that has been launched overseas but not domestically, only a four-year monitoring period will be granted.

During the monitoring period of a new drug, the SFDA will not approve any other enterprise’s application to manufacture or import a similar new drug. The only exception is that the SFDA will continue to handle any application if, prior to the commencement of the monitoring period, the SFDA has already approved the applicant’s clinical trial for a similar new drug. If such application conforms to the relevant provisions, the SFDA may approve such applicant to manufacture or import the similar new drug during the remainder of the monitoring period.

Any applicant who is not satisfied with the SFDA’s decision can appeal within ten days of its receipt of the SFDA’s decision. If the applicant is dissatisfied with the result of the appeal, it may apply for an administrative review with a special committee consisting of senior officials of the SFDA or file an administrative lawsuit with a people’s court in China.

Distribution of pharmaceutical products

According to the PRC Drug Administration Law and its implementing regulations and the Administrative Measures on Oversight of Distribution of Pharmaceutical Products, a manufacturer of pharmaceutical products in the PRC can only engage in the trading of the pharmaceutical products that the manufacturer has produced itself. In addition, such manufacturer can only sell its products to:

Ø wholesalers and distributors holding Pharmaceutical Trading Permits;

Ø other holders of Pharmaceutical Manufacturing Permits; or

Ø medical practitioners holding Medical Practice Permits.

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A pharmaceutical manufacturer in the PRC is prohibited from selling its products to end-users, or individuals or entities other than holders of Pharmaceutical Trading Permits, the Pharmaceutical Manufacturing Permits or the Medical Practice Permits.

The granting of a Pharmaceutical Trading Permit to wholesalers shall be subject to approval of the provincial level FDA, while the granting of a retailer permit shall be subject to the approval of the FDA above the county level. Unless otherwise expressly approved, no pharmaceutical wholesaler may engage in the retail of pharmaceutical products, and neither may pharmaceutical retailers engage in wholesale.

A pharmaceutical distributor shall satisfy the following requirements:

Ø Personnel with pharmaceutical expertise as qualified according to law;

Ø Business site, facilities, warehousing and sanitary environment compatible to the distributed pharmaceutical products;

Ø Quality management system and personnel compatible to the distributed pharmaceutical products; and

Ø Rules and regulations to ensure the quality of the distributed pharmaceutical products.

Operations of pharmaceutical distributors shall be conducted in accordance with the Pharmaceutical Operation Quality Management Rules and shall be granted a certificate under such rules by the SFDA.

Pharmaceutical distributors must keep true and complete records of any pharmaceutical products purchased, distributed or sold with the generic name of such products, specification, approval code, term, manufacturer, purchasing or selling party, price and date of purchase or sale. A pharmaceutical distributor must keep such record at least until one year after the expiry date of such products and in any case, such record must be kept for no less than three years. Penalties may be imposed for any violation of record-keeping.

Pharmaceutical distributors can only distribute pharmaceutical products obtained to those with a Pharmaceutical Manufacturing Permit and a Pharmaceutical Trading Permit.

Price control

The administration of price control of pharmaceutical products is vested in the national and provincial price administration authorities. Depending on the categories of pharmaceutical products in question, the prices of pharmaceutical products listed in the State Basic Medical Insurance Drug Catalogue, drugs with patents and other drugs whose production or trading may constitute monopolies are subject to the control of the National Development and Reform Commission of the PRC, or the NDRC, and the relevant provincial or local price administration authorities. In respect of pharmaceutical products manufactured in the PRC, the national price administration authority from time to time publishes price control lists setting out the names of pharmaceutical products and their respective price ceilings. The provincial price administration authorities also publish price control lists in respect of the pharmaceutical products which are manufactured within their respective areas. The main purpose of the price control policy is to set an upper limit to the prices of pharmaceutical products to prevent excessive increases in the prices of such products. Pursuant to the Measures for Medicine Pricing by the Government, the price ceiling is determined mainly by reference to the quality of the product, whether the products are newly developed products, and the status of implementing the GMP Guidelines by the manufacturer of the relevant product.

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The prices of pharmaceutical products included in the price control lists are subject to adjustment upon approval by the price administration authorities from time to time. Pharmaceutical enterprises in the PRC are required to submit cost related information such as raw material prices regularly to the relevant authorities, so that the authorities could take into account the prevailing market conditions when setting the prices. The price administration authorities may approve adjustments to the price of pharmaceutical products upon the pharmaceutical manufacturer’s request if material changes in the cost structure in producing the pharmaceutical products or significant changes in demand for these pharmaceutical products are recognized.

Product liability

In addition to the strict new drug approval process, certain PRC laws have been promulgated to protect the rights of consumers and to strengthen the control of medical products in the PRC. Under current PRC law, manufacturers and vendors of defective products in the PRC may incur liability for loss and injury caused by such products. Pursuant to the General Principles of the Civil Law of the PRC, or the PRC Civil Law, promulgated on April 12, 1986, a defective product which causes property damage or physical injury to any person may subject the manufacturer or vendor of such product to civil liability for such damage or injury.

On February 22, 1993 the Product Quality Law of the PRC, or the Product Quality Law, was promulgated to supplement the PRC Civil Law aiming to protect the legitimate rights and interests of the end-users and consumers and to strengthen the supervision and control of the quality of products. The Product Quality Law was revised by the Ninth National People’s Congress on July 8, 2000. Pursuant to the Product Quality Law, manufacturers who produce defective products may be subject to civil or criminal liability and have their business licenses revoked.

On October 31, 1993, the PRC Law on the Protection of the Rights and Interests of Consumers, or the Consumers Protection Law, was promulgated which provides further protection to the legal rights and interests of consumers in connection with the purchase or use of goods and services. At present, all business operations must observe and comply with the Consumers Protection Law when they provide their goods and/or consumer services.

Health insurance system

According to the State Council Decision On the Establishment of the Basic Medical Insurance System of Staff in Cities and Town promulgated by the State Council in December 1998, the Ministry of Labor and Social Security assumed the responsibilities for the reform of the social medical insurance system. As part of the reform of the state basic medical insurance system for employees in the urban areas, the Ministry of Labor and Social Security, the MOH, the SDFA and various other governmental departments jointly issued the State Basic Medical Insurance Drug Catalogue with a view to enhancing the management of the use of drugs under the medical insurance system. The drugs listed in the catalogue are covered by the medical insurance system. The labor and social security authorities at the provincial level may, subject to ratification by the Ministry of Labor and Social Security, make amendments to the list of category B drugs in the catalogue to a small extent to suit local needs.

Patent and trademark protection

PRC Patent Law

The PRC first allowed patents for the protection of proprietary rights, as set forth in the China Patent Law, in 1985. Pharmaceutical inventions were not patentable under the China Patent Law until 1994.

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Patents relating to pharmaceutical inventions are effective for 20 years from the initial date the patent application was filed.

Patent prosecution

The Chinese patent prosecution system is different from the U.S. system in a number of ways. The Chinese patent system, like most countries other than the United States, adopts the principle of “first to file.” This means that, where more than one person files a patent application for the same invention, a patent will be granted to the person who first filed the application. The United States uses a principle of first to discover to determine the granting of patents. In addition, the PRC requires absolute novelty in order for an invention to be patentable. Pursuant to this requirement, any prior written or oral publication, demonstration or use before filing the patent application prevents an invention from being patented in the PRC. Conversely, inventors in the United States have a one year grace period after publication of the invention in which they may file a patent. Patents issued in the PRC are not enforceable in Hong Kong, Taiwan or Macau, which each have independent patent systems. Patents are filed at the State Intellectual Property Office, or SIPO, in Beijing.

Patent enforcement

A patent holder who believes the patent is being infringed may either file a civil legal suit or file an administrative complaint with a provincial or municipal office of SIPO. A PRC court may issue a preliminary injunction upon the patent holder’s or an interested party’s request before instituting any legal proceedings or during the proceedings. Damages for infringement are calculated as either the loss suffered by the patent holder arising from the infringement or the benefit gained by the infringer from the infringement. If it is difficult to ascertain damages in this manner, damages may be determined in the range of from one to three times of the license fee under a contractual license. If damages cannot still be determined, statutory damages from RMB5,000 to 500,000 may be requested. As in other jurisdictions, with one notable exception, the patent holder in the PRC has the burden of proving that the patent is being infringed. However, if a the holder of a manufacturing process patent alleges infringement of such patent, the alleged infringing party has the burden of proving that there has been no infringement.

Compulsory license

Under the Patent Law, where a person possesses the means to utilize a patented technology, but such person cannot obtain a license from the patent holder on reasonable terms and in a reasonable period of time, SIPO is authorized to grant a compulsory license. A compulsory license can also be granted where a national emergency or any extraordinary state of affairs occurs or where the public interest so requires. We do not believe a compulsory license has yet been granted by the SIPO.

International patent treaties

The PRC is also a signatory to all major intellectual property conventions, including Paris Convention for the Protection of Industrial Property, Madrid Agreement on the International Registration of Marks and Madrid Protocol, Patent Cooperation Treaty, Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure and the Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPs.

Although patent rights are national rights, there is also a large degree of international co-operation under the Patent Cooperation Treaty, or the PCT, to which China is a signatory. Under the PCT, applicants in one country can seek patent protection for an invention simultaneously in a number of other member countries by filing a single international patent application. The fact that a patent application is pending

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is no guarantee that a patent will be granted, and even if granted, the scope of a patent may not be as broad as the subject of the initial application.

Trademarks

The PRC Trademark Law was promulgated in 1982, followed by the PRC Trademark Implementing Regulations in 1988, and was amended on October 27, 2001. As noted above, the PRC is a signatory to the Madrid Agreement and the Madrid Protocol. These agreements provide a mechanism whereby an international registration produces the same effects as an application for registration of the mark made in each of the countries designated by the applicant.

The PRC Trademark Office is responsible for the registration and administration of trademarks throughout the country. Like patents, the PRC has adopted a “first-to-file” principle with respect to trademarks.

PRC law provides that the following acts constitute infringement of the exclusive right to use a registered trademark:

Ø use of a trademark that is identical with or similar to a registered trademark in respect of the same or similar commodities without the authorization of the trademark registrant;

Ø sale of commodities infringing upon the exclusive right to use the trademark;

Ø counterfeiting or making, without authorization, representations of a registered trademark of another person, or sale of such representations of a registered trademark as were counterfeited, or made without authorization;

Ø changing a registered trademark and putting commodities on which the changed registered trademark is used into the market without the consent of the trademark registrant; and

Ø otherwise infringing upon the exclusive right of another person to use a registered trademark.

In the PRC, a trademark owner who believes the trademark is being infringed has three options:

Ø The trademark owner can provide his trademark registration certificate and other relevant evidence to the State or local Administration for Industry and Commerce (the “AIC”) which can, at its discretion, launch an investigation. The AIC may take such actions as: order the infringer to immediately cease the infringing behavior, seize and destroy the representations of the trademark in question and impose a fine. If the trademark owner is dissatisfied with the SAIC’s decision, he may apply to have the decision reconsidered.

Ø The trademark owner may institute civil proceedings directly with the court. Civil redress for trademark infringement includes:

Ø injunctions;

Ø requiring the infringer to take steps to mitigate the damage (i.e., print notices in newspapers); and

Ø damages (i.e. compensation for the economic loss and injury to reputation as a result of trademark infringement suffered by the trademark holder).

Ø The amount of compensation is calculated according to either the gains acquired by the infringer from the infringement during the infringement, or the loss suffered by the trademark owner, including

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expenses incurred by the trademark holder to deter such infringement. If it is difficult to determine the gains acquired by the infringer from the infringement, or the loss suffered by the trademark owner, the court may elect to award compensation of not more than RMB500,000.

Ø If the case is so serious as to constitute a crime, the trademark owner may lodge a complaint with the relevant public security organ.

Other national and provincial level laws and regulations

We are subject to changing regulations under many other laws and regulations administered by governmental authorities at the national, provincial and municipal levels, some of which are or may become applicable to our business. Our hospital customers are also subject to a wide variety of laws and regulations that could affect the nature and scope of their relationships with us.

For example, regulations control the confidentiality of patients’ medical information and the circumstances under which patient medical information may be released for inclusion in our databases, or released by us to third parties. These laws and regulations governing both the disclosure and the use of confidential patient medical information may become more restrictive in the future.

We also comply with numerous additional state and local laws relating to matters such as safe working conditions, manufacturing practices, environmental protection and fire hazard control. We believe that we are currently in compliance with these laws and regulations; however, we may be required to incur significant costs to comply with these laws and regulations in the future. Unanticipated changes in existing regulatory requirements or adoption of new requirements could therefore have a material adverse effect on our business, results of operations and financial condition.

REGULATION OF FOREIGN CURRENCY EXCHANGE AND DIVIDEND DISTRIBUTION

Foreign currency exchange

Foreign currency exchange regulation in China is primarily governed by the following rules:

Ø the Foreign Currency Administration Rules (1996), as amended, or the Exchange Rules; and

Ø the Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.

Under the Exchange Rules, the Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Conversion of Renminbi for capital account items, such as direct investment, loan, security investment and repatriation of investment, however, is still subject to the approval of the SAFE.

Under the Administration Rules, foreign-invested enterprises in China, such as Shenyang Sunshine, may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from the SAFE. Capital investments by foreign-invested enterprises outside of China are also subject to limitations, which include approvals by the SAFE and other relevant government authorities.

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Dividend distribution

The principal regulations governing distribution of dividends paid by wholly foreign owned enterprises include:

Ø the Wholly Foreign Owned Enterprise Law (1986), as amended; and

Ø the Wholly Foreign Owned Enterprise Law Implementation Rules (1990), as amended.

Under these regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, foreign-invested enterprises in China are required to set aside certain amounts out of their accumulated profits each year, if any, to fund certain reserve funds, bonus and welfare funds. These funds are not distributable as cash dividends.

Regulation of foreign exchange in certain onshore and offshore transactions

On October 21, 2005, the SAFE issued the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Reverse Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or Notice No. 75, which became effective as of November 1, 2005.

Pursuant to Notice No.75, prior to establishing or assuming control of an offshore company for the purpose of financing that offshore company with assets or equity interests in an onshore enterprise in the PRC, each PRC resident who is an ultimate controller, whether a natural or legal person, must complete the overseas investment foreign exchange registration procedures with the relevant local SAFE branch. An amendment to the registration with the local SAFE branch is required to be filed by any PRC resident that directly or indirectly holds interests in that offshore company upon either the injection of equity interests or assets of an onshore enterprise to the offshore company, or the completion of any overseas fundraising by such offshore company. An amendment to the registration with the local SAFE branch is also required to be filed by such PRC resident when there is any material change involving a change in the capital of the offshore company, such as (a) an increase or decrease in its capital, (b) a transfer or swap of shares, (c) a merger or division, (d) a long-term equity or debt investment or (e) the provision of a guarantee to third parties.

Under Notice No. 75, failure to comply with the registration procedures set forth in Notice 75 may result in restrictions being imposed on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliate and the capital inflow from the offshore entity, and may also subject relevant PRC residents to penalties under PRC foreign exchange administration regulations.

Regulation on overseas listings

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, or the MOFCOM, and the CSRC, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006. The New M&A Rule, among other things, purports to require an offshore special purpose vehicle, or SPV, formed for the purpose of listing the SPV’s securities on an offshore securities exchange and controlled directly or indirectly by PRC companies or individuals, to obtain the approval of the CSRC prior to such offshore listing and trading. On September 21, 2006 the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. However, substantial uncertainty remains regarding the scope and applicability of the New M&A Rule to overseas listings of offshore SPVs.

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Our PRC counsel, Jingtian & Gongcheng, has advised us that, based on its understanding of the current PRC laws, regulations and rules, it is not necessary for us to obtain the CSRC’s approval for this offering because we obtained approval from the Shenyang Branch of MOFCOM for the acquisition of Shenyang Sunshine, our wholly owned subsidiary in the PRC, before September 8, 2006, the effective date of the new regulation.

A copy of Jingtian & Gongcheng’s legal opinion regarding this new PRC regulation is filed as an exhibit to our registration statement on Form F-1.

COMPANY LAW

On October 27, 2005, the Standing Committee of the National People’s Congress adopted amendments to the PRC Company Law, which substantially overhauled the PRC company law system and removed a number of legal restrictions and hurdles on the management and operations of limited liability companies and companies limited by shares. It is expected that the WFOE Law and its implementation rules will be amended accordingly in order to align the WFOE Law with the amendments to the PRC Company Law. Shenyang Sunshine is governed by both the PRC Company Law and the WFOE Law and its implementation rules. We believe that Shenyang Sunshine will be able to benefit from a more flexible and business-friendly company law regime under the new PRC Company Law. For example, the amended PRC Company Law eliminates a restriction which limited the amount of equity investments a company could make to a maximum of 50% of such company’s net assets. With the removal of this restriction, Shenyang Sunshine may have increased flexibility in making equity investments or planning potential acquisitions. In addition, the amended PRC Company Law now permits the establishment of single-shareholder limited liability companies. As a result, Shenyang Sunshine may acquire 100% of the equity interest in a PRC limited liability company and become the sole shareholder of such limited liability company.

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Description of share capital

We are a Cayman Islands exempted company with limited liability and our affairs are governed by our memorandum and articles of association and the Companies Law (2004 Revision) of the Cayman Islands, which is referred to below as the Companies Law. A Cayman Islands exempted company is a company that conducts its business outside of the Cayman Islands, is exempted from certain requirements of the Companies Law, including the filing of an annual return of its shareholders with the Registrar of Companies, does not have to make its register of shareholders open to inspection and may obtain an undertaking against the imposition of any future taxation. The liability of each shareholder of our company is limited to the amount paid up on the shares held by such shareholder.

As of the date hereof, our authorized share capital consists of 500,000,000 ordinary shares, par value of US$0.0001 each.

The following are summaries of material terms and provisions of our memorandum and articles of association and the Companies Law insofar as they relate to the material terms of our ordinary shares. This summary is not complete, and you should read the forms of our memorandum and articles of association, which will be filed as exhibits to our registration statement on Form F-1. For information on how to obtain copies of our memorandum and articles of association, see “Where you can find more information.”

The holders of ADSs will not be treated as our shareholders and will be required to surrender their ADSs for cancellation and withdrawal from the depositary facility in which the ordinary shares are held in order to exercise shareholders’ rights in respect of the ordinary shares. The depositary will agree, so far as it is practical, to vote or cause to be voted the amount of ordinary shares represented by ADSs in accordance with the non-discretionary written instructions of the holder of such ADSs.

MEETINGS

Subject to our articles of association, an annual general meeting and any extraordinary general meeting will be called by not less than ten days’ notice in writing. Notice of every general meeting will be given to all of our shareholders.

A meeting may be called by shorter notice if it is so agreed (1) in the case of a meeting called as an annual general meeting by all of our shareholders (or their proxies) entitled to attend and vote at the meeting; or (2) in the case of any other meeting, by a majority in number of our shareholders having a right to attend and vote at the meeting, being a majority together holding not less than 95.0% in nominal value of the ordinary shares giving that right.

No business other than the appointment of a chairman of the meeting may be transacted at any general meeting unless a quorum is present at the commencement of business. However, the absence of a quorum will not preclude the appointment of a chairman of the meeting. If present, the chairman of our board of directors shall be the chairman presiding at any shareholders’ meetings.

Two of our shareholders present in person or by proxy or corporate representative representing not less than one third in nominal value of our total issued voting shares shall be a quorum. A corporation being a shareholder shall be deemed for the purpose of our articles of association to be present in person if represented by its duly authorized representative. Such duly authorized representative shall be entitled to

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exercise the same powers on behalf of the corporation which he or she represents as that corporation could exercise if it were our individual shareholder.

The quorum for a separate general meeting of the holders of a separate class of shares is described in “—Variation of rights attaching to shares” below.

VOTING RIGHTS ATTACHING TO THE SHARES

Subject to any rights or restrictions attached to any shares, at any general meeting on a show of hands every shareholder who is present in person (or, in the case of a shareholder being a corporation, by its duly authorized representative) or by proxy shall have one vote and on a poll every shareholder present in person (or, in the case of a shareholder being a corporation, by its duly appointed representative) or by proxy shall have one vote for each share which such shareholder is the holder. Voting at any meeting of the shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the chairman or at least three shareholders present in person or by proxy or a shareholder present in person or by proxy holding at least 10.0% of the total voting rights of the shares giving a right to attend and vote at the meeting.

Any ordinary resolution to be passed by our shareholders requires the affirmative vote of a simple majority of the votes cast at a meeting of our shareholders, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast at a meeting of our shareholders. Holders of our ordinary shares may by ordinary resolution, among other things, elect directors and make alterations of capital. See “—Alteration of capital.” A special resolution is required for matters such as a change of name. See “—Variation of rights attaching to shares.”

No shareholder shall be entitled to vote or be reckoned in a quorum, in respect of any share, unless such shareholder is registered as our shareholder at the applicable record date for that meeting.

If a recognized clearing house (or its nominee(s)) is our shareholder, it may authorize such person or persons as it thinks fit to act as its representative(s) at any meeting or at any meeting of any class of shareholders provided that, if more than one person is so authorized, the authorization shall specify the number and class of shares in respect of which each such person is so authorized. A person authorized pursuant to this provision is entitled to exercise the same powers on behalf of the recognized clearing house (or its nominee(s)) as if such person was the registered holder of our shares held by that clearing house (or its nominee(s)) including the right to vote individually on a show of hands.

While there is nothing under the laws of the Cayman Islands which specifically prohibits or restricts the creation of cumulative voting rights for the election of our directors, unlike the requirement under the Delaware General Corporation Law where cumulative voting for the election of directors is permitted only if expressly authorized in the certificate of incorporation, it is not a concept that is accepted as a common practice in the Cayman Islands, and we have made no provisions in our memorandum and articles of association to allow cumulative voting for such elections.

PROTECTION OF MINORITY SHAREHOLDERS

The Grand Court of the Cayman Islands may, on the application of shareholders holding not less than one-fifth of our shares in issue, appoint an inspector to examine our affairs and report thereon in a manner as the Grand Court shall direct.

Any shareholder may petition the Grand Court of the Cayman Islands which may make a winding up order, if the court is of the opinion that it is just and equitable that we should be wound up.

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Claims against us by our shareholders must, as a general rule, be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by our memorandum and articles of association.

The Cayman Islands courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to commence a representative action against, or derivative actions in our name to challenge (1) an act which is ultra vires or illegal, (2) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of us, and (3) an irregularity in the passing of a resolution which requires a qualified (or special) majority.

PRE-EMPTION RIGHTS

There are no pre-emption rights applicable to the issuance of new shares under either Cayman Islands law or our memorandum and articles of association.

LIQUIDATION RIGHTS

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares, if we shall be wound up the liquidator may, with the sanction of a special resolution and any other sanction required by the Companies Law, divide among our shareholders in kind the whole or any part of our assets (whether they shall consist of property of the same kind or not) and may, for that purpose, value any assets as the liquidator deems fair and determine how the division shall be carried out as between our shareholders or different classes of shareholders. The liquidator may, with the like sanction, vest any part of such assets in trustees upon such trusts for the benefit of our shareholders as the liquidator, with the like sanction, shall think fit, but so that no contributory shall be compelled to accept any shares or other property upon which there is a liability.

If we shall be wound up, and the assets available for distribution among our shareholders as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by our shareholders in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively. And if winding up the assets available for distribution among our shareholders shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst our shareholders in proportion to the capital paid up at the commencement of the winding up on the shares held by them respectively.

VARIATION OF RIGHTS ATTACHING TO SHARES

Except with respect to share capital (as described below) and the location of the registered office, alterations to our memorandum and articles of association or to our name may only be made by special resolution of no less than two-thirds of votes cast at a meeting of our shareholders.

Subject to the Companies Law, all or any of the special rights attached to any class, unless otherwise provided for by the terms of issue of the shares of that class, may be varied, modified or abrogated with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. The provisions of our articles of association relating to general meetings shall apply mutatis mutandis to every such separate general meeting, but so that the quorum for the purposes of any such separate general meeting shall be a person or persons together holding, or represented by proxy, on the date of the relevant meeting not less than one-third in nominal value of the issued shares of that class.

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Every holder of shares of the class shall be entitled on a poll to one vote for every such share held by such holder and that any holder of shares of that class present in person or by proxy may demand a poll.

The special rights conferred upon the holders of any class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

ALTERATION OF CAPITAL

We may from time to time by ordinary resolution:

Ø increase our share capital by such sum, to be divided into shares of such amounts, as the resolution shall prescribe;

Ø consolidate and divide all or any of our share capital into shares of larger amount than our existing shares;

Ø without prejudice to powers given to our board of directors regarding issuing of shares, divide our shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special rights, privileges, conditions or such restrictions which in the absence of any such determination by us in general meeting, as our directors may determine;

Ø subdivide our shares or any of them into shares of smaller amount than that fixed by our memorandum of association and may by such resolution determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred, deferred or other rights or be subject to any such restrictions as compared with the other or others as we have power to attach to unissued or new shares; and

Ø cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled.

We may, by special resolution, subject to any confirmation or consent required by the Companies Law, reduce our share capital or any capital redemption reserve fund in any manner authorized by law.

TRANSFER OF SHARES

Subject to any applicable restrictions set forth in our articles of association, any of our shareholders may transfer all or any of his or her shares by an instrument of transfer in the usual or common form or in any other form which our directors may approve.

Our board of directors may, in its absolute discretion, decline to register any transfer of any share without assigning any reasons therefor.

If our directors refuse to register a transfer they shall, within two months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.

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SHARE REPURCHASE

We are empowered by the Companies Law and our articles of association to purchase our own shares, subject to certain restrictions. Our directors may only exercise this power on our behalf, subject to the Companies Law, our memorandum and articles of association and to any applicable requirements imposed from time to time by the SEC, The Nasdaq Global Market, or by any recognized stock exchange on which our securities are listed.

DIVIDENDS

Subject to the Companies Law and our articles of association, our board may declare dividends in any currency, but no dividends shall exceed the amount recommended by our board of directors. Dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside from profits which our directors determine is no longer needed. Dividends may also be declared and paid out of share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Law.

Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide, with respect to any shares not fully paid throughout the period in respect of which the dividend is paid, all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. For these purposes no amount paid up on a share in advance of calls shall be treated as paid up on the share.

Our board of directors may from time to time pay to our shareholders such interim dividends as appear to the directors to be justified by our profits. Our directors may also pay dividends semi-annually or at other intervals to be selected by them at a fixed rate if they are of the opinion that the profits available for distribution justify the payment. The board may also declare and pay special dividends as they think fit.

Our board of directors may retain any dividends or other monies payable on or in respect of a share upon which we have a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. Our board of directors may also deduct from any dividend or other monies payable to any shareholder all sums of money, if any, presently payable by him or her to us on account of calls, installments or otherwise.

No unpaid distribution shall bear interest against us.

Whenever our board of directors or we, in general meeting, have resolved that a dividend is to be paid or declared on our share capital, the board of directors may further resolve: (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up on the basis that the shares so allotted are to be of the same class as the class already held by the allottee, provided that those of our shareholders entitled thereto will be entitled to elect to receive such dividend, or part thereof, in cash in lieu of such allotment; or (b) that those of our shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as our board of directors may think fit on the basis that the shares so allotted are to be of the same class as the class already held by the allottee. We may, upon the recommendation of our board of directors by ordinary resolution, resolve in respect of any one particular dividend that notwithstanding the foregoing, a dividend may be satisfied wholly in the form of an allotment of shares credited as fully paid without offering any right to our shareholders to elect to receive such dividend in cash in lieu of such allotment.

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Description of share capital

Any dividend, interest or other sum payable in cash to a holder of shares may be paid by check or draft sent through the post addressed to the registered address of our shareholder entitled, or in the case of joint holders, to the registered address of the person whose name stands first in our register of shareholders in respect of the joint holding to such person and to such address as the holder or joint holders may in writing direct. Every check or draft so sent shall be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on our register of shareholders in respect of such shares, and shall be sent at his or their risk and the payment of any such check or warrant by the bank on which it is drawn shall operate as a good discharge to us in respect of the dividend and/or bonus represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that any endorsement there on has been forged.

Any dividend unclaimed for six years from the date of declaration of such dividend may be forfeited by the board of directors and shall revert to us.

Our board of directors may, with the sanction of the shareholders in general meeting, direct that any dividend be satisfied wholly or in part by the distribution of specific assets of any kind, and in particular of paid up shares, debentures or warrants to subscribe securities of any other company, and where any difficulty arises in regard to such distribution our directors may settle it as they think expedient, and in particular may disregard fractional entitlements, round the same up or down or provide that the same shall accrue to our benefit, and may fix the value for distribution of such specific assets and may determine that cash payments shall be made to any of our shareholders upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to our board of directors.

Untraceable Shareholders

We are entitled to sell any shares of a shareholder who is untraceable, provided that:

Ø all checks or warrants, not being less than three in number, for any sums payable in cash to the holder of such shares have remained uncashed for a period of 12 years;

Ø we have not during that time or before the expiry of the three-month period referred to in the last bullet under this section received any indication of the whereabouts or existence of the shareholder or person entitled to such shares by death, bankruptcy or operation of law; and

Ø upon expiration of the 12-year period, we have caused an advertisement to be published in newspapers, giving notice of its intention to sell these shares, and a period of three months or such shorter period has elapsed since such advertisement.

The net proceeds of any such sale shall belong to us, and when we receive these net proceeds we shall become indebted to the former shareholder for an amount equal to such net proceeds.

BOARD OF DIRECTORS

Our board of directors currently consists of seven members. Our articles of association provide that the board of directors shall consist of not less than two directors, and there shall be no maximum number of directors unless otherwise determined from time to time by the Shareholders in a general meeting.

Our articles of association provide for a staggered board of directors. At each annual general meeting of our shareholders, one-third of our directors (or, if their number is not a multiple of three, the number nearest to but not greater than one-third) are required to stand for reelection. The Chairman shall not be required to stand for reelection at any annual meeting, and will serve for an indefinite term. In addition,

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Description of share capital

the Chairman will not be taken into account in determining the number of directors who must stand for reelection in each year.

The particular directors that must stand for reelection at each annual general meeting is determined according to a rotation. Should a director choose not to offer himself or herself for reelection at an annual meeting, the number of directors who must stand for reelection at that meeting is reduced accordingly. Directors who have been longest in office since their last re-election or appointment shall stand for reelection at the annual meeting, provided that, in the case of directors who were last elected on the same day, which director must stand for reelection shall (unless they otherwise agree among themselves) be determined by lot.

Any director appointed to fill a vacancy shall serve only until the next annual meeting, and shall not be taken into account in determining which particular directors or the number of directors who are stand for reelection at such annual meeting.

Our shareholders may by ordinary resolution at any time remove any director before the expiration of his period of office notwithstanding anything in our articles of association or in any agreement between us and such director, and may by ordinary resolution elect another person in his stead. Subject to our articles of association, the directors will have power at any time and from time to time to appoint any person to be a director, either as an addition to the existing directors or to fill a casual vacancy.

There are no share ownership qualifications for directors. Meetings of our board of directors may be convened at any time deemed necessary by the members of our board of directors. A meeting of our board of directors will be competent to make lawful and binding decisions if any two members of our board of directors are present or represented. At any meeting of our directors, each director, be it by his or her presence or by his or her alternate, is entitled to one vote. A director may vote in respect of any contract or arrangement with us in which he is directly or indirectly interested, provided, such director must declare the nature of his interest at the earliest meeting of the board at which it is practicable for him to do so, either specifically or by way of a general notice stating that, by reason of the facts specified in the notice, he is to be regarded as interested in any contracts of a specified description which we may subsequently make.

Questions arising at a meeting of our board of directors are required to be decided by simple majority votes of the members of our board of directors present or represented at the meeting. In the case of a tie, the chairman of the meeting shall have a second or deciding vote. Our board of directors may also pass resolutions without a meeting by unanimous written consent.

The remuneration to be paid to the directors shall be such remuneration as the directors shall determine. Under our articles of association, the directors shall also be entitled to be paid their traveling, hotel and other expenses reasonably incurred by them in, attending meetings of the directors, or any committee of the directors, or general meetings of the company, or otherwise in connection with the discharge of his duties as director.

ISSUANCE OF ADDITIONAL ORDINARY SHARES OR PREFERRED SHARES

Our articles of association authorize our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.

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Description of share capital

Our articles of association authorize our board of directors from time to time to issue one or more classes or series of ordinary or preferred shares and to determine the terms and rights of that class or series to the extent permitted by the Companies Law, including, among other things:

Ø the designation of such class or series;

Ø the number of shares of such class or series;

Ø the dividend rights, conversion rights and voting rights; and

Ø the rights and terms of redemption and liquidation preferences.

Our board of directors may issue such class or series of preferred shares without action by our shareholders to the extent authorized but unissued. Accordingly, the issuance of preferred shares may adversely affect the rights of the holders of the ordinary shares. In addition, the issuance of preferred shares may be used as an anti-takeover device without further action on the part of the shareholders. We have no immediate plans to issue any preferred shares.

Issuance of preferred shares may dilute the voting power of holders of ordinary shares. Subject to applicable regulatory requirements, our board of directors may issue additional ordinary shares without action by our shareholders to the extent of available authorized but unissued shares. The issuance of additional ordinary shares may be used as an anti-takeover device without further action on the part of the shareholders. Such issuance may dilute the voting power of existing holders of ordinary shares.

EXEMPTED COMPANY STATUS

The Companies Law distinguishes between ordinary resident companies and exempted companies, and we are an exempted company with limited liability under the Companies Law. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The responsibilities of an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below:

Ø an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies;

Ø an exempted company’s register of members is not open to inspection;

Ø an exempted company does not have to hold an annual general meeting;

Ø an exempted company may issue no par value, negotiable or bearer shares;

Ø an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

Ø an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

Ø an exempted company may register as a limited duration company; and

Ø an exempted company may register as a segregated portfolio company.

DIFFERENCES IN CORPORATE LAW

The Companies Law is modeled after similar laws in the United Kingdom but does not follow recent changes in United Kingdom laws. In addition, the Companies Law differs from laws applicable to U.S.

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Description of share capital

corporations and their shareholders. Set forth below is a summary of the significant provisions of the Companies Law applicable to us.

Duties of directors

Under Cayman Islands law, at common law, members of a board of directors owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty has four essential elements:

Ø a duty to act in good faith in the best interests of the company;

Ø a duty not to personally profit from opportunities that arise from the office of director;

Ø a duty to avoid conflicts of interest; and

Ø a duty to exercise powers for the purpose for which such powers were intended.

In general, the Companies Law imposes various duties on officers of a company with respect to certain matters of management and administration of the company. The Companies Law contains provisions, which impose default fines on persons who fail to satisfy those requirements. However, in many circumstances, an individual is only liable if he knowingly is guilty of the default or knowingly and willfully authorizes or permits the default.

Voting rights and quorum requirements

Under Cayman Islands law, the voting rights of shareholders are regulated by the company’s articles of association and, in certain circumstances, the Companies Law. The articles of association will govern matters such as quorum for the transaction of business, rights of shares and majority votes required to approve any action or resolution at a meeting of the shareholders or board of directors. Under Cayman Islands law, certain matters must be approved by a special resolution which is defined as two-thirds of the votes cast by shareholders present at a meeting and entitled to vote; otherwise, unless the articles of association otherwise provide, the majority is usually a simple majority of votes cast.

Mergers and similar arrangements

Cayman Islands law does not provide for mergers as that expression is understood under United States corporate law. However, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement in question is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in-person or by proxy at a meeting, or meetings convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder would have the right to express to the court the view that the transaction should not be approved, the court can be expected to approve the arrangement if it satisfies itself that:

Ø the company is not proposing to act illegally or ultra vires and the statutory provisions as to majority vote have been complied with;

Ø the shareholders have been fairly represented at the meeting in question;

Ø the arrangement is one that a businessman would reasonably approve; and

Ø the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law or that would amount to a “fraud on the minority.”

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Description of share capital

When a takeover offer is made and accepted by holders of 90.0% of the shares within four months, the offerer may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection may be made to the Grand Court of the Cayman Islands but is unlikely to succeed unless there is evidence of fraud, bad faith or collusion.

If the arrangement and reconstruction are thus approved, any dissenting shareholders would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of U.S. corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

Shareholder suits

We are not aware of any reported class action or derivative action having been brought in a Cayman Islands court. In principle, we will normally be the proper plaintiff and a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, exceptions to the foregoing principle apply in circumstances in which:

Ø a company is acting or proposing to act illegally or beyond the scope of its authority;

Ø the act complained of, although not beyond the scope of its authority, could be effected duly if authorized by more than a simple majority vote which has not been obtained; and

Ø those who control the company are perpetrating a “fraud on the minority.”

Under the Delaware General Corporation Law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. Delaware law expressly authorizes stockholder derivative suits on the condition that the stockholder either held the stock at the time of the transaction of which the stockholder complains, or acquired the stock thereafter by operation of law and continues to hold it throughout the duration of the suit. An individual may also commence a class action suit on behalf of himself and other similarly situated stockholders where the requirements for maintaining a class action under Delaware law have been met. A plaintiff instituting a derivative suit is required to serve a demand on the corporation before bringing suit, unless such demand would be futile.

Interested directors

Cayman Islands laws do not restrict transactions with directors, requiring only that directors exercise a duty of care and owe a fiduciary duty to the companies for which they serve. Under our memorandum and articles of association, subject to any separate requirement for audit committee approval under the applicable rules of The Nasdaq Stock Market, Inc. or unless disqualified by the chairman of the relevant board meeting, so long as a director discloses the nature of his interest in any contract or arrangement in which he is interested, such a director may vote in respect of any contract or proposed contract or arrangement in which such director is interested and may be counted in the quorum at such meeting.

Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articles of association provide for the indemnification of our directors, auditors and other officers against all losses or liabilities incurred or sustained by him or her as a director, auditor or other officer of our company in defending any

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Description of share capital

proceedings, whether civil or criminal, in which judgment is given in his or her favor, or in which he or she is acquitted provided that this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of said persons.

Shareholder proposals

The Companies Law does not provide shareholders any right to bring business before a meeting or requisition a general meeting.

Approval of corporate matters by written consent

The Companies Law allows a special resolution to be passed in writing if signed by all the shareholders and authorized by the articles of association.

Calling of special shareholders meetings

The Companies Law does not have provisions governing the proceedings of shareholders meetings which are usually provided in the articles of association.

Staggered board of directors

The Companies Law does not contain statutory provisions that require staggered board arrangements for a Cayman Islands company. Such provisions, however, may validly be provided for in the articles of association, and we have provided for a staggered board of directors in our articles of association. Pursuant to such provision, one-third of the current members of our board are required to stand for a re-election each year.

Issuance of preferred stock

The Companies Law allows shares to be, issued with preferred, deferred or other special rights, whether in regard to dividends, voting, return of share capital or otherwise. Our articles of association provide that the directors may allot, issue, grant options over or otherwise dispose of shares (including fractions of a share) with or without preferred, deferred or other special rights or restrictions, in one or more series, whether with regard to dividend rights, dividend rates, conversion rights, voting rights, rights and terms of redemption and liquidation preferences or otherwise and to such persons, at such times and on such other terms as they think proper.

Anti-takeover provisions

The Companies Law does not prevent companies from adopting a wide range of defensive measures, such as staggered boards, blank check preferred stock, removal of directors only for cause and provisions that restrict the rights of shareholders to call meetings and submit shareholder proposals.

Our articles of association contain the following provisions which may be regarded as defensive measures: (i) a staggered board of directors and (ii) directors may in their absolute discretion decline to register any transfer of shares without assigning any reason.

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Shares eligible for future sale

Prior to this offering, there has been no public market for the ADSs, and while application has been made for the ADSs to be quoted on The Nasdaq Global Market, we cannot assure you that a regular trading market will develop for the ADSs. There is no market for our ordinary shares and it is not presently expected that the ordinary shares will be listed on any exchange or that an active trading market in our ordinary shares will develop in the foreseeable future. Sales of substantial amounts of our ADSs in the public market could adversely affect prevailing market prices of our ADSs.

Upon completion of this offering, we will have 7,700,000 outstanding ADSs, representing approximately 35.9% of our ordinary shares (assuming no exercise of the over-allotment option). All of the ADSs sold in this offering will be freely transferable without restriction or further registration under the Securities Act, except for any ADSs that are purchased by any “affiliates” of our company as that term is defined in Rule 144 under the Securities Act. The remaining ordinary shares held by existing shareholders and any ADSs held by our affiliates are “restricted securities” as that term is defined in Rule 144. Restricted securities may not be sold publicly unless they are registered under the Securities Act or sold pursuant to Rule 144 or another exemption from registration.

LOCK-UP AGREEMENTS

Each of our officers, directors and shareholders has entered into the lock-up agreements described in “Underwriting.”

RULE 144

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this offering, a person who has beneficially owned “restricted securities”, as that term is used by U.S. securities law, for at least one year would be entitled to sell in the United States, within any three-month period, a number of shares that is not more than the greater of:

Ø 1% of the number of our ordinary shares then outstanding, in the form of ADSs or otherwise, which will equal approximately 1,503,157 ordinary shares immediately after this offering; or

Ø the average weekly reported trading volume of the ADSs representing our ordinary shares on The Nasdaq Global Market during the four calendar weeks before a notice of the sale on Form 144 is filed with the SEC by such person.

Sales under Rule 144 must be made through unsolicited brokers’ transactions. They are also subject to manner-of-sale provisions, notice requirements and the availability of current public information about us.

In addition, under Rule 144(k), a person who is not deemed to have been our affiliate at any time during the three months preceding a sale, and who has beneficially owned the ordinary shares proposed to be sold for at least two years from the later of the date these shares were acquired from us or from our affiliate, including the holding period of any prior owner other than an affiliate, is entitled to sell those shares in the United States immediately following this offering without complying with the manner-of-sale, public information, volume limitation or notice provisions of Rule 144.

Rule 144 does not relieve the shareholders named above of their obligations under the lock-up agreements to which they are a party, such that the lock-up restrictions would continue to apply during the 90-day lock-up period regardless of Rule 144. Upon expiration of the lock-up period, the ordinary shares held by these shareholders may be sold in the public markets (in the form of ADSs) or otherwise, subject to any applicable securities laws restrictions, including those of Rule 144.

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Shares eligible for future sale

Rule 701

In general, under Rule 701 of the Securities Act as currently in effect, any of our employees, directors or consultants who hold options to purchase our ordinary shares before the effective date of the registration statement of which this prospectus is a part may rely on the resale provisions of Rule 701. Under Rule 701, these persons who are not our affiliates may generally sell their eligible securities, commencing 90 days after the effective date of the registration statement in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period and volume limitations contained in Rule 144.

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Description of American Depositary Receipts

AMERICAN DEPOSITARY RECEIPTS

JPMorgan Chase Bank, N.A., as depositary, will issue the ADSs which you will be entitled to receive in this offering. Each ADS will represent an ownership interest in seven shares which we will deposit with the custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary and you as an ADR holder. In the future, each ADS will also represent any securities, cash or other property deposited with the depositary but which they have not distributed directly to you. Unless specifically requested by you, all ADSs will be issued on the books of our depositary in book-entry form and periodic statements will be mailed to you which reflect your ownership interest in such ADSs. In our description, references to American depositary receipts, or ADRs, shall include the statements you will receive which reflect your ownership of ADSs.

The depositary’s office is located at Four New York Plaza, New York, NY 10004.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Because the depositary’s nominee will actually be the registered owner of the shares, you must rely on it to exercise the rights of a shareholder on your behalf. The obligations of the depositary and its agents are set forth in the deposit agreement. The deposit agreement and the ADSs are governed by New York law.

The following is a summary of the material terms of the deposit agreement. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire deposit agreement and the form of ADR which contains the terms of your ADSs. A copy of the deposit agreement is filed as an exhibit to the registration statement of which this prospectus forms a part. You may also obtain a copy of the deposit agreement at the SEC’s Public Reference Room which is located at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-732-0330.

SHARE DIVIDENDS AND OTHER DISTRIBUTIONS

How will I receive dividends and other distributions on the shares underlying my ADSs?

We may make various types of distributions with respect to our securities. The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after converting any cash received into U.S. dollars and, in all cases, making any necessary deductions provided for in the deposit agreement. You will receive these distributions in proportion to the number of underlying securities that your ADSs represent.

Except as stated below, to the extent the depositary is legally permitted it will deliver such distributions to ADR holders in proportion to their interests in the following manner:

Ø Cash.    The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to

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Description of American Depositary Receipts

the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain registered holders, and (iii) deduction of the depositary’s expenses in (1) converting any foreign currency to U.S. dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution.

Ø Shares.    In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such shares. Only whole ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto.

Ø Rights to receive additional shares.    In the case of a distribution of rights to subscribe for additional shares or the other rights, if we provide satisfactory evidence that the depositary may lawfully distribute such rights, the depositary will distribute warrants or other instruments representing such rights. However, if we do not furnish such evidence, the depositary may:

Ø sell such rights if practicable and distribute the net proceeds as cash; or

Ø if it is not practicable to sell such rights, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing.

We have no obligation to file a registration statement under the Securities Act in order to make any rights available to ADR holders.

Ø Other Distributions.    In the case of a distribution of securities or property other than those described above, the depositary may either (i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or property and distribute any net proceeds in the same way it distributes cash.

If the depositary determined that any distribution described above is not practicable with respect to any specific ADR holder, the depositary may choose any practicable method of distribution for such ADR holder, including the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.

Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability for interest thereon and dealt with by the Depositary in accordance with its then current practices.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADR holders.

There can be no assurances that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, nor that any such transactions can be completed within a specified time period.

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Description of American Depositary Receipts

DEPOSIT, WITHDRAWAL AND CANCELLATION

How does the depositary issue ADRs?

The depositary will issue ADRs evidencing ADSs if you or your broker deposit shares or evidence of rights to receive shares with the custodian. In the case of the ADSs to be issued under this prospectus, we will arrange with the underwriters named herein to deposit such shares.

Shares deposited in the future with the custodian must be accompanied by certain documentation, including instruments showing that such shares have been properly transferred or endorsed to the person on whose behalf the deposit is being made.

The custodian will hold all deposited shares (including those being deposited by or on our behalf of in connection with the offering to which this prospectus relates) for the account of the depositary. ADR holders thus have no direct ownership interest in the shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as “deposited securities.”

Upon each deposit of shares, receipt of related documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositary’s direct registration system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in such holder’s name. An ADR holder can request that the ADSs not be held through the depositary’s direct registration system and that a certificated ADR be issued.

How do ADR holders cancel an ADS and obtain deposited securities?

When you turn in your ADRs at the depositary’s office, or when you provide proper instructions and documentation in the case of direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying shares at the custodian’s office or effect delivery by such other means as the depositary deems practicable, including transfer to an account of an accredited financial institution on your behalf. At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.

The depositary may only restrict the withdrawal of deposited securities in connection with:

Ø temporary delays caused by closing our transfer books or those of the depositary or the deposit of shares in connection with voting at a shareholders’ meeting, or the payment of dividends;

Ø the payment of fees, taxes and similar charges; or

Ø compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

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Description of American Depositary Receipts

RECORD DATES

The depositary may fix record dates for the determination of the ADR holders who will be entitled (or obligated, as the case may be):

Ø to receive a dividend, distribution or rights;

Ø to give instructions for the exercise of voting rights at a meeting of holders of ordinary shares or other deposited securities;

Ø for the determination of the registered holders who shall be responsible for the fee assessed by the depositary for administration of the ADR program and for any expenses as provided for in the ADR; and

Ø to receive any notice or to act in respect of other matters,

all subject to the provisions of the deposit agreement.

VOTING RIGHTS

How do I vote?

If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the shares which underlie your ADSs. After receiving voting materials from us, the depositary will notify the ADR holders of any shareholder meeting or solicitation of consents or proxies. This notice will state such information as its contained in the voting materials and describe how you may instruct the depositary to exercise the voting rights for the shares which underlie your ADSs and will include instructions for giving a discretionary proxy to a person designated by us. For instructions to be valid, the depositary must receive them in the manner and on or before the date specified. The depositary will try, as far as is practical, subject to the provisions of and governing the underlying shares or other deposited securities, to vote or to have its agents vote the shares or other deposited securities as you instruct. The depositary will only vote or attempt to vote as you instruct. The depositary will not itself exercise any voting discretion. Furthermore, neither the depositary nor its agents are responsible for any failure to carry out any voting instructions, for the manner in which any vote is cast or for the effect of any vote.

There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

REPORTS AND OTHER COMMUNICATIONS

Will I be able to view our reports?

The depositary will make available for inspection by ADR holders any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities. We will furnish these communications in English when so required by any rules or regulations of the SEC.

Additionally, if we make any written communications generally available to holders of our shares, including the depositary or the custodian, and we request the depositary to provide them to ADR holders, the depositary will mail copies of them, or, at its option, English translations or summaries of them to ADR holders.

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FEES AND EXPENSES

What fees and expenses will I be responsible for paying?

ADR holders will be charged a fee for each issuance of ADSs, including issuances resulting from distributions of shares, rights and other property, and for each surrender of ADSs in exchange for deposited securities. The fee in each case is $5.00 for each 100 ADSs (or any portion thereof) issued or surrendered.

The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing shares or by any party surrendering ADRs or to whom ADRs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the ADRs or the deposited securities or a distribution of ADRs), whichever is applicable:

Ø to the extent not prohibited by the rules of any stock exchange or interdealer quotation system upon which the ADSs are traded, a fee of $1.50 per ADR or ADRs for transfers of certificated or direct registration ADRs;

Ø a fee of US$0.02 or less per ADS (or portion thereof) for any cash distribution made pursuant to the deposit agreement;

Ø a fee of US$0.03 per ADS (or portion thereof) per calendar year for services performed by the depositary in administering our ADR program (which fee shall be assessed against holders of ADRs as of the record date set by the depositary not more than once each calendar year and shall be payable in the manner described in the next succeeding provision);

Ø any other charge payable by any of the depositary, any of the depositary’s agents, including, without limitation, the custodian, or the agents of the depositary’s agents in connection with the servicing of our shares or other deposited securities (which charge shall be assessed against registered holders of our ADRs as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such registered holders or by deducting such charge from one or more cash dividends or other cash distributions);

Ø a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those holders entitled thereto;

Ø stock transfer or other taxes and other governmental charges;

Ø cable, telex and facsimile transmission and delivery charges incurred at your request;

Ø transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities;

Ø expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars; and

Ø such fees and expenses as are incurred by the depositary (including without limitation expenses incurred in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable law, rule or regulation.

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We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary. The fees described above may be amended from time to time.

The depositary has agreed to reimburse us for certain expenses we incur that are related to the establishment and maintenance of our ADR program, including investor relations expenses and certain of our current and ongoing U.S. legal and accounting expenses related to the ADR program and our reporting obligations under the Securities Exchange Act of 1934, as amended. The overall amount available to us is a sum based on a reasonable estimate of certain costs incurred in establishing and maintaining the ADR program, although certain amounts designated to cover specific costs may fluctuate based upon the number of new ADSs created during a given year.

The depositary collects ADS issuance and cancellation fees directly from investors depositing ordinary shares or surrendering ADSs, as the case may be, or from intermediaries acting on their behalf. Distribution fees are collected by deducting such fees from the amount to be distributed to holders of ADRs or by selling a sufficient portion of the distributable property to pay such fees. Once each calendar year, the depositary will collect its fee for depositary services by deducting from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee related services to any holders until the fees owing by such holders have been paid.

PAYMENT OF TAXES

ADR holders must pay any tax or other governmental charge payable by the custodian or the depositary on any ADS or ADR, deposited security or distribution. If an ADR holder owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions, or (ii) sell deposited securities and deduct the amount owing from the net proceeds of such sale. In either case the ADR holder remains liable for any shortfall. Additionally, if any tax or governmental charge is unpaid, the depositary may also refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities (except under limited circumstances mandated by securities regulations). If any tax or governmental charge is required to be withheld on any non-cash distribution, the depositary may sell the distributed property or securities to pay such taxes and distribute any remaining net proceeds to the ADR holders entitled thereto.

By holding an ADR or an interest therein, you will be agreeing to indemnify us, the depositary, its custodian and any of our or their respective directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained in respect of, or arising out of, your ADSs.

RECLASSIFICATIONS, RECAPITALIZATIONS AND MERGERS

If we take certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities or (ii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to:

Ø amend the form of ADR;

Ø distribute additional or amended ADRs;

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Ø distribute cash, securities or other property it has received in connection with such actions;

Ø sell any securities or property received and distribute the proceeds as cash; or

Ø do nothing.

If the depositary chooses to do nothing, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a proportionate interest in such property.

AMENDMENT AND TERMINATION

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. ADR holders must be given at least 30 days notice of any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or that otherwise prejudices any substantial existing right of ADR holders. If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder is deemed to to consent and agree to such amendment. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the deposit agreement or the form of ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit agreement and the ADR at any time in accordance with such changed laws, rules or regulations, which amendment or supplement may take effect before a notice is given or you otherwise receive notice. No amendment, however, will impair your right to surrender your ADSs and receive the underlying securities.

How may the deposit agreement be terminated?

The depositary may terminate the deposit agreement by giving the ADR holders at least 30 days prior written notice, and it must do so at our request. The deposit agreement will be terminated on the removal of the depositary for any reason. After termination, the depositary’s only responsibility will be (i) to deliver deposited securities to ADR holders who surrender their ADRs, and (ii) to hold or sell distributions received on deposited securities. As soon as practicable after the expiration of six months from the termination date, the depositary will sell the deposited securities which remain and hold the net proceeds of such sales, without liability for interest, in trust for the ADR holders who have not yet surrendered their ADRs. After making such sale, the depositary shall have no obligations except to account for such proceeds and other cash. The depositary will not be required to invest such proceeds or pay interest on them.

LIMITATIONS ON OBLIGATIONS AND LIABILITY TO ADR HOLDERS

Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and holders of ADSs

Prior to the issue, registration, registration of transfer, split-up, combination, or cancellation of any ADRs, or the delivery of any distribution in respect thereof, the depositary and its custodian may require you to pay, provide or deliver:

Ø payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of shares or other

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deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the ADR;

Ø the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, payment of applicable taxes or governmental charges, or legal or beneficial ownership and the nature of such interest, information relating to the registration of the shares on the books maintained by or on our behalf for the transfer and registration of shares, compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADR, as it may deem necessary or proper; and

Ø compliance with such regulations as the depositary may establish consistent with the deposit agreement.

The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents. Neither we nor the depositary nor any such agent will be liable if:

Ø present or future law, rule, regulation, fiat, order or decree of the United States, the People’s Republic of China, the Cayman Islands or any other country, or of any governmental or regulatory authority or securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism or other circumstance beyond its control shall prevent, delay or subject to any civil or criminal penalty any act which the deposit agreement or the ADRs provides shall be done or performed by it or them (including, without limitation, voting);

Ø it exercises or fails to exercise discretion under the deposit agreement or the ADR;

Ø it performs its obligations without gross negligence or bad faith;

Ø it takes any action or refrains from taking any action in reliance upon the advice of or information from legal counsel, accountants, any person presenting shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information; or

Ø it relies upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.

Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as may be required. The depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the deposit agreement, any registered holder or holders of ADRs, any ADSs or otherwise to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators.

The depositary will not be responsible for failing to carry out instructions to vote the deposited securities or for the manner in which the deposited securities are voted or the effect of the vote. In no event shall the depositary or any of its agents be liable for any indirect, special, punitive or consequential damages.

The depositary may own and deal in deposited securities and in ADSs.

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DISCLOSURE OF INTEREST IN ADSs

To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or other ownership of deposited securities, other shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, you agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may provide in respect thereof. We reserve the right to request you to deliver your ADRs for cancellation and withdrawal of the deposited securities so as to permit us to deal with you directly as a holder of deposited securities and, by holding an ADR or an interest therein, you will be agreeing to comply with such instructions.

REQUIREMENTS FOR DEPOSITARY ACTIONS

We, the depositary or the custodian may refuse to

Ø issue, register or transfer an ADR or ADRs;

Ø effect a split-up or combination of ADRs;

Ø deliver distributions on any such ADRs; or

Ø permit the withdrawal of deposited securities (unless the deposit agreement provides otherwise), until the following conditions have been met:

Ø the holder has paid all taxes, governmental charges, and fees and expenses as required in the deposit agreement;

Ø the holder has provided the depositary with any information it may deem necessary or proper, including, without limitation, proof of identity and the genuineness of any signature; and

Ø the holder has complied with such regulations as the depositary may establish under the deposit agreement.

The depositary may also suspend the issuance of ADSs, the deposit of shares, the registration, transfer, split-up or combination of ADRs, or the withdrawal of deposited securities (unless the deposit agreement provides otherwise), if the register for ADRs or any deposited securities is closed or the depositary decides it is advisable to do so.

BOOKS OF DEPOSITARY

The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which register shall include the depositary’s direct registration system. You may inspect such records at such office during regular business hours, but solely for the purpose of communicating with other holders in the interest of business matters relating to the deposit agreement. Such register may be closed from time to time, when deemed expedient by the depositary.

The depositary will maintain facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADRs. These facilities may be closed from time to time, to the extent not prohibited by law.

PRE-RELEASE OF ADSs

The depositary may issue ADSs prior to the deposit with the custodian of shares (or rights to receive shares). This is called a pre-release of the ADS. A pre-release is closed out as soon as the underlying shares (or rights to receive shares from us or from any registrar, transfer agent or other entity recording

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share ownership or transactions) are delivered to the depositary. The depositary may pre-release ADSs only if:

Ø the depositary has received collateral for the full market value of the pre-released ADSs (marked to market daily); and

Ø each recipient of pre-released ADSs agrees in writing that he or she:

Ø owns the underlying shares;

Ø assigns all rights in such shares to the depositary;

Ø holds such shares for the account of the depositary; and

Ø will deliver such shares to the custodian as soon as practicable, and promptly if the depositary so demands.

In general, the number of pre-released ADSs will not evidence more than 30% of all ADSs outstanding at any given time (excluding those evidenced by pre-released ADSs). However, the depositary may change or disregard such limit from time to time as it deems appropriate. The depositary may retain for its own account any earnings on collateral for pre-released ADSs and its charges for issuance thereof.

APPOINTMENT

In the deposit agreement, each holder and each person holding an interest in ADSs, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the deposit agreement shall be deemed for all purposes to (a) be a party to and bound by the terms of the deposit agreement and the applicable ADR(s), and (b) appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the deposit agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

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Taxation

The following summary of the material Cayman Islands and United States federal income tax consequences of an investment in our ADSs or ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ADSs or ordinary shares. It does not address the United States federal estate and gift tax consequences of such investment nor does it address the tax consequences under United States state or local laws or the laws of any non-United States jurisdiction (other than the Cayman Islands).

CAYMAN ISLANDS TAXATION

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands.

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of the material United States federal income tax considerations relating to the acquisition, ownership, and disposition of ADSs or ordinary shares by U.S. Holders (as defined below) that will hold their ADSs or ordinary shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code (the “Code”). This summary is based upon existing United States federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. This summary does not discuss all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, and does not deal with the tax consequences to investors subject to special tax rules (for example, financial institutions, insurance companies, broker-dealers, partnerships and their partners, and tax-exempt organizations (including private foundations)), holders who are not U.S. Holders, holders who own (directly, indirectly, or constructively) 10% or more of our voting stock, investors that will hold ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, or investors that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this summary does not discuss any non-United States, state, or local tax considerations. Investors are urged to consult their tax advisors regarding the United States federal, state, local, and non-United States income and other tax considerations of an investment in our ADSs or shares.

General

For purposes of this summary, a “U.S. Holder” is a beneficial owner of ADSs or ordinary shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation or other entity taxable as a corporation for United States federal income tax purposes, created in, or organized under the law of, the United States or any State or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a United States person under the Code.

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If a partnership is a beneficial owner of our ADSs or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership.

For United States federal income tax purposes, U.S. Holders of ADSs will be treated as the beneficial owners of the underlying shares represented by the ADSs.

Threshold PFIC Classification Matters.    A non-United States corporation, such as the company, will be treated as a “passive foreign investment company” (a “PFIC”), for United States federal income tax purposes, if 75% or more of its gross income consists of certain types of “passive” income or 50% or more of its assets (based on an average of the quarterly values during a taxable year) are classified as passive assets. The determination of whether we are, or will become, classified as a PFIC is a fact intensive determination that is made annually based on the composition and amounts of income that we earn and the composition and valuation of our assets, all of which are subject to change. For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles are taken into account.

Based on our current income and assets and taking into consideration this offering, it is uncertain whether we will be classified as a PFIC for United States federal income tax purposes for our current taxable year ending December 31, 2007, a determination that can only be made after the close of the taxable year, or future taxable years. The overall level of our passive assets will be significantly affected by the amount and time-frame within which we disperse the cash raised in this offering, and other liquid assets that we presently hold, for the purpose of the capital expenditures described in this prospectus or other projects.

In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our anticipated market capitalization following the close of this offering. Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become classified as a PFIC for the current or one or more future taxable years. Further, while we believe our valuation approach is reasonable, it is possible that the Internal Revenue Service may challenge the valuation of our goodwill and other unbooked intangibles, which may result in the company being or becoming classified as a PFIC for the current or one or more future taxable years. If we are classified as a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or ordinary shares.

Because PFIC status is a fact intensive determination made on an annual basis, no assurance can be given that we are not or will not become classified as a PFIC and will depend upon, in great measure, the timing of our capital expenditures and the value of our unbooked intangibles. The discussion below under “Dividends” and “Sale or Other Disposition of ADSs or Ordinary Shares” is written on the basis that we will not be classified as a PFIC for United States federal income tax purposes. The discussion further below under “PFIC Considerations” summarizes the PFIC rules that would be applicable to an investment in our ADSs or ordinary shares if we were to be or become classified as a PFIC.

Dividends

Any cash distributions paid on ADSs or ordinary shares out of our earnings and profits, as determined under United States federal income tax principles, will be includible in the gross income of a U.S. Holder as dividend income. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution paid will generally be treated as a “dividend” for United States federal income tax purposes. For taxable years beginning before January 1, 2011, a non-corporate recipient of dividend income generally will be subject to tax on dividend income

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from a “qualified foreign corporation” at a maximum United States federal tax rate of 15% rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are met. A non-United States corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program or (ii) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States. There is currently no tax treaty in effect between the United States and the Cayman Islands. We have applied to list the ADSs on The Nasdaq Global Market. Provided the listing is approved, the ADSs are expected to be readily tradable on The Nasdaq Global Market, an established securities market in the United States.

Cash distributions in excess of our earnings and profits will be treated as a tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis in its ADSs or ordinary shares, and thereafter as gain from the sale or exchange of a capital asset. The amount of any cash distribution paid in Renminbi should equal the United States dollar value of the Renminbi on the date of the distribution, regardless of whether the Renminbi is actually converted into United States dollars at that time. Gain or loss, if any, recognized on a subsequent sale, conversion, or other disposition of Renminbi generally will be United States source ordinary income or loss. Dividends received on the ADSs or ordinary shares will not be eligible for the dividends received deduction allowed to corporations.

Dividends generally will be treated as income from foreign sources for United States foreign tax credit purposes. A U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on ADSs or shares. A U.S. Holder who does not elect to claim a foreign tax credit for such withholding taxes, may instead claim a deduction, for United States federal income tax purposes, in respect of such withholdings, but only for a year in which such holder elects to do so for all creditable foreign income taxes.

Sale or Other Disposition of ADSs or Ordinary Shares

A U.S. Holder generally will recognize capital gain or loss upon the sale or other taxable disposition of ADSs or ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or ordinary shares. Any such capital gain or loss will be long-term (and for non-corporate U.S. Holders may be eligible for reduced tax rates) if the ADSs or ordinary shares have been held for more than one year prior to disposition and generally will be United States source gain or loss for United States foreign tax credit purposes. The deductibility of a capital loss may be subject to limitations.

PFIC Considerations

If we are or were to become classified as a PFIC for any taxable year, and unless you make a “mark-to-market” election (as described below), you would be subject to special rules with respect to (i) any gain realized on the sale or other disposition of ADSs or ordinary shares, and (ii) any “excess distribution” made by us on ADSs or ordinary shares (generally, any distributions paid to you in respect of ADSs or ordinary shares during a single taxable year that are greater than 125% of the average annual distributions received by you during the three preceding taxable years or, if shorter, your holding period for such ADSs or ordinary shares).

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Under the PFIC rules:

· the gain or excess distribution would be allocated ratably over your holding period for ADSs or ordinary shares;

· the amount allocated to the taxable year in which the gain or excess distribution was realized, and any taxable year prior to the first taxable year that you held ADSs or ordinary shares in which we are classified as a PFIC (a “pre-PFIC year”), would be taxable as ordinary income; and

· the amount allocated to each prior year, other than the current year and any pre-PFIC year, would be subject to tax at the highest tax rate in effect for that year, and an interest charge generally applicable to underpayments of tax would be imposed on the resulting tax for each such year for the period it had been deferred.

As an alternative to the foregoing rules, a holder of “marketable stock” in a PFIC may make a mark-to-market election, provided that the shares are “regularly traded” on a “qualified exchange,” such as the Nasdaq Global Market. While the company anticipates that the ADSs will qualify as being “regularly traded” on the Nasdaq Global Market, and there has been no prior trading of the ADSs on the Nasdaq Global Market, no assurances may be given that the ADSs will qualify as being regularly traded on such exchange. If you make a valid mark-to-market election, you will generally (i) include as ordinary income for each taxable year the excess, if any, of the fair market value of your ADSs as determined at the end of the taxable year over the adjusted tax basis of such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of your ADSs over the fair market value of such ADSs as determined at the end of the taxable year, but only to the extent of the amount previously included in income as a result of the mark-to-market election. Your adjusted tax basis in your ADSs would be adjusted to reflect any income or loss resulting from the mark-to-market election.

The “qualified electing fund” election which serves as a further alternative to the foregoing rules is not available.

If you own ADSs or ordinary shares during any year that we are classified as a PFIC, you must file an annual Internal Revenue Service Form 8621 that describes the distributions received on ADSs or ordinary shares and the gain realized on the disposition of ADSs or ordinary shares. You are urged to consult your tax advisor concerning the United States federal income tax consequences of acquiring, holding, and disposing of ADSs or ordinary shares if we are or become classified as a PFIC, including the possibility of making a mark-to-market election.

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Enforceability of civil liabilities

We are incorporated in the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of the following benefits:

Ø political and economic stability;

Ø an effective judicial system;

Ø a favorable tax system;

Ø the absence of exchange control or currency restrictions; and

Ø the availability of professional and support services.

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include:

Ø the Cayman Islands has a less developed body of securities laws as compared to that of the United States and these securities laws provide significantly less protection to investors; and

Ø the Cayman Islands companies may not have standing to sue before the federal courts of the United States.

Our constituent documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders be arbitrated.

Almost all of our assets are located in China. A majority of our directors and officers are nationals or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state of the United States. We have appointed CT Corporation System, 111 Eighth Avenue, New York, NY 10011, as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.

Conyers Dill & Pearman, our counsel as to the laws of the Cayman Islands, and Jingtian & Gongcheng, our counsel as to Chinese law, have advised us respectively that there is uncertainty as to whether the courts of the Cayman Islands or the PRC would, respectively,:

Ø recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

Ø entertain original actions brought in the Cayman Islands or the PRC against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Conyers Dill & Pearman has further advised us that the courts of the Cayman Islands would recognize as a valid judgment, a final and conclusive judgment in personam obtained in the federal or state courts in the U.S. under which a sum of money is payable, other than a sum payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty and would give a

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judgment based thereon provided that:

Ø such courts had proper jurisdiction over the parties subject to such judgment;

Ø such courts did not contravene the rules of natural justice of the Cayman Islands;

Ø such judgment was not obtained by fraud;

Ø the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands;

Ø no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and

Ø there is due compliance with the correct procedures under the laws of the Cayman Islands.

Jingtian & Gongcheng has further advised us that the recognition and enforcement of foreign judgments are provided for under PRC Civil Procedure Law. Under the PRC Civil Procedure Law, courts in China may recognize and enforce foreign judgments pursuant to treaties between China and the country where the judgment is rendered or based on reciprocity arrangements for the recognition and enforcement of foreign judgments between jurisdictions. If there are neither treaties nor reciprocity arrangements between China and a foreign jurisdiction where a judgment is rendered, according to the PRC Civil Procedure Law, matters relating to the recognition and enforcement of a foreign judgment in China may be resolved through diplomatic channels. China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of foreign judgments with the United States or the Cayman Islands. As a result, it is generally difficult to recognize and enforce in China a judgment rendered by a court in either of these two jurisdictions.

158

Underwriting

We are offering the ADSs described in this prospectus through the underwriters named below. UBS AG, CIBC World Markets Corp. and Pacific Growth Equities, LLC are the representatives of the underwriters. UBS AG, 52/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong, is the sole book-running manager of this offering. We have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, each of the underwriters has severally agreed to purchase the number of ADSs listed next to its name in the following table:

Underwriters	Number of ADSs
UBS AG
CIBC World Markets Corp.
Pacific Growth Equities, LLC
Total	7,700,000

The underwriting agreement provides that the underwriters must buy all of the ADSs if they buy any of them. However, the underwriters are not required to take or pay for the ADSs covered by the underwriters’ over-allotment option described below.

Our ADSs are offered subject to a number of conditions, including:

Ø receipt and acceptance of our ADSs by the underwriters; and

Ø the underwriters’ right to reject orders in whole or in part.

In connection with this offering, the underwriters may distribute prospectuses electronically.

Over-allotment option

We and certain of the selling shareholders have granted the underwriters an option to buy up to 1,155,000 additional ADSs. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering. The underwriters have 30 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional ADSs approximately in proportion to the amounts specified in the table above. We will not receive any of the proceeds from the sale of our ADSs by the selling shareholders.

Commissions and discounts

ADSs sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any ADSs sold by the underwriters to securities dealers may be sold at a discount of up to $             per ADS from the public offering price. Any of these securities dealers may resell any ADSs purchased from the underwriters to other brokers or dealers at a discount of up to $             per ADS from the public offering price. If all the ADSs are not sold at the public offering price, the underwriters may change the public offering price and the other selling terms. Upon execution of the underwriting agreement, the underwriters will be obligated to purchase the ADSs at the prices and upon the terms stated therein and, as a result, will thereafter bear any risk associated with changing the offering price to the public or other selling terms. UBS AG is expected to make offers and sales in the United States through its U.S. registered broker-dealer affiliate, UBS Securities LLC. Sales of shares made

159

Underwriting

outside of the United States may be made by affiliates of the underwriters. The underwriters have informed us that they do not expect to sell more than          ADSs to accounts over which such underwriters exercise discretionary authority.

The underwriting discounts and commissions represent 7% of the total amount of the offering. The following table shows the per ADS and total underwriting discounts and commissions we will pay to the underwriters, assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional 1,155,000 ADSs:

	Paid by us		Paid by the selling shareholders
	No exercise	Full exercise	No exercise	Full exercise
Per ADS	$	$	$	$
Total	$	$	$	$

We estimate that the total expenses of this offering payable by us, not including the underwriting discounts and commissions, will be approximately $5,000,000.

No sales of similar securities

We, our officers, directors and shareholders have entered into lock-up agreements with the underwriters. Under these agreements, we and each of these persons may not, without the prior written approval of UBS AG, subject to limited exceptions, offer, sell, contract to sell or otherwise dispose of, directly or indirectly, or hedge, any of our ordinary shares, in the form of ADSs or otherwise, or any securities convertible into or exercisable or exchangeable for our ordinary shares, in the form of ADSs or otherwise. These restrictions will be in effect until the expiration of 180 days after the date of this prospectus. At any time and without public notice, UBS AG may in its sole discretion release all or some of the securities from these lock-up agreements.

If:

Ø during the period that begins on the date that is 15 calendar days plus three business days before the last day of the 180-day lock-up period and ends on the last day of the 180-day lock-up period,

Ø we issue an earnings release; or

Ø material news or a material event relating to us occurs; or

Ø prior to the expiration of the 180-day lock-up period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day lock-up period,

then the 180-day lock-up period will be extended until the expiration of the date that is 15 calendar days plus three business days after the date on which the issuance of the earnings release or the material news or material event occurs.

Indemnification and contribution

We and certain selling shareholders have agreed to indemnify the underwriters and their controlling persons against certain liabilities, including liabilities under the Securities Act. If we are unable to provide this indemnification, we will contribute to payments the underwriters and their controlling persons may be required to make in respect of those liabilities.

160

Underwriting

Nasdaq Global Market quotation

Our ADSs have been approved for quotation on The Nasdaq Global Market, subject to notice of official issuance, under the symbol “SSRX.”

Price stabilization, short positions, penalty bids

In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our ADSs, including:

Ø stabilizing transactions;

Ø short sales;

Ø purchases to cover positions created by short sales;

Ø imposition of penalty bids; and

Ø syndicate-covering transactions.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our ADSs while this offering is in progress. These transactions may also include making short sales of our ADSs, which involve the sale by the underwriters of a greater number of ADSs than they are required to purchase in this offering. Short sales may be “covered short sales,” which are short positions in an amount not greater than the underwriters’ over-allotment option referred to above, or may be “naked short sales,” which are short positions in excess of that amount.

The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing ADSs in the open market. In making this determination, the underwriters will consider, among other things, the price of ADSs available for purchase in the open market compared to the price at which they may purchase ADSs through the over-allotment option. The underwriters must close out any naked short position by purchasing ADSs in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the ADSs in the open market after pricing that could adversely affect investors who purchased in this offering.

The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased ADSs sold by or for the account of that underwriter in stabilizing or short covering transactions.

As a result of these activities, the price of our ADSs may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the underwriters at any time. The underwriters may carry out these transactions on The Nasdaq Global Market, in the over-the-counter market or otherwise.

Determination of offering price

Prior to this offering, there was no public market for our ADSs. The initial public offering price will be determined by negotiation by us and the representatives of the underwriters. The principal factors to be considered in determining the initial public offering price include:

Ø the information set forth in this prospectus and otherwise available to representatives;

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Underwriting

Ø our history and prospects, and the history of and prospects for the industry in which we compete;

Ø our past and present financial performance and an assessment of our management;

Ø our prospects for future earnings and the present state of our development;

Ø the general condition of the securities markets at the time of this offering;

Ø the recent market prices of, and demand for, publicly traded equity securities of generally comparable companies; and

Ø other factors deemed relevant by the underwriters and us.

Affiliations

Certain of the underwriters and their affiliates have provided and may from time to time in the future engage in transactions with us and provide certain commercial banking, financial advisory and investment banking services for us for which they receive customary fees.

We have granted UBS Securities LLC, an affiliate of UBS AG, a right of first refusal to participate in potential future transactions and have agreed to reimburse UBS Securities LLC for certain expenses related to this offering. In accordance with the NASD’s Conduct Rules, the right of first refusal will be deemed 1% of underwriting compensation, and up to an estimated maximum of $850,000 of reimbursable expenses which may be paid to UBS Securities LLC, will be deemed underwriting compensation in connection with this offering. It is currently estimated that UBS Securities LLC’s reimbursable expenses will be approximately $350,000.

Directed share program

At our request, certain of the underwriters have reserved up to 5% of the ADSs being offered by this prospectus for sale at the initial offering price to our employees and consultants and other persons having a relationship with us, as designated by us. The sales will be made by UBS Financial Services Inc., an affiliate of UBS AG, through a directed share program. We do not know whether these persons will choose to purchase all or any portion of these reserved shares, but any purchases they do make will reduce the number of shares available to the general public. Directed share participants purchasing these reserved shares may be subject to the restrictions described in “Underwriting—No sales of similar securities” above.

162

Notice to investors

No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of the ADSs, or the possession, circulation or distribution of this prospectus or any other material relating to us or the ADSs in any jurisdiction where action for that purpose is required. Accordingly, the ADSs may not be offered or sold, directly or indirectly, and neither this prospectus nor any other offering material or advertisements in connection with the ADSs may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction.

EUROPEAN ECONOMIC AREA

With respect to each Member State of the European Economic Area which has implemented Prospectus Directive 2003/71/EC, including any applicable implementing measures, from and including the date on which the Prospectus Directive is implemented in that Member State, the offering of ADSs to the public is only being made:

Ø to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

Ø to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

Ø in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of ADSs to the public” in relation to any ADSs in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the ADSs to be offered so as to enable an investor to decide to purchase or subscribe for the ADSs, as the same may be varied in that member state by any measure implementing the Prospectus Directive in that member state and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

UNITED KINGDOM

Our ADSs may not be offered or sold and will not be offered or sold to any persons in the United Kingdom other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses and in compliance with all applicable provisions of the Financial Services and Markets Act 2000 (FSMA) with respect to anything done in relation to our ADSs in, from or otherwise involving the United Kingdom. In addition, each underwriter will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of our ADSs in circumstances in which Section 21(1) of the FSMA does not apply to us. Without limitation to the other restrictions referred to herein, this prospectus is directed only at (1) persons outside the United Kingdom, (2) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the FSMA (Financial Promotion) Order 2005; or (3) high net worth bodies corporate,

163

Notice to investors

unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the FSMA (Financial Promotion) Order 2005. Without limitation to the other restrictions referred to herein, any investment or investment activity to which this prospectus relates is available only to, and will be engaged in only with, such persons, and persons within the United Kingdom who receive this communication (other than persons who fall within (2) or (3) above) should not rely or act upon this communication.

ITALY

The offering of our ADSs has not been cleared by the Italian Securities Exchange Commission (Commissione Nazionale per le Società e la Borsa, the “CONSOB”) pursuant to Italian securities legislation and, accordingly, shares of our ADSs may not and will not be offered, sold or delivered, nor may or will copies of this prospectus supplement and the accompanying prospectus or any other documents relating to our ADSs or the offering be distributed in Italy other than to professional investors (operatori qualificati), as defined in Article 31, paragraph 2 of CONSOB Regulation No. 11522 of July 1, 1998, as amended (“Regulation No. 11522”).

Any offer, sale or delivery of our ADSs or distribution of copies of this prospectus supplement and the accompanying prospectus or any other document relating to our ADSs or the offering in Italy may and will be effected in accordance with all Italian securities, tax, exchange control and other applicable laws and regulations, and, in particular, will be: (i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Legislative Decree No. 385 of September 1, 1993, as amended (the “Italian Banking Law”), Legislative Decree No. 58 of February 24, 1998, as amended, Regulation No. 11522, and any other applicable laws and regulations; (ii) in compliance with Article 129 of the Italian Banking Law and the implementing guidelines of the Bank of Italy; and (iii) in compliance with any other applicable notification requirement or limitation which may be imposed by CONSOB or the Bank of Italy.

Any investor purchasing our ADSs in the offering is solely responsible for ensuring that any offer or resale of ADSs it purchased in the offering occurs in compliance with applicable laws and regulations.

This prospectus supplement and the accompanying prospectus and the information contained herein are intended only for the use of its recipient and are not to be distributed to any third party resident or located in Italy for any reason. No person resident or located in Italy other than the original recipients of this document may rely on it or its content.

In addition to the above (which shall continue to apply to the extent not inconsistent with the implementing measures of the Prospective Directive in Italy), after the implementation of the Prospectus Directive in Italy, the restrictions, warranties and representations set out under the heading “European Economic Area” above shall apply to Italy.

THE NETHERLANDS

The underwriters have not offered, distributed, sold, transferred or delivered, and will not offer, distribute, sell, transfer or deliver, any ADSs, directly or indirectly, in the Netherlands, as part of their initial distribution or at any time thereafter, to any person other than individuals who or legal entities which trade or invest in securities in the conduct of their profession or business within the meaning of article 2 of the Exemption Regulation issued under the Securities Transactions Supervision Act 1995

164

Notice to investors

(“Vrijstellingsregeling Wet toezicht Effectenverkeer 1995”), which includes banks, brokers, pension funds, insurance companies, securities institutions, investment institutions and other institutional investors, including, among others, treasuries of large enterprises, who or which regularly trade or invest in securities in a professional capacity.

SWITZERLAND

Our ADSs may be offered in Switzerland only on the basis of a non-public offering. This prospectus does not constitute an issuance prospectus according to articles 652a or 1156 of the Swiss Federal Code of Obligations or a listing prospectus according to article 32 of the Listing Rules of the Swiss exchange. Our ADSs may not be offered or distributed on a professional basis in or from Switzerland and neither this prospectus nor any other offering material relating to our ADSs may be publicly issued in connection with any such offer or distribution. Our ADSs have not been and will not be approved by any Swiss regulatory authority. In particular, our ADSs are not and will not be registered with or supervised by the Swiss Federal Banking Commission, and investors may not claim protection under the Swiss Investment Fund Act.

HONG KONG

The underwriters (i) have not offered or sold, and will not offer or sell, in Hong Kong, by means of any document, any ADSs other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Chapter 32) of Hong Kong, and (ii) except as permitted under the securities laws of Hong Kong, have not issued, and will not issue, in Hong Kong any document, invitation or advertisement relating to the ADSs other than with respect to ADSs which are intended to be disposed of to persons outside Hong Kong or only to persons whose business involves the acquisition, disposal or holding of securities, whether as principal or agent.

JAPAN

The ADSs have not been and will not be registered under the Securities and Exchange Law of Japan and may not be offered or sold, directly or indirectly, in Japan or to, or for the account or benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to, or for the account or benefit of, any person for reoffering or resale, directly or indirectly, in Japan or to, or for the account or benefit of, any resident of Japan, except (i) pursuant to an exemption from the registration requirements of, or otherwise in compliance with, the Securities and Exchange Law of Japan and (ii) in compliance with any other relevant laws and regulations of Japan.

SINGAPORE

This prospectus has not been registered as a prospectus or information memorandum with the Monetary Authority of Singapore. Accordingly, no advertisement may be made offering or calling attention to an offer or intended offer of the ADSs to the public in Singapore. The underwriters will not offer or sell ADSs, and will not make ADSs the subject of an invitation for subscription or purchase, and will not circulate or distribute this prospectus or any other document or material in connection with the offer or

165

Notice to investors

sale, or invitation for subscription or purchase, of ADSs, whether directly or indirectly, to the public or any member of the public in Singapore other than:

Ø to an institutional investor or other person specified in Section 274 of the Securities and Futures Act 2001 of Singapore, or the

Ø Securities and Futures Act,

Ø to a sophisticated investor, and in accordance with the conditions, specified in Section 275 of the Securities and Futures Act, or

Ø otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.

PEOPLE’S REPUBLIC OF CHINA

The underwriters have not circulated and will not circulate or distribute this prospectus in the PRC and the underwriters have not offered or sold, and will not offer or sell to any person for re-offering or resale, directly or indirectly, any ADSs to any resident of the PRC except pursuant to applicable laws and regulations of the PRC. For the purposes of this paragraph, PRC does not include Hong Kong, Macau and Taiwan.

CAYMAN ISLANDS

This prospectus does not constitute an invitation or offer to the public in the Cayman Islands of the ADSs, whether by way of sale or subscription. The underwriters have not offered or sold, and will not offer or sell, directly or indirectly, any ADSs in the Cayman Islands.

166

Expenses relating to this offering

The following table sets forth the main estimated expenses in connection with this offering, other than the underwriting discounts and commissions, which we will be required to pay:

U.S. Securities and Exchange Commission registration fee	US$	13,265
National Association of Securities Dealers filing fee		12,897
Nasdaq listing fee		150,000
Legal fees and expenses		2,000,000
Accounting fees and expenses		850,000
Other professional fees		710,000
Printing fees		300,000
Roadshow expenses		450,000
Other fees and expenses		513,838
Total	US$	5,000,000

All amounts are estimated, except the U.S. Securities and Exchange Commission registration fee, the Nasdaq listing fee and the NASD filing fee.

167

Legal matters

The validity of the ADSs and certain other legal matters with respect to U.S. federal and New York law will be passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, Hong Kong. Dewey Ballantine LLP, New York, New York is U.S. counsel for the underwriters in connection with this offering. The validity of our ordinary shares represented by the ADSs offered in this offering and certain other legal matters as to Cayman Islands law will be passed upon for us by Conyers Dill & Pearman. Legal matters as to Chinese law will be passed upon for us by Jingtian & Gongcheng, Beijing, China and for the underwriters by the Commerce and Finance Law Offices, Beijing, China. Skadden, Arps, Slate, Meagher & Flom LLP may rely upon Conyers Dill & Pearman, with respect to matters governed by the Cayman Islands law and upon Jingtian & Gongcheng, Beijing, China with respect to matters governed by PRC law. Dewey Ballantine LLP may rely upon Conyers Dill & Pearman, with respect to matters governed by Cayman Islands and upon Commerce and Finance Law Offices, Beijing, China with respect to matters governed by PRC law.

Experts

The consolidated financial statements of 3SBio Inc. as of December 31, 2004 and 2005 and September 30, 2006, and for each of the years in the three-year period ended December 31, 2005 and for the nine months ended September 30, 2005 and 2006, have been included herein in reliance upon the report of KPMG, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of the said firm as experts in accounting and auditing.

The offices of KPMG are located at 8th Floor, Prince’s Building, 10 Chater Road, Central, Hong Kong, China.

168

Where you can find more information

We have filed with the U.S. Securities and Exchange Commission a registration statement (including relevant exhibits and schedules) on Form F-1 (No. 333-    ) under the Securities Act with respect to our ordinary shares to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information contained in the registration statement. You should read the registration statement and its exhibits and schedules for further information with respect to us and our ordinary shares and ADSs. Information regarding the contents of contracts or other documents described in this prospectus is not necessarily complete and you should refer to the actual contracts and documents filed as exhibits to the registration statement for more detailed and complete information.

Immediately upon completion of this offering we will become subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements and annual reports to shareholders, and our officers and directors will not be subject to the insider short-swing profit disclosure and recovery requirements of Section 16 of the Exchange Act. The registration statement, reports and other information so filed can be inspected and copied at the public reference facility maintained by the SEC at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating fee by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facility.

Our SEC filings will also be available to the public on the SEC’s Internet Web site at http://www.sec.gov.

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3SBIO INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS	PAGE(S)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
CONSOLIDATED BALANCE SHEETS	F-3
CONSOLIDATED STATEMENTS OF INCOME	F-4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY	F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS	F-6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	F-7

F-1

3SBIO INC. AND SUBSIDIARIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF 3SBIO INC.

We have audited the accompanying consolidated balance sheets of 3SBio Inc. (the “Company”) and subsidiaries as of December 31, 2004 and 2005 and September 30, 2006, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2005 and for the nine months ended September 30, 2005 and 2006, all expressed in Renminbi. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of 3SBio Inc. and subsidiaries as of December 31, 2004 and 2005 and September 30, 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005 and for the nine months ended September 30, 2005 and 2006, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements as of and for the year ended December 31, 2005 and as of and for the nine months ended September 30, 2006 have been translated into United States dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, such consolidated financial statements expressed in Renminbi have been translated into United States dollars on the basis set forth in Note 2(b) to the consolidated financial statements.

/s/ KPMG

Hong Kong, China

November 10, 2006

F-2

3SBIO INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(RMB and US$ expressed in thousands, except per share data)

			December 31,						September 30,
			2004		2005		2005		2006		2006
	Note		RMB		RMB		US$		RMB		US$
Assets
Current assets
Cash and cash equivalents			20,151		25,746		3,257		42,813		5,416
Accounts receivable, less allowance for doubtful accounts: December 31, 2004 — RMB5,586; December 31, 2005 — RMB5,892 (US$745); September 30, 2006 — RMB5,892 (US$745)	3		40,148		34,376		4,349		37,960		4,803
Inventories	4		8,688		6,450		816		8,346		1,056
Prepaid expenses and other receivables	5		4,485		6,927		876		9,818		1,242
Amount due from shareholder	17	(b)	19,473		19,675		2,489		—		—
Income tax prepaid			2		121		16		—		—
Deferred tax assets	15		3,692		2,717		344		1,940		245
Total current assets			96,639		96,012		12,147		100,877		12,762
Property, plant and equipment, net	6		45,568		42,472		5,374		43,829		5,545
Lease prepayments	7		492		9,953		1,259		9,688		1,226
Intangible assets, net	8		823		—		—		—		—
Deferred tax assets	15		2,727		2,124		269		1,577		200
Total assets			146,249		150,561		19,049		155,971		19,733
Liabilities
Current liabilities
Short-term bank loans	9		69,000		89,000		11,260		44,000		5,567
Accounts payable			1,248		1,336		169		981		124
Deferred grant income	10		1,050		924		117		730		92
Accrued expenses and other payables	11		11,519		11,039		1,397		16,525		2,091
Income tax payable			—		—		—		1,391		176
Amount due to investee company	17	(b)	1,813		1,813		229		—		—
Other current liabilities			158		139		18		109		14
Total current liabilities			84,788		104,251		13,190		63,736		8,064
Long-term bank loans	9		30,000		—		—		25,000		3,163
Deferred grant income	10		5,435		4,511		571		3,993		505
Other liabilities			815		677		86		599		76
Total liabilities			121,038		109,439		13,847		93,328		11,808
Commitments and contingencies	21
Minority interests			646		502		63		501		63
Shareholders’ equity	12
Share capital — ordinary shares US$0.0001 par value, 500,000,000 shares authorized, 100,000,998 shares issued and outstanding as of September 30, 2006			—		—		—		80		10
Registered capital			62,974		62,974		7,967		—		—
Additional paid-in capital			15,167		15,167		1,919		78,141		9,886
Statutory reserves			850		2,266		287		2,266		287
Accumulated losses			(54,426	)	(39,787	)	(5,034	)	(18,345	)	(2,321	)
Total shareholders’ equity			24,565		40,620		5,139		62,142		7,862
Total liabilities and shareholders’ equity			146,249		150,561		19,049		155,971		19,733

See accompanying notes to the consolidated financial statements.

F-3

3SBIO INC. AND SUBSIDIARIES

Consolidated Statements of Income

(RMB and US$ expressed in thousands, except per share data)

		Year ended December 31,								Nine months ended September 30,
		2003		2004		2005		2005		2005		2006		2006
	Note	RMB		RMB		RMB		US$		RMB		RMB		US$
Revenues	13	72,840		77,248		102,013		12,907		76,130		92,572		11,712
Cost of revenues	14	(12,653	)	(15,027	)	(15,497	)	(1,961	)	(12,664	)	(8,779	)	(1,111	)
Gross profit		60,187		62,221		86,516		10,946		63,466		83,793		10,601
Operating expenses
Research and development costs	14	(3,073	)	(3,699	)	(3,196	)	(404	)	(2,311	)	(3,754	)	(475	)
Sales, marketing and distribution expenses	14	(37,021	)	(38,762	)	(49,205	)	(6,225	)	(35,133	)	(43,448	)	(5,497	)
General and administrative expenses	14	(15,789	)	(13,600	)	(13,956	)	(1,766	)	(9,378	)	(10,729	)	(1,358	)
Total operating expenses		(55,883	)	(56,061	)	(66,357	)	(8,395	)	(46,822	)	(57,931	)	(7,330	)
Operating income		4,304		6,160		20,159		2,551		16,644		25,862		3,271
Other income/(expense), net
Interest income		88		81		144		18		82		309		39
Interest expense		(5,836	)	(6,029	)	(5,551	)	(702	)	(4,246	)	(3,387	)	(428	)
Grant income	10	2,518		6,442		3,771		477		2,763		2,414		305
Others		288		—		(850	)	(108	)	(832	)	(183	)	(23	)
Total other income/(expense), net		(2,942	)	494		(2,486	)	(315	)	(2,233	)	(847	)	(107	)
Income before income tax expense and minority interests		1,362		6,654		17,673		2,236		14,411		25,015		3,164
Income tax expense	15	(1,201	)	(226	)	(1,762	)	(223	)	(1,668	)	(3,574	)	(452	)
Income before minority interests		161		6,428		15,911		2,013		12,743		21,441		2,712
Minority interests, net of tax		349		182		144		18		153		1		—
Net income		510		6,610		16,055		2,031		12,896		21,442		2,712
Net income per share:
— Basic and diluted		0.01		0.07		0.16		0.02		0.13		0.21		0.03

See accompanying notes to the consolidated financial statements.

F-4

3SBIO INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

(RMB and US$ expressed in thousands, except per share data)

		Share capital
		No. of shares	Amount	Registered capital		Additional paid-in capital	Statutory reserves	Accumulated losses		Total shareholders’ equity
	Note		RMB	RMB		RMB	RMB	RMB		RMB
Balance as of January 1, 2003		—	—	62,974		15,167	850	(61,546	)	17,445
Net income		—	—	—		—	—	510		510
Balance as of December 31, 2003		—	—	62,974		15,167	850	(61,036	)	17,955
Net income		—	—	—		—	—	6,610		6,610
Balance as of December 31, 2004		—	—	62,974		15,167	850	(54,426	)	24,565
Net Income		—	—	—		—	—	16,055		16,055
Transfer to statutory reserves	12(b)	—	—	—		—	1,416	(1,416	)	—
Balance as of December 31, 2005		—	—	62,974		15,167	2,266	(39,787	)	40,620
Balance as of December 31, 2005 — US$		—	—	7,967		1,919	287	(5,034	)	5,139
Balance as of January 1, 2006		—	—	62,974		15,167	2,266	(39,787	)	40,620
Capital on incorporation	12(a)	1	—	—		—	—	—		—
Effect of reorganization	12(a)	100,000,997	80	(62,974	)	62,974	—	—		80
Net income		—	—	—		—	—	21,442		21,442
Balance as of September 30, 2006		100,000,998	80	—		78,141	2,266	(18,345	)	62,142
Balance as of September 30, 2006 — US$		100,000,998	10	—		9,886	287	(2,321	)	7,862

See accompanying notes to the consolidated financial statements.

F-5

3SBIO INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(RMB and US$ expressed in thousands)

			Year ended December 31,								Nine months ended September 30,
			2003		2004		2005		2005		2005		2006		2006
	Note		RMB		RMB		RMB		US$		RMB		RMB		US$
Cash flow from operating activities
Net income			510		6,610		16,055		2,031		12,896		21,442		2,712
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
(Gain)/loss on disposal of property, plant and equipment			(94	)	2		841		106		857		228		29
Depreciation of property, plant and equipment	14		6,479		7,252		7,488		948		5,796		4,046		512
Amortization of intangible assets	8		1,235		1,235		823		104		823		—		—
Amortization of deferred grant income			(1,468	)	(1,284	)	(1,050	)	(133	)	(800	)	(712	)	(91	)
Minority interests, net of tax			(349	)	(182	)	(144	)	(18	)	(153	)	(1	)	—
Deferred income taxes, deferred tax charges and deferred credit			1,138		226		1,421		180		1,317		1,216		154
Changes in operating assets and liabilities:
Lease prepayments	7		22		22		(9,461	)	(1,197	)	(9,549	)	265		33
Accounts receivable, net			1,190		(10,522	)	5,772		730		(484	)	(3,584	)	(454	)
Inventories			(3,259	)	2,735		2,238		283		2,606		(1,896	)	(240	)
Prepaid expenses and other receivables			(401	)	(241	)	1,367		173		635		(6,415	)	(811	)
Accounts payable			(8,768	)	(202	)	88		11		(264	)	(355	)	(45	)
Accrued expenses and other payables			(13,470	)	1,470		(480	)	(61	)	489		5,486		694
Amount due to investee company			1,813		—		—		—		—		(1,813	)	(229	)
Income tax prepaid/ payable			(693	)	71		(119	)	(14	)	351		1,512		192
Net cash (used in)/provided by operating activities			(16,115	)	7,192		24,839		3,143		14,520		19,419		2,456
Cash flow from investing activities
Purchase of property, plant and equipment			(2,816	)	(901	)	(9,151	)	(1,158	)	(6,609	)	(2,051	)	(259	)
Proceeds from disposal of property, plant and equipment			280		621		109		14		21		24		3
(Advance to)/repayment from shareholder	17	(b)	(22,021	)	2,548		(202	)	(26	)	(202	)	19,675		2,489
Net cash (used in)/provided by investing activities			(24,557	)	2,268		(9,244	)	(1,170	)	(6,790	)	17,648		2,233
Cash flow from financing activities
Principal payments of short-term bank loans			(88,000	)	(69,000	)	(74,000	)	(9,362	)	(20,000	)	(60,000	)	(7,591	)
Proceeds from short-term bank loans			121,000		69,000		64,000		8,097		10,000		15,000		1,898
Proceeds from long-term bank loans			—		—		—		—		—		25,000		3,163
Contribution from minority shareholder			1,000		—		—		—		—		—		—
Net cash provided by/(used in) financing activities			34,000		—		(10,000	)	(1,265	)	(10,000	)	(20,000	)	(2,530	)
Net (decrease)/increase in cash and cash equivalents			(6,672	)	9,460		5,595		708		(2,270	)	17,067		2,159
Cash and cash equivalents at beginning of year/period			17,363		10,691		20,151		2,549		20,151		25,746		3,257
Cash and cash equivalents at end of year/period			10,691		20,151		25,746		3,257		17,881		42,813		5,416
Supplemental disclosure of cash flow information
Cash (paid)/received during the year/period for:
Income taxes			(756	)	71		(460	)	(58	)	—		(846	)	(107	)
Interest expense (net of amount capitalized)			(5,798	)	(6,024	)	(5,563	)	(704	)	(4,267	)	(3,459	)	(438	)

See accompanying notes to the consolidated financial statements.

F-6

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(expressed in RMB and US$)

1    Reorganization, principal activities, basis of presentation and liquidity

(a)    Reorganization

3SBio Inc. (“the Company”) was incorporated in the Cayman Islands in August 2006 under the Cayman Islands Companies Law as an exempted company with limited liability. The Company was incorporated as part of the reorganization of Shenyang Sunshine Pharmaceutical Company Limited (“Shenyang Sunshine”) and its subsidiaries (the “Reorganization”) in preparation of its anticipated initial public offering of securities. In connection with the Reorganization, and pursuant to a shareholders’ agreement amongst the existing beneficial shareholders of Shenyang Sunshine, an ultimate beneficial shareholder of Shenyang Sunshine established Collected Mind Limited (“Collected Mind”) in July 2006 in the British Virgin Islands and held the interest in Collected Mind on behalf of all the ultimate beneficial shareholders of Shenyang Sunshine or their nominees, in proportion to their respective effective share ownership in Shenyang Sunshine. Collected Mind acquired all of the equity interest in Shenyang Sunshine in July 2006. Shortly after this acquisition, the Company was established as the ultimate holding company. In September 2006, in consideration of the Company’s issuance of shares to the ultimate beneficial shareholders of Collected Mind or their nominees in proportion to each of their beneficial interest in Collected Mind, the entire equity interest in Collected Mind was acquired by the Company. Upon completion of the Reorganization, Collected Mind and the Company became Shenyang Sunshine’s immediate and ultimate holding companies, respectively. The proportionate ownership of the Company immediately after and Shenyang Sunshine before the Reorganization is substantially the same. The Company, Collected Mind and Shenyang Sunshine, together with Shenyang Sunshine’s subsidiary, Liaoning Bio-Pharmaceutical Company Limited (“Liaoning Sunshine”) and variable interest entity (“VIE”) for which Shenyang Sunshine is the primary beneficiary, Beijing Sunshine Bio-Product Sales Company Limited (“Beijing Sunshine”) are collectively referred to as the “Group”.

(b)    Principal activities

The Group is principally engaged in the research, development, manufacture and distribution of pharmaceutical products in the People’s Republic of China (“PRC”). The Group currently manufactures four types of biopharmaceutical products, making use of technical know-how injected by the former majority shareholder of Shenyang Sunshine and the Group’s own research and development. The Group’s major products include the following:

· EPIAO, an injectable recombinant human erythropoietin that is used to stimulate the production of red blood cells in patients with anemia and to reduce the need for blood transfusions;

· TPIAO, a recombinant human thrombopoietin indicated for the treatment of chemotherapy-induced thrombocytopenia; and

· Two legacy products, including Intefen, a recombinant interferon alpha-2a product indicated for the treatment of carcinoma of the lymphatic or hematopoietic system and viral infectious diseases; and Inleusin, a recombinant human IL-2 product indicated for the treatment of renal cell carcinoma, metastatic melanoma, thoratic fluid build-up caused by cancer and tuberculosis.

Shenyang Sunshine was established in the PRC in January 1993 as a Sino-foreign joint stock limited company and has registered, issued and paid up capital of 62,974,046 shares of RMB1 each. In connection with the Reorganization, Shenyang Sunshine became a wholly foreign-owned enterprise in the PRC. Liaoning Sunshine is a 90% owned domestic limited liability company incorporated in the PRC.

F-7

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

Beijing Sunshine is a domestic limited liability company incorporated in the PRC. Beijing Sunshine is primarily engaged in the distribution of products manufactured by Shenyang Sunshine. Shenyang Sunshine holds a 45% equity interest in Beijing Sunshine while a related party of the Company, Shenyang Keweier Advanced Technology Co., Ltd., holds the remaining 55% equity interest. The registered capital of Beijing Sunshine is RMB1,010,000. The total equity investment at risk is not sufficient to permit Beijing Sunshine to finance its activities without additional subordinated financial support provided by Shenyang Sunshine. Shenyang Sunshine finances Beijing Sunshine in the form of subordinated trade payables arising from the sales of products from Shenyang Sunshine to Beijing Sunshine.

Financial Accounting Standards Board (“FASB”) Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (“FIN 46(R)”) requires certain VIEs to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without subordinated financial support from other parties. FIN 46(R) also requires that, for purposes of determining whether an enterprise is the primary beneficiary of a VIE, an enterprise with a variable interest shall treat variable interests in the same entity held by its related parties as its own interests. As variable interests in Beijing Sunshine are predominately held by Shenyang Sunshine and its related party, Shenyang Sunshine is deemed to be the primary beneficiary of Beijing Sunshine under FIN 46(R). Accordingly, the financial statements of Beijing Sunshine are consolidated in Shenyang Sunshine’s financial statements from the date Shenyang Sunshine became involved with Beijing Sunshine.

After initial measurement, the assets, liabilities and non-controlling interests of Beijing Sunshine are accounted for as if the entity were consolidated based on voting interests and the usual accounting rules are applied to Beijing Sunshine as they would be to a consolidated subsidiary as follows:

· Carrying amounts of assets and liabilities of Beijing Sunshine are consolidated into the financial statements of Shenyang Sunshine as the primary beneficiary; and

· Intercompany transactions and balances between Shenyang Sunshine and Beijing Sunshine are eliminated in their entirety.

(c)    Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”).

As the Reorganization was completed for the sole purpose of establishing the legal structure of the Group in preparation for the initial public offering of securities of the Company, and as the shareholders’ proportionate equity interests in the Company upon consummation of the Reorganization were substantially identical to their proportionate equity interests in Shenyang Sunshine just prior to the consummation of the Reorganization, the Reorganization has been accounted for in a manner similar to a pooling-of-interests. Accordingly, the accompanying consolidated financial statements of the Company include the assets and liabilities of Shenyang Sunshine at their historical carrying amounts. In addition, the accompanying consolidated financial statements present the results of the Group as if Collected Mind, Shenyang Sunshine and its subsidiaries were transferred to the Company as of the beginning of the earliest period presented.

F-8

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

This basis of accounting differs in certain material respects from that used for the preparation of the books of account of Shenyang Sunshine and its subsidiaries, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises limited by shares as established by the Ministry of Finance of the PRC (“PRC GAAP”), the accounting standards used in the country of their domicile. The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of Shenyang Sunshine and its subsidiaries to present them in conformity with US GAAP.

2    Summary of significant accounting policies and practices

(a)    Principles of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated on consolidation.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.

(b)    Foreign currency transactions

The functional and reporting currency of the Company and its subsidiaries is the Renminbi (“RMB”).

Transactions denominated in currencies other than RMB are translated into RMB at the exchange rates quoted by the People’s Bank of China (the “PBOC”) prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into RMB using the applicable exchange rates quoted by the PBOC at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statements of income.

Commencing from July 21, 2005, the PRC government moved the RMB into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. The exchange rate of the U.S. dollar against the RMB was adjusted from approximately RMB8.28 per U.S. dollar on July 20, 2005 to RMB8.11 per U.S. dollar on July 21, 2005. The exchange rate has continued to fluctuate since the initial adjustment.

For the convenience of the readers, the December 31, 2005 and September 30, 2006 RMB amounts included in the accompanying consolidated financial statements have been translated into U.S. dollars at the rate of US$1.00 = RMB7.9040, being the noon buying rate for U.S. dollars in effect on September 29, 2006 for cable transfers in RMB per U.S. dollar as certified for custom purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at that rate or at any other rate on December 31, 2005, September 30, 2006 or at any other date.

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the PBOC or other institutions authorized to buy and sell foreign exchange. The

F-9

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand.

(c)    Use of estimates

The preparation of the consolidated financial statements in accordance with US GAAP requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates and assumptions including, but not limited to, those related to the recoverability of the carrying amount and estimated useful lives of long-lived assets, valuation allowances for accounts receivable and realizable values for inventories. Changes in facts and circumstances may result in revised estimates.

(d)    Cash and cash equivalents

Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. None of the Group’s cash is restricted as to withdrawal.

(e)    Accounts receivable

Accounts receivable are stated at the invoiced amount after deduction of trade discounts and allowances, if any, and do not bear interest. The allowance for doubtful accounts is the Group’s best estimate of the amount of credit losses in the Group’s existing accounts receivable. The Group determines the allowance based on historical write-off experience, customer specific facts and economic conditions.

Outstanding account balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company and its subsidiaries are required to comply with local tax requirements on the write-offs of doubtful accounts, which allow for such write-offs only when the related account balances are aged over three years and sufficient evidence is available to prove the debtors’ inability to make payments. For financial reporting purposes, the Company generally records write-offs of doubtful accounts at the same time the local tax requirements for the write-offs are met. As a result, there may be time lags between the time when allowance for doubtful accounts is provided and the time such allowance is written off. The Group does not have any off-balance-sheet credit exposure related to its customers.

(f)    Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the weighted average cost method. Cost of work-in-progress and finished goods comprises direct materials, direct production cost and an allocated proportion of production overheads based on normal operating capacity.

(g)    Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation.

F-10

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

Depreciation on property, plant and equipment is calculated based on the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the assets as follows:

Buildings	20 years
Plant and machinery	5 -10 years
Motor vehicles	5 years
Furniture, fixtures and computer equipment	5 -10 years

Interest expense incurred related to the construction of property, plant and equipment is capitalized. The capitalization of interest expense as part of the cost of a qualifying asset commences when expenditures for the asset have been made, activities that are necessary to get the asset ready for its intended use are in progress and interest cost is being incurred. The capitalization period ends when the asset is substantially complete and ready for its intended use.

No depreciation is provided in respect of construction-in-progress.

Depreciation of property, plant and equipment attributable to manufacturing activities is capitalized as part of inventory, and expensed to cost of revenues when inventory is sold.

(h)    Lease prepayments

Lease prepayments represent the cost of land use rights in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the respective periods of the rights of 30 years.

The current portion of lease prepayments has been included in prepaid expenses and other receivables in the consolidated balance sheets.

(i)    Intangible assets

Technical know-how for the production of certain pharmaceutical products, which was contributed by Shenyang Sunshine’s then majority shareholder as capital, is stated at the fair value on the date of initial capital contribution less accumulated amortization. Amortization expense was recognized based on the straight-line method over the estimated useful life of 10 years ending in 2005.

(j)    Long-term investment

Investments in equity securities of privately held companies over which the Group exercises significant influence, but not control (generally where the Group’s level of ownership is between 20% and 50%), are accounted for using the equity method. Equity method accounting involves recognizing the investment in the consolidated balance sheet initially at cost and adjusting thereafter for the post acquisition change in the Group’s share of the investee’s net assets, and recognizing in the consolidated statement of income the Group’s share of earnings or loss of the investee for the year.

When the Group’s share of loss exceeds its interest in the investee, the Group’s interest is reduced to zero and recognition of further losses is discontinued except to the extent that the Group has guaranteed obligations of the investee or is otherwise committed to provide further financial support for the investee.

F-11

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

(k)    Impairment of long-lived assets

Long-lived assets, including property, plant and equipment and intangible assets with finite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is measured by the asset’s discounted cash flows or market value, if readily determinable.

(l)    Revenue recognition

Sales of pharmaceutical products represent the invoiced value of goods, net of value added taxes (“VAT”), sales returns, trade discounts and allowances. The Group recognizes revenue when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable.

In the PRC, VAT at a general rate of 17% on invoice amount is collected on behalf of tax authorities in respect of the sales of goods. Revenue is stated net of VAT. VAT collected from customers is netted off VAT paid for purchases, with the net amount recorded as a liability in the consolidated balance sheet until it is paid to the authorities.

(m)    Government grants

An unconditional government grant is recognized in the consolidated statement of income when the grant becomes receivable. The government grants received by the Group were lump sum payments for which approval is at the sole discretion of the government and are subject to availability of the government funds. The amount and timing of the grants cannot be directly attributable to specific expenditures incurred and the timing of incurrence of such expenditures. As such, grant income is recognized as other income in the consolidated statement of income rather as part of the Company’s operating income.

Government grants relating to the acquisition of property, plant and equipment are recognized in the consolidated balance sheet as deferred income when there is reasonable assurance that it will be received and amortized as other income over the weighted average useful life of the assets purchased under the related subsidized capital project. Grants that compensate the Group for expenses incurred on research and development activities are recognized as other income in the consolidated statement of income upon the later of the award of the grant or in the same period in which the related expenses are incurred.

(n)    Retirement and other postretirement benefits

Contributions to retirement schemes (which are defined contribution plans) are charged to the consolidated statements of income as and when the related employee service is provided.

F-12

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

(o)    Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statement of income in the period that includes the enactment date.

(p)    Advertising and research and development costs

Advertising and research and development costs are expensed as incurred. Advertising costs included in sales, marketing and distribution expenses amounted to RMB351,000, RMB414,000 and RMB2,725,000 (US$345,000) for the years ended December 31, 2003, 2004 and 2005 respectively, and RMB2,038,000 and RMB2,008,000 (US$254,000) for the nine months ended September 30, 2005 and 2006 respectively. Research and development costs consist primarily of the remuneration of research and development staff, depreciation and material costs.

(q)    Commitments and contingencies

In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, including among others, product liability. The Group records accruals for such contingency based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. The Group may consider many factors in making these assessments including past history and the specifics of each matter. As the Group has not become aware of any product liability claim since operations commenced, the Group has not recognized a liability for product liability claims.

(r)    Income per share

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, Earnings per Share, basic net income per share available is computed by dividing net income by the number of shares outstanding of 100,000,998 as if the Reorganization as described in Note 1(a) had occurred at the beginning of the earliest period presented and such shares had been outstanding for all periods. Diluted earnings per share is calculated by dividing net income by the weighted average number of ordinary and dilutive potential ordinary shares outstanding during the period. There were no dilutive potential shares during the years ended December 31, 2003, 2004 and 2005, and nine months ended September 30, 2005. As of September 30, 2006, there were 15,000 dilutive potential shares, being unvested shares granted to an executive of the Company. The dilutive potential shares have no material impact on income per share for the nine months ended September 30, 2006.

(s)    Segment reporting

The Group uses the management approach in determining operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker for making operating decisions, allocating resources and assessing performance as the source of

F-13

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

determining the Group’s reportable segments. Management, including the chief operating decision maker, reviews operating results solely by monthly revenue and operating results of the Group and, as such, the Group has determined that the Group has a single operating segment as defined by SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, which is the research, development, manufacture and distribution of pharmaceutical products in the PRC.

(t)    Recently issued accounting standards

SFAS No. 123 (revised 2004)

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which requires companies to measure and recognize compensation expenses for all share-based payments at fair value. This Statement replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees. This Statement is effective for all interim and annual periods beginning after June 15, 2005 and is effective for the Group for the year beginning January 1, 2006. The Group has adopted SFAS No. 123R for share-based payments made in 2006 (Note 16).

SFAS No. 151

In November 2004, the FASB issued SFAS No. 151, Inventory Costs—an Amendment of ARB No. 43. This Statement requires amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) be recognized as current-period charges. In addition, the Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this Statement did not have a material effect on the Company’s consolidated financial statements.

SFAS No. 153

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an Amendment of APB Opinion No. 29. The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that opinion, however, included certain exceptions to that principle. This Statement amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This Statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this Statement did not have a material effect on the Company’s consolidated financial statements.

SFAS No. 154

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections—a Replacement of APB Opinion No. 20 and FASB Statement No. 3, which supersedes APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. APB Opinion No. 20 previously required that most voluntary changes in accounting principle be recognized by including the cumulative effect of changing to the new accounting principle in net income of the period of the change. SFAS No. 154 requires retrospective application to prior periods’

F-14

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

financial statements of changes in accounting principles, unless it is impracticable to determine the period-specific effects or the cumulative effect of the change. This Statement is effective for accounting changes and corrections of errors made in fiscal periods beginning after December 15, 2005. The adoption of this Statement did not have a material effect on the Company’s consolidated financial statements.

FASB Interpretation No. 48 (“FIN 48”)

In June 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of this Interpretation to have a material effect on the Company’s consolidated financial statements.

Securities and Exchange Commission Staff Accounting Bulletin No. 108 (“SAB 108”)

In September 2006, the Securities and Exchange Commission issued SAB 108. This Bulletin prescribes that misstatements in current year financial statements should be quantified based on both the “rollover” approach, which quantifies a misstatement based on the amount of the error originating in the current year income statement, and the “iron curtain” approach, which quantifies a misstatement based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year. This Bulletin requires a misstatement to be adjusted in the current year financial statements if the misstatement quantified using either the rollover approach or the iron curtain approach is material. This Bulletin further requires that, if correcting an error in the current year materially misstates the current year’s income statement, the prior year financial statements should be corrected. This Bulletin is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. The Company does not expect the adoption of this Bulletin to have a material effect on the Company’s consolidated financial statements.

3    Accounts receivable, net

Accounts receivable consist of the following:

	December 31,						September 30,
	2004		2005		2005		2006		2006
	RMB’000		RMB’000		US$’000		RMB’000		US$’000
Accounts receivable	43,490		37,336		4,724		39,338		4,977
Bills receivable	2,244		2,932		370		4,514		571
	45,734		40,268		5,094		43,852		5,548
Less: Allowance for doubtful accounts	(5,586	)	(5,892	)	(745	)	(5,892	)	(745	)
	40,148		34,376		4,349		37,960		4,803

F-15

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

An analysis of the allowance for doubtful accounts is as follows:

	Year ended December 31,								Nine months ended September 30,
	2003		2004		2005		2005		2005		2006	2006
	RMB’000		RMB’000		RMB’000		US$’000		RMB’000		RMB’000	US$’000
Balance at beginning of year/period	17,679		15,955		5,586		707		5,586		5,892	745
Charged to income	2,073		849		919		116		919		—	—
Written off against accounts receivable	(3,797	)	(11,218	)	(613	)	(78	)	(613	)	—	—
Balance at end of year/period	15,955		5,586		5,892		745		5,892		5,892	745

The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. These receivables are normally due within 60 to 180 days from the date of billing. Normally, the Group does not obtain collateral from customers.

4    Inventories

Inventories consist of the following:

	December 31,			September 30,
	2004	2005	2005	2006	2006
	RMB’000	RMB’000	US$’000	RMB’000	US$’000
Raw materials	823	1,572	199	1,354	171
Work-in-progress	5,034	2,859	362	5,527	699
Finished goods	1,653	774	98	914	116
Consumables and packaging materials	1,178	1,245	157	551	70
	8,688	6,450	816	8,346	1,056

5    Prepaid expenses and other receivables

Prepaid expenses and other receivables consist of the following:

	December 31,			September 30,
	2004	2005	2005	2006	2006
	RMB’000	RMB’000	US$’000	RMB’000	US$’000
Deposits for property, plant and equipment	93	3,902	494	298	38
Prepayments and other deposits	463	1,114	141	1,895	240
Expenses incurred for the proposed initial public offering of securities of the Company	—	—	—	4,019	508
Other receivables	3,929	1,911	241	3,606	456
	4,485	6,927	876	9,818	1,242

F-16

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

Prepayments as of December 31, 2004, December 31, 2005 and September 30, 2006 include an amount of RMB22,000, RMB353,000 (US$44,000) and RMB353,000 (US$44,000) respectively, representing the current portion of lease prepayments of the Group (Note 7).

The Company incurred expenses amounting to RMB4,019,000 (US$508,000) during the nine months ended September 30, 2006 for the proposed initial public offering of its securities (“IPO”). Such expenses are incremental costs to the Company as a result of the proposed IPO and would be offset against the IPO proceeds and capitalized upon the IPO date.

6    Property, plant and equipment, net

Property, plant and equipment consist of the following:

	December 31,						September 30,
	2004		2005		2005		2006		2006
	RMB’000		RMB’000		US$’000		RMB’000		US$’000
Buildings	41,081		43,831		5,545		43,909		5,555
Plant and machinery	23,350		21,192		2,681		25,269		3,197
Motor vehicles	3,215		4,772		604		4,879		617
Furniture, fixtures and computer equipment	22,714		22,065		2,792		22,292		2,820
Construction-in-progress	27		203		26		497		63
	90,387		92,063		11,648		96,846		12,252
Less: accumulated depreciation	(44,819	)	(49,591	)	(6,274	)	(53,017	)	(6,707	)
	45,568		42,472		5,374		43,829		5,545

All of the Group’s buildings are located in the PRC. As of December 31, 2004, December 31, 2005 and September 30, 2006, property, plant and equipment with carrying value totaling RMB12,099,000, RMB11,281,000 (US$1,427,000) and RMB27,249,000 (US$3,447,000) respectively were pledged to banks as collateral for short-term and long-term bank loans of RMB14,000,000, RMB20,000,000 (US$2,530,000) and RMB30,000,000 (US$3,796,000) respectively (Note 9).

F-17

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

7    Lease prepayments

The balance represents the land use rights of the Group as follows:

	December 31,						September 30,
	2004		2005		2005		2006		2006
	RMB’000		RMB’000		US$’000		RMB’000		US$’000
Prepaid land use rights	669		10,593		1,340		10,593		1,340
Less: accumulated amortization	(155	)	(287	)	(37	)	(552	)	(70	)
	514		10,306		1,303		10,041		1,270
The balance is analyzed as follows:
Non-current portion	492		9,953		1,259		9,688		1,226
Current portion—amount to be amortized next year (Note 5)	22		353		44		353		44
	514		10,306		1,303		10,041		1,270

In 2005, the Group paid RMB9,924,000 for land use rights for a piece of land located besides the land on which the existing plant of the Group was constructed. It is planned that a new plant would be constructed on the newly acquired land to expand the production capacity of the Group.

As of December 31, 2005 and September 30, 2006, the prepaid land use rights were pledged to banks as collateral for short-term bank loans of RMB5,000,000 (US$633,000) and long-term bank loans of RMB5,000,000 (US$633,000) respectively (Note 9).

Land lease expense for the years ended December 31, 2003, 2004 and 2005 were RMB22,000, RMB22,000 and RMB132,000 (US$17,000) respectively, and that for the nine months ended September 30, 2005 and 2006 were RMB44,000 and RMB265,000 (US$33,000) respectively.

8    Intangible assets, net

	December 31,						September 30,
	2004		2005		2005		2006		2006
	RMB’000		RMB’000		US$’000		RMB’000		US$’000
Technical know-how	12,348		12,348		1,562		12,348		1,562
Less: accumulated amortization	(11,525	)	(12,348	)	(1,562	)	(12,348	)	(1,562	)
	823		—		—		—		—

Intangible assets represent technical know-how used in the manufacture of pharmaceutical products contributed by Shenyang Sunshine’s then majority shareholder, Shenyang Keweier Advanced Technology Co., Ltd., in 1995 as capital of RMB12,348,000, being the then estimated fair value of the technical know-how.

Amortization expense for the years ended December 31, 2003, 2004 and 2005 were RMB1,235,000, RMB1,235,000 and RMB823,000 (US$104,000) respectively, and that for the nine months ended September 30, 2005 and 2006 were RMB823,000 and RMBNil respectively.

F-18

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

9    Bank loans

			December 31,			September 30,
			2004	2005	2005	2006	2006
Lender	Note		RMB’000	RMB’000	US$’000	RMB’000	US$’000
Short-term loans
Bank of China Co., Ltd	(a	)	5,000	—	—	—	—
Bank of China Co., Ltd	(b	)	5,000	—	—	—	—
Bank of China Co., Ltd	(c	)	20,000	—	—	—	—
Bank of China Co., Ltd	(d	)	20,000	—	—	—	—
Bank of China Co., Ltd	(e	)	9,000	—	—	—	—
Bank of China Co., Ltd	(f	)	—	5,000	633	—	—
Bank of China Co., Ltd	(g	)	—	9,000	1,138	9,000	1,138
Bank of China Co., Ltd	(h	)	—	5,000	633	—	—
Bank of China Co., Ltd	(i	)	—	20,000	2,530	—	—
Bank of China Co., Ltd	(j	)	—	20,000	2,530	20,000	2,530
Bank of China Co., Ltd	(k	)	—	30,000	3,796	—	—
Bank of China Co., Ltd	(m	)	—	—	—	5,000	633
Industrial Bank Co., Ltd	(l	)	10,000	—	—	—	—
China Citic Bank	(n	)	—	—	—	10,000	1,266
			69,000	89,000	11,260	44,000	5,567
Long-term loans
Bank of China Co., Ltd	(k	)	30,000	—	—	—	—
Bank of China Co., Ltd	(o	)	—	—	—	20,000	2,530
Bank of China Co., Ltd	(p	)	—	—	—	5,000	633
			99,000	89,000	11,260	69,000	8,730

During the years ended December 31, 2004, 2005 and nine months ended September 30, 2006, the Group entered into various loan agreements with commercial banks with terms ranging from nine months to one and a half years to finance its working capital. None of the loan agreements requires the Group to comply with financial covenants. All the loans bear fixed interest rates except for the long-term loans as of September 30, 2006, which bear a floating interest rate at 110% of PBOC’s base lending rate per annum and re-price annually. The weighted average interest rates of bank loans outstanding as of December 31, 2004, 2005 and September 30, 2006 were 6.101%, 6.104% and 6.429% per annum, respectively.

F-19

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

Details of each of the bank loans as of December 31, 2004 and 2005 and September 30, 2006 were as follows:

				Interest expense for the year ended December 31,			Interest expense for the nine months ended September 30,
	Loan period	Interest rate %		2004	2005	2005	2006		2006
				RMB’000	RMB’000	US$’000	RMB’000		US$’000
(a)	May 28, 2004 to February 2, 2005	5.841	%	174	26	3	—		—
(b)	August 23, 2004 to May 18, 2005	5.841	%	105	110	14	—		—
(c)	December 30, 2004 to November 29, 2005	6.435	%	7	1,171	148	—		—
(d)	December 30, 2004 to December 29, 2005	6.234	%	7	1,240	157	—		—
(e)	December 30, 2004 to November 29, 2005	6.138	%	3	502	64	—		—
(f)	June 24, 2005 to March 23, 2006	6.138	%	—	161	20	68		9
(g)	December 6, 2005 to November 5, 2006	6.138	%	—	39	5	413		52
(h)	December 6, 2005 to November 5, 2006	6.138	%	—	22	3	230		29
(i)	December 14, 2005 to November 13, 2006	6.138	%	—	61	8	928		117
(j)	December 28, 2005 to December 27, 2006	6.138	%	—	13	2	928		117
(k)	April 30, 2003 to April 29, 2006	6.039	%	1,812	1,812	229	588		76
(l)	May 19, 2004 to April 15, 2005	5.841	%	417	168	21	—		—
(m)	April 21, 2006 to April 20, 2007	6.138	%	—	—	—	137		17
(n)	April 27, 2006 to January 31, 2007	6.138	%	—	—	—	264		33
(o)	September 22, 2006 to March 22, 2008	6.930	%	—	—	—	34		4
(p)	September 30, 2006 to March 29, 2008	6.930	%	—	—	—	1		—
				2,525	5,325	674	3,591		454
	Interest expense on bank loans as of December 31, 2003 repaid in 2004			3,504	—	—	—		—
	Interest expense on bank loans drawn and repaid in the same year/period			—	226	28	—		—
	Interest expense capitalized			—	—	—	(204	)	(26	)
				6,029	5,551	702	3,387		428

The principal balances of the above bank loans are repayable at the end of the respective loan periods.

Bank loans outstanding, which are all denominated in RMB, are collateralized or guaranteed as follows:

	December 31,			September 30,
	2004	2005	2005	2006	2006
	RMB’000	RMB’000	US$’000	RMB’000	US$’000
Collateralized	14,000	25,000	3,163	35,000	4,429
Guaranteed by a related party
(Note 17(a))	25,000	34,000	4,302	25,000	3,163
Guaranteed by third parties
(Note 21(d))	60,000	30,000	3,795	9,000	1,138
	99,000	89,000	11,260	69,000	8,730

F-20

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

10    Deferred grant income

Deferred grant income in the consolidated balance sheets represent the unamortized amount of the government grant approved by the State Development Planning Committee of the PRC in August 1999, amounting to RMB15,000,000, which was granted for the purchase of plant and equipment costing a total of RMB45,029,000. The grant income is amortized to the consolidated statements of income on a straight-line basis over the weighted average expected useful life of the plant and equipment acquired. Amount to be amortized to the statement of income in the coming year is classified as a current liability and any remaining unamortized amount is classified as a non-current liability.

Unamortized deferred grant income as of September 30, 2006 is expected to be amortized as follows:

	RMB’000	US$’000
October 1, 2006 to December 31, 2006	212	27
2007	611	77
2008	374	47
2009	374	47
2010 and thereafter	3,152	399
	4,723	597

11    Accrued expenses and other payables

Accrued expenses and other payables consist of the following:

	December 31,			September 30,
	2004	2005	2005	2006	2006
	RMB’000	RMB’000	US$’000	RMB’000	US$’000
Receipts in advance from customers	109	234	30	44	5
VAT payable	1,956	823	104	3,042	385
Accrued salaries, bonus and welfare expenses	2,833	2,595	328	1,643	208
Other accrued expenses	6,621	7,387	935	11,796	1,493
	11,519	11,039	1,397	16,525	2,091

Other accrued expenses mainly include accrued selling expenses and staff costs, accrued liabilities on stock-based compensation (Note 16), payables for purchase of plant and equipment and miscellaneous deposits received.

12    Shareholders’ equity

(a)    Share capital

Prior to the Reorganization, the registered capital of Shenyang Sunshine comprised 62,974,046 shares of RMB1 each.

On August 9, 2006, the Company issued 1 ordinary share at par value of US$1 upon incorporation with an authorized share capital of 50,000 ordinary shares of US$1 each. Pursuant to an ordinary resolution passed on September 5, 2006, the authorized share capital of US$50,000 was divided into 500,000,000

F-21

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

ordinary shares of US$0.0001 each and issued share capital of US$1 was divided into 10,000 ordinary shares of US$0.0001 each. In connection with the Reorganization described in Note 1(a), on September 5, 2006, the Company issued 99,990,998 ordinary shares at par on a pro-rata basis to the ultimate beneficial shareholders of Collected Mind or their nominees as consideration for the acquisition of Collected Mind. The issue of the 99,990,998 ordinary shares at par resulted in a capital contribution of approximately RMB80,000 by the shareholders.

(b)    Statutory reserves

Transfers from retained earnings of the Group to statutory reserves were made in accordance with PRC rules and regulations and the Articles of Association of Shenyang Sunshine and its subsidiaries, and were approved by the respective boards of directors.

Details of the statutory reserves are set out as follows:

Statutory surplus reserve

According to the respective Articles of Association, Shenyang Sunshine and its subsidiaries are required to transfer 10% of the net profit, as determined in accordance with PRC GAAP, to a statutory surplus reserve until the reserve balance reaches 50% of the registered capital of the respective companies. The transfer to this reserve must be made before distribution of dividends to shareholders can be made.

The statutory surplus reserve is non-distributable but can be used to make good previous years’ losses, if any, and may be converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by the shareholders, provided that the balance of the reserve after such issue is not less than 25% of the registered capital.

Statutory public welfare fund

According to the respective Articles of Association, Shenyang Sunshine and its subsidiaries are required to transfer 5% of the net profit, as determined in accordance with PRC GAAP, to a statutory public welfare fund. This fund can only be utilized on capital items for the collective benefit of the employees such as the construction of dormitories, canteen and other staff welfare facilities. This fund is non-distributable other than on liquidation. The transfer to this fund must be made before distribution of dividends to shareholders can be made.

No transfers were made for the years ended December 31, 2003 and 2004 as Shenyang Sunshine and its subsidiaries have accumulated losses in the local statutory financial statements, prepared in accordance with PRC GAAP, as of the respective balance sheet dates. Transfers of RMB1,416,000 (US$179,000) have been made to the reserves for the year ended December 31, 2005. Transfers for 2006 would be made at the year end based on the PRC audited financial statements of Shenyang Sunshine and its subsidiaries.

In accordance with PRC rules and regulations, effective from April 1, 2006, all statutory public welfare fund is transferred to statutory surplus reserve in the local statutory financial statements.

13    Revenues

The Group’s revenue is primarily derived from the distribution of self-manufactured pharmaceutical products.

F-22

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

In view of the fact that the Group operates and manages its business solely in the PRC and sales were predominantly made to customers located in the PRC, no geographical segment information is provided.

The Group’s products are subject to price control by the PRC government. The maximum prices of the products are published by the price administration authorities from time to time.

The Group’s revenues can be analyzed as follows:

	Year ended December 31,				Nine months ended September 30,
	2003	2004	2005	2005	2005	2006	2006
	RMB’000	RMB’000	RMB’000	US$’000	RMB’000	RMB’000	US$’000
Domestic sales:
EPIAO	44,787	64,937	84,804	10,729	64,625	72,852	9,217
TPIAO	—	—	2,795	354	844	10,176	1,287
Intefen	22,820	7,680	6,827	864	5,326	3,468	439
Inleusin	4,264	2,738	1,606	203	1,378	822	104
Export sales	896	1,736	4,990	631	3,187	4,669	591
Others	73	157	991	126	770	585	74
	72,840	77,248	102,013	12,907	76,130	92,572	11,712

14    Depreciation

Depreciation of property, plant and equipment is included in the following captions:

	Year ended December 31,				Nine months ended September 30,
	2003	2004	2005	2005	2005	2006	2006
	RMB’000	RMB’000	RMB’000	US$’000	RMB’000	RMB’000	US$’000
Cost of revenues	3,868	4,778	4,832	612	3,705	2,576	326
Research and development costs	328	409	342	43	242	193	25
Sales, marketing and distribution expenses	236	169	124	16	106	120	15
General and administrative expenses	2,047	1,896	2,190	277	1,743	1,157	146
	6,479	7,252	7,488	948	5,796	4,046	512

15    Income tax expense

Cayman Islands Tax

Under the current Cayman Islands laws, the Company is not subject to tax on income or capital gains.

PRC Tax

Shenyang Sunshine, being a Hi-Tech Enterprise in the Shenyang Economic and Technology Development Zone in Liaoning Province, the PRC, has been granted a preferential tax treatment by the State Tax Bureau of the PRC. According to the PRC Income Tax Law and various approval documents issued by

F-23

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

the Tax Bureau, Shenyang Sunshine’s profit is taxed at a rate of 15%. In 2005, Shenyang Sunshine has successfully obtained the recognition as a “foreign-invested advanced technology enterprise”, pursuant to which Shenyang Sunshine is granted a further 50% tax relief (subject to a minimum tax rate of 10%) for 2005. As a result, the applicable tax rate for 2005 is 10% while those for 2003, 2004 and 2006 are 15%.

Liaoning Sunshine and Beijing Sunshine, which are engaged in the distribution of pharmaceutical products, are subject to a tax rate of 33%.

Income tax expense represents PRC income tax as follows:

	Current	Deferred	Total
	RMB’000	RMB’000	RMB’000
Year ended December 31, 2003	63	1,138	1,201
Year ended December 31, 2004	—	226	226
Year ended December 31, 2005	341	1,421	1,762
Year ended December 31, 2005 (US$’000)	43	180	223
Nine months ended September 30, 2005	351	1,317	1,668
Nine months ended September 30, 2006	2,358	1,216	3,574
Nine months ended September 30, 2006 (US$’000)	298	154	452

F-24

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

Income tax expense reported in the consolidated statements of income differs from the amount computed by applying the PRC income tax rate of 15% (the statutory tax rate of Shenyang Sunshine) for the following reasons:

	Year ended December 31,								Nine months ended September 30,
	2003		2004		2005		2005		2005		2006		2006
	RMB’000		RMB’000		RMB’000		US$’000		RMB’000		RMB’000		US$’000
Income before income tax expense	1,362		6,654		17,673		2,236		14,411		25,015		3,164
Computed “expected” tax expense	204		998		2,651		335		2,162		3,752		475
Non-deductible staff costs	1,611		672		—		—		—		—		—
Non-deductible entertainment expenses	902		—		—		—		—		—		—
Non-deductible share-based compensation	—		—		—		—		—		445		56
Other non-deductible expenses	111		15		77		10		58		—		—
Non-taxable income	(378	)	(966	)	(566	)	(72	)	(414	)	(331	)	(42	)
Tax rate differential of subsidiaries	(1,456	)	(255	)	(221	)	(28	)	(108	)	177		22
Tax holiday	—		—		(244	)	(31	)	—		—		—
Change in valuation allowance on deferred tax assets	214		(261	)	436		55		171		(311	)	(39	)
Tax concession for research and development expenses	—		—		(225	)	(28	)	(169	)	(251	)	(32	)
Tax credit for purchase of domestic equipment	—		—		(145	)	(18	)	—		—		—
Others	(7	)	23		(1	)	—		(32	)	93		12
Actual income tax expense	1,201		226		1,762		223		1,668		3,574		452

All income of the Group arose from operations in the PRC.

The tax effect of the tax holiday in 2005 has no significant impact on net income per share for the year ended December 31, 2005.

As of September 30, 2006, the Group’s subsidiaries have unused tax losses of RMB2,202,000 (US$279,000). The tax losses will expire as follows if unutilized:

	RMB’000	US$’000
2007	575	73
2008	1,473	186
2009	83	11
2010	71	9
	2,202	279

F-25

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets are presented below:

	December 31,						September 30,
	2004		2005		2005		2006		2006
	RMB’000		RMB’000		US$’000		RMB’000		US$’000
Property, plant and equipment	720		724		92		607		77
Accounts receivable	1,208		1,416		179		1,376		174
Inventories	941		1,069		135		469		59
Accruals	1,178		1,289		163		1,143		145
Deferred grant income	973		816		103		708		90
Deferral of research and development costs for tax purposes	1,661		1,191		151		840		106
Tax losses carryforward	1,965		999		127		726		92
	8,646		7,504		950		5,869		743
Less: valuation allowance	(2,227	)	(2,663	)	(337	)	(2,352	)	(298	)
Deferred tax assets	6,419		4,841		613		3,517		445
Represented by:
Current portion	3,692		2,717		344		1,940		245
Non-current portion	2,727		2,124		269		1,577		200
	6,419		4,841		613		3,517		445

An analysis of the valuation allowance is as follows:

	Year ended December 31,					Nine months ended September 30,
	2003	2004		2005	2005	2005	2006		2006
	RMB’000	RMB’000		RMB’000	US$’000	RMB’000	RMB’000		US$’000
Balance at beginning of year/period	2,274	2,488		2,227	282	2,227	2,663		337
Charged/(credited) to income	214	(261	)	436	55	171	(311	)	(39	)
Balance at end of year/period	2,488	2,227		2,663	337	2,398	2,352		298

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and tax carryforwards are utilizable. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon an assessment of the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible or can be utilized, management has provided valuation allowance of RMB2,227,000, RMB2,663,000 (US$337,000) and RMB2,352,000 (US$298,000) as of December 31, 2004, December 31, 2005 and September 30, 2006 respectively. Full valuation allowance is provided for loss making subsidiaries of the Company since it is more likely than not that the net deferred tax assets would not be realized. Management believes that the deferred tax asset, less valuation allowance made, as of

F-26

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

December 31, 2004, December 31, 2005 and September 30, 2006 is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced.

16    Stock-based compensation

On June 1, 2006, the then majority shareholder of Shenyang Sunshine, Shenyang Keweier Advanced Technology Co., Ltd. (“Shenyang Keweier”), committed to grant shares of the Company to a director and a senior executive of the Company as compensation for their on-going services, primarily related to the IPO efforts, rendered to the Company. The Company intended to provide compensation to each grantee in a predetermined amount based on US$277,778 per award to be paid in the form of the Company’s shares. The shares vest upon the earlier of (1) 18 months from June 1, 2006 or (2) on the date of the Company’s IPO. Should the date of the IPO fall within 18 months from June 1, 2006, the number of vested shares to be granted to each of the grantees would be calculated by dividing a predetermined monetary amount of US$277,778 by the fair value per share on the IPO date. The number of vested shares to be granted was to be calculated based on a revised monetary amount that is adjusted proportionately to reflect the excess of the market capitalization at the IPO date of the Company over US$222 million. In the event that the IPO did not occur within 18 months from June 1, 2006, a total number of 312,504 vested shares of the Company would be granted. Subsequent to the Reorganization as described in Note 1(a), the ultimate shareholders of Shenyang Keweier hold shares of the Company via Achieve Well International Limited (“Achieve Well”), and it was intended that Achieve Well would transfer shares of the Company to the director and executive upon vesting.

In accordance with SFAS No. 123(R), since the stock awards contain vesting and exercisability conditions other than those based on service, performance or market criteria, the awards have been classified as a liability and included in accrued expenses and other payables in the Company’s balance sheet as of September 30, 2006. As such, the awards are initially measured at the estimated fair value of the shares expected to vest at the grant date and remeasured at each financial reporting date until settled. Since the ultimate stock awards to be granted by the Company will depend upon occurrence, timing and results of the IPO, the fair value of the stock awards is estimated based on (1) management’s assessment of the probability and timing of an IPO within the 18-month period, (2) an estimate of the monetary amount that would be used to calculate the number of shares to be issued based on management’s best projection of the Company’s market capitalization at the IPO date, and (3) the fair value of 312,504 shares of the Company at each financial reporting date (which would be the awards entitled by the grantees if the IPO does not occur within the 18-month period).

The Company has estimated the fair value of the stock awards to be approximately RMB4,391,000 (US$556,000) as of the grant date and as of September 30, 2006 and has recorded stock-based compensation expenses of RMB2,927,000 (US$370,000) for the nine months ended September 30, 2006. The estimated fair value of the stock awards was recognized over the six-month period from the grant date, which represented the Company’s estimate of the requisite service period based on the substantive terms of the stock awards.

On October 15, 2006, the stock awards were modified and settled, with Achieve Well granting an aggregate of 312,504 fully vested ordinary shares of the Company to the two individuals. The stock awards ceased to be liability-classified and were reclassified as equity upon settlement. Stock-based compensation expense of approximately RMB1,050,000 is expected to be reversed in October 2006 based on the difference between the estimated fair value of the modified awards as of the settlement date of RMB6.00 per share and the cumulative compensation expense previously recognized through September 30, 2006. Fair value of the modified awards as of the settlement date is estimated based on

F-27

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

transaction price of a recent private placement of shares by a shareholder of the Company with unrelated third parties.

On September 5, 2006, the Company adopted the 2006 stock incentive plan (the “Plan”) pursuant to which the Board of Directors may grant stock options and shares of the Company to directors and employees. Under the Plan, shares and options to purchase shares up to 10% of the issued shares of the Company can be granted. The Plan will remain in effect for five years from the date of adoption. No options were granted during the nine months ended September 30, 2006.

Other stock-based compensation has been awarded by the Company to its employees. However, the effect of such awards is not material.

17    Related party transactions

Name of party	Relationship
China Transport Resources Northeast Co., Ltd. (“China Transport”)	Shareholder (6.67%) of Shenyang Sunshine prior to the Reorganization
Shenyang Keweier Advanced Technology Co., Ltd. (“Shenyang Keweier”)	Majority shareholder (50.88%) of Shenyang Sunshine prior to the Reorganization; under common control with the Company
LifeGen, Inc.	Investee (45%) of the Company

(a) The principal related party transactions are as follows:

		Year ended December 31,				Nine months ended September 30,
		2003	2004	2005	2005	2005	2006	2006
	Note	RMB’000	RMB’000	RMB’000	US$’000	RMB’000	RMB’000	US$’000
Bank loans guaranteed by China Transport	(i)	25,000	25,000	34,000	4,302	34,000	25,000	3,163
Bank loans of China Transport guaranteed by Shenyang Sunshine	(i)	39,200	39,200	37,200	4,706	37,200	10,000	1,265
Purchase of motor vehicles	(ii)	—	—	800	101	800	—	—

Notes:

(i) As of December 31, 2003, December 31, 2004, December 31, 2005, September 30, 2005 and September 30, 2006, bank loans of the Group totaling RMB25,000,000, RMB25,000,000, RMB34,000,000 (US$4,302,000), RMB34,000,000 and RMB25,000,000 (US$3,163,000) respectively, were guaranteed by China Transport.

In return, Shenyang Sunshine guaranteed bank loans of China Transport amounting to RMB39,200,000, RMB39,200,000, RMB37,200,000 (US$4,706,000), RMB37,200,000 and RMB10,000,000 (US$1,265,000) as of December 31, 2003, December 31, 2004, December 31, 2005, September 30, 2005 and September 30, 2006 respectively. The guarantees cover the repayment of loan principal and the related interest payments. If China Transport defaults on debt

F-28

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

payments, Shenyang Sunshine is required to perform under the guarantee. No amounts have been accrued for any estimated obligations under the guarantees, as it is probable that China Transport will be able to make all scheduled payments.

(ii) During the nine months ended September 30, 2005 and the year ended December 31, 2005, the Group paid RMB800,000 (US$101,000) for the purchase of motor vehicles from Shenyang Keweier.

(b) Amounts due from and due to related parties are as follows:

	December 31,				September 30,
		2004	2005	2005	2006	2006
	Note	RMB’000	RMB’000	US$’000	RMB’000	US$’000
Due from Shenyang Keweier	(i)	19,473	19,675	2,489	—	—
Due to LifeGen, Inc.	(ii)	1,813	1,813	229	—	—

Notes:

(i) The balance represents a loan advanced to Shenyang Keweier, which was unsecured, interest-free and repayable on demand. The balance has been subsequently settled in 2006.

(ii) The balance represents research and development expenses paid by LifeGen, Inc. on behalf of Shenyang Sunshine. The balance has been subsequently settled in 2006.

18    Pension and other postretirement benefits

Pursuant to the relevant PRC regulations, the Group is required to make contributions for each employee at a rate of approximately 20% on a standard salary base as determined by the local Social Security Bureau, to a defined contribution retirement scheme organized by the local Social Security Bureau in respect of the retirement benefits for the Group’s employees in the PRC. The total amount of contributions of RMB684,000, RMB878,000 and RMB1,224,000 (US$155,000) for the years ended December 31, 2003, 2004 and 2005 respectively, and RMB894,000 and RMB997,000 (US$126,000) for the nine months ended September 30, 2005 and 2006 respectively, was charged to expense in the accompanying consolidated statements of income. The Group has no other obligation to make payments in respect of retirement benefits of the employees.

19    Fair value of financial instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amount of financial assets, such as cash and cash equivalents, accounts receivable, other receivables, accounts payable and other payables, approximates their fair values because of the short maturity of these instruments. The carrying amount of bank loans approximates their fair value based on the borrowing rates currently available for bank loans with similar terms and maturities.

F-29

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

20    Business and credit concentrations

Almost all of the Group’s customers are located in the PRC. The following are sales to customers that individually comprise 10% or more of gross revenue:

	Year ended December 31,
	2003		2004		2005		2005
	RMB’000	%	RMB’000	%	RMB’000	%	US$’000	%
Beijing Tianxingpuxin     Bio-Medical Co., Ltd.	6,118	8	7,662	10	13,333	13	1,687	13
Xiamen International     Economic & Trading Co., Ltd.	25,836	35	5,844	8	—	—	—	—
	31,954		13,506		13,333		1,687

	Nine months ended September 30,
	2005		2006		2006
	RMB’000	%	RMB’000	%	US$’000	%
Beijing Tianxingpuxin
Bio-Medical Co., Ltd.	9,290	12	11,574	13	1,464	13

The gross accounts receivable due from major customers representing more than 10% of the outstanding accounts receivable were as follows:

	December 31,						September 30,
	2004		2005		2005		2006		2006
	RMB’000	%	RMB’000	%	US$’000	%	RMB’000	%	US$’000	%
Beijing Tianxingpuxin
Bio-Medical Co., Ltd.	2,533	6	4,140	12	524	12	3,656	10	463	10

21    Commitments and contingencies

(a)    Operating lease commitments

The Group leases staff quarters and motor vehicles under operating leases. The leases typically run for a period of one year. The Group also leases land from the PRC government under operating leases. Operating lease charges are prepaid in full at the inception of the lease (Note 7). None of the leases includes contingent rentals.

For the years ended December 31, 2003, 2004 and 2005, total rental expenses for operating leases, including land lease expense, were RMB833,000, RMB1,355,000 and RMB1,352,000 (US$171,000), respectively. For the nine months ended September 30, 2005 and 2006, total rental expenses for operating leases, including land lease expense, were RMB958,000 and RMB1,491,000 (US$189,000) respectively.

F-30

3SBIO INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements — (Continued)

(expressed in RMB and US$)

(b)    Capital commitments

Capital commitments for purchase and installation of plant and equipment as of December 31, 2005 and September 30, 2006 were RMB15,000 (US$2,000) and RMB495,000 (US$63,000) respectively.

(c)    Purchase commitments

In May 2006, the Group executed a distribution agreement with a supplier of a prescription iron sucrose supplement product to act as the exclusive distributor for that product. Pursuant to the distribution agreement, the Group commits to purchase from the supplier a certain quantity of the product within the period from September 2006 to August 2007 (“the commitment period”) and has paid a guarantee deposit of RMB1,000,000 (US$127,000), which has been recorded as prepaid expenses and other receivables in the consolidated balance sheet as of September 30, 2006. Should the Group fail to purchase the committed quantity of the product from the supplier within the commitment period, part or all of the guarantee deposit would be forfeited by the supplier. The Group expects to satisfy the purchase commitment, and to recover the guarantee deposit.

(d)    Guarantees

As disclosed in Note 9, certain bank loans of the Group as of December 31, 2004, December 31, 2005 and September 30, 2006 were guaranteed by a related party and a third party. In return, Shenyang Sunshine guaranteed bank loans drawn by the related party and a third party as follows:

			December 31,			September 30,
			2004	2005	2005	2006	2006
	Note		RMB’000	RMB’000	US$’000	RMB’000	US$’000
Bank loans of China Transport guaranteed by Shenyang Sunshine	17	(a)	39,200	37,200	4,706	10,000	1,265
Bank loans of a third party guaranteed by Shenyang Sunshine			40,000	—	—	40,000	5,061
			79,200	37,200	4,706	50,000	6,326

The guarantees cover the repayment of loan principals and the related interest payments. If the guaranteed parties default on debt payments, Shenyang Sunshine is required to perform under the guarantees. The estimated fair value of the Group’s standby commitment is not material.

22    Subsequent events

On October 1, 2006, the Company granted several directors and employees options to purchase a total of 1,060,000 ordinary shares of the Company at an exercise price of US$1.60 per share. The vesting dates of the options granted are as follows:

No. of options	Vesting date
15,000	August 1, 2007
333,333	September 30, 2007
45,000	December 31, 2007
333,333	September 30, 2008
333,334	September 30, 2009
1,060,000

All the options granted are exercisable by the grantees upon vesting and will expire on October 1, 2009.

F-31

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 6.    INDEMNIFICATION OF DIRECTORS AND OFFICERS

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such, except through their own willful neglect or default.

The registrant’s articles of association provide for the indemnification of its directors, auditors and other officers against all losses or liabilities incurred or sustained by him or her as a director, auditor or other officer of the registrant in defending any proceedings, whether civil or criminal, in which judgment is given in his or her favor, or in which he or she is acquitted provided that this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of said persons.

In the underwriting agreement the registrant will enter into in connection with the sale of the ADSs being registered hereby, the underwriters will agree, under certain circumstances, to indemnify the registrant’s directors, officers and controlling persons against certain liabilities, including liabilities under the Securities Act of 1933, as amended.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

ITEM 7.    RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, we have issued the following securities (including options to acquire our ordinary shares). We believe that each of the following issuances was exempt from registration under the Securities Act in reliance on Regulation S under the Securities Act or pursuant to Section 4(2) of the Securities Act regarding transactions not involving a public offering.

In September 2006, we issued 99,989 ordinary shares for all the equity interests of Collected Mind Limited. Achieve Well International Limited, Happyview Finance Limited, Lan’s Holdings Limited, Fullcity International Limited, Starry Investments Limited, W&W Investments Limited, Witty Mind International Limited and Precious Winwin Limited subscribed for 29,035,123, 16,024,392, 12,232,215, 12,112,801, 9,400,001, 7,732,074, 6,000,000 and 7,463,392 of our ordinary shares, respectively, in exchange for their respective outstanding ownership interests in Collected Mind Limited. In October 2006, Fullcity International Limited sold 10,353,142, 1,314,803,181,696 and 263,160 of our ordinary shares to Pacven Walden Ventures VI, LP, WIIG-Nikko IT LLC, Alisanae Group Limited and Mission Galaxy Enterprises Limited respectively. Precious Winwin Limited sold 4,463,392 of our ordinary shares to Remose Enterprises Limited. No underwriter was involved in these transactions.

On October 1, 2006, we granted options to purchase a total of 1,060,000 ordinary shares to our employees and directors at an exercise price of US$1.60 per share.

II-1

ITEM 8.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)    Exhibits

The following exhibits are filed herewith or incorporated by reference in this Registration Statement:

EXHIBIT INDEX

Exhibit No.	Document
1.1	Form of Underwriting Agreement
3.1	Amended and Restated Memorandum of Association of the Registrant
3.2	Amended and Restated Articles of Association of the Registrant
3.3	Voting Agreement among 3SBio Inc., Achieve Well International Limited, Happyview Finance Limited and Witty Mind International Limited dated as of September 5, 2006
4.1	Form of Share Certificate
4.2	Form of Deposit Agreement, including form of American Depositary Receipt
5.1	Form of Opinion of Conyers Dill & Pearman regarding the validity of the ordinary shares
10.1	Stock Option Plan adopted by 3SBio Inc. dated as of September 5, 2006
10.2	Guarantee letter issued by Shenyang Sunshine Pharmaceutical Company Limited dated February 20, 2006
10.3	Share Transfer Agreement between China Transport Resources Northeast Co., Ltd. and Collected Mind Limited dated as of July 18, 2006
10.4	Share Transfer Agreement between Ms. Lisha Zhang and Collected Mind Limited dated as of July 18, 2006
10.5	Share Transfer Agreement between Starry Investment Limited and Collected Mind Limited dated as of July 18, 2006
10.6	Share Transfer Agreement between Shenyang Keweier High Technology Co. Ltd. and Collected Mind Limited dated as of July 18, 2006
10.7	Share Transfer Agreement between Montgomery Bio-Medicine, Inc. and Collected Mind Limited dated as of July 18, 2006
10.8	Share Transfer Agreement between Lan’s Holdings Limited and Collected Mind Limited dated as of July 18, 2006
10.9	Form of Employment Agreement
10.10	National Agency Agreement for Tietai between Shenyang Sunshine Pharmaceutical Company Limited and Shenyang Borui Pharmaceutical Co., Ltd dated as of May 1, 2006 and supplementary memo†
10.11	Sole Agency Agreement for Baolijin between Shenyang Sunshine Pharmaceutical Company Limited and Chengdu Institute of Biological Products dated as of August 31, 2006†
10.12	Purchase Agreement for BPT-6 culture medium between Shenyang Sunshine Pharmaceutical Company Limited and Invitrogen Hong Kong Co., Ltd. dated as of March 8, 2006†
10.13	Purchase Contract for FCS between Shenyang Sunshine Pharmaceutical Company Limited and Shanghai Weike Biochemical Reagent Co., Ltd. dated as of April 12, 2005†
10.14	Collaboration Agreement for License and Co-development of anti-TNF alpha monoclonal antibody therapeutics between Shenyang Sunshine Pharmaceutical Company Limited and Epitomics Inc. dated as of March 4, 2006†
10.15	Form of Distribution Agreement
10.16	Equity Transfer Agreement of Beijing Sunshine Bio-product Sales Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dongmei Su dated as of September 2, 2006

II-2

Exhibit No.	Document
10.17	Equity Transfer Agreement of Liaoning Sunshine Bio-Pharmaceutical Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dan Lou dated as of November 10, 2006
10.18	Form of Purchase Agreement for the Acquisition of Equity Interest in Liaoning Sunshine Bio-Pharmaceutical Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dan Lou / in Beijing Sunshine Bio-product Sales Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dongmei Su and Shenyang Keweier Advance Technology Co. Ltd.
10.19	Form of Pledge Agreement of Equity Interest in Liaoning Sunshine Bio-Pharmaceutical Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dan Lou / in Beijing Sunshine Bio-product Sales Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dongmei Su and Shenyang Keweier Advance Technology Co. Ltd.
10.20	Form of Voting Agreement between Shenyang Sunshine Pharmaceutical Company Limited and Dan Lou / Dongmei Su and Shenyang Keweier Advance Technology Co. Ltd.
10.21	Form of Business Cooperation Agreement among 3SBio Inc., Shenyang Sunshine Pharmaceutical Company Limited and Liaoning Sunshine Bio-Pharmaceutical Company Limited / Beijing Sunshine Bio-product Sales Company Limited
21.1	List of subsidiaries of the Registrant
23.1	Consent of KPMG
23.2	Consent of Conyers Dill & Pearman (included in Exhibit 5.1)
23.3	Consent of Jingtian & Gongcheng (included in Exhibit 99.1)
24.1	Powers of Attorney (included in signature page)
99.1	Opinion of Jingtian & Gongcheng regarding approval requirement by the China Securities Regulatory Commission for overseas listing of PRC companies

† Portions of this exhibit have been redacted pursuant to an application for confidential treatment to the U.S. Securities and Exchange Commission.

(b)    Financial Statement Schedules

None.

ITEM 9.    UNDERTAKINGS

(1) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(2) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the U.S. Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suite or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

The registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A

II-3

and contained in a form of prospectus filed by the issuer pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4

Signatures

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the People’s Republic of China, on the 19th day of January, 2007.

3SBio Inc.
By:	/s/ Dr. Jing Lou
	Name: Dr. Jing Lou
	Title: Chief Executive Officer and Director

Power of attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Dr. Jing Lou and Clara Mak, and each of them singly, as his true and lawful attorneys-in-fact and agents, each with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and sign any registration statement for the same offering covered by this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, as amended, and all post-effective amendments thereto and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signatures	Title	Date
/s/ Dan Lou	Dan Lou Chairman of Board of Directors	January 19, 2007
/s/ Dr. Jing Lou	Dr. Jing Lou Chief Executive Officer and Director (principal executive officer)	January 19, 2007
/s/ Clara Mak	Clara Mak Chief Financial Officer	January 19, 2007
/s/ Yongfu Chen	Yongfu Chen Controller	January 19, 2007
/s/ Liping Xu	Liping Xu Vice President and Director	January 19, 2007
/s/ Bin Huang	Bin Huang Vice President and Director	January 19, 2007
/s/ Guanjin Hu	Guanjin Hu Director	January 19, 2007

II-5

Signatures	Title	Date
/s/ Moujia Qi	Moujia Qi Director	January 19, 2007
	Lawrence S. Wizel Director	January 19, 2007
/s/ Donald J. Puglisi	Authorized Representative in the United States	January 19, 2007

II-6

EXHIBIT INDEX

Exhibit No.	Document
1.1	Form of Underwriting Agreement
3.1	Amended and Restated Memorandum of Association of the Registrant
3.2	Amended and Restated Articles of Association of the Registrant
3.3	Voting Agreement among 3SBio Inc., Achieve Well International Limited, Happyview Finance Limited and Witty Mind International Limited dated as of September 5, 2006
4.1	Form of Share Certificate
4.2	Form of Deposit Agreement, including form of American Depositary Receipt
5.1	Form of Opinion of Conyers Dill & Pearman regarding the validity of the ordinary shares
10.1	Stock Option Plan adopted by 3SBio Inc. dated as of September 5, 2006
10.2	Guarantee letter issued by Shenyang Sunshine Pharmaceutical Company Limited dated February 20, 2006
10.3	Share Transfer Agreement between China Transport Resources Northeast Co., Ltd. and Collected Mind Limited dated as of July 18, 2006
10.4	Share Transfer Agreement between Ms. Lisha Zhang and Collected Mind Limited dated as of July 18, 2006
10.5	Share Transfer Agreement between Starry Investment Limited and Collected Mind Limited dated as of July 18, 2006
10.6	Share Transfer Agreement between Shenyang Keweier High Technology Co. Ltd. and Collected Mind Limited dated as of July 18, 2006
10.7	Share Transfer Agreement between Montgomery Bio-Medicine, Inc. and Collected Mind Limited dated as of July 18, 2006
10.8	Share Transfer Agreement between Lan’s Holdings Limited and Collected Mind Limited dated as of July 18, 2006
10.9	Form of Employment Agreement
10.10	National Agency Agreement for Tietai between Shenyang Sunshine Pharmaceutical Company Limited and Shenyang Borui Pharmaceutical Co., Ltd dated as of May 1, 2006 and supplementary memo†
10.11	Sole Agency Agreement for Baolijin between Shenyang Sunshine Pharmaceutical Company Limited and Chengdu Institute of Biological Products dated as of August 31, 2006†
10.12	Purchase Agreement for BPT-6 culture medium between Shenyang Sunshine Pharmaceutical Company Limited and Invitrogen Hong Kong Co., Ltd. dated as of March 8, 2006†
10.13	Purchase Contract for FCS between Shenyang Sunshine Pharmaceutical Company Limited and Shanghai Weike Biochemical Reagent Co., Ltd. dated as of April 12, 2005†
10.14	Collaboration Agreement for License and Co-development of anti-TNF alpha monoclonal antibody therapeutics between Shenyang Sunshine Pharmaceutical Company Limited and Epitomics Inc. dated as of March 4, 2006†
10.15	Form of Distribution Agreement
10.16	Equity Transfer Agreement of Beijing Sunshine Bio-product Sales Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dongmei Su dated as of September 2, 2006
10.17	Equity Transfer Agreement of Liaoning Sunshine Bio-Pharmaceutical Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dan Lou dated as of November 10, 2006

Exhibit No.	Document
10.18	Form of Purchase Agreement for the Acquisition of Equity Interest in Liaoning Sunshine Bio-Pharmaceutical Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dan Lou / in Beijing Sunshine Bio-product Sales Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dongmei Su and and Shenyang Keweier Advance Technology Co. Ltd.
10.19	Form of Pledge Agreement of Equity Interest in Liaoning Sunshine Bio-Pharmaceutical Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dan Lou / in Beijing Sunshine Bio-product Sales Company Limited between Shenyang Sunshine Pharmaceutical Company Limited and Dongmei Su and Shenyang Keweier Advance Technology Co. Ltd.
10.20	Form of Voting Agreement between Shenyang Sunshine Pharmaceutical Company Limited and Dan Lou / Dongmei Su and Shenyang Keweier Advance Technology Co. Ltd.
10.21	Form of Business Cooperation Agreement among 3SBio Inc., Shenyang Sunshine Pharmaceutical Company Limited and Liaoning Sunshine Bio-Pharmaceutical Company Limited / Beijing Sunshine Bio-product Sales Company Limited
21.1	List of subsidiaries of the Registrant
23.1	Consent of KPMG
23.2	Consent of Conyers Dill & Pearman (included in Exhibit 5.1)
23.3	Consent of Jingtian & Gongcheng (included in Exhibit 99.1)
24.1	Powers of Attorney (included in signature page)
99.1	Opinion of Jingtian & Gongcheng regarding approval requirement by the China Securities Regulatory Commission for overseas listing of PRC companies

† Portions of this exhibit have been redacted pursuant to an application for confidential treatment to the U.S. Securities and Exchange Commission.

EX-1.1

Exhibit 1.1

DB Draft of January 12, 2007

3SBIO INC.

[            ] American Depositary Shares

Each Representing [            ] Ordinary Shares, Par Value US$0.0001 Per Share

UNDERWRITING AGREEMENT

[pricing date]

DB Draft of January 12, 2007

UNDERWRITING AGREEMENT

[pricing date]

UBS AG

CIBC World Markets Corp.

Pacific Growth Equities, LLC

    as Managing Underwriters

c/o UBS AG

52/F, Two International Finance Centre

8 Finance Street, Central

Hong Kong

Ladies and Gentlemen:

3SBio Inc., an exempted company incorporated under the laws of the Cayman Islands (the “Company”), proposes to issue and sell, and each person or entity (each a “Selling Shareholder”) identified as a Selling Shareholder in Schedule C annexed hereto proposes to sell, to the underwriters named in Schedule A annexed hereto (the “Underwriters”), for whom you are acting as representatives, an aggregate of [# of firm ADSs] American Depositary Shares (the “Firm ADSs”), each ADS representing [            ] Ordinary Shares (as defined below), of which [# of firm ADSs from the Company] Firm ADSs are to be issued and sold by the Company and an aggregate of [# or firm ADSs from Selling Shareholders] Firm ADSs are to be sold by the Selling Shareholders. In addition, solely for the purpose of covering over-allotments, the Selling Shareholders propose to grant to the Underwriters the option to purchase up to an additional [# of additional ADSs] ADSs (the “Additional ADSs”). The number of Firm ADSs and Additional ADSs, as the case may be, to be sold by each Selling Shareholder is the number of Firm ADSs and Additional ADSs, as the case may be, set forth opposite the name of such Selling Shareholder in Schedule C annexed hereto. The Firm ADSs and the Additional ADSs are hereinafter collectively sometimes referred to as the “Offered ADSs.” The Offered ADSs are described in the Prospectus which is referred to below. Unless the context otherwise requires, each reference to the Firm ADSs, the Additional ADSs or the Offered ADSs herein also includes the Ordinary Shares underlying such ADSs. As used herein, “Ordinary Shares” means the ordinary shares, par value US$0.0001, of the Company.

The Ordinary Shares to be represented by the Offered ADSs will be evidenced by American Depositary Receipts (the “ADRs”) to be issued pursuant to the Deposit Agreement, dated [            ], 2007 (the “Deposit Agreement”), among the Company, JPMorgan Chase Bank, N.A., as depositary (the “Depositary”), and the holders and beneficial owners from time to time of the ADRs.

The Company hereby acknowledges that, in connection with the proposed offering of the Offered ADSs, it has requested UBS Financial Services Inc. (“UBS-FinSvc”) to administer a directed share program (the “Directed Share Program”) under which up to [# of reserved shares] Firm ADSs, or [            ]% of the Firm ADSs to be purchased by the Underwriters (the “Reserved ADSs”), shall be reserved for sale by UBS-FinSvc at the initial public offering price to the Company’s officers, directors, employees and consultants and other persons having a relationship with the Company as designated by the Company (the “Directed Share Participants”) as part of the distribution of the Offered ADSs by the Underwriters, subject to the terms of this Agreement, the applicable rules, regulations and interpretations of the National Association of Securities Dealers, Inc. (the “NASD”) and all other applicable laws, rules and regulations. The number of Offered ADSs available for sale to the general public will be reduced to the extent that Directed Share Participants purchase Reserved ADSs. The Underwriters may offer any Reserved ADSs not purchased by Directed Share Participants to the general public on the same basis as the other Offered ADSs being issued and sold hereunder. The Company has supplied UBS-FinSvc with the names, addresses and telephone numbers of the individuals or other entities which the Company has designated to be participants in the Directed Share Program. It is understood that any number of those so designated to participate in the Directed Share Program may decline to do so.

The Company has prepared and filed, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the “Act”), with the Securities and Exchange Commission (the “Commission”) a registration statement on Form F-1 (File No. 333-[            ]) under the Act, including a prospectus, relating to the Offered ADSs.

Except where the context otherwise requires, “Registration Statement,” as used herein, means the registration statement, as amended at the time of such registration statement’s effectiveness for purposes of Section 11 of the Act, as such section applies to the respective Underwriters (the “Effective Time”), including (i) all documents filed as a part thereof, (ii) any information contained in a prospectus filed with the Commission pursuant to Rule 424(b) under the Act, to the extent such information is deemed, pursuant to Rule 430A or Rule 430C under the Act, to be part of the registration statement at the Effective Time, (iii) any registration statement filed to register the offer and sale of Offered ADSs pursuant to Rule 462(b) under the Act, and (iv) the F-6 Registration Statement (as defined herein).

The Company has furnished to you, for use by the Underwriters and by dealers in connection with the offering of the Offered ADSs, copies of one or more preliminary prospectuses relating to the Offered ADSs. Except where the context otherwise requires, “Preliminary Prospectus,” as used herein, means each such preliminary prospectus, in the form so furnished.

Except where the context otherwise requires, “Prospectus,” as used herein, means the prospectus, relating to the Offered ADSs, filed by the Company with the Commission pursuant to Rule 424(b) under the Act on or before the second business day after the date hereof (or such earlier time as may be required under the Act), or, if no such filing is required, the final prospectus included in the Registration Statement at the time it became effective under the Act, in each case in the form furnished by the Company to you for use by the Underwriters and by dealers in connection with the offering of the Offered ADSs.

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“Permitted Free Writing Prospectuses,” as used herein, means the documents listed on Schedule B attached hereto and each “road show” (as defined in Rule 433 under the Act), if any, related to the offering of the Offered ADSs contemplated hereby that is a “written communication” (as defined in Rule 405 under the Act) (each such road show, an “Electronic Road Show”). The Underwriters have not offered or sold and will not offer or sell, without the Company’s consent, any Offered ADSs by means of any “free writing prospectus” (as defined in Rule 405 under the Act) that is required to be filed by the Underwriters with the Commission pursuant to Rule 433 under the Act, other than a Permitted Free Writing Prospectus.

“Disclosure Package,” as used herein, means any Preliminary Prospectus together with any combination of one or more of the Permitted Free Writing Prospectuses, if any.

As used in this Agreement, “business day” shall mean a day on which the New York Stock Exchange (the “NYSE”) is open for trading. The terms “herein,” “hereof,” “hereto,” “hereinafter” and similar terms, as used in this Agreement, shall in each case refer to this Agreement as a whole and not to any particular section, paragraph, sentence or other subdivision of this Agreement. The term “or,” as used herein, is not exclusive.

The Company, each of the Selling Shareholders and the Underwriters agree as follows:

1. Sale and Purchase. Upon the basis of the representations and warranties and subject to the terms and conditions herein set forth, the Company agrees to issue and sell, and each of the Selling Shareholders agrees to sell, in each case severally and not jointly, to the respective Underwriters and each of the Underwriters, severally and not jointly, agrees to purchase from the Company and each Selling Shareholder, the respective number of Firm ADSs (subject to adjustment as UBS AG (“UBS”) may determine to avoid fractional shares) which bears the same proportion to the total number of Firm ADSs to be sold by the Company or by such Selling Shareholder, as the case may be, as the number of Firm ADSs set forth opposite the name of such Underwriter in Schedule A annexed hereto, subject to adjustment in accordance with Section 11 hereof, bears to the total number of Firm ADSs, in each case at a purchase price of US$[            ] per share. The Company and the Selling Shareholders are advised by you that the Underwriters intend (i) to make a public offering of their respective portions of the Firm ADSs as soon after the effectiveness of the Registration Statement as in your judgment is advisable and (ii) initially to offer the Firm ADSs upon the terms set forth in the Prospectus. You may from time to time increase or decrease the public offering price after the initial public offering to such extent as you may determine. It is understood by all parties that the Underwriters are offering ADSs in the United States and internationally outside the People’s Republic of China (the “PRC”, which, for the purposes of this Agreement, excludes Taiwan, The Hong Kong Special Administrative Region and the Macau Special Administrative Region).

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In addition, the Selling Shareholders, severally and not jointly hereby grant to the several Underwriters the option (the “Over-Allotment Option”) to purchase, and upon the basis of the representations and warranties and subject to the terms and conditions herein set forth, the Underwriters shall have the right to purchase, severally and not jointly, from the Selling Shareholders, ratably in accordance with the number of Firm ADSs to be purchased by each of them, all or a portion of the Additional ADSs as may be necessary to cover over-allotments made in connection with the offering of the Firm ADSs, at the same purchase price per share to be paid by the Underwriters to the Company and the Selling Shareholders for the Firm ADSs. The Over-Allotment Option may be exercised by UBS on behalf of the several Underwriters at any time and from time to time on or before the thirtieth day following the date of the Prospectus, by written notice to the Company and the Selling Shareholders. Such notice shall set forth the aggregate number of Additional ADSs as to which the Over-Allotment Option is being exercised and the date and time when the Additional ADSs are to be delivered (any such date and time being herein referred to as an “additional time of purchase”); provided, however, that no additional time of purchase shall be earlier than the “time of purchase” (as defined below) nor earlier than the second business day after the date on which the Over-Allotment Option shall have been exercised nor later than the tenth business day after the date on which the Over-Allotment Option shall have been exercised. The number of Additional ADSs to be sold to each Underwriter shall be the number which bears the same proportion to the aggregate number of Additional ADSs being purchased as the number of Firm ADSs set forth opposite the name of such Underwriter on Schedule A hereto bears to the total number of Firm ADSs (subject, in each case, to such adjustment as UBS may determine to eliminate fractional ADSs), subject to adjustment in accordance with Section 11 hereof. Upon any exercise of the Over-Allotment Option, the number of Additional ADSs to be purchased from each Selling Shareholder shall be the number which bears the same proportion to the aggregate number of Additional ADSs being purchased as the number of Additional ADSs set forth opposite the name of such Selling Shareholder in Schedule C annexed hereto bears to [# of additional shares], subject, in each case, to such adjustment as UBS may determine solely to eliminate fractional shares.

Pursuant to powers of attorney (the “Powers of Attorney”) granted by each Selling Shareholder (which Powers of Attorney shall be satisfactory to UBS), Dan Lou and Dr. Jing Lou shall act as representatives of the Selling Shareholders. Each of the foregoing representatives (collectively, the “Representatives of the Selling Shareholders”) is authorized, on behalf of each Selling Shareholder, among other things, to execute any documents necessary or desirable in connection with the sale of the Offered ADSs to be sold hereunder by such Selling Shareholder, to make delivery of the certificates of such Offered ADSs, to receive the proceeds of the sale of such Offered ADSs, to give receipts for such proceeds, to pay therefrom the expenses to be borne by such Selling Shareholder in connection with the sale and public offering of the Offered ADSs, to distribute the balance of such proceeds to such Selling Shareholder, to receive notices on behalf of such Selling Shareholder and to take such other action as may be necessary or desirable in connection with the transactions contemplated by this Agreement and the Deposit Agreement.

2. Payment and Delivery. Payment of the purchase price for the Firm ADSs shall be made to the Company and to each Selling Shareholder by Federal Funds wire transfer against delivery of the certificates for the Firm ADSs to you through the facilities of The Depository Trust Company (“DTC”) for the respective accounts of the Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York City time, on [closing date] (unless another time shall be agreed to by you and the Company and any Representative of the Selling Shareholders or unless postponed in accordance with the provisions of Section 11 hereof). For the avoidance of doubt, the purchase price for the Firm ADSs due to the Selling Shareholders shall be made by the Underwriters as a single payment to [the Company] as custodian for the Selling Shareholders. The time at which such payment and delivery are to be made is hereinafter sometimes called the “time of purchase.” Electronic transfer of the Firm ADSs shall be made to you at the time of purchase in such names and in such denominations as you shall specify.

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Payment of the purchase price for the Additional ADSs shall be made at the additional time of purchase in the same manner and at the same office and time of day as the payment for the Firm ADSs. For the avoidance of doubt, the purchase price for the Additional ADSs due to the Selling Shareholders shall be made by the Underwriters as a single payment to [the Company] as custodian for the Selling Shareholders. Electronic transfer of the Additional ADSs shall be made to you at the additional time of purchase in such names and in such denominations as you shall specify.

Deliveries of the documents described in Section 9 hereof with respect to the purchase of the Offered ADSs shall be made at the offices of Dewey Ballantine LLP at 1301 Avenue of the Americas, New York, New York 10019, at 9:00 A.M., New York City time, on the date of the closing of the purchase of the Firm ADSs or the Additional ADSs, as the case may be.

3. Representations and Warranties of the Company and each Controlling Shareholder. The Company and Achieve Well International Limited, Witty Mind International Limited and Precious Winwin Limited (each, a “Controlling Shareholder”), jointly and severally, represent and warrant to and agree with each of the Underwriters that:

(a) the Registration Statement has heretofore become effective under the Act or, with respect to any registration statement to be filed to register the offer and sale of Offered ADSs pursuant to Rule 462(b) under the Act, will be filed with the Commission and become effective under the Act no later than 10:00 P.M., New York City time, on the date of determination of the public offering price for the Offered ADSs; no stop order of the Commission preventing or suspending the use of any Preliminary Prospectus or Permitted Free Writing Prospectus, or the effectiveness of the Registration Statement, has been issued, and no proceedings for such purpose have been instituted or, to the Company’s knowledge, are contemplated by the Commission;

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(b) the Registration Statement complied when it became effective, complies as of the date hereof and, as amended or supplemented, at the time of purchase, each additional time of purchase, if any, and at all times during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Offered ADSs, will comply, in all material respects, with the requirements of the Act; the Registration Statement did not, as of the Effective Time, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; each Preliminary Prospectus complied, at the time it was filed with the Commission, and complies as of the date hereof, in all material respects with the requirements of the Act; at no time during the period that begins on the earlier of the date of such Preliminary Prospectus and the date such Preliminary Prospectus was filed with the Commission and ends at the time of purchase did or will any Preliminary Prospectus, as then amended or supplemented, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and at no time during such period did or will any Preliminary Prospectus, as then amended or supplemented, together with any combination of one or more of the then issued Permitted Free Writing Prospectuses, if any, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; the Prospectus will comply, as of its date, the date that it is filed with the Commission, the time of purchase, each additional time of purchase, if any, and at all times during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of the Offered ADSs, in all material respects, with the requirements of the Act (including, without limitation, Section 10(a) of the Act); at no time during the period that begins on the earlier of the date of the Prospectus and the date the Prospectus is filed with the Commission and ends at the later of the time of purchase, the latest additional time of purchase, if any, and the end of the period during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Offered ADSs did or will the Prospectus, as then amended or supplemented, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; at no time during the period that begins on the date of such Permitted Free Writing Prospectus and ends at the time of purchase did or will any Permitted Free Writing Prospectus include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty in this Section 3(b) with respect to any statement contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus in reliance upon and in conformity with information concerning an Underwriter and furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in the Registration Statement, such Preliminary Prospectus, the Prospectus or such Permitted Free Writing Prospectus;

(c) a registration statement on Form F-6 (No. 333-            ) relating to the Offered ADSs has been filed with the Commission (such registration statement, including all exhibits thereto, as amended at the time of effectiveness of such registration statement for purposes of Section 11 of the Act, as such section applies to the respective Underwriters, being referred to herein as the “F-6 Registration Statement”); the F-6 Registration Statement has become effective under the Act; no stop order of the Commission preventing or suspending use of the F-6 Registration Statement has been issued, and no proceedings for such purpose have been instituted or, to the Company’s knowledge, are contemplated by the Commission; the F-6 Registration Statement complied when it became effective, complies as of the date hereof and, as amended or supplemented, at the time of purchase and each additional time of purchase, if any, will comply, in all material respects, with the requirements of the Act; the F-6 Registration Statement did not when it became effective, does not as of the date hereof and will not at the time of purchase and each additional time of purchase, if any, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

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(d) a registration statement on Form 8-A (No. 1-            ) relating to the registration of the Ordinary Shares and the Offered ADSs has been filed with the Commission, has been declared effective under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”) and the Ordinary Shares and the Offered ADSs have been duly registered under the Exchange Act pursuant to such registration statement; the various parts of such registration statement on Form 8-A for the registration of the Ordinary Shares and the Offered ADSs, including all exhibits thereto, each as amended at the time such part of the registration statement became effective, are hereinafter called the “Exchange Act Registration Statement”; no stop order of the Commission preventing or suspending the effectiveness of the Exchange Act Registration Statement has been issued and no proceedings for such purpose have been instituted or, to the Company’s knowledge after due inquiry, are contemplated by the Commission; the Exchange Act Registration Statement, conformed when it became effective, conforms and will conform, at the time of purchase and any additional time of purchase in all material respects to the requirements of the Exchange Act and did not, when it became effective, does not and will not, at the time of purchase and any additional time of purchase contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

(e) prior to the execution of this Agreement, the Company has not, directly or indirectly, offered or sold any Offered ADSs by means of any “prospectus” (within the meaning of the Act) or used any “prospectus” (within the meaning of the Act) in connection with the offer or sale of the Offered ADSs, in each case other than the Preliminary Prospectuses and the Permitted Free Writing Prospectuses, if any; the Company has not, directly or indirectly, prepared, used or referred to any Permitted Free Writing Prospectus except in compliance with Rules 164 and 433 under the Act; assuming that such Permitted Free Writing Prospectus is accompanied or preceded by the most recent Preliminary Prospectus that contains a price range or the Prospectus, as the case may be, and that such Permitted Free Writing Prospectus is so sent or given after the Registration Statement was filed with the Commission (and after such Permitted Free Writing Prospectus was, if required pursuant to Rule 433(d) under the Act, filed with the Commission), the sending or giving, by any Underwriter, of any Permitted Free Writing Prospectus will satisfy the provisions of Rule 164 and Rule 433 (without reliance on subsections (b), (c) and (d) of Rule 164); the Preliminary Prospectus dated [                    ] is a prospectus that, other than by reason of Rule 433 or Rule 431 under the Act, satisfies the requirements of Section 10 of the Act, including a price range where required by rule; neither the Company nor the Underwriters are disqualified, by reason of subsection (f) or (g) of Rule 164 under the Act, from using, in connection with the offer and sale of the Offered ADSs, “free writing prospectuses” (as defined in Rule 405 under the Act) pursuant to Rules 164 and 433 under the Act; the Company is not an “ineligible issuer” (as defined in Rule 405 under the Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the Act with respect to the offering of the Offered ADSs contemplated by the Registration Statement; the parties hereto agree and understand that the content of any and all “road shows” (as defined in Rule 433 under the Act) related to the offering of the Offered ADSs contemplated hereby is solely the property of the Company; the Company has caused there to be made available at least one version of a “bona fide electronic road show” (as defined in Rule 433 under the Act) in a manner that, pursuant to Rule 433(d)(8)(ii) under the Act, causes the Company not to be required, pursuant to Rule 433(d) under the Act, to file, with the Commission, any Electronic Road Show;

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(f) as of the date of this Agreement, the Company has an authorized and outstanding capitalization as set forth in the sections of the Registration Statement, the Preliminary Prospectuses and the Prospectus entitled “Capitalization” and “Description of capital stock” (and any similar sections or information, if any, contained in any Permitted Free Writing Prospectus), and, as of the time of purchase and any additional time of purchase, as the case may be, the Company shall have an authorized and outstanding capitalization as set forth in the sections of the Registration Statement, the Preliminary Prospectuses and the Prospectus entitled “Capitalization” and “Description of share capital” (and any similar sections or information, if any, contained in any Permitted Free Writing Prospectus), subject, in each case, to the issuance of ordinary shares upon exercise of stock options disclosed as outstanding in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus and the grant of options under existing stock option plans described in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus; all of the issued and outstanding shares of capital stock, including the Ordinary Shares, of the Company have been duly authorized and validly issued and are fully paid and non-assessable, have been issued in compliance with all applicable securities laws and were not issued in violation of any preemptive right, resale right, right of first refusal or similar right; the Offered ADSs are duly listed, and admitted and authorized for trading, subject to official notice of issuance and evidence of satisfactory distribution, on the Nasdaq Global Market (the “Nasdaq”);

(g) the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Cayman Islands, with full corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, to execute and deliver this Agreement and to issue, sell and deliver the Offered ADSs as contemplated herein;

(h) the Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, either (i) have a material adverse effect on the business, properties, financial condition, results of operations or prospects of the Company and the Subsidiaries (as defined below) taken as a whole, (ii) prevent or materially interfere with consummation of the transactions contemplated hereby or (iii) prevent the Offered ADSs from being accepted for listing on, or result in the delisting of Offered ADSs from Nasdaq (the occurrence of any such effect or any such prevention or interference or any such result described in the foregoing clauses (i), (ii) and (iii) being herein referred to as a “Material Adverse Effect”);

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(i) the Company has no subsidiaries (as defined under the Act) other than Collected Mind Limited, a company incorporated under the laws of the British Virgin Islands (“Collected Mind”) and Shenyang Sunshine Pharmaceutical Company Limited, a wholly foreign owned limited liability company incorporated under the laws of the PRC (“Shenyang Sunshine”) (each of Collected Mind, Shenyang Sunshine and each VIE (as defined herein) may be referred to herein as a “Subsidiary” and collectively as the “Subsidiaries”); the Company owns all of the issued and outstanding capital stock of Collected Mind and Collected Mind owns all of the issued and outstanding capital stock of Shenyang Sunshine, in each case, free and clear of all liens, encumbrances, equities or claims; the Company does not own, directly or indirectly, any shares of stock or any other equity interests or long-term debt securities of any corporation, firm, partnership, joint venture, association or other entity, other than Collected Mind, Shenyang Sunshine and the Company’s 45% equity interest in LifeGen, Inc., a Delaware corporation that has no operations, material assets or material liabilities; complete and correct copies of the articles of association, business licenses or other constituent documents of the Company and each Subsidiary and all amendments thereto have been delivered to you, and, except as set forth in the exhibits to the Registration Statement, no changes therein will be made on or after the date hereof through and including the time of purchase or, if later, any additional time of purchase; each Subsidiary has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any; each Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect; all of the outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable, have been issued in compliance with all applicable securities and other laws, were not issued in violation of any preemptive right, resale right, right of first refusal or similar right; and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligation into shares of capital stock or ownership interests in the Subsidiaries are outstanding;

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(j) the Ordinary Shares underlying the Offered ADSs to be sold by the Company pursuant hereto have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and non-assessable and free of statutory and contractual preemptive rights, resale rights, rights of first refusal and similar rights; the Ordinary Shares underlying the Offered ADSs to be sold by the Company pursuant hereto, when issued and delivered against payment therefor as provided herein, will be free of any restriction upon the voting or transfer thereof pursuant to any applicable law or the Company’s articles of association, business license or other constituent documents or any agreement or other instrument to which the Company is a party; the Ordinary Shares underlying the Offered ADSs to be sold by the Selling Shareholders pursuant hereto have been duly and validly authorized and issued and are and, after they are delivered against payment thereof as provided herein, will be fully paid, non-assessable and free of statutory and contractual preemptive rights, resale rights, rights of first refusal and similar rights; the Ordinary Shares underlying the Offered ADSs to be sold by the Selling Shareholders pursuant hereto are and, after they are delivered against payment therefor as provided herein, will be free of any restriction upon the voting or transfer thereof pursuant to the Company’s articles of association, business license or other constituent documents or any agreement or other instrument to which the Company is a party; the Ordinary Shares represented by the Offered ADSs may be freely deposited by the Company with the Depositary or its nominee against issuance of ADRs evidencing the Offered ADSs, as contemplated by the Deposit Agreement;

(k) the capital stock of the Company, including the Ordinary Shares underlying the Offered ADSs, conforms in all material respects to each description thereof, if any, contained in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any; and the ADRs evidencing the Offered ADSs are in due and proper form;

(l) this Agreement has been duly authorized, executed and delivered by the Company;

(m) the Deposit Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; upon due issuance by the Depositary of the ADRs evidencing the Offered ADSs against the deposit of the underlying Ordinary Shares in respect thereof in accordance with the provisions of the Deposit Agreement, such ADRs will be duly and validly issued and the persons in whose names such ADRs are registered will be entitled to the rights specified therein and in the Deposit Agreement; the Deposit Agreement and the ADRs conform in all material respects to each description thereof contained in the Preliminary Prospectuses, Prospectus and the Permitted Free Writing Prospectuses, if any; there are no restrictions on transfers of Ordinary Shares or the Offered ADSs, as the case may be, under the laws of the Cayman Islands or the State of New York, as the case may be, except as disclosed in the Registration Statement, the Preliminary Prospectuses and the Prospectus and subject to the terms and provisions, of the Deposit Agreement; upon the sale and delivery to the Underwriters of the Offered ADSs, and payment therefor, pursuant to this Agreement, the Underwriters will acquire good, marketable and valid title to such Offered ADSs, free and clear of all pledges, liens, security interests, charges, claims or encumbrances of any kind;

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(n) neither the Company nor any of the Subsidiaries is in breach or violation of or in default under (nor has any event occurred which, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (A) its articles of association, business license or other constituent documents, (B) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which it is a party or by which it or any of its properties may be bound or affected, or (C) any federal, state, local or foreign law, rule or regulation, or (D) any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, the rules, regulations and listing standards of Nasdaq), or (E) any decree, judgment or order applicable to the Company or any of the Subsidiaries or any of their respective properties;

(o) the execution, delivery and performance of this Agreement and the Deposit Agreement, the deposit of the Ordinary Shares with the Depositary and the issuance of the ADRs evidencing underlying the Offered ADSs, the issuance and sale of the Offered ADSs to be sold by the Company pursuant hereto, the sale of the Offered ADSs to be sold by the Selling Shareholders pursuant hereto, the compliance by the Company with all of the provisions of this Agreement and the Deposit Agreement and the consummation of the transactions contemplated by this Agreement and the Deposit Agreement will not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (or result in the creation or imposition of a lien, charge or encumbrance on any property or assets of the Company or any Subsidiary pursuant to) (A) the articles of association, business license or other constituent documents of the Company or any of the Subsidiaries, or (B) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (C) any federal, state, local or foreign law, rule or regulation, or (D) any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, the rules, regulations and listing standards of Nasdaq), or (E) any decree, judgment or order applicable to the Company or any of the Subsidiaries or any of their respective properties;

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(p) no approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency, or of or with any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, Nasdaq), or approval of the shareholders of the Company, is required in connection with the issuance and sale of the Offered ADSs to be sold by the Company pursuant hereto, the sale of the Offered ADSs to be sold by the Selling Shareholders pursuant hereto or the deposit of the Ordinary Shares with the Depositary and the issuance of ADRs evidencing the Offered ADSs or the consummation by the Company of the transactions contemplated hereby, other than (i) registration under the Act of the Offered ADSs and the Ordinary Shares underlying the Offered ADSs, which has been effected (or, with respect to any registration statement to be filed hereunder pursuant to Rule 462(b) under the Act, will be effected in accordance herewith), (ii) any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the Offered ADSs and the Ordinary Shares underlying the Offered ADSs are being offered by the Underwriters or (iii) under the Conduct Rules of the NASD;

(q) except as described in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, (i) no person has the right, contractual or otherwise, to cause the Company to issue or sell to it any ADSs, Ordinary Shares or shares of any other capital stock or other equity interests of the Company, (ii) no person has any preemptive rights, resale rights, rights of first refusal or other rights to purchase any ADSs, Ordinary Shares or shares of any other capital stock of or other equity interests in the Company and (iii) no person has the right to act as an underwriter or as a financial advisor to the Company in connection with the offer and sale of the Offered ADSs and the Ordinary Shares underlying the Offered ADSs; except as described in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, no person has the right, contractual or otherwise, to cause the Company to register under the Act any ADSs, Ordinary Shares or shares of any other capital stock of or other equity interests in the Company, and no person has the right to include any such ADSs or interests in the Registration Statement or the offering contemplated thereby;

(r) each of the Company and the Subsidiaries has all necessary licenses, authorizations, franchises, consents, concessions, orders, certificates, permits and approvals (the “Permits”) and has made all necessary filings required under any applicable law, rule or regulation, and has obtained all Permits from other persons, in order to conduct their respective businesses; neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew any Permit when and as such Permit expires; neither the Company nor any of the Subsidiaries is in violation of, or in default under, or has received notice of any proceedings relating to revocation or modification of, any Permits; and the Company and the Subsidiaries are in compliance in all material respects with all of the provisions of the Permits;

(s) all legal or governmental proceedings, related-party transactions, off-balance sheet transactions, contracts, licenses, agreements, leases or documents of a character required to be described in the Registration Statement, any Preliminary Prospectus or the Prospectus or to be filed as an exhibit to the Registration Statement have been so described or filed as required;

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(t) there are no actions, suits, claims, investigations or proceedings pending or, to the Company’s knowledge, threatened or contemplated to which the Company or any of the Subsidiaries or any of their respective directors or officers is or would be a party or of which any of their respective properties is or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency, or before or by any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, Nasdaq), except any such action, suit, claim, investigation or proceeding which, if resolved adversely to the Company or any Subsidiary, would not, individually or in the aggregate, have a Material Adverse Effect;

(u) KPMG LLP, whose report on the consolidated financial statements of the Company and the Subsidiaries is included in the Registration Statement, the Preliminary Prospectuses and the Prospectus, are independent registered public accountants as required by the Act and by the rules of the Public Company Accounting Oversight Board;

(v) the financial statements included in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, together with the related notes and schedules, present fairly the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated statements of income, cash flows and changes in shareholders’ equity of the Company for the periods specified and have been prepared in compliance with the requirements of the Act and in conformity with U.S. generally accepted accounting principles applied on a consistent basis during the periods involved; all pro forma financial statements or data included in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, comply with the requirements of the Act, and the assumptions used in the preparation of such pro forma financial statements and data are reasonable, the pro forma adjustments used therein are appropriate to give effect to the transactions or circumstances described therein and the pro forma adjustments have been properly applied to the historical amounts in the compilation of those statements and data; the other financial and statistical data contained in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, are accurately and fairly presented and prepared on a basis consistent with the financial statements and books and records of the Company; there are no financial statements (historical or pro forma) that are required to be included in the Registration Statement, any Preliminary Prospectus or the Prospectus that are not included as required; the Company and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus; and all disclosures contained in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Act, to the extent applicable;

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(w) subsequent to the respective dates as of which information is given in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, in each case excluding any amendments or supplements to the foregoing made after the execution of this Agreement, there has not been (i) any material adverse change, or any development involving a prospective material adverse change, in the business, properties, management, financial condition or results of operations of the Company and the Subsidiaries taken as a whole, (ii) any transaction which is material to the Company and the Subsidiaries taken as a whole, (iii) any obligation or liability, direct or contingent (including any off-balance sheet obligations), incurred by the Company or any Subsidiary, which is material to the Company and the Subsidiaries taken as a whole, (iv) any change in the capital stock or outstanding indebtedness of the Company or any Subsidiaries or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any Subsidiary; neither the Company nor any Subsidiary has sustained since the date of the last audited financial statements included in the Registration Statement, the Preliminary Prospectuses and the Prospectus any material loss or interference with its respective business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree;

(x) the Company has obtained for the benefit of the Underwriters the agreement (a “Lock-Up Agreement”), in the form set forth as Exhibit A hereto, of (i) each of its directors and “officers” (within the meaning of Rule 16a-1(f) under the Exchange Act), (ii) each Selling Shareholder, (iii) each shareholder, (iv) each person that holds a right to acquire during the Lock-up Period (as defined herein) any Ordinary Shares, ADSs or any securities convertible into or exchangeable or exercisable for Ordinary Shares or ADSs, and (iv) each Directed Share Participant who has subscribed for a number of Reserved ADSs with an aggregate purchase price of more than US$100,000.

(y) neither the Company nor any Subsidiary is, and at no time during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of the Offered ADSs will either of them be, and, after giving effect to the offering and sale of the Offered ADSs and the application of the proceeds thereof, neither of them will be, an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”); [neither the Company nor any Subsidiary is, and, after giving effect to the offering and sale of the Offered ADSs and the application of the proceeds thereof, neither of them will be, a “passive foreign investment company” or a “controlled foreign corporation,” as such terms are defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”)];

(z) the Company and each of the Subsidiaries have good and marketable title to all property (real and personal) described the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, as being owned by any of them, free and clear of all liens, claims, security interests or other encumbrances, except for such liens, claims, security interests or other encumbrances that would not, individually or in the aggregate, have a Material Adverse Effect; all the property described in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, as being held under lease by the Company or a Subsidiary is held thereby under valid, subsisting and enforceable leases;

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(aa) the Company and the Subsidiaries own, or have obtained valid and enforceable licenses for, or other rights to use, the inventions, patent applications, patents, trademarks (both registered and unregistered), tradenames, service names, copyrights, trade secrets and other proprietary information described in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, as being owned or licensed by them or which are necessary for the conduct of their respective businesses as currently conducted or as proposed to be conducted (including the commercialization of products or services described in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, as under development), except where the failure to own, license or have such rights would not, individually or in the aggregate, have a Material Adverse Effect (collectively, “Intellectual Property”);

(bb) (i) there are no third parties who have or, to the Company’s knowledge, will be able to establish rights to any Intellectual Property, except for, and to the extent of, the ownership rights of the owners of the Intellectual Property which the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus disclose is licensed to the Company;

(ii) to the Company’s knowledge, there is no infringement by third parties of any Intellectual Property, other than any such infringement that would not, individually or in the aggregate, have a Material Adverse Effect;

(iii) (A) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the Company’s rights in or to any Intellectual Property, and (B) the Company is unaware of any facts which could form a reasonable basis for any such action, suit, proceeding or claim, except any such action, suit, proceeding or claim which, if resolved adversely to the Company, would not, individually or in the aggregate, have a Material Adverse Effect;

(iv) (A) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity, enforceability or scope of any Intellectual Property, and (B) the Company is unaware of any facts which could form a reasonable basis for any such action, suit, proceeding or claim, except any such action, suit, proceeding or claim which, if resolved adversely to the Company, would not, individually or in the aggregate, have a Material Adverse Effect;

(v) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any Subsidiary infringes or otherwise violates, or would, upon the commercialization of any product or service described in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, as under development, infringe or violate, any patent, trademark, tradename, service name, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any facts which could form a reasonable basis for any such action, suit, proceeding or claim;

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(vi) the Company and the Subsidiaries have complied in all material respects with the terms of each agreement pursuant to which Intellectual Property has been licensed to the Company or any Subsidiary, and all such agreements are in full force and effect;

(vii) the Company is not aware of any patent or patent application that contains claims that interfere with the issued or pending claims of any of the Intellectual Property or that challenges the validity, enforceability or scope of any of the Intellectual Property; and

(viii) the Company is not aware of any prior art that may render any patent application within the Intellectual Property unpatentable that has not been disclosed to the State Intellectual Property Office of the PRC and/or other relevant PRC intellectual property administrative authority (collectively, the “PRC Intellectual Property Authority”);

(cc) The description of the intellectual property matters of the Company as set forth in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, does not and, at no time during the period that begins on the date of the first Preliminary Prospectus and ends at the time of purchase and any additional time of purchase, did and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; the Company is the exclusive owner of all right, title and interest in and to each of the patents and patent applications described as being owned by it in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any (collectively, the “Patents”); the Company has a valid right to use each of the Patents as currently used or as currently contemplated to be used by the Company, in each case, as described in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any; all such Patents have been properly prepared as to form and have been assigned solely to the Company, which assignments are either recorded in and proclaimed by a PRC Intellectual Property Authority or other foreign patent office, as applicable, or have been submitted for recording in the PRC Intellectual Property Authority or other foreign patent office, as applicable; and each such pending Patent is being diligently prosecuted by the Company; to the extent that a Patent was acquired by the Company pursuant to an assignment, such assignment is valid, binding and enforceable, and all PRC governmental approvals in respect of such assignment have been validly obtained and are in full force and effect; the Patents have been duly maintained and are in full force and in effect; no security interests or other liens have been created with respect to any of the Patents;

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(dd) neither the Company nor any of the Subsidiaries is engaged in any unfair labor practice; except for matters which would not, individually or in the aggregate, have a Material Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or, to the Company’s knowledge, threatened against the Company or any of the Subsidiaries before the any competent governmental authority or agency, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements is pending or, to the Company’s knowledge, threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to the Company’s knowledge, threatened against the Company or any of the Subsidiaries and (C) no union representation dispute currently existing concerning the employees of the Company or any of the Subsidiaries, (ii) to the Company’s knowledge, no union organizing activities are currently taking place concerning the employees of the Company or any of the Subsidiaries and (iii) there has been no violation of any federal, state, local or foreign law relating to discrimination in the hiring, promotion or pay of employees, any applicable wage or hour laws or any other comparable law, rule or regulation applicable to the Company or any of the Subsidiaries, concerning the employees of the Company or any of the Subsidiaries;

(ee) the Company and the Subsidiaries and their respective properties, assets and operations are in compliance with, and the Company and each of the Subsidiaries hold all permits, authorizations and approvals required under, Environmental Laws (as defined below), except to the extent that failure to so comply or to hold such permits, authorizations or approvals would not, individually or in the aggregate, have a Material Adverse Effect; there are no past, present or, to the Company’s knowledge, reasonably anticipated future events, conditions, circumstances, activities, practices, actions, omissions or plans that could reasonably be expected to give rise to any material costs or liabilities to the Company or any Subsidiary under, or to interfere with or prevent compliance by the Company or any Subsidiary with, Environmental Laws; except as would not, individually or in the aggregate, have a Material Adverse Effect, neither the Company nor any of the Subsidiaries (i) is the subject of any investigation, (ii) has received any notice or claim, (iii) is a party to or affected by any pending or, to the Company’s knowledge, threatened action, suit or proceeding, (iv) is bound by any judgment, decree or order or (v) has entered into any agreement, in each case relating to any alleged violation of any Environmental Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Materials (as defined below) (as used herein, “Environmental Law” means any federal, state, local or foreign law, statute, ordinance, rule, regulation, order, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials, and “Hazardous Materials” means any material (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise to liability under any Environmental Law);

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(ff) all tax returns required to be filed by the Company or any of the Subsidiaries have been timely filed, and all taxes and other assessments of a similar nature (whether imposed directly or through withholding) including any interest, additions to tax or penalties applicable thereto due or claimed to be due from such entities have been timely paid, other than (i) those being contested in good faith and for which adequate reserves have been provided or (ii) where the failure to file such tax returns would not, individually or in the aggregate, have a Material Adverse Effect; all local and national PRC governmental tax waivers and other local and national PRC tax relief, concession and preferential treatment are valid, binding and enforceable and do not violate any provision of any law or statute or any order, rule or regulation of any local or national governmental authority;

(gg) the Company and each of the Subsidiaries maintain insurance as the Company reasonably deems adequate; such insurance insures against such losses and risks to an extent which is adequate in accordance with customary industry practice in the PRC to protect the Company and the Subsidiaries and their respective businesses; all such insurance is fully in force on the date hereof and will be fully in force at the time of purchase and each additional time of purchase, if any; neither the Company nor any Subsidiary has reason to believe that it will not be able to renew any such insurance as and when such insurance expires;

(hh) neither the Company nor any Subsidiary has sent or received any communication regarding termination of, or intent not to renew, any of the contracts or agreements referred to or described in any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus, or referred to or described in, or filed as an exhibit to, the Registration Statement, and no such termination or non-renewal has been threatened by the Company or any Subsidiary or, to the Company’s knowledge, any other party to any such contract or agreement;

(ii) the Company and each of the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences;

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(jj) the Company has established “disclosure controls and procedures” (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the Company’s Chief Executive Officer and its Chief Financial Officer by others within those entities, and such disclosure controls and procedures are effective to perform the functions for which they were established; the Company’s independent auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies, if any, in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data; and (ii) all fraud, if any, whether or not material, that involves management or other employees who have a role in the Company’s internal controls; all material weaknesses, if any, in internal controls have been identified to the Company’s independent auditors; since the date of the most recent evaluation of such disclosure controls and procedures and internal controls, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses; and the Company has taken all necessary actions to ensure that, upon and at all times after the filing of the Registration Statement, the Company and the Subsidiaries and their respective officers and directors, in the capacities as such, will be in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and any related rules and regulations promulgated thereunder;

(kk) each “forward-looking statement” (within the meaning of Section 27A of the Act or Section 21E of the Exchange Act) contained in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, has been made or reaffirmed with a reasonable basis and in good faith;

(ll) all statistical or market-related data included in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, are based on or derived from sources that the Company reasonably believes to be reliable and accurate, and the Company has obtained the written consent to the use of such data from such sources to the extent required;

(mm) neither the Company nor any of the Subsidiaries nor, to the Company’s knowledge, any employee or agent of the Company or any Subsidiary has made any payment of funds of the Company or any Subsidiary or received or retained any funds in violation of any law, rule or regulation, which payment, receipt or retention of funds is of a character required to be disclosed in the Registration Statement, any Preliminary Prospectus or the Prospectus;

(nn) the section entitled “Management’s discussion and analysis of financial condition and results of operations” in the Registration Statement, the Preliminary Prospectuses and the Prospectus describes accurately and fully, in all material respects, (i) accounting policies that the Company believes are the most important in the portrayal of the Company’s financial condition and results of operations and that require management’s most difficult, subjective or complex judgments; (ii) judgments and uncertainties affecting the application of critical accounting policies; and (iii) the likelihood that materially different amounts would be reported under different conditions or using different assumptions and an explanation thereof; the Company’s directors and management have reviewed and agreed with the selection, application and disclosure of the Company’s critical accounting policies as described in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, and have consulted with its legal advisers and independent accountants with regards to such disclosure;

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(oo) the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, fairly and accurately describes (i) all material trends, demands, commitments and events known to the Company, and uncertainties, and the potential effects thereof, that the Company believes would materially affect its liquidity and are reasonably likely to occur; and (ii) neither the Company nor any Subsidiary is engaged in any transactions with, or have any obligations to, its unconsolidated entities (if any) that are contractually limited to narrow activities that facilitate the transfer of or access to assets by the Company or any Subsidiary, including, without limitation, structured finance entities and special purpose entities, or otherwise engage in, or have any obligations under, any off-balance sheet transactions or arrangements, other than Liaoning Bio-Pharmaceutical Company Limited, a domestic limited liability company incorporated under the laws of the PRC (“Liaoning Sunshine”), and Beijing Sunshine Bio-product Sales Company, a domestic limited liability company incorporated under the laws of the PRC (“Beijing Sunshine”) (each of Liaoning Sunshine and Beijing Sunshine may be referred to herein as a “VIE” and collectively as the “VIEs”); as used herein, the phrase “reasonably likely” refers to a disclosure threshold lower than “more likely than not”;

(pp) the Company, each Subsidiary and the officers and directors of the Company and the Subsidiaries, in their capacities as such, are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder and the corporate governance rules of Nasdaq that foreign private issuers listing on Nasdaq are required to be in compliance with prior to the time of purchase;

(qq) except as described in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectuses and the Prospectus, neither the Company nor any of the Subsidiaries has any material obligation to provide retirement, healthcare, death or disability benefits to any of the present or past employees of the Company or any of the Subsidiaries, or to any other person;

(rr) each holder of ADRs evidencing ADSs issued pursuant to the Deposit Agreement shall be entitled, subject to the Deposit Agreement, to seek enforcement of its rights through the Depositary or its nominee registered as representative of the holders of the ADRs in a direct suit, action or proceeding against the Company;

(ss) neither the Company nor any of the Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of the Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “Foreign Corrupt Practices Act”); and the Company, the Subsidiaries and, to the knowledge of the Company, its affiliates have instituted and maintain policies and procedures designed to ensure continued compliance therewith;

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(tt) the operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the U.S. Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any federal, state, local or foreign agency (collectively, the “Money Laundering Laws”); and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator or non-governmental authority involving the Company or any of the Subsidiaries with respect to the Money Laundering Laws is pending or, to the Company’s best knowledge, threatened;

(uu) neither the Company nor any of the Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of the Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering of the Offered ADSs contemplated hereby, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other person or entity for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC;

(vv) no Subsidiary is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such Subsidiary’s capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary’s property or assets to the Company or any other Subsidiary of the Company, except as described in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus;

(ww) the preclinical tests and clinical trials that are described in, or the results of which are referred to in, the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, were and, if still pending, are being conducted in all material respects in accordance with protocols filed with the appropriate regulatory authorities for each such test or trial, as the case may be, and with standard medical and scientific research procedures; each description of the results of such tests and trials contained in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, is accurate and complete in all material respects and fairly presents the data derived from such tests and trials, and the Company and the Subsidiaries have no knowledge of any other studies or tests the results of which are inconsistent with, or otherwise call into question, the results described or referred to in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any; neither the Company nor any Subsidiaries has received any notices or other correspondence from the PRC State Food and Drug Administration or any provincial or local equivalent thereof or from any other foreign or domestic government or drug regulatory agency (collectively, the “Healthcare Regulatory Agencies”) requiring the termination, suspension or modification of any clinical trials that are described or referred to in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any; and the Company and the Subsidiaries have each operated and currently are in compliance in all material respects with all applicable rules, regulations and policies of the Healthcare Regulatory Agencies;

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(xx) the issuance and sale of the Offered ADSs to be sold by the Company and the sale of the Offered ADSs to be sold by the Selling Shareholders and the deposit of the Ordinary Shares with the Depositary and the issuance of the ADRs evidencing the Offered ADSs as contemplated by the Agreement and the Deposit Agreement will neither (i) cause any holder of any shares of capital stock, securities convertible into or exchangeable or exercisable for capital stock or options, warrants or other rights to purchase capital stock or any other securities of the Company to have any right to acquire any shares of preferred stock of the Company nor (ii) trigger any anti-dilution rights of any such holder with respect to such shares, securities, options, warrants or rights;

(yy) except pursuant to this Agreement, neither the Company nor any of the Subsidiaries has incurred any liability for any finder’s or broker’s fee or agent’s commission in connection with the execution and delivery of this Agreement or the Deposit Agreement or the consummation of the transactions contemplated by this Agreement or the Deposit Agreement or by the Registration Statement;

(zz) the Company is a “foreign private issuer” within the meaning of Rule 405 under the Act;

(aaa) the statements set forth in the Prospectus under the captions “Description of Share Capital” and “Description of American Depositary Receipts”, insofar as they purport to constitute a summary of the terms of the Ordinary Shares and the ADSs, respectively, and under the captions “Taxation”, “Underwriting”, “Enforceability of civil liabilities” and “Regulation”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair in all material respects; there are no material relationships or transactions between the Company or any of the Subsidiaries on one hand and the Company’s 5% or greater shareholders, affiliates, directors or officers, or any affiliates or members of the immediate families of such persons, on the other hand which are not disclosed in the Registration Statement, the Preliminary Prospectuses and the Prospectus;

(bbb) except as disclosed in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, no transaction, stamp, capital or other issuance, registration or transfer taxes or duties are, under the laws and regulations of the PRC or the Cayman Islands, payable by or on behalf of the Underwriters in connection with (i) the sale and delivery of the Ordinary Shares represented by the Offered ADSs, the issuance of the Offered ADSs to or for the accounts of the Underwriters, (ii) the initial sale and delivery by the Underwriters of the Offered ADSs to purchasers thereof, (iii) the holding or transfer of the Offered ADSs outside the Cayman Islands, (iv) the deposit of the Ordinary Shares with the Depositary and the Custodian (as defined below) and the issuance and delivery of the ADRs evidencing the Offered ADSs, or (v) the execution and delivery of this Agreement or the Deposit Agreement;

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(ccc) the choice of the laws of the State of New York as the governing law of this Agreement is a valid choice of law under the laws of the PRC and the Cayman Islands and will be honored by courts in the PRC and the Cayman Islands; the Company has the power to submit and, pursuant to Section 16 of this Agreement and Section [16] of the Deposit Agreement, has legally, validly, effectively and irrevocably submitted, to the personal jurisdiction of each New York Court (as defined Section 16 hereof), and the Company has the power to designate, appoint and authorize and, pursuant to Section 16 of this Agreement and Section [16] of the Deposit Agreement, has legally, validly, effectively and irrevocably designated, appointed and authorized, the Authorized Agent (as defined Section 16 hereof) for service of process in any action arising out of or relating to this Agreement, the Deposit Agreement or the Offered ADSs in any New York Court, and service of process effected on such Authorized Agent will be effective to confer valid personal jurisdiction over the Company as provided in Section 16 hereof and Section [16] of the Deposit Agreement;

(ddd) neither the Company, or any Subsidiary nor any of their respective properties, assets or revenues has any right of immunity under Cayman Islands, PRC or New York law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any Cayman Islands, PRC, New York or U.S. federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement or the Deposit Agreement; and, to the extent that the Company, or any of the Subsidiaries or any of their respective properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, each of the Company and the Subsidiaries waives or will waive such right to the extent permitted by law and has consented to such relief and enforcement as provided in Section 16 of this Agreement;

(eee) any final judgment for a fixed sum of money rendered by a New York Court having jurisdiction under its own domestic laws in respect of any suit, action or proceeding against the Company or any of the Subsidiaries based upon this Agreement, the Deposit Agreement or the Offered ADSs would be recognized and enforced by courts of the PRC and courts of the Cayman Islands without re-examining the merits of the case; the agreement of the Company, pursuant to Section 16 hereof, that this Agreement and the Deposit Agreement be construed in accordance with and governed by the laws of the State of New York will be recognized by courts of the PRC and courts of the Cayman Islands;

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(fff) except as disclosed in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, no federal, state, local or foreign approvals are currently required in the PRC or the Cayman Islands in order for the Company to pay dividends or other distributions declared by the Company to holders of the Company’s capital stock, including the Offered ADSs, and no withholding or other taxes under the laws and regulations of the PRC or the Cayman Islands will be imposed in connection with the declaration and payment by the Company of dividends and other distributions in respect of shares of its capital stock; except as disclosed in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, under the laws and regulations of the PRC and the Cayman Islands, all dividends and other distributions declared and payable on the Offered ADSs and Ordinary Shares underlying the Offered ADSs may be paid by the Company to the holder thereof in United States dollars and all such payments made to holders thereof or therein who are non-residents of the PRC or the Cayman Islands will not be subject to income, withholding or other taxes under the laws and regulations of the PRC or the Cayman Islands or any taxing authority thereof or therein and will otherwise be free and clear of any other tax, duty, withholding or deduction in the PRC or the Cayman Islands, without the necessity of obtaining any governmental authorization in the PRC or the Cayman Islands or from any taxing authority thereof or therein;

(ggg) except as disclosed in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, dividends declared with respect to after-tax retained earnings on the equity interests of Shenyang Sunshine may under the current laws and regulations of the PRC be paid to Collected Mind in U.S. dollars, subject to the successful completion of PRC formalities required for such remittances and all such dividends and other distributions will not be subject to withholding or other taxes under the laws and regulations of the PRC and are otherwise free and clear of any other tax, withholding or deduction in the PRC, and without the necessity of obtaining any consents, approvals, authorizations, orders, registrations, clearances, or qualifications with any governmental agency in the PRC;

(hhh) the entering into and performance or enforcement of this Agreement and the Deposit Agreement in accordance with their terms will not subject the Underwriters to a requirement to be licensed or otherwise qualified to do business in the PRC or the Cayman Islands, nor will the Underwriters be deemed to be resident, domiciled or carrying on business through an establishment or place in the PRC or the Cayman Islands or in breach of any laws or regulations of the PRC or the Cayman Islands by reason of the entering into, performance or enforcement of this Agreement and the Deposit Agreement;

(iii) it is not necessary, in order to ensure the legality, validity, enforceability or admissibility into evidence in the PRC or the Cayman Islands of this Agreement or the Deposit Agreement or any document to be furnished pursuant the Agreement or the Deposit Agreement, that any stamp or similar tax be paid in the PRC or the Cayman Islands or that this Agreement, the Deposit Agreement or such documents be filed or recorded with any court or other authority in the PRC or the Cayman Islands;

(jjj) neither the Company nor any of the Subsidiaries nor any of their respective directors, officers, affiliates or controlling persons has taken, directly or indirectly, any action designed, or which has constituted or might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Ordinary Shares of the Offered ADSs;

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(kkk) to the Company’s knowledge, there are no affiliations or associations between (i) any member of the NASD and (ii) the Company or any of the Company’s officers, directors or 5% or greater security holders or any beneficial owner of the Company’s unregistered equity securities that were acquired at any time on or after the 180th day immediately preceding the date the Registration Statement was initially filed with the Commission, except as disclosed in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus;

(lll) except as described in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectuses and the Prospectus, no material indebtedness (actual or contingent) and no material contract or arrangement is outstanding between the Company or any of the Subsidiaries and any director or executive officer of the Company or any of the Subsidiaries or any person connected with such director or executive officer (including his/her spouse, infant children, any company or undertaking in which he/she holds a controlling interest);

(mmm) the descriptions of the events and transactions (the “Restructuring”) set forth in the Registration Statement, the Preliminary Prospectuses and the Prospectus under the caption “Our corporate structure” are accurate, complete and fair in all material respects;

(nnn) the Restructuring does not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (or result in the creation or imposition of a lien, charge or encumbrance on any property or assets of the Company or any Subsidiary pursuant to) (A) the articles of association, business license or other constituent documents of the Company or any of the Subsidiaries, or (B) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (C) any federal, state, local or foreign law, rule or regulation, or (D) any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, the rules, regulations and listing standards of Nasdaq), or (E) any decree, judgment or order applicable to the Company or any of the Subsidiaries or any of their respective properties;

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(ooo) Each of the Company and each of the Company’s directors that signed the Registration Statement is aware of and has been advised as to, the content of the Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors jointly promulgated by the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Tax Administration, the State Administration of Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and the State Administration of Foreign Exchange of the PRC on August 8, 2006 (the “M&A Rules”), in particular the relevant provisions thereof which purport to require offshore special purpose vehicles, or SPVs, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals, to obtain the approval of the CSRC prior to the listing and trading of their securities on an overseas stock exchange; the Company has received legal advice specifically with respect to the M&A Rules from its PRC counsel and the Company understands such legal advice; and the Company has fully communicated such legal advice from its PRC counsel to each of its directors that signed the Registration Statement and each director has confirmed that he or she understands such legal advice;

(ppp) all consents, licenses, franchises, approvals, concessions, permits, authorizations, orders, registrations, clearances or qualifications of or with any governmental agency having jurisdiction over the Company or any of the Subsidiaries or any of their respective properties required in connection with the Restructuring, including any consents, licenses, franchises, approvals, concessions, permits, authorizations, orders, registrations, clearances or qualifications that would be required under the M&A Rules, have been unconditionally obtained in writing, and no such consent, license, franchise, approval, concession, permit, authorization, order, registration, clearance or qualification has been withdrawn or revoked or is subject to any condition precedent which has not been fulfilled or performed;

(qqq) the issuance and sale of the Shares and the ADSs, the listing and trading of the ADSs on Nasdaq or the consummation of the transactions contemplated by this Agreement, the Deposit Agreement and the Power of Attorney is not and will not be, as of the date hereof at each time of purchase, adversely affected by the M&A Rules or any official clarifications, guidance, interpretations or implementation rules in connection with or related to the M&A Rules (collectively, the “M&A Rules and Related Clarifications”);

(rrr) as of the date of each PreliminaryProspectus and as of the date hereof, the M&A Rules did not and do not apply to the issuance and sale of the Shares and the ADSs, the listing and trading of the ADSs on the Nasdaq, or the consummation of the transactions contemplated by this Agreement, the Deposit Agreement and the Power of Attorney;

(sss) the statements set forth in the Preliminary Prospectus under the captions “Risk Factors — The approval of China Securities Regulatory Commission, or the CSRC, may be required in connection with this offering under a recently adopted PRC regulation; any requirement to obtain prior CSRC approval could significantly delay this offering or could have a material adverse effect on our business, operating results, reputation and trading price of our ADSs, and may also create uncertainties for this offering. The regulation also establishes more complex procedures for acquisitions by foreign investors, which could make it more difficult to pursue growth through acquisitions”, when taken together with the statements under “Regulation — Regulation on overseas listings”, are fair and accurate summaries of the matters described therein, and nothing has been omitted from such summaries which would make the same misleading in any material respect;

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(ttt) each of the Company and the Subsidiaries that were incorporated outside of the PRC has taken, or is in the process of taking, all reasonable steps to comply with, and to ensure compliance by each of its shareholders, directors, officers and employees that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the Ministry of Commerce, the National Development and Reform Commission and the State Administration of Foreign Exchange) relating to overseas investment by PRC residents and citizens or overseas listing by offshore special purpose vehicles controlled directly or indirectly by PRC companies and individuals, such as the Company, (the “PRC Overseas Investment and Listing Regulations”), including without limitation, requesting each shareholder, director, officer and employees that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations;

(uuu) the Registration Statement, the F-6 Registration Statement, each Preliminary Prospectus, the Prospectus and each Permitted Free Writing Prospectus comply, and any further amendments or supplements thereto will comply, with any applicable laws or regulations of any foreign jurisdiction in which any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus is distributed in connection with the Directed Share Program; and no approval, authorization, consent or order of or filing with any federal, state, local or foreign or regulatory commission, board, body, authority or agency, other than those heretofore obtained, is required in connection with the offering of the Reserved ADSs in any jurisdiction where the Reserved ADSs are being offered; and

(vvv) the Company has not offered, or caused the Underwriters to offer, Offered ADSs to any person pursuant to the Directed Share Program with the intent to influence unlawfully (i) a customer or supplier of the Company or any of the Subsidiaries to alter the customer’s or supplier’s level or type of business with the Company or any of the Subsidiaries, or (ii) a trade journalist or publication to write or publish favorable information about the Company or any of the Subsidiaries or any of their respective products or services.

[NB: additional representations may be added addressing White Paper 1 diligence]

In addition, any certificate signed by any officer of the Company or any of the Subsidiaries and delivered to the Underwriters or counsel for the Underwriters in connection with the offering of the Offered ADSs shall be deemed to be a representation and warranty by the Company, as to matters covered thereby, to each Underwriter.

4. Representations and Warranties of the Selling Shareholders. Each Selling Shareholder, severally and not jointly with the other Selling Shareholders, represents and warrants to each of the Underwriters that:

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(a) such Selling Shareholder now has and, at the time of delivery of such Offered ADSs (whether the time of purchase or any additional time of purchase, as the case may be), will have valid and marketable title to the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement, and upon delivery of and payment for such Offered ADSs (whether at the time of purchase or any additional time of purchase, as the case may be), the Underwriters will acquire valid and marketable title to such Offered ADSs free and clear of any claim, lien, encumbrance, security interest, community property right, restriction on transfer or other defect in title;

(b) such Selling Shareholder has and, at the time of delivery of the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement (whether the time of purchase or any additional time of purchase, as the case may be), will have full legal right, power and capacity, and all authorizations and approvals required by law (other than those imposed by the Act and state securities or blue sky laws), to (i) enter into this Agreement and a Custody Agreement (as defined below) and to execute a Power of Attorney, (ii) sell, assign, transfer and deliver the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement in the manner provided in this Agreement and (iii) make the representations, warranties and agreements made by such Selling Shareholder herein;

(c) this Agreement and the custody agreement (the “Custody Agreement”), dated a recent date before the trade date, between [the Company], as custodian (the “Custodian”), and such Selling Shareholder and the Power of Attorney to which such Selling Shareholder is a party have each been duly executed and delivered by (or, in the case of this Agreement, on behalf of) such Selling Shareholder, and each is a legal, valid and binding agreement of such Selling Shareholder enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles;

(d) such Selling Shareholder has duly and irrevocably authorized each of the Representatives of the Selling Shareholders (acting alone), on behalf of such Selling Shareholder, to execute and deliver this Agreement and any other documents necessary or desirable in connection with the transactions contemplated hereby or thereby and to deliver the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement and receive payment therefor pursuant hereto;

(e) the sale of the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement is not prompted by any information concerning the Company or any Subsidiary which is not set forth in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus;

(f) neither such Selling Shareholder nor any of its affiliates has taken, directly or indirectly, any action designed to, or which has constituted or might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Offered ADSs;

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(g) there are no affiliations or associations between any member of the NASD and such Selling Shareholder, except as disclosed in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus; none of the proceeds received by such Selling Shareholder from the sale of the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement will be paid to a member of the NASD or any affiliate of (or person “associated with,” as such terms are used in the Rules of the NASD) such member;

(h) at the time of purchase and each additional time of purchase, all stock transfer or other taxes (other than income taxes), if any, that are required to be paid in connection with the sale and transfer of the Offered ADSs and the underlying Ordinary Shares to be sold by such Selling Shareholder to the several Underwriters hereunder will be fully paid or provided for by such Selling Shareholder, and all laws imposing such taxes will be fully complied with;

(i) no approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency, or of or with any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, Nasdaq), is required in connection with the sale of the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement or the consummation by such Selling Shareholder of the transactions contemplated by this Agreement or by the Custody Agreement or Power of Attorney to which such Selling Shareholder is a party other than (i) registration under the Act of the Offered ADSs and the Ordinary Shares underlying the Offered ADSs, which has been effected (or, with respect to any registration statement to be filed hereunder pursuant to Rule 462(b) under the Act, will be effected in accordance herewith), (ii) any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the Offered ADSs and the Ordinary Shares underlying the Offered ADSs are being offered by the Underwriters or (iii) under the Conduct Rules of the NASD;

(j) such Selling Shareholder has not, prior to the execution of this Agreement, offered or sold any Offered ADSs by means of any “prospectus” (within the meaning of the Act), or used any “prospectus” (within the meaning of the Act) in connection with the offer or sale of the Offered ADSs, in each case other than the then most recent Preliminary Prospectus;

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(k) pursuant to the Custody Agreement to which such Selling Shareholder is a party, certificates in negotiable form for the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement have been placed in custody for the purpose of making delivery of such Offered ADSs in accordance with this Agreement; such Selling Shareholder agrees that (i) such Offered ADSs represented by such certificates are for the benefit of, and coupled with and subject to the interest of, the Custodian, the Representatives of the Selling Shareholders, the Underwriters and the Company, (ii) the appointment of the Representatives of the Selling Shareholders by such Selling Shareholders is irrevocable, and the arrangements made by such Selling Shareholder for custody and for the appointment of the Custodian are irrevocable prior to June 30, 2007, and (iii) the obligations of such Selling Shareholder hereunder shall not be terminated, except as provided in this Agreement or in the Custody Agreement and the Power of Attorney, by operation of law, whether by the death, disability or incapacity of such Selling Shareholder (or, if such Selling Shareholder is not an individual, the liquidation, dissolution, merger or consolidation of such Selling Shareholder) or the occurrence of any other event (each, an “Event”); if an Event occurs before the delivery of the Offered ADSs hereunder, certificates for the Offered ADSs shall be delivered by the Custodian in accordance with the terms and conditions of the Power of Attorney to which such Selling Shareholder is a party, the Custody Agreement to which such Selling Shareholder is a party and this Agreement, and actions taken by the Custodian and the Representatives of the Selling Shareholders pursuant to such Power or Attorney or such Custody Agreement shall be as valid as if such Event had not occurred, regardless of whether or not the Custodian or the Representatives of the Selling Shareholders, or either of them, shall have received notice thereof;

(l) neither such Selling Shareholder nor any of its subsidiaries nor any director, officer, agent, employee or affiliate of such Selling Shareholder or any of its subsidiaries is currently subject to any U.S. sanctions administered by OFAC; and such Selling Shareholder will not directly or indirectly use the proceeds of the offering of the Offered ADSs contemplated hereby, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC; and

(m) neither the execution, delivery and performance of this Agreement or the Custody Agreement or Power of Attorney to which such Selling Shareholder is a party nor the sale by such Selling Shareholder of the Offered ADSs to be sold by such Selling Shareholder pursuant to this Agreement nor the consummation of the transactions contemplated herein or thereby will conflict with, result in any breach or violation of or constitute a default under (or constitute any event which with notice, lapse of time or both would result in any breach or violation of or constitute a default under) (i) if such Selling Shareholder is not an individual, the charter or bylaws or other organizational documents of such Selling Shareholder, (ii) any material indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any material license, lease, contract or other agreement or instrument to which such Selling Shareholder is a party or by which such Selling Shareholder or any of its properties may be bound or affected, (iii) any federal, state, local or foreign law, rule or regulation applicable to such Selling Shareholder or any of its properties, (iv) or any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, the rules and regulations of Nasdaq), or (v) any decree, judgment or order applicable to such Selling Shareholder or any of its properties.

In addition, any certificate signed by any Selling Shareholder (or, with respect to any Selling Shareholder that is not an individual, any officer of such Selling Shareholder or of any of such Selling Shareholder’s subsidiaries) or by any Representative of the Selling Shareholders and delivered to the Underwriters or counsel for the Underwriters in connection with the offering of the Offered ADSs shall be deemed to be a representation and warranty by such Selling Shareholder, as to matters covered thereby, to each Underwriter.

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5. Certain Covenants of the Company. The Company hereby agrees:

(a) to furnish such information as may be required and otherwise to cooperate in qualifying the Offered ADSs for offering and sale under the securities or blue sky laws of such states or other jurisdictions as you may designate and to maintain such qualifications in effect so long as you may request for the distribution of the Offered ADSs; provided, however, that the Company shall not be required to qualify as a foreign corporation or to consent to the service of process under the laws of any such jurisdiction (except service of process with respect to the offering and sale of the Offered ADSs); and to promptly advise you of the receipt by the Company of any notification with respect to the suspension of the qualification of the Offered ADSs for offer or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(b) to make available to the Underwriters in New York City, as soon as practicable after this Agreement becomes effective, and thereafter from time to time to furnish to the Underwriters, as many copies of the Prospectus (or of the Prospectus as amended or supplemented if the Company shall have made any amendments or supplements thereto after the effective date of the Registration Statement) as the Underwriters may request for the purposes contemplated by the Act; in case any Underwriter is required to deliver (whether physically or through compliance with Rule 172 under the Act or any similar rule), in connection with the sale of the Offered ADSs, a prospectus after the nine-month period referred to in Section 10(a)(3) of the Act, the Company will prepare, at its expense, promptly upon request such amendment or amendments to the Registration Statement and the Prospectus as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act;

(c) if, at the time this Agreement is executed and delivered, it is necessary or appropriate for a post-effective amendment to the Registration Statement, or a Registration Statement under Rule 462(b) under the Act, to be filed with the Commission and become effective before the Offered ADSs may be sold, the Company will use its best efforts to cause such post-effective amendment or such Registration Statement to be filed and become effective, and will pay any applicable fees in accordance with the Act, as soon as possible; and the Company will advise you promptly and, if requested by you, will confirm such advice in writing, (i) when such post-effective amendment or such Registration Statement has become effective, and (ii) if Rule 430A under the Act is used, when the Prospectus is filed with the Commission pursuant to Rule 424(b) under the Act (which the Company agrees to file in a timely manner in accordance with such Rules);

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(d) if, at any time during the period when a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Offered ADSs, the Registration Statement shall cease to comply with the requirements of the Act with respect to eligibility for the use of the form on which the Registration Statement was filed with the Commission, to (i) promptly notify you, (ii) promptly file with the Commission a new registration statement under the Act, relating to the Offered ADSs, or a post-effective amendment to the Registration Statement, which new registration statement or post-effective amendment shall comply with the requirements of the Act and shall be in a form satisfactory to you, (iii) use its best efforts to cause such new registration statement or post-effective amendment to become effective under the Act as soon as practicable, (iv) promptly notify you of such effectiveness and (v) take all other action necessary or appropriate to permit the public offering and sale of the Offered ADSs to continue as contemplated in the Prospectus; all references herein to the Registration Statement shall be deemed to include each such new registration statement or post-effective amendment, if any;

(e) to advise you promptly, confirming such advice in writing, of any request by the Commission for amendments or supplements to the Registration Statement, the F-6 Registration Statement, the Exchange Act Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or for additional information with respect thereto, or of notice of institution of proceedings for, or the entry of a stop order, suspending the effectiveness of the Registration Statement or the F-6 Registration Statement and, if the Commission should enter a stop order suspending the effectiveness of the Registration Statement or the F-6 Registration Statement, to use its best efforts to obtain the lifting or removal of such order as soon as possible; to advise you promptly of any proposal to amend or supplement the Registration Statement, the F-6 Registration Statement, the Exchange Act Registration Statement, any Preliminary Prospectus or the Prospectus, and to provide you and Underwriters’ counsel copies of any such documents for review and comment a reasonable amount of time prior to any proposed filing and to file no such amendment or supplement to which you shall object in writing;

(f) subject to Section 5(e) hereof, to file promptly all reports and documents and any preliminary or definitive proxy or information statement required to be filed by the Company with the Commission in order to comply with the Exchange Act for so long as a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of the Offered ADSs; and to provide you, for your review and comment, with a copy of such reports and statements and other documents to be filed by the Company pursuant to Section 13, 14 or 15(d) of the Exchange Act during such period a reasonable amount of time prior to any proposed filing, and to file no such report, statement or document to which you shall have objected in writing; and to promptly notify you of such filing;

(g) to advise the Underwriters promptly of the happening of any event within the period during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of the Offered ADSs, which event could require the making of any change in the Prospectus then being used so that the Prospectus would not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading, and to advise the Underwriters promptly if, during such period, it shall become necessary to amend or supplement the Prospectus to cause the Prospectus to comply with the requirements of the Act, and, in each case, during such time, subject to Section 5(e) hereof, to prepare and furnish, at the Company’s expense, to the Underwriters promptly such amendments or supplements to such Prospectus as may be necessary to reflect any such change or to effect such compliance;

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(h) to make generally available to its security holders, and to deliver to you, an earnings statement of the Company (which will satisfy the provisions of Section 11(a) of the Act) covering a period of twelve months beginning after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act) as soon as is reasonably practicable after the termination of such twelve-month period but in any case not later than [to come];

(i) to furnish to you five copies of each of the Registration Statement and the F-6 Registration Statement, as initially filed with the Commission, and of all amendments thereto (including all exhibits thereto) and sufficient copies of the foregoing (other than exhibits) for distribution of a copy to each of the other Underwriters;

(j) to furnish to you as early as practicable prior to the time of purchase and any additional time of purchase, as the case may be, but not later than two business days prior thereto, a copy of the latest available unaudited interim and monthly consolidated financial statements, if any, of the Company and the Subsidiaries;

(k) to apply the net proceeds to the Company from the sale of the Offered ADSs in the manner set forth under the caption “Use of proceeds” in the Prospectus and to file such reports with the Commission with respect to the sale of the Offered ADSs and the application of the proceeds therefrom as may be required by Rule 463 under the Act; the Company will not use, and will cause the Subsidiaries not to use, the proceeds from the sale of any Ordinary Shares or ADSs, directly or indirectly, for any purpose or activity that would cause the Underwriters or any purchaser of the Ordinary Shares or ADSs, by virtue of their purchasing or holding any Ordinary Shares or ADSs, to be in violation of the Trading With the Enemy Act, as amended, the International Emergency Economic Powers Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, or in connection with business, operations or contracts with the governments or with any person or entity of the Balkans, Burma (Myanmar), Cuba, Iraq, Iran, Libya, Liberia, North Korea, Sudan, Zimbabwe or any person or entity that is subject to sanctions under any program administered by OFAC;

(l) to comply with Rule 433(d) under the Act (without reliance on Rule 164(b) under the Act) and with Rule 433(g) under the Act;

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(m) beginning on the date hereof and ending on, and including, the date that is 180 days after the date of the Prospectus (the “Lock-Up Period”), without the prior written consent of UBS, not to (i) issue, sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, with respect to, any Ordinary Shares or ADSs, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, (ii) file or cause to become effective a registration statement under the Act relating to the offer and sale of any Ordinary Shares or ADSs or any other securities of the Company that are substantially similar to Ordinary Shares or ADSs, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Ordinary Shares or ADSs or any other securities of the Company that are substantially similar to Shares or ADSs, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, whether any such transaction is to be settled by delivery of Shares or ADSs or such other securities, in cash or otherwise or (iv) publicly announce an intention to effect any transaction specified in clause (i), (ii) or (iii), except, in each case, for (A) the registration of the offer and sale of the Offered ADSs as contemplated by this Agreement, (B) issuances of Ordinary Shares upon the exercise of options or warrants disclosed as outstanding in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, and (C) the issuance of employee stock options not exercisable during the Lock-Up Period pursuant to stock option plans described in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus; provided, however, that if (a) during the period that begins on the date that is fifteen (15) calendar days plus three (3) business days before the last day of the Lock-Up Period and ends on the last day of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (b) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the sixteen (16) day period beginning on the last day of the Lock-Up Period, then the restrictions imposed by this Section 5(m) shall continue to apply until the expiration of the date that is fifteen (15) calendar days plus three (3) business days after the date on which the issuance of the earnings release or the material news or material event occurs;

(n) prior to the time of purchase or any additional time of purchase, as the case may be, to issue no press release or other communication directly or indirectly and hold no press conferences with respect to the Company or any Subsidiary, the financial condition, results of operations, business, properties, assets, or liabilities of the Company or any Subsidiary, or the offering of the Offered ADSs, without your prior consent;

(o) not, at any time at or after the execution of this Agreement, to, directly or indirectly, offer or sell any Offered ADSs by means of any “prospectus” (within the meaning of the Act), or use any “prospectus” (within the meaning of the Act) in connection with the offer or sale of the Offered ADSs, in each case other than the Prospectus;

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(p) not to, and to cause the Subsidiaries not to, take, directly or indirectly, any action designed, or which will constitute, or has constituted, or might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company;

(q) (i) not to attempt to avoid any judgment obtained by it or denied to it in a court of competent jurisdiction outside the Cayman Islands; (ii) following the consummation of the offering of the Offered ADSs, to use its best efforts to obtain and maintain all approvals required in the Cayman Islands to pay and remit outside the Cayman Islands all dividends declared by the Company and payable on the Ordinary Shares; and (iii) to use its best efforts to obtain and maintain all approvals required in the Cayman Islands for the Company to acquire sufficient foreign exchange for the payment of dividends and all other relevant purposes;

(r) to comply with the terms of the Deposit Agreement, including without limitation, the covenants set forth in the Deposit Agreement;

(s) to indemnify and hold harmless the Underwriters against any documentary, stamp or similar issue tax, including any interest and penalties, on the creation, issue and sale of the Offered ADSs and on the execution and delivery of this Agreement, except for profit tax; to make all payments to be made by the Company hereunder without withholding or deduction for or on account of any present or future taxes, duties or governmental charges whatsoever unless the Company is compelled by law to deduct or withhold such taxes, duties or charges, in which event, to pay such additional amounts as may be necessary in order that the net amounts received after such withholding or deduction shall equal the amounts that would have been received if no withholding or deduction had been made;

(t) to use its best efforts to cause the Offered ADSs to be listed for quotation on Nasdaq and to maintain the listing of the Offered ADSs on Nasdaq;

(u) to maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar for the Ordinary Shares; and

(v) to cause each Directed Share Participant who has subscribed for such number of Reserved ADSs with an aggregate purchase price of more than USS$100,000 to execute a Lock-Up Agreement and otherwise to cause the Reserved ADSs to be restricted from sale, transfer, assignment, pledge or hypothecation to such extent as may be required by the NASD and its rules, and to direct the transfer agent to place stop transfer restrictions upon such Reserved ADSs during the Lock-Up Period or any such longer period of time as may be required by the NASD and its rules; and to comply with all applicable securities and other laws, rules and regulations in each jurisdiction in which the Reserved ADSs are offered in connection with the Directed Share Program.

6. Certain Covenants of the Selling Shareholders. Each Selling Shareholder hereby agrees:

(a) not, at any time at or after the execution of this Agreement, to offer or sell any Offered ADSs by means of any “prospectus” (within the meaning of the Act), or use any “prospectus” (within the meaning of the Act) in connection with the offer or sale of the Offered ADSs, in each case other than the Prospectus;

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(b) not to take, directly or indirectly, any action designed, or which will constitute, or has constituted, or might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Offered ADSs;

(c) to indemnify and hold each of the Underwriters harmless against any documentary, stamp or similar issuance or transfer taxes, duties or fees and any transaction levies, commissions or brokerage charges, including any interest and penalties, which are or may be required to be paid in connection with the creation, allotment, issuance, offer and distribution of the Offered ADSs to be sold by such Selling Shareholder to the Underwriters and the execution and delivery of this Agreement;

(d) not to use any of the proceeds received by such Selling Shareholder from the sale of the Offered ADSs to fund any operations in, to finance any investments, projects or activities in, or to make any payments to, any country, or to make any payments to, or finance any activities with, any person, targeted by any of the economic sanctions promulgated by any Executive Order issued by the President of the United States or administered by the OFAC, or in any manner that is not in compliance with applicable laws, rules and regulations of any governmental agency having jurisdiction over such Selling Shareholders including, without limitation, the requirement for PRC residents or citizens to repatriate the net proceeds received by such Selling Shareholders into the PRC under the applicable regulation of the Ministry of Commerce and the State Administration of Foreign Exchange of the PRC;

(e) to advise you promptly, and if requested by you, confirm such advice in writing, so long as a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Offered ADSs, of (i) any material change in the business, properties, financial condition, results of operations or prospects of the Company and the Subsidiaries taken as a whole, (ii) any change in information in the Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus relating to such Selling Shareholder or (iii) any new material information relating to the Company or relating to any matter stated in the Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus, in each case, which comes to the attention of such Selling Shareholder; and

(f) prior to or concurrently with the execution and delivery of this Agreement, to execute and deliver to the Underwriters a Power of Attorney, Custody Agreement and a Lock-Up Agreement.

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7. Covenant to Pay Costs. Each of the Company and each Selling Shareholder agrees to pay all costs, expenses, fees and taxes in connection with (i) the preparation and filing of the Registration Statement, the F-6 Registration Statement, each Preliminary Prospectus, the Prospectus, each Permitted Free Writing Prospectus and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to the Underwriters and to dealers (including costs of mailing and shipment), (ii) the registration, issue, sale and delivery of the Offered ADSs including any stock or transfer taxes and stamp or similar duties payable upon the sale, issuance or delivery of the Offered ADSs to the Underwriters, (iii) the producing, word processing and/or printing of this Agreement, the Deposit Agreement, any Agreement Among Underwriters, any dealer agreements, any Powers of Attorney and Custody Agreements and any closing documents (including compilations thereof) and the reproduction and/or printing and furnishing of copies of each thereof to the Underwriters and (except closing documents) to dealers (including costs of mailing and shipment), (iv) the qualification of the Offered ADSs for offering and sale under state or foreign laws and the determination of their eligibility for investment under state or foreign law (including the legal fees and filing fees and other disbursements of counsel for the Underwriters) and the printing and furnishing of copies of any blue sky surveys or legal investment surveys to the Underwriters and to dealers, (v) any listing of the Offered ADSs on any securities exchange or qualification of the Offered ADSs for quotation on Nasdaq and any registration thereof under the Exchange Act, (vi) any filing for review of the public offering of the Offered ADSs by the NASD[, including the reasonable legal fees and filing fees and other disbursements of counsel to the Underwriters relating to NASD matters], (vii) the fees and disbursements of any transfer agent or registrar for the Offered ADSs and Ordinary Shares underlying the Offered ADSs, (viii) the costs and expenses of the Company, the Selling Shareholders and UBS relating to presentations or meetings undertaken in connection with the marketing of the offering and sale of the Offered ADSs to prospective investors and the Underwriters’ sales forces, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel, lodging and other expenses incurred by the officers of the Company or by the Selling Shareholders and any such consultants, and the cost of any aircraft chartered in connection with the road show, (ix) the costs and expenses of qualifying the Offered ADSs for inclusion in the book-entry settlement system of the DTC, (x) the preparation and filing of the Exchange Act Registration Statement, including any amendments thereto and (xi) the performance of the Company’s and each Selling Shareholder’s other obligations pursuant to the transactions contemplated hereby. The Company hereby agrees with the Underwriters that it will pay any such amounts not so paid by any Selling Shareholder.

8. Reimbursement of Underwriters’ Expenses. If the Offered ADSs are not delivered for any reason other than the termination of this Agreement pursuant to the fifth paragraph of Section 11 hereof or the default by one or more of the Underwriters in its or their respective obligations under this Agreement, the Company and the Selling Shareholders, jointly and severally, shall, in addition to paying the amounts described in Section 7 hereof, reimburse the Underwriters for all of their out-of-pocket accountable expenses, including the fees and disbursements of their counsel.

9. Conditions of Underwriters’ Obligations. The several obligations of the Underwriters hereunder are subject to the accuracy of the respective representations and warranties on the part of the Company and each Selling Shareholder on the date hereof, at the time of purchase and, if applicable, at the additional time of purchase, the performance by the Company and each Selling Shareholder of each of their respective obligations hereunder and to the following additional conditions precedent:

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(a) The Company shall furnish to you at the time of purchase and, if applicable, at the additional time of purchase, an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, U.S. counsel for the Company, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with executed copies for each of the other Underwriters, and in form and substance satisfactory to UBS, in the form set forth in Exhibit B hereto.

(b) The Company shall furnish to you at the time of purchase and, if applicable, at the additional time of purchase, an opinion of China Sinda, special counsel for the Company with respect to patents and proprietary rights, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with executed copies for each of the other Underwriters, and in form and substance satisfactory to UBS, in the form set forth in Exhibit C hereto.

(c) The Company shall furnish to you at the time of purchase and, if applicable, at the additional time of purchase, an opinion of Conyers Dill & Pearman, Cayman Islands and British Virgin Islands counsel for the Company and certain of the Selling Shareholders, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with executed copies for each of the other Underwriters, and in form and substance satisfactory to UBS, in the form set forth in Exhibit D hereto.

(d) The Company shall furnish to you on date of the initial Preliminary Prospectus, at the time of purchase and, if applicable, at the additional time of purchase, an opinion of Jingtian & Gongcheng, Beijing, China, PRC counsel for the Company, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with executed copies for each of the other Underwriters, and in form and substance satisfactory to UBS, in the form set forth in Exhibit E hereto.

(e) The Selling Shareholders shall furnish to you at the time of purchase and, if applicable, at the additional time of purchase, the opinions of Morrison & Foerster LLP and [Samoan counsel], counsels for certain of the Selling Shareholders, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with executed copies for each of the other Underwriters, and in form and substance satisfactory to UBS, in the form set forth in Exhibit F hereto.

(f) The Depositary shall furnish to you at the time of purchase and, if applicable, at the additional time of purchase, an opinion of Ziegler, Ziegler & Associates LLP, counsel for the Depositary, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with executed copies for each of the other Underwriters, and in form and substance satisfactory to UBS, in the form set forth in Exhibit G hereto.

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(g) You shall have received from KPMG LLP letters dated, respectively, the date of this Agreement, the date of the Prospectus, the time of purchase and, if applicable, the additional time of purchase, and addressed to the Underwriters (with executed copies for each of the Underwriters) in the forms satisfactory to UBS, which letters shall cover, without limitation, the various financial disclosures contained in the Registration Statement, the F-6 Registration Statement the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any.

(h) You shall have received at the time of purchase and, if applicable, at the additional time of purchase, the favorable opinion of Dewey Ballantine LLP, U.S. counsel for the Underwriters, dated the time of purchase or the additional time of purchase, as the case may be, in form and substance reasonably satisfactory to UBS.

(i) You shall have received at the time of purchase and, if applicable, at the additional time of purchase, the favorable opinion of Commerce & Finance Law Offices, special PRC counsel for the Underwriters, dated the time of purchase or the additional time of purchase, as the case may be, in form and substance reasonably satisfactory to UBS.

(j) No Prospectus or amendment or supplement to the Registration Statement, the F-6 Registration Statement or the Prospectus shall have been filed to which you shall have objected in writing.

(k) The Registration Statement and the F-6 Registration Statement and the Exchange Act Registration Statement shall have been filed and shall have become effective under the Act or the Exchange Act, as the case may be [not later than              New York City time, on the date of this Agreement] and, if Rule 430A under the Act is used, the Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act at or before 5:30 P.M., New York City time, on the second full business day after the date of this Agreement (or such earlier time as may be required under the Act).

(l) Prior to and at the time of purchase, and, if applicable, the additional time of purchase, (i) no stop order with respect to the effectiveness of the Registration Statement or the F-6 Registration Statement shall have been issued under the Act or proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the Registration Statement, the F-6 Registration Statement and all amendments thereto shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iii) none of the Preliminary Prospectuses or the Prospectus, and no amendment or supplement thereto, shall include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; (iv) no Disclosure Package, and no amendment or supplement thereto, shall include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; and (v) none of the Permitted Free Writing Prospectuses, if any, shall include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

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(m) The Company will, at the time of purchase and, if applicable, at the additional time of purchase, deliver to you a certificate of its Chief Executive Officer and its Chief Financial Officer, dated the time of purchase or the additional time of purchase, as the case may be, in the form attached as Exhibit H hereto.

(n) The Selling Shareholders will, at the time of purchase and, if applicable, at the additional time of purchase, deliver to you a certificate signed by a Representative of the Selling Shareholders, dated the time of purchase or the additional time or purchase, as the case may be, in the form attached as Exhibit I hereto.

(o) You shall have received each of the signed Lock-Up Agreements referred to in Section 3(x) hereof, and each such Lock-Up Agreement shall be in full force and effect at the time of purchase and the additional time of purchase, as the case may be.

(p) The Company and each Selling Shareholder (with respect to statements regarding such Selling Shareholder) shall have furnished to you such other documents and certificates as to the accuracy and completeness of any statement in the Registration Statement, the F-6 Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus as of the time of purchase and, if applicable, the additional time of purchase, as you may reasonably request.

(q) The Offered ADSs shall have been approved for quotation on Nasdaq, subject only to notice of issuance at or prior to the time of purchase or the additional time of purchase, as the case may be.

(r) The NASD shall not have raised any objection with respect to the fairness or reasonableness of the underwriting, or other arrangements of the transactions, contemplated hereby.

(s) Each Selling Shareholder shall have delivered to you a duly executed Power of Attorney and a duly executed Custody Agreement, in each case in form and substance satisfactory to UBS.

(t) There shall not be any litigation, proceedings, investigations, processes for administrative sanctions or other actions initiated or threatened by any federal, state local or foreign authority, in each case with due authority, against or involving any party hereto, in the PRC or elsewhere, that seeks to declare non-compliance, unlawful or illegal, under PRC laws, rules and regulations, the issuance and sales of the Shares and ADSs, the listing and trading of the ADSs on the Nasdaq or the transactions contemplated by this Agreement, the Deposit Agreement, the Custody Agreement and the Power of Attorney.

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(u) There shall not be any adverse legislative or regulatory developments related to the M&A Rules and Related Clarifications which in the sole judgment of the UBS would make it inadvisable to proceed with the public offering or the delivery of the Shares and the ADSs being delivered at such time of purchase on the terms and in the manner contemplated in this Agreement (including any such development that results in either PRC counsel to the Company or PRC counsel to the Underwriters not being able to confirm, at such time of purchase, the respective opinions of such counsel dated January [            ], 2007).

10. Effective Date of Agreement; Termination. This Agreement shall become effective when the parties hereto have executed and delivered this Agreement.

The obligations of the several Underwriters hereunder shall be subject to termination in the absolute discretion of UBS, if (1) since the time of execution of this Agreement or the earlier respective dates as of which information is given in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, there has been any change or any development involving a prospective change in the business, properties, management, financial condition or results of operations of the Company and the Subsidiaries taken as a whole, the effect of which change or development is, in the sole judgment of UBS, so material and adverse as to make it impractical or inadvisable to proceed with the public offering or the delivery of the Offered ADSs on the terms and in the manner contemplated in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, or (2) since the time of execution of this Agreement, there shall have occurred: (A) a suspension or material limitation in trading in securities generally on the NYSE, the American Stock Exchange or Nasdaq; (B) a suspension or material limitation in trading in the Company’s securities on Nasdaq; (C) a general moratorium on commercial banking activities declared by either federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (D) an outbreak or escalation of hostilities or acts of terrorism involving the United States or a declaration by the United States of a national emergency or war; or (E) any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (D) or (E), in the sole judgment of UBS, makes it impractical or inadvisable to proceed with the public offering or the delivery of the Offered ADSs on the terms and in the manner contemplated in the Registration Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if any, or (3) since the time of execution of this Agreement, there shall have occurred any downgrading, or any notice or announcement shall have been given or made of: (A) any intended or potential downgrading or (B) any watch, review or possible change that does not indicate an affirmation or improvement in the rating accorded any securities of or guaranteed by the Company or any Subsidiary by any “nationally recognized statistical rating organization,” as that term is defined in Rule 436(g)(2) under the Act.

If UBS elects to terminate this Agreement as provided in this Section 10, the Company, the Selling Shareholders and each other Underwriter shall be notified promptly in writing.

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If the sale to the Underwriters of the Offered ADSs, as contemplated by this Agreement, is not carried out by the Underwriters for any reason permitted under this Agreement, or if such sale is not carried out because the Company or any Selling Shareholder, as the case may be, shall be unable to comply with any of the terms of this Agreement, the Company and the Selling Shareholders shall not be under any obligation or liability under this Agreement (except to the extent provided in Sections 5(s), 6, 7, 12 and 17 hereof), and the Underwriters shall be under no obligation or liability to the Company or any Selling Shareholder under this Agreement (except to the extent provided in Section 12 hereof) or to one another hereunder.

11. Increase in Underwriters’ Commitments. Subject to Sections 9 and 10 hereof, if any Underwriter shall default in its obligation to take up and pay for the Firm ADSs to be purchased by it hereunder (otherwise than for a failure of a condition set forth in Section 9 hereof or a reason sufficient to justify the termination of this Agreement under the provisions of Section 10 hereof) and if the number of Firm ADSs which all Underwriters so defaulting shall have agreed but failed to take up and pay for does not exceed 10% of the total number of Firm ADSs, the non-defaulting Underwriters (including the Underwriters, if any, substituted in the manner set forth below) shall take up and pay for (in addition to the aggregate number of Firm ADSs they are obligated to purchase pursuant to Section 1 hereof) the number of Firm ADSs agreed to be purchased by all such defaulting Underwriters, as hereinafter provided. Such Offered ADSs shall be taken up and paid for by such non-defaulting Underwriters in such amount or amounts as you may designate with the consent of each Underwriter so designated or, in the event no such designation is made, such Offered ADSs shall be taken up and paid for by all non-defaulting Underwriters pro rata in proportion to the aggregate number of Firm ADSs set forth opposite the names of such non-defaulting Underwriters in Schedule A.

Without relieving any defaulting Underwriter from its obligations hereunder, the Company and each Selling Shareholder agree with the non-defaulting Underwriters that they will not sell any Firm ADSs hereunder unless all of the Firm ADSs are purchased by the Underwriters (or by substituted Underwriters selected by you with the approval of the Company or selected by the Company with your approval).

If a new Underwriter or Underwriters are substituted by the Underwriters or by the Company for a defaulting Underwriter or Underwriters in accordance with the foregoing provision, the Company or you shall have the right to postpone the time of purchase for a period not exceeding five business days in order that any necessary changes in the Registration Statement and the Prospectus and other documents may be effected.

The term “Underwriter” as used in this Agreement shall refer to and include any Underwriter substituted under this Section 11 with like effect as if such substituted Underwriter had originally been named in Schedule A hereto.

If the aggregate number of Firm ADSs which the defaulting Underwriter or Underwriters agreed to purchase exceeds 10% of the total number of Firm ADSs which all Underwriters agreed to purchase hereunder, and if neither the non-defaulting Underwriters nor the Company shall make arrangements within the five business day period stated above for the purchase of all the Firm ADSs which the defaulting Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall terminate without further act or deed and without any liability on the part of the Company or any Selling Shareholder to any Underwriter and without any liability on the part of any non-defaulting Underwriter to the Company or any Selling Shareholder. Nothing in this paragraph, and no action taken hereunder, shall relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

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12. Indemnity and Contribution.

(a) The Company and each Controlling Shareholder, jointly and severally, agree to indemnify, defend and hold harmless each Underwriter, its partners, directors and officers, and any person who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, any such Underwriter or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the F-6 Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Company) or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in, the Registration Statement or arises out of or is based upon any omission or alleged omission to state a material fact in the Registration Statement, the F-6 Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Company) in connection with such information, which material fact was not contained in such information and which material fact was required to be stated in such Registration Statement or was necessary to make such information not misleading or (ii) any untrue statement or alleged untrue statement of a material fact included in any Prospectus (the term Prospectus for the purpose of this Section 12 being deemed to include any Preliminary Prospectus, the Prospectus and any amendments or supplements to the foregoing), in any Permitted Free Writing Prospectus, in any “issuer information” (as defined in Rule 433 under the Act) of the Company or in any Prospectus together with any combination of one or more of the Permitted Free Writing Prospectuses, if any, or arises out of or is based upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except, with respect to such Prospectus or Permitted Free Writing Prospectus, insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in, such Prospectus or Permitted Free Writing Prospectus or arises out of or is based upon any omission or alleged omission to state a material fact in such Prospectus or Permitted Free Writing Prospectus in connection with such information, which material fact was not contained in such information and which material fact was necessary in order to make the statements in such information, in the light of the circumstances under which they were made, not misleading; or (iii) the Directed Share Program, except, with respect to this clause (iii), insofar as such loss, damage, expense, liability or claim is finally judicially determined to have resulted from the gross negligence or willful misconduct of the Underwriters in conducting the Directed Share Program.

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Without limitation of and in addition to its obligations under the other paragraphs of this Section 12, the Company agrees to indemnify, defend and hold harmless UBS-FinSvc and its partners, directors and officers, and any person who controls UBS-FinSvc within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, UBS-FinSvc or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim (1) arises out of or is based upon (a) any of the matters referred to in clauses (i) through (iii) of the first paragraph of this Section 12(a), or (b) any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or on behalf or with the consent of the Company for distribution to Directed Share Participants in connection with the Directed Share Program or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (2) is or was caused by the failure of any Directed Share Participant to pay for and accept delivery of Reserved ADSs that the Directed Share Participant has agreed to purchase; or (3) otherwise arises out of or is based upon the Directed Share Program, provided, however, that the Company shall not be responsible under this clause (3) for any loss, damage, expense, liability or claim that is finally judicially determined to have resulted from the gross negligence or willful misconduct of UBS-FinSvc in conducting the Directed Share Program. Section 12(c) shall apply equally to any Proceeding (as defined below) brought against UBS-FinSvc or any such person in respect of which indemnity may be sought against the Company pursuant to the immediately preceding sentence, except that the Company shall be liable for the expenses of one separate counsel (in addition to any local counsel) for UBS-FinSvc and any such person, separate and in addition to counsel for the persons who may seek indemnification pursuant to the first paragraph of this Section 12(a), in any such Proceeding.

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(b) Each Underwriter severally agrees to indemnify, defend and hold harmless the Company, its directors and officers, each Selling Shareholder and any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, the Company, such Selling Shareholder or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in, the Registration Statement, the F-6 Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Company), or arises out of or is based upon any omission or alleged omission to state a material fact in such Registration Statement in connection with such information, which material fact was not contained in such information and which material fact was required to be stated in such Registration Statement or was necessary to make such information not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in, a Prospectus or a Permitted Free Writing Prospectus, or arises out of or is based upon any omission or alleged omission to state a material fact in such Prospectus or Permitted Free Writing Prospectus in connection with such information, which material fact was not contained in such information and which material fact was necessary in order to make the statements in such information, in the light of the circumstances under which they were made, not misleading.

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(c) If any action, suit or proceeding (each, a “Proceeding”) is brought against a person (an “indemnified party”) in respect of which indemnity may be sought against the Company, a Selling Shareholder or an Underwriter (as applicable, the “indemnifying party”) pursuant to subsection (a) or (b), respectively, of this Section 12, such indemnified party shall promptly notify such indemnifying party in writing of the institution of such Proceeding and such indemnifying party shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses; provided, however, that the omission to so notify such indemnifying party shall not relieve such indemnifying party from any liability which such indemnifying party may have to any indemnified party or otherwise, except to the extent that such indemnifying party has been materially prejudiced (through forfeiture of substantive rights or defenses) by such failure. The indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless the employment of such counsel shall have been authorized in writing by the indemnifying party or, in the case such indemnifying party is a Selling Shareholder, by such Selling Shareholder or by a Representative of the Selling Shareholders in connection with the defense of such Proceeding or the indemnifying party shall not have, within a reasonable period of time in light of the circumstances, employed counsel to defend such Proceeding or such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from, additional to or in conflict with those available to such indemnifying party (in which case such indemnifying party shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties), in any of which events such fees and expenses shall be borne by such indemnifying party and paid as incurred (it being understood, however, that except as provided in the second and third paragraphs of Section 12(a), such indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). The indemnifying party shall not be liable for any settlement of any Proceeding effected without its written consent or, in the case such indemnifying party is a Selling Shareholder, without the written consent of either such Selling Shareholder or a Representative of the Selling Shareholders but, if settled with its written consent or, in the case such indemnifying party is a Selling Shareholder, with the written consent of such Selling Shareholder or of a Representative of the Selling Shareholders, such indemnifying party agrees to indemnify and hold harmless the indemnified party or parties from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party or, where such indemnifying party is a Selling Shareholder, requested such Selling Shareholder or any Representative of the Selling Shareholders to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this Section 12(c), then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party or, where such indemnifying party is a Selling Shareholder, receipt by such Selling Shareholder or by any Representative of the Selling Shareholders of the aforesaid request, (ii) such indemnifying party shall not have fully reimbursed the indemnified party in accordance with such request prior to the date of such settlement and (iii) such indemnified party shall have given the indemnifying party or, where such indemnifying party is a Selling Shareholder, giving such Selling Shareholder or any Representative of the Selling Shareholders at least 30 days’ prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party or, where such indemnified party is a Selling Shareholder, the prior written consent of such Selling Shareholder or of any Representative of the Selling Shareholders, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault or culpability or a failure to act by or on behalf of such indemnified party.

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(d) If the indemnification provided for in this Section 12 is unavailable to an indemnified party under subsections (a) and (b) of this Section 12 or insufficient to hold an indemnified party harmless in respect of any losses, damages, expenses, liabilities or claims referred to therein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other hand from the offering of the Offered ADSs or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Selling Shareholders on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, damages, expenses, liabilities or claims, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other shall be deemed to be in the same respective proportions as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and the Selling Shareholders, and the total underwriting discounts and commissions received by the Underwriters, bear to the aggregate public offering price of the Offered ADSs. The relative fault of the Company and the Selling Shareholders on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by the Company or the Selling Shareholders or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, damages, expenses, liabilities and claims referred to in this subsection shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating, preparing to defend or defending any Proceeding.

(e) The Company, the Selling Shareholders and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 12 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in subsection (d) above. Notwithstanding the provisions of this Section 12, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Offered ADSs underwritten by such Underwriter and distributed to the public were offered to the public exceeds the amount of any damage which such Underwriter has otherwise been required to pay by reason of such untrue statement or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this Section 12 are several in proportion to their respective underwriting commitments and not joint.

(f) The indemnity and contribution agreements contained in this Section 12 and the covenants, warranties and representations of the Company and the Selling Shareholders contained in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of any Underwriter, its partners, directors or officers or any person (including each partner, officer or director of such person) who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of the Company or the Selling Shareholders, their respective directors or officers or any person who controls the Company or any Selling Shareholder within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and shall survive any termination of this Agreement or the issuance and delivery of the Offered ADSs to be sold by the Company pursuant hereto. The Company, the Selling Shareholders and each Underwriter agree promptly to notify each other of the commencement of any Proceeding against it and, in the case of the Company or a Selling Shareholder, against any of their officers or directors in connection with the issuance and sale of the Offered ADSs, or in connection with the Registration Statement, the F-6 Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus. Notwithstanding anything herein to the contrary, in no event shall the liability of the any Controlling Shareholder to provide indemnity pursuant to Section 12(a) exceed an amount equal to the aggregate initial public offering price of the Shares sold by such Controlling Shareholder to the Underwriters pursuant hereto.

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13. Information Furnished by the Underwriters. The statements set forth in paragraphs [to come] under the caption “Underwriting” in the Prospectus, only insofar as such statements relate to the amount of selling concession and reallowance or to over-allotment and stabilization activities that may be undertaken by the Underwriters, constitute the only information furnished by or on behalf of the Underwriters, as such information is referred to in Sections 3 and 12 hereof.

14. Notices. Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing or by telegram or facsimile and, if to the Underwriters, shall be sufficient in all respects if delivered or sent to UBS AG at 52/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong, Attention: Syndicate Department and, if to the Company, shall be sufficient in all respects if delivered or sent to the Company at the offices of the Company at [                    ], Attention: [                    ], and if to any Selling Shareholder, shall be sufficient in all respects if delivered or sent to any Representative of the Selling Shareholders as [                            ] (facsimile: [            ]), Attention: [            ].

15. Governing Law; Construction. This Agreement and any claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement (“Claim”), directly or indirectly, shall be governed by, and construed in accordance with, the laws of the State of New York. The section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement.

16. Submission to Jurisdiction. Except as set forth below, no Claim may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York (collectively, “New York Courts”), which courts shall have jurisdiction over the adjudication of such matters, and the Company and the Selling Shareholders each consent to the jurisdiction of such courts and personal service with respect thereto. The Company and the Selling Shareholders each hereby consent to personal jurisdiction, service and venue, and hereby waives any objection to venue, in any court in which any Claim arising out of or in any way relating to this Agreement is brought by any third party against any Underwriter or any indemnified party. Each Underwriter and the Company (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) and each Selling Shareholder (on its behalf and, in the case such Selling Shareholder is not an individual, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) waive all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement. The Company and the Selling Shareholders each agree that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Company and each Selling Shareholder and may be enforced in any other courts to the jurisdiction of which the Company or any Selling Shareholder is or may be subject, by suit upon such judgment. The Company has appointed, without power of revocation, CT Corporation System (the “Authorized Agent”) at 111 Eighth Avenue, 13th Floor, New York, New York 10011, as its agent to accept and acknowledge on its behalf service of any and all process which may be served in any action, proceeding or counterclaim in any way relating to or arising out of this Agreement.

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17. Judgment Currency. The Company and the Selling Shareholders each hereby covenant and agree that the following provisions shall apply to conversion of currency in respect of this Agreement:

(a) If for the purpose of obtaining judgment in, or enforcing the judgment of, any court in any country other than the United States, it becomes necessary to convert into any other currency (the “judgment currency”) an amount due in United States Dollars, then the conversion shall be made at the rate of exchange prevailing on the Business Day before the day which judgment is given or the order of enforcement is made, as the case may be. The term “rate(s) of exchange” shall mean the rate at which the Underwriters are able or would have been able on the relevant date to purchase, at such money center bank in the City of New York as you designate at such time, United States Dollars with judgment currency above and includes any premiums and costs of exchange payable.

(b) The Company and the Selling Shareholders each hereby agree to indemnify the Underwriters and each other indemnified party related to the Underwriters against any loss incurred by any of them as a result of any judgment or order being given or made for any amount due under this Agreement and such judgment or order being expressed and paid in the judgment currency or as a result of any variation between (i) the rate of exchange at which the United States Dollar amount is converted into the judgment currency for the purpose of such judgment or order and (ii) the spot rate of exchange in the City of New York at which such Underwriter or other indemnified party is, on the date of payment of such judgment or order, able to purchase United States Dollars with the amount of the judgment currency actually paid by the Company or any Selling Shareholder. The foregoing indemnity shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term “spot rate of exchange” shall include any premiums and costs of exchange payable in connection with the purchase of, or conversion into, United States Dollars.

18. Parties at Interest. The Agreement herein set forth has been and is made solely for the benefit of the Underwriters and the Company and the Selling Shareholders and to the extent provided in Sections 12 and 17 hereof the controlling persons, partners, directors and officers referred to in such Sections, and their respective successors, assigns, heirs, personal representatives and executors and administrators. No other person, partnership, association or corporation (including a purchaser, as such purchaser, from any of the Underwriters) shall acquire or have any right under or by virtue of this Agreement.

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19. No Fiduciary Relationship. The Company and the Selling Shareholders each hereby acknowledge that the Underwriters are acting solely as underwriters in connection with the purchase and sale of the Company’s securities. The Company and the Selling Shareholders each further acknowledges that the Underwriters are acting pursuant to a contractual relationship created solely by this Agreement entered into on an arm’s length basis, and in no event do the parties intend that the Underwriters act or be responsible as a fiduciary to the Company or any Selling Shareholder, their respective management, shareholders or creditors or any other person in connection with any activity that the Underwriters may undertake or have undertaken in furtherance of the purchase and sale of the Company’s securities, either before or after the date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar obligations to the Company or any Selling Shareholder, either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions, and the Company and the Selling Shareholders each hereby confirm their understanding and agreement to that effect. The Company, the Selling Shareholders and the Underwriters agree that they are each responsible for making their own independent judgments with respect to any such transactions and that any opinions or views expressed by the Underwriters to the Company or any Selling Shareholder regarding such transactions, including, but not limited to, any opinions or views with respect to the price or market for the Company’s securities, do not constitute advice or recommendations to the Company or any Selling Shareholder. The Company and the Selling Shareholders each hereby waive and release, to the fullest extent permitted by law, any claims that the Company or any Selling Shareholder may have against the Underwriters with respect to any breach or alleged breach of any fiduciary or similar duty to the Company or any Selling Shareholder in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions.

20. Counterparts. This Agreement may be signed by the parties in one or more counterparts which together shall constitute one and the same agreement among the parties.

21. Successors and Assigns. This Agreement shall be binding upon the Underwriters and the Company and the Selling Shareholders and their successors and assigns and any successor or assign of any substantial portion of the Company’s, and Selling Shareholder’s and any of the Underwriters’ respective businesses and/or assets.

[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]

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If the foregoing correctly sets forth the understanding among the Company, the Selling Shareholders and the several Underwriters, please so indicate in the space provided below for that purpose, whereupon this Agreement and your acceptance shall constitute a binding agreement among the Company, the Selling Shareholders and the Underwriters, severally.

Very truly yours,

3SBIO INC.

By:

Name:

Title:

HAPPYVIEW FINANCE LIMITED
PRECIOUS WINWIN LIMITED
LAN’S HOLDINGS LIMITED
STARRY INVESTMENTS LIMITED
By:	[REPRESENTATIVE], Attorney-in-Fact
By:
Name:
Title:

Accepted and agreed to as of the date first above written, on behalf of themselves and the other several Underwriters named in Schedule A

UBS AG
CIBC WORLD MARKETS CORP.
PACIFIC GROWTH EQUITIES, LLC
By:	UBS AG
By:
Name:
Title:
By:
Name:
Title:

SCHEDULE A

Underwriter	Number of Firm ADSs
UBS AG	[	]
CIBC World Markets Corp.	[	]
Pacific Growth Equities, LLC	[	]
Total	[	]

SCHEDULE B

[            ]

SCHEDULE C

	Number of Firm ADSs	Number of Additional ADSs
Selling Shareholder
Achieve Well International Limited	1,145,310	1,769,367
Happyview Finance Limited	1,000,000	—
Precious Winwin Limited	—	3,000,000
Lan’s Holdings Limited	500,000	—
Starry Investments Limited	940,000	—
Witty Mind International Limited	—	600,000
Total	3,585,310	5,369,367

EXHIBIT A

Lock-Up Agreement

                         , 2006

UBS AG

Together with any other Underwriters

named in Schedule A to the Underwriting Agreement

referred to herein

c/o UBS AG

52/F, Two International Finance Centre

8 Finance Street

Central, Hong Kong

Ladies and Gentlemen:

This Lock-Up Agreement is being delivered to you in connection with an Underwriting Agreement (the “Underwriting Agreement”) proposed to be entered into by 3SBio Inc., a company incorporated under the laws of the Cayman Islands (the “Company”), and the underwriters named in Schedule A to the Underwriting Agreement, with respect to the public offering (the “Offering”) of American Depositary Shares (the “ADSs”), each representing ordinary shares, par value U.S. $0.0001 per share, of the Company (the “Ordinary Shares”).

In order to induce you to enter into the Underwriting Agreement, the undersigned agrees that, for a period (the “Lock-Up Period”) beginning on the date hereof and ending on, and including, the date that is 180 days after the date of the final prospectus relating to the Offering, the undersigned will not, without the prior written consent of UBS AG, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or file (or participate in the filing of) a registration statement with the U.S. Securities and Exchange Commission (the “Commission”) in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder (the “Exchange Act”) with respect to, any ADSs or Ordinary Shares or any other securities of the Company that are substantially similar to ADSs or Ordinary Shares, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of ADSs or Ordinary Shares or any other securities of the Company that are substantially similar to ADSs or Ordinary Shares, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, whether any such transaction is to be settled by delivery of ADSs or Ordinary Shares or such other securities, in cash or otherwise or (iii) publicly announce an intention to effect any transaction specified in clause (i) or (ii). The foregoing sentence shall not apply to (a) the registration of the offer and sale of ADSs or Ordinary Shares as contemplated by the Underwriting Agreement and the sale of ADSs or Ordinary Shares to the Underwriters (as defined in the Underwriting Agreement) in the Offering, (b) bona fide gifts, provided the recipient thereof agrees in writing with the Underwriters to be bound by the terms of this Lock-Up Agreement or (c) dispositions to any trust for the direct or indirect benefit of the undersigned and/or the immediate family of the undersigned, provided that such trust agrees in writing with the Underwriters to be bound by the terms of this Lock-Up Agreement. For purposes of this paragraph, “immediate family” shall mean the undersigned and the spouse, any lineal descendent, father, mother, brother or sister of the undersigned.

A-1

In addition, the undersigned hereby waives any rights the undersigned may have to require registration of ADSs or Ordinary Shares in connection with the filing of a registration statement relating to the Offering. The undersigned further agrees that, for the Lock-Up Period, the undersigned will not, without the prior written consent of UBS AG, make any demand for, or exercise any right with respect to, the registration of ADSs or Ordinary Shares or any securities convertible into or exercisable or exchangeable for ADSs or Ordinary Shares, or warrants or other rights to purchase ADSs or Ordinary Shares or any such securities. Furthermore, the undersigned hereby waives any and all preemptive rights, participation rights, resale rights, rights of first refusal and similar rights that the undersigned may have in connection with the Offering or with any issuance or sale by the Company of any equity or other securities before the Offering, except for any such rights as have been heretofore duly exercised.

Notwithstanding the above, if (a) during the period that begins on the date that is fifteen (15) calendar days plus three (3) business days before the last day of the Lock-Up Period and ends on the last day of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (b) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the sixteen (16) day period beginning on the last day of the Lock-Up Period, then the restrictions imposed by this Lock-Up Agreement shall continue to apply until the expiration of the date that is fifteen (15) calendar days plus three (3) business days after the date on which the issuance of the earnings release or the material news or material event occurs.

The undersigned hereby confirms that the undersigned has not, directly or indirectly, taken, and hereby covenants that the undersigned will not, directly or indirectly, take, any action designed, or which has constituted or will constitute or might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the ADSs or Ordinary Shares to be sold in the Offering.

If (i) the Company notifies you in writing that it does not intend to proceed with the Offering, (ii) the registration statement filed with the Commission with respect to the Offering is withdrawn or (iii) for any reason the Underwriting Agreement shall be terminated prior to the “time of purchase” (as defined in the Underwriting Agreement), this Lock-Up Agreement shall be terminated and the undersigned shall be released from its obligations hereunder.

Yours very truly,

Name:

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EXHIBIT B

OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, HONG KONG,

[date]

UBS AG

CIBC World Markets Corp.

Pacific Growth Equities, LLC

    as Managing Underwriters

c/o UBS AG

52/F, Two International Finance Centre

8 Finance Street, Central

Hong Kong

Ladies and Gentlemen:

[NB: please provide entry/exit language to be inserted into this exhibit]

1. The Underwriting Agreement has been duly executed and delivered by the Company.

2. The Deposit Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Depositary, constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

3. Upon due issuance by the Depositary of ADRs evidencing the Offered ADSs against the deposit of the underlying Ordinary Shares in respect thereof in accordance with the provisions of the Deposit Agreement, such Offered ADSs will be duly and validly issued and the persons in whose names such ADRs are registered will be entitled to the rights specified therein and in the Deposit Agreement.

4. Upon the sale and delivery to the Underwriters of the Offered ADSs, and payment therefor, pursuant to this Agreement, the Underwriters will acquire good, marketable and valid title to such Offered ADSs, free and clear of all pledges, liens, security interests, charges, claims or encumbrances of any kind

5. The Registration Statement, the Preliminary Prospectus and the Prospectus (except as to the financial statements and schedules, and other financial data derived therefrom, contained in the Registration Statement, the Preliminary Prospectus and the Prospectus, as to which we express no opinion) comply as to form in all material respects with the requirements of the Act (including, in the case of the Prospectus, Section 10(a) of the Act).

6. The statements set forth in the Preliminary Prospectus and the Prospectus under the captions [“Risk factors—Risks related to this offering—We may be classified as a passive foreign investment company, which could result in adverse United States federal income tax consequences],” “[Business—[                     ]],” “[Management—[                     ]],” “[Related party transactions],” “[Shares eligible for future sale,]” “[Description of American Depositary Shares,]” “[Taxation,]” “[Enforceability of civil liabilities]” and “[Underwriting,”] in each case insofar as such statements constitute summaries of documents or legal proceedings or refer to matters of law or legal conclusions, are accurate and complete in all material respects and present fairly the information purported to be shown.

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7. To our knowledge, the Company is not an “ineligible issuer” (as defined in Rule 405 under the Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the Act with respect to the offering of the Offered ADSs contemplated by the Registration Statement.

8. The Company is a “foreign private issuer” within the meaning of Rule 405 under the Act.

9. The Registration Statement and the F-6 Registration Statement have become effective under the Act and, to our knowledge, no stop order proceedings with respect thereto are pending or threatened under the Act, and any required filing of the Prospectus and any supplement thereto pursuant to Rule 424 under the Act has been made in the manner and within the time period required by such Rule 424 and in the manner and within the time period required by Rule 430A under the Act.

10. No approval, authorization, consent or order of or filing with any federal, state, local or foreign or regulatory commission, board, body, authority or agency, or of or with any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, Nasdaq), or approval of the shareholders of the Company, is required in connection with the issuance and sale of the Offered ADSs by the Company pursuant to the Underwriting Agreement or the issuance and deposit with the Depositary of the Ordinary Shares underlying the Offered ADSs or the consummation by the Company of the transactions contemplated by the Underwriting Agreement, other than (i) registration under the Act of the Offered ADSs and the Ordinary Shares underlying the Offered ADSs, which has been effected, (ii) any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the Offered ADSs and the Ordinary Shares underlying the Offered ADSs are being offered by the Underwriters or (iii) under the Conduct Rules of the NASD.

11. The execution, delivery and performance of the Underwriting Agreement and the Deposit Agreement, the issuance and deposit with the Depositary of the Ordinary Shares underlying the Offered ADSs, the issuance and sale of the Offered ADSs by the Company pursuant to the Underwriting Agreement, the compliance by the Company with all of the provisions of the Underwriting Agreement and the Deposit Agreement and the consummation of the transactions contemplated by the Underwriting Agreement and the Deposit Agreement will not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (or result in the creation or imposition of a lien, charge or encumbrance on any property or assets of the Company or any Subsidiary pursuant to) (A) the articles of association, business license or other constituent documents of the Company or any of the Subsidiaries, or (B) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (C) any federal, state, local or foreign law, rule or regulation, or (D) any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, the rules, regulations and listing standards of Nasdaq), or (E) any decree, judgment or order applicable to the Company or any of the Subsidiaries or any of their respective properties.

B-2

12. To our knowledge, there are no contracts, licenses, agreements, leases or documents of a character which are required to be described in the Registration Statement, the Preliminary Prospectus or the Prospectus or to be filed as an exhibit to the Registration Statement which have not been so described or filed as required.

13. To our knowledge, (i) the Company is not a party to any legal or governmental action or proceeding that challenges the validity or enforceability, or seeks to enjoin the performance, of the Underwriting Agreement or the Deposit Agreement; and (ii) there are no actions, suits, claims, investigations or proceedings pending, threatened or contemplated to which the Company or any of the Subsidiaries or any of their respective directors or officers is or would be a party or to which any of their respective properties is or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency which are required to be described in the Registration Statement, the Preliminary Prospectus or the Prospectus but are not so described as required.

14. Neither the Company nor any Subsidiary is and, after giving effect to the offering and sale of the Offered ADSs and the application of the proceeds thereof as described in the Prospectus, neither will be an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act.

15. Neither the Company nor any Subsidiary is and, after giving effect to the offering and sale of the Offered ADSs and the application of the proceeds thereof as described in the Prospectus, neither will be a “passive foreign investment company” or a “controlled foreign corporation,” as such terms are defined in the Internal Revenue Code of 1986, as amended.

16. No person has the right, pursuant to the terms of any contract, agreement or other instrument described in or filed as an exhibit to the Registration Statement, or otherwise known to us, to cause the Company to register under the Act any Ordinary Shares or shares of any other capital stock or other equity interest in the Company or to include any such shares or interest in the Registration Statement or the offering contemplated thereby.

B-3

17. The Company has the power to submit and, pursuant to the Underwriting Agreement and the Deposit Agreement, has legally, validly, effectively and irrevocably submitted, to the personal jurisdiction of each New York Court; the Company has validly and irrevocably waived any objection to the venue of a proceeding in any New York Court; the Company has validly and irrevocably waived all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to the Underwriting Agreement or the Deposit Agreement; and the Company has the power to designate, appoint and authorize and, pursuant to the Underwriting Agreement and the Deposit Agreement, has legally, validly, effectively and irrevocably designated, appointed and authorized, the Authorized Agent for service of process in any action arising out of or relating to the Underwriting Agreement, the Deposit Agreement or the Offered ADSs in any New York Court, and service of process effected on such Authorized Agent will be effective to confer valid personal jurisdiction over the Company as provided in the Underwriting Agreement and the Deposit Agreement.

18. We have participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants of the Company, representatives of the Selling Shareholders and representatives of the Underwriters at which the contents of the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses were discussed and, although we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus (except as and to the extent stated in subparagraph 6 above), on the basis of the foregoing, nothing has come to our attention that causes us to believe that (i) the Registration Statement, at the Effective Time, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Disclosure Package (as defined below), as of the Applicable Time (as defined below), when taken together with the Pricing Information (as defined below), included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (iii) the Prospectus, as of its date, or as of the date hereof, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that we express no opinion in this paragraph 18 with respect to the financial statements and schedules, and other financial data derived therefrom, included in the Registration Statement, the Disclosure Package or the Prospectus). As used herein, (A) “Disclosure Package” means the Preliminary Prospectus together with the Permitted Free Writing Prospectuses attached hereto as Annex A, (B) “Applicable Time” means [            ][“A.M.” / “P.M.”], New York City time, on [            ], and (C) “Pricing Information” means (i) the number of Shares offered for sale pursuant to the Prospectus and (ii) the public offering price per Share, in the case of each of clause (C)(i) and clause (C)(ii), as reflected on the cover page of the Prospectus.

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

B-4

EXHIBIT C

OPINION OF CHINA SINDA

[date]

UBS AG

CIBC World Markets Corp.

Pacific Growth Equities, LLC

    as Managing Underwriters

c/o UBS AG

52/F, Two International Finance Centre

8 Finance Street, Central

Hong Kong

Ladies and Gentlemen:

[NB: please provide entry/exit language to be inserted into this exhibit]

1. The statements included in the Registration Statement, the preliminary prospectus of the Company, dated [date], relating to the Offered ADSs (“the “Preliminary Prospectus”) or the Prospectus relating to PRC Intellectual Property (as defined below) (collectively, the “Intellectual Property Statements”), insofar as such Intellectual Property Statements constitute summaries of documents or legal proceedings or refer to matters of law or legal conclusions, are accurate and complete in all material respects and present fairly the information purported to be shown; nothing has come to our attention that causes us to believe that (i) the Intellectual Property Statements included in the Registration Statement, at the Effective Time, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Intellectual Property Statements included in the Preliminary Prospectus, as of [            ] [“A.M.” / “P.M.”], New York City time, on [            ], included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (iii) the Intellectual Property Statements included in the Prospectus, as of the date of the Prospectus or the date hereof, included or include an untrue statement of a material fact or omitted or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

2. To the best of our knowledge after due inquiry, no PRC legal or government proceedings, actions or claims, including administrative proceedings, have been asserted or are pending or threatened against the Company or any of the Subsidiaries (i) based upon or challenging or seeking to deny or restrict the use by the Company or any of the Subsidiaries of any of the patents and patent applications of the Company and the Subsidiaries (collectively, the “Patents”), (ii) alleging that any services provided by, processes used by, or products manufactured or sold by the Company or any of the Subsidiaries infringe, misappropriate or violate any intellectual property right of any third party, (iii) alleging that an assignment to the Company or any of the Subsidiaries of any Patent right is invalid, or (iv) or that otherwise relate to the patent rights, inventions, trade secrets, trademarks, service marks or other proprietary information or materials of the Company or the Subsidiaries in the PRC (the “PRC Intellectual Property”).

C-1

3. To the best of our knowledge after due inquiry, neither the Company nor any of the Subsidiaries is infringing, misappropriating or violating any intellectual property right of any third party; and no Patent is subject to any outstanding decree, order, injunction, judgment or ruling in the PRC restricting the use of such Patent that would impair the validity or enforceability of such Patent.

4. To the best of our knowledge after due inquiry, there is no existing PRC patent that would invalidate (a) the claims of any issued Patent or (b) any pending Patent if the claims of such pending Patent were issued in substantially the same form as currently written; and we are not aware of any material fact with respect to the patent applications of the Company and the Subsidiaries presently on file that (x) would preclude the issuance of Patents with respect to such applications, (y) would lead us to conclude that such Patents, when issued, would not be valid and enforceable in accordance with applicable regulations or (z) would result in a third party having any rights in any patents issuing from such patent applications.

5. To the best of our knowledge after due inquiry, no person or entity is engaging in any activity that infringes, misappropriates or violates the PRC Intellectual Property.

6. We have no knowledge of any facts which would preclude the Company or the Subsidiaries from having valid license rights or clear title to the PRC patents referenced in the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses, if any. We have no knowledge that the Company lacks or will be unable to obtain any rights or licenses to use all PRC Intellectual Property as described in the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses, if any. We are not aware of any facts which form a basis for a finding of unenforceability or invalidity of any of the PRC Intellectual Property.

7. To the best of our knowledge after due inquiry, no security interests or other liens have been created with respect to any of the Patents.

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

C-2

EXHIBIT D

OPINION OF CONYERS DILL & PEARMAN

[date]

UBS AG

CIBC World Markets Corp.

Pacific Growth Equities, LLC

    as Managing Underwriters

c/o UBS AG

52/F, Two International Finance Centre

8 Finance Street

Central, Hong Kong

Ladies and Gentlemen:

[NB: please provide entry/exit language to be inserted into this exhibit]

1. The Company has been duly incorporated and is validly existing as an exempt corporation in good standing under the laws of Cayman Islands, with full corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses.

2. Collected Mind has been duly incorporated and is validly existing as a corporation in good standing under the laws of the British Virgin Islands (“BVI”), with full corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses.

3. The Underwriting Agreement and the Deposit Agreement have been duly executed and delivered for and on behalf of the Company and constitute legal, valid and binding obligations of the Company enforceable in the Cayman Islands in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

4. The Ordinary Shares have been duly authorized and validly issued and are fully paid and non-assessable.

5. The Company has an authorized and outstanding capitalization as set forth in the Registration Statement, the Preliminary Prospectus and the Prospectus (and any similar sections or information, if any, contained in any Permitted Free Writing Prospectus); all of the issued and outstanding shares of capital stock of the Company and Collected Mind have been duly authorized and validly issued, are fully paid and non-assessable and are free of statutory preemptive rights and, to our knowledge, contractual preemptive rights, resale rights, rights of first refusal and similar rights; the Ordinary Shares are free of statutory preemptive rights and, to our knowledge, contractual preemptive rights, resale rights, rights of first refusal and similar rights; the certificates for the Ordinary Shares are in due and proper form.

D-1

6. The capital stock of the Company, including the Ordinary Shares, conforms in all material respects to the description thereof contained in the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses.

7. No approval, authorization, consent or order under any laws of the Cayman Islands or approval, authorization, consent of or filing with any Cayman Islands governmental or regulatory commission, board, body, authority or agency, or approval of the shareholders of the Company or Collected Mind pursuant to Cayman Islands or BVI law, is required in connection with the issuance and sale of the Ordinary Shares or with the consummation by the Company of the transactions contemplated by the Underwriting Agreement and the Deposit Agreement.

8. The execution, delivery and performance of the Underwriting Agreement and the Deposit Agreement, the issuance and deposit with the Depositary of the Ordinary Shares underlying the Offered ADSs, the issuance and sale of the Offered ADSs by the Company pursuant to the Underwriting Agreement, the compliance by the Company with all of the provisions of the Underwriting Agreement and the Deposit Agreement and the consummation of the transactions contemplated by the Underwriting Agreement and the Deposit Agreement will not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (or result in the creation or imposition of a lien, charge or encumbrance on any property or assets of the Company or any Subsidiary pursuant to) (A) the articles of association, business license or other constituent documents of the Company or any of the Subsidiaries, or (B) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (C) any federal, state, local or foreign law, rule or regulation, or (D) any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, the rules, regulations and listing standards of Nasdaq), or (E) any decree, judgment or order applicable to the Company or any of the Subsidiaries or any of their respective properties.

9. To our knowledge, (i) neither the Company nor Collected Mind is a party to any legal or governmental action or proceeding that challenges the validity or enforceability, or seeks to enjoin the performance, of the Underwriting Agreement; and (ii) there are no actions, suits, claims, investigations or proceedings pending, threatened or contemplated to which the Company, Collected Mind or any of their respective directors or officers is or would be a party or to which any of their respective properties is or would be subject at law or in equity, before or by any federal, state, local or foreign or regulatory commission, board, body, authority or agency which are required to be described in the Registration Statement, the Preliminary Prospectus or the Prospectus but are not so described as required.

D-2

10. The statements in the Registration Statement, the Preliminary Prospectus and the Prospectus under the headings [“Risk factors—                    ,” “Enforceability of civil liabilities,” “Management’s discussion and analysis of financial condition and results of operations—Taxes and incentives,” “Management—Duties of directors,” “Description of share capital,” “Taxation—Cayman Islands Taxation” and [            ], and in the Registration Statement under the heading “Part II—Item 6. Indemnification of directors and officers,” insofar as such statements constitute summaries of documents or legal proceedings or refer to matters of law or legal conclusions, are accurate and complete in all material respects and present fairly the information purported to be shown.

11. No person has the right, pursuant to the terms of any contract, agreement or other instrument described in or filed as an exhibit to the Registration Statement or otherwise known to us, to cause the Company or Collected Mind to register under the Act any Ordinary Shares or shares of any other capital stock or other equity interest in the Company or Collected Mind or to include any such shares or interest in the Registration Statement or the offering contemplated thereby.

12. There are no reporting obligations under the laws of The Cayman Islands on holders of the Ordinary Shares who are not resident or domiciled in the Cayman Islands.

13. To ensure the legality, validity, enforceability or admissibility into evidence of each of the Underwriting Agreement, the Deposit Agreement and any other document required to be furnished thereunder in the Cayman Islands, it is not necessary that the Underwriting Agreement, the Deposit Agreement or any such other document be filed or recorded with any court or other authority in the Cayman Islands, provided such documents are executed outside of the Cayman Islands.

14. As a matter of the laws of the Cayman Islands, no holder of the Ordinary Shares will be subject to any personal liability, or be subject to a requirement to be licensed or otherwise qualified to do business or be deemed resident or domiciled in the Cayman Islands by virtue only of holding such Ordinary Shares. There are no limitations under the laws of the Cayman Islands on the rights of holders of the Ordinary Shares to hold, vote or transfer their Ordinary Shares nor are there any statutory pre-emptive rights or transfer restrictions applicable to the Ordinary Shares under the laws of the Cayman Islands.

15. The execution and delivery of the Underwriting Agreement and the Deposit Agreement, and the performance or enforcement thereof in accordance with their terms, will not subject any of the Underwriters to any requirement to be licensed or otherwise qualified to do business in the Cayman Islands, nor will any Underwriter be deemed to be resident, domiciled, carrying on business through an establishment or place in the Cayman Islands or in breach of any laws of the Cayman Islands by reason of such execution, delivery, performance or enforcement.

D-3

16. Except as disclosed in the Registration Statement, the Preliminary Prospectus and the Prospectus, neither the Company nor any Subsidiary is, to the best of our knowledge after due inquiry, in breach or violation of or in default under (nor has any event occurred which, with notice, lapse of time or both, would result in any breach or violation of or constitute a default under) (i) the articles of association, business license or other constituent documents of the Company, or (ii) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument known by us and to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (iii) the laws of the Cayman Islands, or (iv) any decree, judgment or order applicable to the Company or any of the Subsidiaries or any of their respective properties, which decree, judgment or order is known by us.

17. No approvals are currently required from any governmental department, agency or other authority in the Cayman Islands or BVI in order for the Company or Collected Mind to pay dividends declared by the Company or Collected Mind to the holders of their capital stock, including the Depositary.

18. Except as disclosed in the Registration Statement, the Preliminary Prospectus and the Prospectus, all dividends and other distributions declared and payable on the Company’s equity interests in the Subsidiaries may, under the laws of the Cayman Islands, be payable in a foreign currency and may be freely transferred out of the Cayman Islands, and no such dividends will be subject to withholding, deduction or other taxes under the laws of the Cayman Islands, and such dividends may be paid without the necessity of obtaining any government authorization, consent or order in the Cayman Islands.

19. Except as disclosed in the Registration Statement, the Preliminary Prospectus and the Prospectus, all dividends and other distributions declared and payable on the Company’s equity interests in the Subsidiaries may, under the laws of the Cayman Islands and BVI, be payable in a foreign currency and may be freely transferred out of the Cayman Islands and BVI, and no such dividends will be subject to withholding, deduction or other taxes under the laws of the Cayman Islands or BVI, and such dividends may be paid without the necessity of obtaining any government authorization, consent or order in the Cayman Islands or BVI.

20. The submission of the Company to the exclusive jurisdiction of the New York Courts and the waiver by the Company of any objection to the venue of a proceeding in a New York Court, in each case as provided in the Underwriting Agreement and the Deposit Agreement, and the agreement of the Company that the Underwriting Agreement and the Deposit Agreement be construed in accordance with and governed by the laws of the State of New York, will be recognized by courts of the Cayman Islands and BVI; service of process effected in the manner set forth in the Underwriting Agreement and the Deposit Agreement will be effective to confer jurisdiction over the Company, the Subsidiaries and their respective assets and property in the Cayman Islands and BVI; and, except as disclosed in the Registration Statement, the Preliminary Prospectus and the Prospectus, any judgment obtained in a New York Court arising out of or in relation to the obligations of the Company under the Underwriting Agreement or the Deposit Agreement will be recognized by courts in the Cayman Islands and BVI without re-examination of the merits of the claim.

D-4

21. Neither the Company nor any Subsidiary nor any of their properties, assets or revenues has any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) under the laws of the Cayman Islands or BVI.

22. No stamp or other issuance or transfer taxes or duties, and no capital gains, income, withholding or other taxes, are payable by or on behalf of the Company, the Underwriters or the subsequent holders of the Ordinary Shares to any governmental body or political subdivision or taxing authority of the Cayman Islands or BVI in connection with (i) the issuance, sale and delivery of the Ordinary Shares to the Underwriters, (ii) the deposit with the Depositary of the Ordinary Shares underlying the Offered ADSs, (iii) the offer, sale and delivery of the Offered ADSs by the Underwriters in the manner set forth in the Prospectus or (iv) the execution, delivery and performance of the Underwriting Agreement by the Company.

23. We have participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants of the Company, representatives of the Selling Shareholders and representatives of the Underwriters at which the contents of the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses were discussed and, although we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus (except as and to the extent stated in subparagraphs 6 and 10 above), on the basis of the foregoing, nothing has come to our attention that causes us to believe that (i) the Registration Statement, at the Effective Time, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Disclosure Package (as defined below), as of the Applicable Time (as defined below), when taken together with the Pricing Information (as defined below), included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (iii) the Prospectus, as of its date, or as of the date hereof, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that we express no opinion in this paragraph 23 with respect to the financial statements and schedules, and other financial data derived therefrom, included in the Registration Statement, the Disclosure Package or the Prospectus). As used herein, (A) “Disclosure Package” means the Preliminary Prospectus together with the Permitted Free Writing Prospectuses, (B) “Applicable Time” means [        ][“A.M.” / “P.M.”], New York City time, on [            ], and (C) “Pricing Information” means (i) the number of Ordinary Shares offered for sale pursuant to the Prospectus and (ii) the public offering price per Share, in the case of each of clause (C)(i) and clause (C)(ii), as reflected on the cover page of the Prospectus.

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

D-5

EXHIBIT E

OPINION OF JINGTIAN & GONGCHENG, BEIJING, CHINA

[date]

UBS AG

CIBC World Markets Corp.

Pacific Growth Equities, LLC

    as Managing Underwriters

c/o UBS AG

52/F, Two International Finance Centre

8 Finance Street, Central

Hong Kong

Ladies and Gentlemen:

[NB: please provide entry/exit language to be inserted into this exhibit]

1. The Company is duly qualified to transact business and is in good standing in the PRC.

2. Each of Shenyang Sunshine and Liaoning Sunshine (the “PRC Subsidiaries”) has been duly incorporated and is validly existing as a corporation in good standing under the laws of the PRC, with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses and is duly qualified to transact business and is in good standing in each jurisdiction in which it owns or uses or leases properties or conducts any business, or in which such qualification is required, except where the failure to be so qualified and in good standing in such other jurisdiction would not, individually or in the aggregate, have a Material Adverse Effect; the articles of association, the business license and other constituent documents of each of the PRC Subsidiaries comply with the requirements of applicable PRC law and are in full force and effect. Shenyang Sunshine is a validly existing as a wholly foreign owned enterprise in the PRC.

3. All of the outstanding shares of capital stock of each of the PRC Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and, except as otherwise disclosed in the Registration Statement (excluding the exhibits thereto), the Preliminary Prospectus and the Prospectus, are owned by the Company, in each case subject to no security interest, other encumbrance or adverse claim.

4. No approval, authorization, consent or order under any laws of the PRC, or of any political subdivision thereof, or approval, authorization, consent of or filing with any federal, state, local or foreign or regulatory commission, board, body, authority or agency in the PRC, or approval of the shareholders of the Company or any PRC Subsidiary pursuant to the laws of the PRC, or of any political subdivision thereof, is required in connection with the issuance and sale of the Ordinary Shares and the Offered ADSs or with the consummation by the Company of the transactions contemplated by the Underwriting Agreement and the Deposit Agreement.

E-1

5. The entering into, and the consummation of the transactions contemplated in the relevant documents in connection with the Restructuring (the “Restructuring Documents”) constitute legal, valid and binding obligations of all the parties therein, enforceable against all the parties therein, in accordance with their terms; all necessary steps for transactions contemplated in the Restructuring Documents have being taken and all consents required from respective parties have been obtained and are in full force and effect; all consents, licenses, franchises, approvals, concessions, permits, authorizations, orders, registrations, clearances or qualifications of or with any governmental agency having jurisdiction over the Company or any of the Subsidiaries or any of their respective properties required in connection with the Restructuring, including any consents, licenses, franchises, approvals, concessions, permits, authorizations, orders, registrations, clearances or qualifications that would be required under the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which became effective on September 8, 2006, have been unconditionally obtained in writing, and no such consent, license, franchise, approval, concession, permit, authorization, order, registration, clearance or qualification has been withdrawn or revoked or is subject to any condition precedent which has not been fulfilled or performed; the PRC Subsidiaries have obtained all consents, licenses, franchises, approvals, concessions, permits, authorizations, orders, registrations, clearances and qualifications, and has made all filings, which are required under PRC law and regulations so that Shenyang Sunshine may be a wholly foreign owned enterprise with all equity interests held by Collected Mind.

6. The execution, delivery and performance of the Underwriting Agreement and the Deposit Agreement by the Company, the issuance and sale of Ordinary Shares and the Offered ADSs and the consummation of the transactions contemplated by the Underwriting Agreement and the Deposit Agreement, and the application by the Company of the proceeds thereof in the manner described in the Registration Statement, Preliminary Prospectus and the Prospectus, do not and will not result in any breach or violation of or constitute a default under (nor constitute any event which, with notice, lapse of time or both, would result in any breach or violation of or constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (or result in the creation or imposition of a lien, charge or encumbrance on any property or assets of the Company or either PRC Subsidiary pursuant to) (i) the articles of association, business license or other constituent documents of either PRC Subsidiary, or (ii) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument known by us and to which the Company or any of the PRC Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (iii) the laws of the PRC, or of any political subdivision thereof, or any PRC regulation or (iv) any decree, judgment or order applicable to the Company or any of the PRC Subsidiaries or any of their respective properties, which decree, judgment or order is known by us.

E-2

7. To our knowledge, (i) no PRC Subsidiary is a party to any legal or governmental action or proceeding that challenges the validity or enforceability, or seeks to enjoin the performance, of the Underwriting Agreement; and (ii) there are no actions, suits, claims, investigations or proceedings pending, threatened or contemplated to which any of the PRC Subsidiaries or any of their respective directors or officers is or would be a party or to which any of their respective properties is or would be subject at law or in equity, before or by any governmental or regulatory commission, board, body, authority or agency which are required to be described in the Registration Statement, the Preliminary Prospectus or the Prospectus but are not so described as required.

8. The application of the net proceeds to be received by the Company from the sale of the Offered ADSs as contemplated by the Prospectus, will not contravene any provision of applicable PRC law, rule or regulation, or the articles of association, other constitutive documents or the business license or other constitutive documents of the PRC Subsidiaries or contravene the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, note, lease or other agreement or instrument binding upon PRC Subsidiaries, or any judgment, order or decree of any governmental agency in the PRC.

9. Each of the PRC Subsidiaries has valid title to all of its properties and assets, in each case, free and clear of all liens, charges, encumbrances, equities, claims, defects, options or restrictions, except to the extent disclosed in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectus and the Prospectus; each lease agreement to which any of the PRC Subsidiaries is a party is legally executed; the leasehold interests of the PRC Subsidiaries are fully protected by the terms of the lease agreements, which are valid, binding and enforceable in accordance with their respective terms under PRC law; and, to the best of such counsel’s knowledge after due inquiry, neither the Company nor either of the PRC Subsidiaries own, operate, manage or have any other right or interest in any other material real property of any kind, except as described in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectus and the Prospectus.

10. There are no outstanding guarantees or contingent payment obligations of the PRC Subsidiaries in respect of indebtedness of third parties except as disclosed in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectus and the Prospectus.

11. There are no legal, governmental, administrative or arbitrative proceedings before any court of the PRC or before or by any governmental agency pending or, to such counsel’s knowledge, threatened against, or involving the properties or business of, the Company or either of the PRC Subsidiaries or to which any of the properties of the Company or the PRC Subsidiaries are subject which will have a Material Adverse Effect

12. The statements in the Registration Statement, the Preliminary Prospectus and the Prospectus under the headings [“Risk factors—Risks related to doing business in China,” “Enforceability of civil liabilities,” “Management’s discussion and analysis of financial condition and results of operations—Taxes and incentives,” [to come], insofar as such statements constitute summaries of documents or legal proceedings or refer to matters of law or legal conclusions, are accurate and complete in all material respects and present fairly the information purported to be shown.

E-3

13. The PRC Subsidiaries are duly licensed to conduct their respective business under all applicable PRC laws and regulations, and has all other necessary licenses, consents, authorizations, approvals, orders, certificates and permits of and from, and has made all necessary declarations and filings with, all governmental agencies (i) to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Prospectus, and (ii) to use the proceeds to be received by the Company from the sale of the Offered ADSs, for the purposes set forth in, and in the manner contemplated by, the Registration Statement, the Preliminary Prospectus and the Prospectus; and such licenses, consents, authorizations, approvals, orders, certificates or permits contain no materially burdensome restrictions or conditions not described in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectus and the Prospectus; and to such counsel’s knowledge, (a) none of the governmental agencies is considering modifying, suspending or revoking any such PRC licenses, consents, authorizations, approvals, orders, certificates or permits and (b) the Company and the Subsidiaries are in compliance with the provisions of all such PRC licenses, consent, authorizations, approvals, orders, certificates or permits in all material respects.

14. No person has the right, pursuant to the terms of any contract, agreement or other instrument described in or filed as an exhibit to the Registration Statement or otherwise known to us, to cause the Company to register under the Act any Ordinary Shares or shares of any other capital stock or other equity interest in the Company or the Subsidiaries or to include any such shares or interest in the Registration Statement or the offering contemplated thereby.

15. There are no reporting obligations under the laws of the PRC, or of any political subdivision thereof, on holders of the Ordinary Shares or the Offered ADSs who are not resident or domiciled in the PRC.

16. As a matter of the laws of the PRC and its political subdivisions, no holder of the Ordinary Shares or the Offered ADSs will be subject to any personal liability, or be subject to a requirement to be licensed or otherwise qualified to do business or be deemed resident or domiciled in the PRC by virtue only of holding such securities. There are no limitations under the laws of the PRC, or of any political subdivision thereof, on the rights of holders of the Ordinary Shares or the Offered ADSs to hold, vote or transfer their securities nor are there any statutory pre-emptive rights or transfer restrictions applicable to the Ordinary Shares or the Offered ADSs under the laws of the PRC, or of any political subdivision thereof.

17. The execution and delivery of the Underwriting Agreement and the Deposit Agreement, and the performance or enforcement thereof in accordance with its respective terms, will not subject any of the Underwriters to any requirement to be licensed or otherwise qualified to do business in the PRC, nor will any Underwriter be deemed to be resident, domiciled, carrying on business through an establishment or place in the PRC or in breach of any laws of the PRC, or of any political subdivision thereof, by reason of such execution, delivery, performance or enforcement.

E-4

18. Except as disclosed in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectus and the Prospectus, neither the Company nor any Subsidiary is, to our knowledge, in breach or violation of or in default under (nor has any event occurred which, with notice, lapse of time or both, would result in any breach or violation of or constitute a default under) (i) the articles of association, business license or other constituent documents of any PRC Subsidiary, or (ii) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument known by us and to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (iii) the laws of the PRC, or of any political subdivision thereof, or any PRC regulation or (iv) any decree, judgment or order applicable to the Company or any of the Subsidiaries or any of their respective properties, which decree, judgment or order is known by us.

19. Except as disclosed in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectus and the Prospectus, all dividends and other distributions declared and payable on the Company’s equity interests in the PRC Subsidiaries may, under the laws of the PRC, or of any political subdivision thereof, be payable in a foreign currency and may be freely transferred out of the PRC, and no such dividends will be subject to withholding, deduction or other taxes under the laws of the PRC, or of any political subdivision thereof, and such dividends may be paid without the necessity of obtaining any government authorization, consent or order in the PRC.

20. The submission of the Company to the non-exclusive jurisdiction of the New York Courts and the waiver by the Company of any objection to the venue of a proceeding in a New York Court, in each case as provided in the Underwriting Agreement, and the agreement of the Company that the Underwriting Agreement be construed in accordance with and governed by the laws of the State of New York, will be recognized by courts in the PRC; service of process effected in the manner set forth in the Underwriting Agreement will be effective to confer jurisdiction over the Company, the Subsidiaries and their respective assets and property in the PRC; and, except as disclosed in the Registration Statement, the Preliminary Prospectus and the Prospectus, any judgment obtained in a New York Court arising out of or in relation to the obligations of the Company under the Underwriting Agreement will be recognized by courts in the PRC without re-examination of the merits of the claim.

21. Neither the Company nor any Subsidiary nor any of their properties, assets or revenues has any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) under the laws of the PRC, or of any political subdivision thereof.

22. The indemnification and contribution provisions set forth in the Underwriting Agreement and the Deposit Agreement do not contravene the public policy or laws of the PRC, and insofar as matters of PRC law are concerned, constitute the legal, valid and binding obligations of the Company, enforceable in accordance with the terms therein, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights; each of the Underwriting Agreement and the Deposit Agreement is in proper legal form under PRC law for the enforcement thereof against the Company, subject to compliance with relevant civil procedural requirements (which do not involve a re-examination of the merits of the claim in the PRC); and to ensure the legality, validity, enforceability or admissibility in evidence of the Underwriting Agreement and the Deposit Agreement in the PRC, it is not necessary that any such document be filed or recorded with any court or other authority in the PRC or that any stamp or similar tax be paid on or in respect of any such document.

E-5

23. All matters of PRC law and practice relating to the Company, the PRC Subsidiaries and their respective businesses and other statements with respect to or involving PRC law set forth in the Registration Statement (excluding exhibits thereto), the Preliminary Prospectus and the Prospectus are correctly set forth therein, and nothing has been omitted from such statements which would make the same misleading in any material respect.

24. No stamp or other issuance or transfer taxes or duties, and no capital gains, income, withholding or other taxes, are payable by or on behalf of the Company, the Underwriters or the subsequent holders of the Ordinary Shares or the Offered ADSs to any governmental body or political subdivision or taxing authority of the PRC in connection with (i) the issuance, sale and delivery of the Offered ADSs to the Underwriters, (ii) the offer, sale and delivery of the Offered ADSs by the Underwriters in the manner set forth in the Prospectus or (iii) the execution, delivery and performance of the Underwriting Agreement by the Company.

25. Each of the Material Contracts listed in Annex A hereto has been duly authorized, executed and delivered; the respective PRC Subsidiary has taken all necessary corporate actions to authorize the performance thereof; the PRC Subsidiaries have the corporate power and capacity to enter into and to perform their obligations under the Material Contracts; each of the Material Contracts to which either of the PRC Subsidiaries is a party constitutes a legal, valid and binding obligation of such PRC Subsidiary, enforceable against such PRC Subsidiary in accordance with its terms; if applicable, such Material Contract has been properly transferred, amended or assigned such that the respective PRC Subsidiary is the obligor and beneficiary under such Material Contract; such transfers, amendments or assignments were duly authorized, executed and delivered by the parties to the applicable Material Contract; all governmental authorizations required in the PRC for such transfers, amendments and assignments have been obtained and are in full force and effect; and all necessary steps for such transfers and assignments have been taken and all consents required from all counter parties to such contracts have been obtained and are in full force and effect.

E-6

26. We have participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants of the Company and representatives of the Underwriters at which the contents of the Registration Statement, the Preliminary Prospectus, the Prospectus and the Permitted Free Writing Prospectuses were discussed and, although we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus (except as and to the extent stated in subparagraph 7 above), on the basis of the foregoing, nothing has come to our attention that causes us to believe that (i) the Registration Statement, at the Effective Time, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Disclosure Package (as defined below), as of the Applicable Time (as defined below), when taken together with the Pricing Information (as defined below), included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (iii) the Prospectus, as of its date, or as of the date hereof, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that we express no opinion in this paragraph 25 with respect to the financial statements and schedules, and other financial data derived therefrom, included in the Registration Statement, the Disclosure Package or the Prospectus). As used herein, (A) “Disclosure Package” means the Preliminary Prospectus together with the Permitted Free Writing Prospectuses, (B) “Applicable Time” means [            ][“A.M.” / “P.M.”], New York City time, on [            ], and (C) “Pricing Information” means (i) the number of Shares offered for sale pursuant to the Prospectus and (ii) the public offering price per Share, in the case of each of clause (C)(i) and clause (C)(ii), as reflected on the cover page of the Prospectus.

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

E-7

EXHIBIT F

OPINION OF [SELLING SHAREHOLDER COUNSEL]

[date]

UBS AG

CIBC World Markets Corp.

Pacific Growth Equities, LLC

    as Managing Underwriters

c/o UBS AG

52/F, Two International Finance Centre

8 Finance Street, Central

Hong Kong

Ladies and Gentlemen:

[NB: please provide entry/exit language to be inserted into this exhibit]

1. The Underwriting Agreement has been duly executed and delivered by the Selling Shareholder.

2. Each of the Custody Agreement and the Power of Attorney has been duly executed and delivered by the Selling Shareholder and is the legal, valid and binding obligation of the Selling Shareholder, enforceable against the Selling Shareholder in accordance with its terms.

3. The execution, delivery and performance by the Selling Shareholder of the Underwriting Agreement or the Custody Agreement or Power of Attorney and the consummation by such Selling Shareholder of the transactions contemplated by the Underwriting Agreement, the Custody Agreement or Power of Attorney do not and will not result in any breach or violation of or constitute a default under (nor constitute any event which, with notice, lapse of time or both, would result in any breach or violation of or constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (or result in the creation or imposition of a lien, charge or encumbrance on any property or assets of such Selling Shareholder pursuant to) (i) if such Selling Shareholder is not an individual, the charter or bylaws or other organizational instruments of such Selling Shareholder, (ii) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument known by us and to which such Selling Shareholder is a party or by which such Selling Shareholder or any of its properties may be bound or affected, (iii) any federal, state, local or foreign law, rule or regulation, (iv) any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority or (v) any decree, judgment or order applicable to such Selling Shareholder or any of such Selling Shareholder’s properties, which decree, judgment or order is known by us.

F-1

4. The Selling Shareholder has full legal right and power, and has obtained all authorization and approval required by law (other than those imposed by the Act and state securities or blue sky laws), to execute and perform its obligations under the Underwriting Agreement and the Custody Agreement and Power of Attorney and to sell, assign, transfer and deliver the underlying Ordinary Shares to be sold by such Selling Shareholder in the manner provided in the Underwriting Agreement.

5. The Selling Shareholder has the power to submit and, pursuant to the Underwriting Agreement and the Deposit Agreement, has legally, validly, effectively and irrevocably submitted, to the personal jurisdiction of each New York Court; the Selling Shareholder has validly and irrevocably waived any objection to the venue of a proceeding in any New York Court; the Selling Shareholder has validly and irrevocably waived all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to the Underwriting Agreement or the Deposit Agreement; and the Selling Shareholder has the power to designate, appoint and authorize and, pursuant to the Underwriting Agreement and the Deposit Agreement, has legally, validly, effectively and irrevocably designated, appointed and authorized, the Authorized Agent for service of process in any action arising out of or relating to the Underwriting Agreement, the Deposit Agreement or the Offered ADSs in any New York Court, and service of process effected on such Authorized Agent will be effective to confer valid personal jurisdiction over the Selling Shareholder as provided in the Underwriting Agreement and the Deposit Agreement.

6. Under the laws of the State of New York, the Selling Shareholder has validly chosen New York law to govern its rights and duties under the Underwriting Agreement.

7. Upon indication by book entry that the ADSs sold by the Selling Shareholder pursuant to the Agreement have been credited to a securities account maintained by the Underwriters at the DTC and payment therefor in accordance with the Agreement (assuming that the Underwriters do not have notice of any adverse claim (within the meaning of Section 8-105 of the New York Uniform Commercial Code (“UCC”)) to such ADSs), (A) under Section 8-501 of the UCC, the Underwriters will acquire a valid security entitlement with respect to such ADSs and (B) no action based on any “adverse claim,” within the meaning of Section 8-102 of the UCC, to such ADSs, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may be asserted against any Underwriter with respect to such security entitlement.

8. It is not a condition to validity and effectiveness to stamp the Custodian Agreement or Power of Attorney, nor are any stamp or other issuance or transfer taxes or duties, or capital gains, income, withholding or other taxes payable by or on behalf of the Underwriters to any jurisdiction where each Selling Shareholder is resident (in the case of individuals) or incorporated (in the case of entities) in connection with (A) the delivery of the Ordinary Shares to be sold by the Selling Shareholder in the manner contemplated by this Underwriting Agreement, (B) the consummation by such Selling Shareholder of any other transaction contemplated in the Underwriting Agreement or the Deposit Agreement or (C) the performance by such Selling Shareholder of its obligations under the Underwriting Agreement or the Deposit Agreement.

F-2

9. Each of the Representatives of the Selling Shareholder has been duly authorized by the Selling Shareholder to execute and deliver on behalf of such Selling Shareholder the Underwriting Agreement and any and all other documents necessary or desirable in connection with the transactions contemplated thereby and to deliver the underlying Ordinary Shares to be sold by such Selling Shareholder.

10. The statements included in the Registration Statement, the Preliminary Prospectus or the Prospectus under the captions “[                    ]” and “[                     ]”} (the “Selling Shareholder Statements”), insofar as such Selling Shareholder Statements constitute summaries of documents or legal proceedings or refer to matters of law or legal conclusions, are accurate and complete in all material respects and present fairly the information purported to be shown; nothing has come to our attention that causes us to believe that (i) the Selling Shareholder Statements included in the Registration Statement, at the Effective Time, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Selling Shareholder Statements include in the Preliminary Prospectus, as of [        ][“A.M.” / “P.M.”], New York City time, on [            ], included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (iii) the Selling Shareholder Statements included in the Prospectus, as of the date of the Prospectus or the date hereof, included or include an untrue statement of a material fact or omitted or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

11. The Selling Shareholder Statements included in the Registration Statement, the Preliminary Prospectus or the Prospectus comply as to form in all material respects with the requirements of the Act.

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

F-3

EXHIBIT G

OPINION OF ZIEGLER, ZIEGLER & ASSOCIATES LLP

[date]

UBS AG

CIBC World Markets Corp.

Pacific Growth Equities, LLC

    as Managing Underwriters

c/o UBS AG

52/F, Two International Finance Centre

8 Finance Street

Central, Hong Kong

Ladies and Gentlemen:

[NB: please provide entry/exit language to be inserted into this exhibit]

1. The Deposit Agreement has been duly authorized, executed and delivered by the Depositary and constitutes a legal, valid and binding instrument enforceable against the Depositary in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally from time to time in effect).

2. The statements in the Prospectus under the heading Description of American Depositary Shares, insofar as such statements purport to describe the Depositary and summarize certain provisions of the Deposit Agreement, the ADSs and the ADRs are fair and accurate.

3. The Depositary has full power and authority and legal right to execute and deliver the Deposit Agreement and to perform its obligations thereunder.

4. The ADSs evidenced the Deposit Agreement are in valid and sufficient form and, when issued under the Deposit Agreement, the ADSs will entitle the holders thereof to the rights specified therein and in the Deposit Agreement.

5. The F-6 Registration Statement has become effective under the Act and, to the knowledge of such counsel, no stop order suspending the effectiveness of the F-6 Registration Statement has been issued, no proceedings for that purpose have been instituted or threatened, and the F-6 Registration Statement, and each amendment comply as to form in all material respects with the applicable requirements of the Act and the rules thereunder.

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

G-1

EXHIBIT H

OFFICERS’ CERTIFICATE

Each of the undersigned, Dr. Jing Lou, Chief Executive Officer of 3SBio Inc., a Cayman Islands corporation (the “Company”), and Clara Mak, Chief Financial Officer of the Company, on behalf of the Company, does hereby certify pursuant to Section 9(m) of that certain Underwriting Agreement dated [pricing date] (the “Underwriting Agreement”) among the Company, the Selling Shareholders named therein and, on behalf of the several Underwriters named therein, UBS AG, CIBC World Markets Corp. and Pacific Growth Equities, LLC, that as of [date]:

1. He or she has reviewed the Registration Statement, each Preliminary Prospectus, the Prospectus and each Permitted Free Writing Prospectus.

2. The representations and warranties of the Company as set forth in the Underwriting Agreement are true and correct as of the date hereof and as if made on the date hereof.

3. The Company has performed all of its obligations under the Underwriting Agreement as are to be performed at or before the date hereof.

4. The conditions set forth in paragraph (l) of Section 9 of the Underwriting Agreement have been met.

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands on this [date].

Name:	Dr. Jing Lou
Title:	Chief Executive Officer
Name:	Clara Mak
Title:	Chief Financial Officer

H-1

SCHEDULE I

SELLING SHAREHOLDERS’ CERTIFICATE

The undersigned, [name of Representative of the Selling Shareholders or name of authorized signatory of the Selling Shareholder], on behalf of each Selling Shareholder (as defined in the Underwriting Agreement referred to below), does hereby certify pursuant to Section 9(n) of that certain Underwriting Agreement dated [pricing date] (the “Underwriting Agreement”) among the Company, the Selling Shareholders named therein and, on behalf of the several Underwriters named therein, UBS AG, CIBC World Markets Corp. and Pacific Growth Equities, LLC, and pursuant to the Powers of Attorney (as defined in the Underwriting Agreement), that as of [date]:

1. The Selling Shareholder has reviewed the Registration Statement, each Preliminary Prospectus, the Prospectus and each Permitted Free Writing Prospectus.

2. The representations and warranties of the Selling Shareholder (including, without limitation, the representations and warranties of such Selling Shareholder made jointly and severally with the Company) as set forth in the Underwriting Agreement are true and correct as of the date hereof and as if made on the date hereof.

3. The Selling Shareholder has performed all of its obligations under the Underwriting Agreement as are to be performed at or before the date hereof.

[NB: additional representations may be added addressing White Paper 1 diligence]]

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

IN WITNESS WHEREOF, the undersigned has hereunto set his hands on this [date] on behalf of the Selling Shareholder.

HAPPYVIEW FINANCE LIMITED
PRECIOUS WINWIN LIMITED
LAN’S HOLDINGS LIMITED
STARRY INVESTMENTS LIMITED
By:	[REPRESENTATIVE], Attorney-in-Fact
Name:
Title:

I-1

EX-3.1

Exhibit. 3.1

THE COMPANIES LAW

EXEMPTED COMPANY LIMITED BY SHARES

AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION

OF

3SBio Inc.

(Adopted by way of a special resolution passed on September 5, 2006 and effective

on September 5, 2006)

1. The name of the Company is 3SBio Inc.

2. The Registered Office of the Company shall be at the offices of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681 GT, George Town, Grand Cayman, British West Indies.

3. Subject to the following provisions of this Memorandum, the objects for which the Company is established are unrestricted.

4. Subject to the following provisions of this Memorandum, the Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided by Section 27(2) of The Companies Law.

5. Nothing in this Memorandum shall permit the Company to carry on a business for which a licence is required under the laws of the Cayman Islands unless duly licensed.

6. The Company shall not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this clause shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands.

7. The liability of each member is limited to the amount from time to time unpaid on such member’s shares.

8. The authorised share capital of the Company is US$50,000 divided into 500,000,000 shares of a nominal or par value of US$0.0001 each.

9. The Company may exercise the power contained in the Companies Law to deregister in the Cayman Islands and be registered by way of continuation in another jurisdiction.

EX-3.2

Exhibit 3.2

Conyers Dill & Pearman

The Companies Law (2004 Revision)

Company Limited by Shares

THE AMENDED AND RESTATED

ARTICLES OF ASSOCIATION

OF

3SBio Inc.

(Adopted by way of a special resolution passed and effective on September 5, 2006)

INDEX

SUBJECT	Article No.
Table A	1
Interpretation	2
Share Capital	3
Alteration Of Capital	4-7
Share Rights	8-9
Variation Of Rights	10-11
Shares	12-15
Share Certificates	16-21
Lien	22-24
Calls On Shares	25-33
Forfeiture Of Shares	34-42
Register Of Members	43-44
Record Dates	45
Transfer Of Shares	46-51
Transmission Of Shares	52-54
Untraceable Members	55
General Meetings	56-58
Notice Of General Meetings	59-60
Proceedings At General Meetings	61-65
Voting	66-77
Proxies	78-83
Corporations Acting By Representatives	84
No Action By Written Resolutions Of Members	85
Board Of Directors	86
Retirement of Directors	87-88
Disqualification Of Directors	89
Executive Directors	90-91
Directors’ Fees And Expenses	92-94
Directors’ Interests	95-98
General Powers Of The Directors	99-104
Borrowing Powers	105-108
Proceedings Of The Directors	109-118
Audit Committee	119-121
Officers	122-125
Register of Directors and Officers	126
Minutes	127
Seal	128
Authentication Of Documents	129
Destruction Of Documents	130
Dividends And Other Payments	131-140
Reserves	141
Capitalisation	142-143
Subscription Rights Reserve	144
Accounting Records	145-149
Audit	150-155
Notices	156-158
Signatures	159
Winding Up	160-161
Indemnity	162
Amendment To Memorandum and Articles of Association And Name of Company	163
Information	164

INTERPRETATION

TABLE A

1. The regulations in Table A in the Schedule to the Companies Law (2004 Revision) do not apply to the Company.

INTERPRETATION

2.(1) In these Articles, unless the context otherwise requires, the words standing in the first column of the following table shall bear the meaning set opposite them respectively in the second column.

WORD	MEANING
“Audit Committee”	the audit committee of the Company formed by the Board pursuant to Article 119 hereof, or any successor audit committee.
“Auditor”	the independent auditor of the Company which shall be an internationally recognized firm of independent accountants.
“Articles”	these Articles in their present form or as supplemented or amended or substituted from time to time.
“Board” or “Directors”	the board of directors of the Company or the directors present at a meeting of directors of the Company at which a quorum is present.
“capital”	the share capital from time to time of the Company.
“clear days”	in relation to the period of a notice, that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect.
“clearing house”	a clearing house recognised by the laws of the jurisdiction in which the shares of the Company (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such jurisdiction.
“Company”	3SBio Inc.
“competent regulatory authority”	a competent regulatory authority in the territory where the shares of the Company (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such territory.

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“debenture” and “debenture holder”	include debenture stock and debenture stockholder respectively.
“Designated Stock Exchange”	the National Market of The Nasdaq Stock Market, Inc.
“dollars” and “$”	dollars, the legal currency of the United States of America.
“Exchange Act”	the Securities Exchange Act of 1934, as amended.
“head office”	such office of the Company as the Directors may from time to time determine to be the principal office of the Company.
“Law”	The Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands.
“Member”	a duly registered holder from time to time of the shares in the capital of the Company.
“month”	a calendar month.
“NASD”	National Association of Securities Dealers.
“NASD Rules”	the rules set forth in the NASD Manual.
“Notice”	written notice unless otherwise specifically stated and as further defined in these Articles.
“Office”	the registered office of the Company for the time being.
“ordinary resolution”	a resolution shall be an ordinary resolution when it has been passed by a simple majority of votes cast by such Members as, being entitled so to do, vote in person or, in the case of any Member being a corporation, by its duly authorised representative or, where proxies are allowed, by proxy at a general meeting of which not less than ten (10) clear days’ Notice has been duly given.
“paid up”	paid up or credited as paid up.
“Register”	the principal register and where applicable, any branch register of Members of the Company to be maintained at such place within or outside the Cayman Islands as the Board shall determine from time to time.

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“Registration Office”	in respect of any class of share capital such place as the Board may from time to time determine to keep a branch register of Members in respect of that class of share capital and where (except in cases where the Board otherwise directs) the transfers or other documents of title for such class of share capital are to be lodged for registration and are to be registered.
“SEC”	the United States Securities and Exchange Commission.
“Seal”	common seal or any one or more duplicate seals of the Company (including a securities seal) for use in the Cayman Islands or in any place outside the Cayman Islands.
“Secretary”	any person, firm or corporation appointed by the Board to perform any of the duties of secretary of the Company and includes any assistant, deputy, temporary or acting secretary.
“special resolution”	a resolution shall be a special resolution when it has been passed by a majority of not less than two-thirds of votes cast by such Members as, being entitled so to do, vote in person or, in the case of such Members as are corporations, by their respective duly authorised representative or, where proxies are allowed, by proxy at a general meeting of which not less than ten (10) clear days’ Notice, specifying (without prejudice to the power contained in these Articles to amend the same) the intention to propose the resolution as a special resolution, has been duly given. Provided that, except in the case of an annual general meeting, if it is so agreed by a majority in number of the Members having the right to attend and vote at any such meeting, being a majority together holding not less than ninety-five (95) per cent. in nominal value of the shares giving that right and in the case of an annual general meeting, if it is so agreed by all Members entitled to attend and vote thereat, a resolution may be proposed and passed as a special resolution at a meeting of which less than ten (10) clear days’ Notice has been given;
	a special resolution shall be effective for any purpose for which an ordinary resolution is expressed to be required under any provision of these Articles or the Statutes.
“Statutes”	the Law and every other law of the Legislature of the Cayman Islands for the time being in force applying to or affecting the Company, its Memorandum of Association and/or these Articles.
“year”	a calendar year.

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(2) In these Articles, unless there be something within the subject or context inconsistent with such construction:

(a) words importing the singular include the plural and vice versa;

(b) words importing a gender include both gender and the neuter;

(c) words importing persons include companies, associations and bodies of persons whether corporate or not;

(d) the words:

(i) “may” shall be construed as permissive;

(ii) “shall” or “will” shall be construed as imperative;

(e) expressions referring to writing shall, unless the contrary intention appears, be construed as including printing, lithography, photography and other modes of representing words or figures in a visible form, and including where the representation takes the form of electronic display, provided that both the mode of service of the relevant document or notice and the Member’s election comply with all applicable Statutes, rules and regulations;

(f) references to any law, ordinance, statute or statutory provision shall be interpreted as relating to any statutory modification or re-enactment thereof for the time being in force;

(g) save as aforesaid words and expressions defined in the Statutes shall bear the same meanings in these Articles if not inconsistent with the subject in the context;

(h) references to a document being executed include references to it being executed under hand or under seal or by electronic signature or by any other method and references to a notice or document include a notice or document recorded or stored in any digital, electronic, electrical, magnetic or other retrievable form or medium and information in visible form whether having physical substance or not.

SHARE CAPITAL

3.(1) The share capital of the Company at the date on which these Articles come into effect shall be divided into shares of a par value of $0.0001 each.

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(2) Subject to the Law, the Company’s Memorandum of Association and these Articles and, where applicable, the rules of the Designated Stock Exchange and/or any competent regulatory authority, any power of the Company to purchase or otherwise acquire its own shares shall be exercisable by the Board in such manner, upon such terms and subject to such conditions as it thinks fit.

(3) No share shall be issued to bearer.

ALTERATION OF CAPITAL

4. The Company may from time to time by ordinary resolution in accordance with the Law alter the conditions of its Memorandum of Association to:

(a) increase its capital by such sum, to be divided into shares of such amounts, as the resolution shall prescribe;

(b) consolidate and divide all or any of its capital into shares of larger amount than its existing shares;

(c) without prejudice to the powers of the Board under Article 12, divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special rights, privileges, conditions or such restrictions which in the absence of any such determination by the Company in general meeting, as the Directors may determine provided always that, for the avoidance of doubt, where a class of shares has been authorized by the Company no resolution of the Company in general meeting is required for the issuance of shares of that class and the Directors may issue shares of that class and determine such rights, privileges, conditions or restrictions attaching thereto as aforesaid, and further provided that where the Company issues shares which do not carry voting rights, the words “non-voting” shall appear in the designation of such shares and where the equity capital includes shares with different voting rights, the designation of each class of shares, other than those with the most favourable voting rights, must include the words “restricted voting” or “limited voting”;

(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the Law), and may by such resolution determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred, deferred or other rights or be subject to any such restrictions as compared with the other or others as the Company has power to attach to unissued or new shares; or

(e) cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled or, in the case of shares, without par value, diminish the number of shares into which its capital is divided.

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5. The Board may settle as it considers expedient any difficulty which arises in relation to any consolidation and division under the last preceding Article and in particular but without prejudice to the generality of the foregoing may issue certificates in respect of fractions of shares or arrange for the sale of the shares representing fractions and the distribution of the net proceeds of sale (after deduction of the expenses of such sale) in due proportion amongst the Members who would have been entitled to the fractions, and for this purpose the Board may authorise some person to transfer the shares representing fractions to their purchaser or resolve that such net proceeds be paid to the Company for the Company’s benefit. Such purchaser will not be bound to see to the application of the purchase money nor will his title to the shares be affected by any irregularity or invalidity in the proceedings relating to the sale.

6. The Company may from time to time by special resolution, subject to any confirmation or consent required by the Law, reduce its share capital or any capital redemption reserve or other undistributable reserve in any manner permitted by law.

7. Except so far as otherwise provided by the conditions of issue, or by these Articles, any capital raised by the creation of new shares shall be treated as if it formed part of the original capital of the Company, and such shares shall be subject to the provisions contained in these Articles with reference to the payment of calls and instalments, transfer and transmission, forfeiture, lien, cancellation, surrender, voting and otherwise.

SHARE RIGHTS

8. Subject to the provisions of the Law, the rules of the Designated Stock Exchange and the Memorandum and Articles of Association and to any special rights conferred on the holders of any shares or class of shares, and without prejudice to Article 12 hereof, any share in the Company (whether forming part of the present capital or not) may be issued with or have attached thereto such rights or restrictions whether in regard to dividend, voting, return of capital or otherwise as the Board may determine, including without limitation on terms that they may be, or at the option of the Company or the holder are, liable to be redeemed on such terms and in such manner, including out of capital, as the Board may deem fit.

9. Subject to the Law, any preferred shares may be issued or converted into shares that, at a determinable date or at the option of the Company or the holder if so authorised by its Memorandum of Association, are liable to be redeemed on such terms and in such manner as the Company before the issue or conversion may by ordinary resolution of the Members determine. Where the Company purchases for redemption a redeemable share, purchases not made through the market or by tender shall be limited to a maximum price as may from time to time be determined by the Board, either generally or with regard to specific purchases. If purchases are by tender, tenders shall comply with applicable laws.

VARIATION OF RIGHTS

10. Subject to the Law and without prejudice to Article 8, all or any of the special rights for the time being attached to the shares or any class of shares may, unless otherwise provided by the terms of issue of the shares of that class, from time to time (whether or not the Company is being wound up) be varied, modified or abrogated with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting all the provisions of these Articles relating to general meetings of the Company shall, mutatis mutandis, apply, but so that:

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(a) the necessary quorum (whether at a separate general meeting or at its adjourned meeting) shall be a person or persons (or in the case of a Member being a corporation, its duly authorized representative) together holding or representing by proxy not less than one-third in nominal value of the issued shares of that class;

(b) every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him; and

(c) any holder of shares of the class present in person or by proxy or authorised representative may demand a poll.

11. The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be varied, modified or abrogated by the creation or issue of further shares ranking pari passu therewith.

SHARES

12.(1) Subject to the Law, these Articles and, where applicable, the rules of the Designated Stock Exchange and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, the unissued shares of the Company (whether forming part of the original or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration and upon such terms and conditions as the Board may in its absolute discretion determine but so that no shares shall be issued at a discount. In particular and without prejudice to the generality of the foregoing, the Board is hereby empowered to authorize by resolution or resolutions from time to time the issuance of one or more classes or series of preferred shares and to fix the designations, powers, preferences and relative, participating, optional and other rights, if any, and the qualifications, limitations and restrictions thereof, if any, including, without limitation, the number of shares constituting each such class or series, dividend rights, conversion rights, redemption privileges, voting powers, full or limited or no voting powers, and liquidation preferences, and to increase or decrease the size of any such class or series (but not below the number of shares of any class or series of preferred shares then outstanding) to the extent permitted by Law. Without limiting the generality of the foregoing, the resolution or resolutions providing for the establishment of any class or series of preferred shares may, to the extent permitted by law, provide that such class or series shall be superior to, rank equally with or be junior to the preferred shares of any other class or series.

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(2) Neither the Company nor the Board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to Members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the Board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever. Except as otherwise expressly provided in the resolution or resolutions providing for the establishment of any class or series of preferred shares, no vote of the holders of preferred shares or ordinary shares shall be a prerequisite to the issuance of any shares of any class or series of the preferred shares authorized by and complying with the conditions of the Memorandum and Articles of Association.

(3) The Board may issue options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of shares or securities in the capital of the Company on such terms as it may from time to time determine.

13. The Company may in connection with the issue of any shares exercise all powers of paying commission and brokerage conferred or permitted by the Law. Subject to the Law, the commission may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one and partly in the other.

14. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or required in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any fractional part of a share or (except only as otherwise provided by these Articles or by law) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.

15. Subject to the Law and these Articles, the Board may at any time after the allotment of shares but before any person has been entered in the Register as the holder, recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation upon and subject to such terms and conditions as the Board considers fit to impose.

SHARE CERTIFICATES

16. Every share certificate shall be issued under the Seal or a facsimile thereof and shall specify the number and class and distinguishing numbers (if any) of the shares to which it relates, and the amount paid up thereon and may otherwise be in such form as the Directors may from time to time determine. No certificate shall be issued representing shares of more than one class. The Board may by resolution determine, either generally or in any particular case or cases, that any signatures on any such certificates (or certificates in respect of other securities) need not be autographic but may be affixed to such certificates by some mechanical means or may be printed thereon.

17.(1) In the case of a share held jointly by several persons, the Company shall not be bound to issue more than one certificate therefor and delivery of a certificate to one of several joint holders shall be sufficient delivery to all such holders.

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(2) Where a share stands in the names of two or more persons, the person first named in the Register shall as regards service of notices and, subject to the provisions of these Articles, all or any other matters connected with the Company, except the transfer of the shares, be deemed the sole holder thereof.

18. Every person whose name is entered, upon an allotment of shares, as a Member in the Register shall be entitled, without payment, to receive one certificate for all such shares of any one class or several certificates each for one or more of such shares of such class upon payment for every certificate after the first of such reasonable out-of-pocket expenses as the Board from time to time determines.

19. Share certificates shall be issued within the relevant time limit as prescribed by the Law or as the Designated Stock Exchange may from time to time determine, whichever is the shorter, after allotment or, except in the case of a transfer which the Company is for the time being entitled to refuse to register and does not register, after lodgment of a transfer with the Company.

20.(1) Upon every transfer of shares the certificate held by the transferor shall be given up to be cancelled, and shall forthwith be cancelled accordingly, and a new certificate shall be issued to the transferee in respect of the shares transferred to him at such fee as is provided in paragraph (2) of this Article. If any of the shares included in the certificate so given up shall be retained by the transferor a new certificate for the balance shall be issued to him at the aforesaid fee payable by the transferor to the Company in respect thereof.

(2) The fee referred to in paragraph (1) above shall be an amount not exceeding the relevant maximum amount as the Designated Stock Exchange may from time to time determine provided that the Board may at any time determine a lower amount for such fee.

21. If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed a new certificate representing the same shares may be issued to the relevant Member upon request and on payment of such fee as the Company may determine and, subject to compliance with such terms (if any) as to evidence and indemnity and to payment of the costs and reasonable out-of-pocket expenses of the Company in investigating such evidence and preparing such indemnity as the Board may think fit and, in case of damage or defacement, on delivery of the old certificate to the Company provided always that where share warrants have been issued, no new share warrant shall be issued to replace one that has been lost unless the Board has determined that the original has been destroyed.

LIEN

22. The Company shall have a first and paramount lien on every share (not being a fully paid share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of that share. The Company shall also have a first and paramount lien on every share (not being a fully paid share) registered in the name of a Member (whether or not jointly with other Members) for all amounts of money presently payable by such Member or his estate to the Company whether the same shall have been incurred before or after notice to the Company of any equitable or other interest of any person other than such member, and whether the period for the payment or discharge of the same shall have actually arrived or not, and notwithstanding that the same are joint debts or liabilities of such Member or his estate and any other person, whether a Member of the Company or not. The Company’s lien on a share shall extend to all dividends or other moneys payable thereon or in respect thereof. The Board may at any time, generally or in any particular case, waive any lien that has arisen or declare any share exempt in whole or in part, from the provisions of this Article.

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23. Subject to these Articles, the Company may sell in such manner as the Board determines any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable, or the liability or engagement in respect of which such lien exists is liable to be presently fulfilled or discharged nor until the expiration of fourteen (14) clear days after a notice in writing, stating and demanding payment of the sum presently payable, or specifying the liability or engagement and demanding fulfilment or discharge thereof and giving notice of the intention to sell in default, has been served on the registered holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy.

24. The net proceeds of the sale shall be received by the Company and applied in or towards payment or discharge of the debt or liability in respect of which the lien exists, so far as the same is presently payable, and any residue shall (subject to a like lien for debts or liabilities not presently payable as existed upon the share prior to the sale) be paid to the person entitled to the share at the time of the sale. To give effect to any such sale the Board may authorise some person to transfer the shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the shares so transferred and he shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings relating to the sale.

CALLS ON SHARES

25. Subject to these Articles and to the terms of allotment, the Board may from time to time make calls upon the Members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or by way of premium), and each Member shall (subject to being given at least fourteen (14) clear days’ Notice specifying the time and place of payment) pay to the Company as required by such notice the amount called on his shares. A call may be extended, postponed or revoked in whole or in part as the Board determines but no member shall be entitled to any such extension, postponement or revocation except as a matter of grace and favour.

26. A call shall be deemed to have been made at the time when the resolution of the Board authorising the call was passed and may be made payable either in one lump sum or by instalments.

27. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect of which the call was made. The joint holders of a share shall be jointly and severally liable to pay all calls and instalments due in respect thereof or other moneys due in respect thereof.

28. If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the amount unpaid from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding twenty per cent. (20%) per annum) as the Board may determine, but the Board may in its absolute discretion waive payment of such interest wholly or in part.

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29. No Member shall be entitled to receive any dividend or bonus or to be present and vote (save as proxy for another Member) at any general meeting either personally or by proxy, or be reckoned in a quorum, or exercise any other privilege as a Member until all calls or instalments due by him to the Company, whether alone or jointly with any other person, together with interest and expenses (if any) shall have been paid.

30. On the trial or hearing of any action or other proceedings for the recovery of any money due for any call, it shall be sufficient to prove that the name of the Member sued is entered in the Register as the holder, or one of the holders, of the shares in respect of which such debt accrued, that the resolution making the call is duly recorded in the minute book, and that notice of such call was duly given to the Member sued, in pursuance of these Articles; and it shall not be necessary to prove the appointment of the Directors who made such call, nor any other matters whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of the debt.

31. Any amount payable in respect of a share upon allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call duly made and payable on the date fixed for payment and if it is not paid the provisions of these Articles shall apply as if that amount had become due and payable by virtue of a call duly made and notified.

32. On the issue of shares the Board may differentiate between the allottees or holders as to the amount of calls to be paid and the times of payment.

33. The Board may, if it thinks fit, receive from any Member willing to advance the same, and either in money or money’s worth, all or any part of the moneys uncalled and unpaid or instalments payable upon any shares held by him and upon all or any of the moneys so advanced (until the same would, but for such advance, become presently payable) pay interest at such rate (if any) as the Board may decide. The Board may at any time repay the amount so advanced upon giving to such Member not less than one month’s Notice of its intention in that behalf, unless before the expiration of such notice the amount so advanced shall have been called up on the shares in respect of which it was advanced. Such payment in advance shall not entitle the holder of such share or shares to participate in respect thereof in a dividend subsequently declared.

FORFEITURE OF SHARES

34.(1) If a call remains unpaid after it has become due and payable the Board may give to the person from whom it is due not less than fourteen (14) clear days’ Notice:

(a) requiring payment of the amount unpaid together with any interest which may have accrued and which may still accrue up to the date of actual payment; and

(b) stating that if the Notice is not complied with the shares on which the call was made will be liable to be forfeited.

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(2) If the requirements of any such Notice are not complied with, any share in respect of which such Notice has been given may at any time thereafter, before payment of all calls and interest due in respect thereof has been made, be forfeited by a resolution of the Board to that effect, and such forfeiture shall include all dividends and bonuses declared in respect of the forfeited share but not actually paid before the forfeiture.

35. When any share has been forfeited, notice of the forfeiture shall be served upon the person who was before forfeiture the holder of the share. No forfeiture shall be invalidated by any omission or neglect to give such Notice.

36. The Board may accept the surrender of any share liable to be forfeited hereunder and, in such case, references in these Articles to forfeiture will include surrender.

37. Any share so forfeited shall be deemed the property of the Company and may be sold, re-allotted or otherwise disposed of to such person, upon such terms and in such manner as the Board determines, and at any time before a sale, re-allotment or disposition the forfeiture may be annulled by the Board on such terms as the Board determines.

38. A person whose shares have been forfeited shall cease to be a Member in respect of the forfeited shares but nevertheless shall remain liable to pay the Company all moneys which at the date of forfeiture were presently payable by him to the Company in respect of the shares, with (if the Directors shall in their discretion so require) interest thereon from the date of forfeiture until payment at such rate (not exceeding twenty per cent. (20%) per annum) as the Board determines. The Board may enforce payment thereof if it thinks fit, and without any deduction or allowance for the value of the forfeited shares, at the date of forfeiture, but his liability shall cease if and when the Company shall have received payment in full of all such moneys in respect of the shares. For the purposes of this Article any sum which, by the terms of issue of a share, is payable thereon at a fixed time which is subsequent to the date of forfeiture, whether on account of the nominal value of the share or by way of premium, shall notwithstanding that time has not yet arrived be deemed to be payable at the date of forfeiture, and the same shall become due and payable immediately upon the forfeiture, but interest thereon shall only be payable in respect of any period between the said fixed time and the date of actual payment.

39. A declaration by a Director or the Secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share, and such declaration shall (subject to the execution of an instrument of transfer by the Company if necessary) constitute a good title to the share, and the person to whom the share is disposed of shall be registered as the holder of the share and shall not be bound to see to the application of the consideration (if any), nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture, sale or disposal of the share. When any share shall have been forfeited, notice of the declaration shall be given to the Member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the register, but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or make any such entry.

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40. Notwithstanding any such forfeiture as aforesaid the Board may at any time, before any shares so forfeited shall have been sold, re-allotted or otherwise disposed of, permit the shares forfeited to be bought back upon the terms of payment of all calls and interest due upon and expenses incurred in respect of the share, and upon such further terms (if any) as it thinks fit.

41. The forfeiture of a share shall not prejudice the right of the Company to any call already made or instalment payable thereon.

42. The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.

REGISTER OF MEMBERS

43.(1) The Company shall keep in one or more books a Register of its Members and shall enter therein the following particulars, that is to say:

(a) the name and address of each Member, the number and class of shares held by him and the amount paid or agreed to be considered as paid on such shares;

(b) the date on which each person was entered in the Register; and

(c) the date on which any person ceased to be a Member.

(2) The Company may keep an overseas or local or other branch register of Members resident in any place, and the Board may make and vary such regulations as it determines in respect of the keeping of any such register and maintaining a Registration Office in connection therewith.

44. The Register and branch register of Members, as the case may be, shall be open to inspection for such times and on such days as the Board shall determine by Members without charge or by any other person, upon a maximum payment of $2.50 or such other sum specified by the Board, at the Office or such other place at which the Register is kept in accordance with the Law or, if appropriate, upon a maximum payment of $1.00 or such other sum specified by the Board at the Registration Office. The Register including any overseas or local or other branch register of Members may, after notice has been given by advertisement in an appointed newspaper or any other newspapers in accordance with the requirements of the Designated Stock Exchange or by any electronic means in such manner as may be accepted by the Designated Stock Exchange to that effect, be closed at such times or for such periods not exceeding in the whole thirty (30) days in each year as the Board may determine and either generally or in respect of any class of shares.

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RECORD DATES

45. For the purpose of determining the Members entitled to notice of or to vote at any general meeting, or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares or for the purpose of any other lawful action, the Board may fix, in advance, a date as the record date for any such determination of Members, which date shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other such action.

If the Board does not fix a record date for any general meeting, the record date for determining the Members entitled to a notice of or to vote at such meeting shall be at the close of business on the day next preceding the day on which notice is given, or, if in accordance with these Articles notice is waived, at the close of business on the day next preceding the day on which the meeting is held. If corporate action without a general meeting is to be taken, the record date for determining the Members entitled to express consent to such corporate action in writing, when no prior action by the Board is necessary, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company by delivery to its head office. The record date for determining the Members for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

A determination of the Members of record entitled to notice of or to vote at a meeting of the Members shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

TRANSFER OF SHARES

46. Subject to these Articles, any Member may transfer all or any of his shares by an instrument of transfer in the usual or common form or in a form prescribed by the Designated Stock Exchange or in any other form approved by the Board and may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the Board may approve from time to time.

47. The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the Board may dispense with the execution of the instrument of transfer by the transferee in any case which it thinks fit in its discretion to do so. Without prejudice to the last preceding Article, the Board may also resolve, either generally or in any particular case, upon request by either the transferor or transferee, to accept mechanically executed transfers. The transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the Register in respect thereof. Nothing in these Articles shall preclude the Board from recognising a renunciation of the allotment or provisional allotment of any share by the allottee in favour of some other person.

48.(1) The Board may, in its absolute discretion, and without giving any reason therefor, refuse to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve, or any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also, without prejudice to the foregoing generality, refuse to register a transfer of any share to more than four joint holders or a transfer of any share (not being a fully paid up share) on which the Company has a lien.

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(2) The Board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the Register to any branch register or any share on any branch register to the Register or any other branch register. In the event of any such transfer, the shareholder requesting such transfer shall bear the cost of effecting the transfer unless the Board otherwise determines.

(3) Unless the Board otherwise agrees (which agreement may be on such terms and subject to such conditions as the Board in its absolute discretion may from time to time determine, and which agreement the Board shall, without giving any reason therefor, be entitled in its absolute discretion to give or withhold), no shares upon the Register shall be transferred to any branch register nor shall shares on any branch register be transferred to the Register or any other branch register and all transfers and other documents of title shall be lodged for registration, and registered, in the case of any shares on a branch register, at the relevant Registration Office, and, in the case of any shares on the Register, at the Office or such other place at which the Register is kept in accordance with the Law.

49. Without limiting the generality of the last preceding Article, the Board may decline to recognise any instrument of transfer unless:-

(a) a fee of such maximum sum as the Designated Stock Exchange may determine to be payable or such lesser sum as the Board may from time to time require is paid to the Company in respect thereof;

(b) the instrument of transfer is in respect of only one class of share;

(c) the instrument of transfer is lodged at the Office or such other place at which the Register is kept in accordance with the Law or the Registration Office (as the case may be) accompanied by the relevant share certificate(s) and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do); and

(d) if applicable, the instrument of transfer is duly and properly stamped.

50. If the Board refuses to register a transfer of any share, it shall, within two months after the date on which the transfer was lodged with the Company, send to each of the transferor and transferee notice of the refusal.

51. The registration of transfers of shares or of any class of shares may, after notice has been given by advertisement in an appointed newspaper or any other newspapers or by any other means in accordance with the requirements of the Designated Stock Exchange to that effect be suspended at such times and for such periods (not exceeding in the whole thirty (30) days in any year) as the Board may determine.

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TRANSMISSION OF SHARES

52. If a Member dies, the survivor or survivors where the deceased was a joint holder, and his legal personal representatives where he was a sole or only surviving holder, will be the only persons recognised by the Company as having any title to his interest in the shares; but nothing in this Article will release the estate of a deceased Member (whether sole or joint) from any liability in respect of any share which had been solely or jointly held by him.

53. Any person becoming entitled to a share in consequence of the death or bankruptcy or winding-up of a Member may, upon such evidence as to his title being produced as may be required by the Board, elect either to become the holder of the share or to have some person nominated by him registered as the transferee thereof. If he elects to become the holder he shall notify the Company in writing either at the Registration Office or Office, as the case may be, to that effect. If he elects to have another person registered he shall execute a transfer of the share in favour of that person. The provisions of these Articles relating to the transfer and registration of transfers of shares shall apply to such notice or transfer as aforesaid as if the death or bankruptcy of the Member had not occurred and the notice or transfer were a transfer signed by such Member.

54. A person becoming entitled to a share by reason of the death or bankruptcy or winding-up of a Member shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share. However, the Board may, if it thinks fit, withhold the payment of any dividend payable or other advantages in respect of such share until such person shall become the registered holder of the share or shall have effectually transferred such share, but, subject to the requirements of Article 75(2) being met, such a person may vote at meetings.

UNTRACEABLE MEMBERS

55.(1) Without prejudice to the rights of the Company under paragraph (2) of this Article, the Company may cease sending cheques for dividend entitlements or dividend warrants by post if such cheques or warrants have been left uncashed on two consecutive occasions. However, the Company may exercise the power to cease sending cheques for dividend entitlements or dividend warrants after the first occasion on which such a cheque or warrant is returned undelivered.

(2) The Company shall have the power to sell, in such manner as the Board thinks fit, any shares of a Member who is untraceable, but no such sale shall be made unless:

(a) all cheques or warrants in respect of dividends of the shares in question, being not less than three in total number, for any sum payable in cash to the holder of such shares in respect of them sent during the relevant period in the manner authorised by the Articles of the Company have remained uncashed;

(b) so far as it is aware at the end of the relevant period, the Company has not at any time during the relevant period received any indication of the existence of the Member who is the holder of such shares or of a person entitled to such shares by death, bankruptcy or operation of law; and

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(c) the Company, if so required by the rules governing the listing of shares on the Designated Stock Exchange, has given notice to, and caused advertisement in newspapers to be made in accordance with the requirements of, the Designated Stock Exchange of its intention to sell such shares in the manner required by the Designated Stock Exchange, and a period of three months or such shorter period as may be allowed by the Designated Stock Exchange has elapsed since the date of such advertisement.

For the purpose of the foregoing, the “relevant period” means the period commencing twelve (12) years before the date of publication of the advertisement referred to in paragraph (c) of this Article and ending at the expiry of the period referred to in that paragraph.

(3) To give effect to any such sale the Board may authorise some person to transfer the said shares and an instrument of transfer signed or otherwise executed by or on behalf of such person shall be as effective as if it had been executed by the registered holder or the person entitled by transmission to such shares, and the purchaser shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings relating to the sale. The net proceeds of the sale will belong to the Company and upon receipt by the Company of such net proceeds it shall become indebted to the former Member for an amount equal to such net proceeds. No trust shall be created in respect of such debt and no interest shall be payable in respect of it and the Company shall not be required to account for any money earned from the net proceeds which may be employed in the business of the Company or as it thinks fit. Any sale under this Article shall be valid and effective notwithstanding that the Member holding the shares sold is dead, bankrupt or otherwise under any legal disability or incapacity.

GENERAL MEETINGS

56. An annual general meeting of the Company shall be held in each year other than the year of the Company’s incorporation at such time and place as may be determined by the Board.

57. Each general meeting, other than an annual general meeting, shall be called an extraordinary general meeting. General meetings may be held at such times and in any location in the world as may be determined by the Board.

58. Only a majority of the Board or the Chairman of the Board may call extraordinary general meetings, which extraordinary general meetings shall be held at such times and locations (as permitted hereby) as such person or persons shall determine.

NOTICE OF GENERAL MEETINGS

59.(1) An annual general meeting and any extraordinary general meeting may be called by not less than ten (10) clear days’ Notice but a general meeting may be called by shorter notice, subject to the Law, if it is so agreed:

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(a) in the case of a meeting called as an annual general meeting, by all the Members entitled to attend and vote thereat; and

(b) in the case of any other meeting, by a majority in number of the Members having the right to attend and vote at the meeting, being a majority together holding not less than ninety-five per cent. (95%) in nominal value of the issued shares giving that right.

(2) The notice shall specify the time and place of the meeting and, in case of special business, the general nature of the business. The notice convening an annual general meeting shall specify the meeting as such. Notice of every general meeting shall be given to all Members other than to such Members as, under the provisions of these Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company, to all persons entitled to a share in consequence of the death or bankruptcy or winding-up of a Member and to each of the Directors and the Auditors.

60. The accidental omission to give Notice of a meeting or (in cases where instruments of proxy are sent out with the Notice) to send such instrument of proxy to, or the non-receipt of such Notice or such instrument of proxy by, any person entitled to receive such Notice shall not invalidate any resolution passed or the proceedings at that meeting.

PROCEEDINGS AT GENERAL MEETINGS

61.(1) All business shall be deemed special that is transacted at an extraordinary general meeting, and also all business that is transacted at an annual general meeting, with the exception of:

(a) the declaration and sanctioning of dividends;

(b) consideration and adoption of the accounts and balance sheet and the reports of the Directors and Auditors and other documents required to be annexed to the balance sheet;

(c) the election of Directors;

(d) appointment of Auditors (where special notice of the intention for such appointment is not required by the Law) and other officers;

(e) the fixing of the remuneration of the Auditors, and the voting of remuneration or extra remuneration to the Directors;

(f) the granting of any mandate or authority to the Directors to offer, allot, grant options over or otherwise dispose of the unissued shares in the capital of the Company representing not more than 20 per cent. (20%) in nominal value of its existing issued share capital; and

(g) the granting of any mandate or authority to the Directors to repurchase securities of the Company.

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(2) No business other than the appointment of a chairman of a meeting shall be transacted at any general meeting unless a quorum is present at the commencement of the business. At any general meeting of the Company, two (2) Members entitled to vote and present in person or by proxy or (in the case of a Member being a corporation) by its duly authorised representative representing not less than one-third in nominal value of the total issued voting shares in the Company throughout the meeting shall form a quorum for all purposes.

62. If within thirty (30) minutes (or such longer time not exceeding one hour as the chairman of the meeting may determine to wait) after the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Board may determine. If at such adjourned meeting a quorum is not present within half an hour from the time appointed for holding the meeting, the meeting shall be dissolved.

63. The chairman of the Company shall preside as chairman at every general meeting. If at any meeting the chairman is not present within fifteen (15) minutes after the time appointed for holding the meeting, or is not willing to act as chairman, the Directors present shall choose one of their number to act, or if one Director only is present he shall preside as chairman if willing to act. If no Director is present, or if each of the Directors present declines to take the chair, or if the chairman chosen shall retire from the chair, the Members present in person or by proxy and entitled to vote shall elect one of their number to be chairman.

64. The chairman may adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business which might lawfully have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen (14) days or more, at least seven (7) clear days’ notice of the adjourned meeting shall be given specifying the time and place of the adjourned meeting but it shall not be necessary to specify in such notice the nature of the business to be transacted at the adjourned meeting and the general nature of the business to be transacted. Save as aforesaid, it shall be unnecessary to give notice of an adjournment.

65. If an amendment is proposed to any resolution under consideration but is in good faith ruled out of order by the chairman of the meeting, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a special resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon.

VOTING

66. Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with these Articles, at any general meeting on a show of hands every Member present in person (or being a corporation, is present by a duly authorised representative), or by proxy shall have one vote and on a poll every Member present in person or by proxy or, in the case of a Member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purposes as paid up on the share. Notwithstanding anything contained in these Articles, where more than one proxy is appointed by a Member which is a clearing house (or its nominee(s)), each such proxy shall have one vote on a show of hands. A resolution put to the vote of a meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

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(a) by the chairman of such meeting; or

(b) by at least three Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

(c) by a Member or Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Members having the right to vote at the meeting; or

(d) by a Member or Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a Member or in the case of a Member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Member.

67. Unless a poll is duly demanded and the demand is not withdrawn, a declaration by the chairman that a resolution has been carried, or carried unanimously, or by a particular majority, or not carried by a particular majority, or lost, and an entry to that effect made in the minute book of the Company, shall be conclusive evidence of the facts without proof of the number or proportion of the votes recorded for or against the resolution.

68. If a poll is duly demanded the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. There shall be no requirement for the chairman to disclose the voting figures on a poll.

69. A poll demanded on the election of a chairman, or on a question of adjournment, shall be taken forthwith. A poll demanded on any other question shall be taken in such manner (including the use of ballot or voting papers or tickets) and either forthwith or at such time (being not later than thirty (30) days after the date of the demand) and place as the chairman directs. It shall not be necessary (unless the chairman otherwise directs) for notice to be given of a poll not taken immediately.

70. The demand for a poll shall not prevent the continuance of a meeting or the transaction of any business other than the question on which the poll has been demanded, and, with the consent of the chairman, it may be withdrawn at any time before the close of the meeting or the taking of the poll, whichever is the earlier.

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71. On a poll votes may be given either personally or by proxy.

72. A person entitled to more than one vote on a poll need not use all his votes or cast all the votes he uses in the same way.

73. All questions submitted to a meeting shall be decided by a simple majority of votes except where a greater majority is required by these Articles or by the Law. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of such meeting shall be entitled to a second or casting vote in addition to any other vote he may have.

74. Where there are joint holders of any share any one of such joint holder may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the joint holding. Several executors or administrators of a deceased Member in whose name any share stands shall for the purposes of this Article be deemed joint holders thereof.

75.(1) A Member who is a patient for any purpose relating to mental health or in respect of whom an order has been made by any court having jurisdiction for the protection or management of the affairs of persons incapable of managing their own affairs may vote, whether on a show of hands or on a poll, by his receiver, committee, curator bonis or other person in the nature of a receiver, committee or curator bonis appointed by such court, and such receiver, committee, curator bonis or other person may vote on a poll by proxy, and may otherwise act and be treated as if he were the registered holder of such shares for the purposes of general meetings, provided that such evidence as the Board may require of the authority of the person claiming to vote shall have been deposited at the Office, head office or Registration Office, as appropriate, not less than forty-eight (48) hours before the time appointed for holding the meeting, or adjourned meeting or poll, as the case may be.

(2) Any person entitled under Article 53 to be registered as the holder of any shares may vote at any general meeting in respect thereof in the same manner as if he were the registered holder of such shares, provided that forty-eight (48) hours at least before the time of the holding of the meeting or adjourned meeting, as the case may be, at which he proposes to vote, he shall satisfy the Board of his entitlement to such shares, or the Board shall have previously admitted his right to vote at such meeting in respect thereof.

76. No Member shall, unless the Board otherwise determines, be entitled to attend and vote and to be reckoned in a quorum at any general meeting unless he is duly registered and all calls or other sums presently payable by him in respect of shares in the Company have been paid.

77. If:

(a) any objection shall be raised to the qualification of any voter; or

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(b) any votes have been counted which ought not to have been counted or which might have been rejected; or

(c) any votes are not counted which ought to have been counted;

the objection or error shall not vitiate the decision of the meeting or adjourned meeting on any resolution unless the same is raised or pointed out at the meeting or, as the case may be, the adjourned meeting at which the vote objected to is given or tendered or at which the error occurs. Any objection or error shall be referred to the chairman of the meeting and shall only vitiate the decision of the meeting on any resolution if the chairman decides that the same may have affected the decision of the meeting. The decision of the chairman on such matters shall be final and conclusive.

PROXIES

78. Any Member entitled to attend and vote at a meeting of the Company shall be entitled to appoint another person as his proxy to attend and vote instead of him. A Member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a Member. In addition, a proxy or proxies representing either a Member who is an individual or a Member which is a corporation shall be entitled to exercise the same powers on behalf of the Member which he or they represent as such Member could exercise.

79. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. In the case of an instrument of proxy purporting to be signed on behalf of a corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was duly authorised to sign such instrument of proxy on behalf of the corporation without further evidence of the facts.

80. The instrument appointing a proxy and (if required by the Board) the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to such place or one of such places (if any) as may be specified for that purpose in or by way of note to or in any document accompanying the notice convening the meeting (or, if no place is so specified at the Registration Office or the Office, as may be appropriate) not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, not less than twenty-four (24) hours before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration of twelve (12) months from the date named in it as the date of its execution, except at an adjourned meeting or on a poll demanded at a meeting or an adjourned meeting in cases where the meeting was originally held within twelve (12) months from such date. Delivery of an instrument appointing a proxy shall not preclude a Member from attending and voting in person at the meeting convened and in such event, the instrument appointing a proxy shall be deemed to be revoked.

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81. Instruments of proxy shall be in any common form or in such other form as the Board may approve (provided that this shall not preclude the use of the two-way form) and the Board may, if it thinks fit, send out with the notice of any meeting forms of instrument of proxy for use at the meeting. The instrument of proxy shall be deemed to confer authority to demand or join in demanding a poll and to vote on any amendment of a resolution put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy shall, unless the contrary is stated therein, be valid as well for any adjournment of the meeting as for the meeting to which it relates.

82. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the instrument of proxy or of the authority under which it was executed, provided that no intimation in writing of such death, insanity or revocation shall have been received by the Company at the Office or the Registration Office (or such other place as may be specified for the delivery of instruments of proxy in the notice convening the meeting or other document sent therewith) two hours at least before the commencement of the meeting or adjourned meeting, or the taking of the poll, at which the instrument of proxy is used.

83. Anything which under these Articles a Member may do by proxy he may likewise do by his duly appointed attorney and the provisions of these Articles relating to proxies and instruments appointing proxies shall apply mutatis mutandis in relation to any such attorney and the instrument under which such attorney is appointed.

CORPORATIONS ACTING BY REPRESENTATIVES

84.(1) Any corporation which is a Member may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or at any meeting of any class of Members. The person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual Member and such corporation shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorised is present thereat.

(2) If a clearing house (or its nominee(s)), being a corporation, is a Member, it may authorise such persons as it thinks fit to act as its representatives at any meeting of the Company or at any meeting of any class of Members provided that the authorisation shall specify the number and class of shares in respect of which each such representative is so authorised. Each person so authorised under the provisions of this Article shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same rights and powers on behalf of the clearing house (or its nominee(s)) as if such person was the registered holder of the shares of the Company held by the clearing house (or its nominee(s)) including the right to vote individually on a show of hands.

(3) Any reference in these Articles to a duly authorised representative of a Member being a corporation shall mean a representative authorised under the provisions of this Article.

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NO ACTION BY WRITTEN RESOLUTIONS OF MEMBERS

85. Any action required or permitted to be taken at any annual or extraordinary general meetings of the Company may be taken only upon the vote of the Members at an annual or extraordinary general meeting duly noticed and convened in accordance with these Articles and the Law and may not be taken by written resolution of Members without a meeting.

BOARD OF DIRECTORS

86.(1) Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two (2). There shall be no maximum number of Directors unless otherwise determined from time to time by the Members in general meeting. The Directors shall be elected or appointed in the first place by the subscribers to the Memorandum of Association or by a majority of them and thereafter in accordance with Article 87 and shall hold office until their successors are elected or appointed.

(2) Subject to the Articles and the Law, the Company may by ordinary resolution elect any person to be a Director either to fill a casual vacancy or as an addition to the existing Board.

(3) The Directors shall have the power from time to time and at any time to appoint any person as a Director to fill a casual vacancy on the Board or as an addition to the existing Board. Any Director so appointed by the Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.

(4) No Director shall be required to hold any shares of the Company by way of qualification and a Director who is not a Member shall be entitled to receive notice of and to attend and speak at any general meeting of the Company and of all classes of shares of the Company.

(5) Subject to any provision to the contrary in these Articles, a Director may be removed by way of an ordinary resolution of the Members at any time before the expiration of his period of office notwithstanding anything in these Articles or in any agreement between the Company and such Director (but without prejudice to any claim for damages under any such agreement).

(6) A vacancy on the Board created by the removal of a Director under the provisions of subparagraph (5) above may be filled by the election or appointment by ordinary resolution of the Members at the meeting at which such Director is removed or by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting.

(7) The Company may from time to time in general meeting by ordinary resolution increase or reduce the number of Directors but so that the number of Directors shall never be less than two (2).

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RETIREMENT OF DIRECTORS

87.(1) Notwithstanding any other provisions in the Articles, at each annual general meeting one-third of the Directors for the time being (or, if their number is not a multiple of three (3), the number nearest to but not greater than one-third) shall retire from office by rotation provided that notwithstanding anything herein, the chairman of the Board and/or the managing director of the Company shall not, whilst holding such office, be subject to retirement by rotation or be taken into account in determining the number of Directors to retire in each year.

(2) A retiring Director shall be eligible for re-election. The Directors to retire by rotation shall include (so far as necessary to ascertain the number of directors to retire by rotation) any Director who wishes to retire and not to offer himself for re-election. Any further Directors so to retire shall be those of the other Directors subject to retirement by rotation who have been longest in office since their last re-election or appointment and so that as between persons who became or were last re-elected Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot. Any Director appointed pursuant to Article 86(2) or Article 86(3) shall not be taken into account in determining which particular Directors or the number of Directors who are to retire by rotation.

88. No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any general meeting unless a Notice signed by a Member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also a Notice signed by the person to be proposed of his willingness to be elected shall have been lodged at the head office or at the Registration Office provided that the minimum length of the period, during which such Notice(s) are given, shall be at least seven (7) days and that the period for lodgment of such Notice(s) shall commence no earlier than the day after the dispatch of the notice of the general meeting appointed for such election and end no later than seven (7) days prior to the date of such general meeting.

DISQUALIFICATION OF DIRECTORS

89. The office of a Director shall be vacated if the Director:

(1) resigns his office by notice in writing delivered to the Company at the Office or tendered at a meeting of the Board;

(2) becomes of unsound mind or dies;

(3) without special leave of absence from the Board, is absent from meetings of the Board for six consecutive months and the Board resolves that his office be vacated; or

(4) becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors;

(5) is prohibited by law from being a Director; or

(6) ceases to be a Director by virtue of any provision of the Statutes or is removed from office pursuant to these Articles.

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EXECUTIVE DIRECTORS

90. The Board may from time to time appoint any one or more of its body to be a managing director, joint managing director or deputy managing director or to hold any other employment or executive office with the Company for such period (subject to their continuance as Directors) and upon such terms as the Board may determine and the Board may revoke or terminate any of such appointments. Any such revocation or termination as aforesaid shall be without prejudice to any claim for damages that such Director may have against the Company or the Company may have against such Director. A Director appointed to an office under this Article shall be subject to the same provisions as to removal as the other Directors of the Company, and he shall (subject to the provisions of any contract between him and the Company) ipso facto and immediately cease to hold such office if he shall cease to hold the office of Director for any cause.

91. An executive director appointed to an office under Article 90 hereof shall receive such remuneration (whether by way of salary, commission, participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as the Board may from time to time determine, and either in addition to or in lieu of his remuneration as a Director.

DIRECTORS’ FEES AND EXPENSES

92. The Directors shall receive such remuneration as the Board may from time to time determine. Each Director shall be entitled to be repaid or prepaid all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred by him in attending meetings of the Board or committees of the board or general meetings or separate meetings of any class of shares or of debenture of the Company or otherwise in connection with the discharge of his duties as a Director.

93. Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the Board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration provided for by or pursuant to any other Article.

94. The Board may make any payment to any Director or past Director of the Company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office (not being payment to which the Director is contractually entitled).

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DIRECTORS’ INTERESTS

95. A Director may:

(a) hold any other office or place of profit with the Company (except that of Auditor) in conjunction with his office of Director for such period and upon such terms as the Board may determine. Any remuneration (whether by way of salary, commission, participation in profits or otherwise) paid to any Director in respect of any such other office or place of profit shall be in addition to any remuneration provided for by or pursuant to any other Article;

(b) act by himself or his firm in a professional capacity for the Company (otherwise than as Auditor) and he or his firm may be remunerated for professional services as if he were not a Director;

(c) continue to be or become a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer or member of any other company promoted by the Company or in which the Company may be interested as a vendor, shareholder or otherwise and (unless otherwise agreed) no such Director shall be accountable for any remuneration, profits or other benefits received by him as a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer or member of or from his interests in any such other company. Subject as otherwise provided by these Articles the Directors may exercise or cause to be exercised the voting powers conferred by the shares in any other company held or owned by the Company, or exercisable by them as Directors of such other company in such manner in all respects as they think fit (including the exercise thereof in favour of any resolution appointing themselves or any of them directors, managing directors, joint managing directors, deputy managing directors, executive directors, managers or other officers of such company) or voting or providing for the payment of remuneration to the director, managing director, joint managing director, deputy managing director, executive director, manager or other officers of such other company and any Director may vote in favour of the exercise of such voting rights in manner aforesaid notwithstanding that he may be, or about to be, appointed a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer of such a company, and that as such he is or may become interested in the exercise of such voting rights in manner aforesaid.

Notwithstanding the foregoing, no “Independent Director” as defined in NASD Rules or in Rule 10A-3 under the Exchange Act, and with respect of whom the Board has determined constitutes an “Independent Director” for purposes of compliance with applicable law or the Company’s listing requirements, shall without the consent of the Audit Committee take any of the foregoing actions or any other action that would reasonably be likely to affect such Director’s status as an “Independent Director” of the Company.

96. Subject to the Law and to these Articles, no Director or proposed or intending Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the Members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relationship thereby established provided that such Director shall disclose the nature of his interest in any contract or arrangement in which he is interested in accordance with Article 97 herein. Any such transaction that would reasonably be likely to affect a Director’s status as an “Independent Director”, or that would constitute a “related party transaction” as defined by Item 7.N of Form 20F promulgated by the SEC, shall require the approval of the Audit Committee.

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97. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at the meeting of the Board at which the question of entering into the contract or arrangement is first considered, if he knows his interest then exists, or in any other case at the first meeting of the Board after he knows that he is or has become so interested. For the purposes of this Article, a general Notice to the Board by a Director to the effect that:

(a) he is a member or officer of a specified company or firm and is to be regarded as interested in any contract or arrangement which may after the date of the Notice be made with that company or firm; or

(b) he is to be regarded as interested in any contract or arrangement which may after the date of the Notice be made with a specified person who is connected with him;

shall be deemed to be a sufficient declaration of interest under this Article in relation to any such contract or arrangement, provided that no such Notice shall be effective unless either it is given at a meeting of the Board or the Director takes reasonable steps to secure that it is brought up and read at the next Board meeting after it is given.

98. Following a declaration being made pursuant to the last preceding two Articles, subject to any separate requirement for Audit Committee approval under applicable law or the listing rules of the Company’s Designated Stock Exchange, and unless disqualified by the chairman of the relevant Board meeting, a Director may vote in respect of any contract or proposed contract or arrangement in which such Director is interested and may be counted in the quorum at such meeting.

GENERAL POWERS OF THE DIRECTORS

99.(1) The business of the Company shall be managed and conducted by the Board, which may pay all expenses incurred in forming and registering the Company and may exercise all powers of the Company (whether relating to the management of the business of the Company or otherwise) which are not by the Statutes or by these Articles required to be exercised by the Company in general meeting, subject nevertheless to the provisions of the Statutes and of these Articles and to such regulations being not inconsistent with such provisions, as may be prescribed by the Company in general meeting, but no regulations made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if such regulations had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Board by any other Article.

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(2) Any person contracting or dealing with the Company in the ordinary course of business shall be entitled to rely on any written or oral contract or agreement or deed, document or instrument entered into or executed as the case may be by any two of the Directors acting jointly on behalf of the Company and the same shall be deemed to be validly entered into or executed by the Company as the case may be and shall, subject to any rule of law, be binding on the Company.

(3) Without prejudice to the general powers conferred by these Articles it is hereby expressly declared that the Board shall have the following powers:

(a) To give to any person the right or option of requiring at a future date that an allotment shall be made to him of any share at par or at such premium as may be agreed.

(b) To give to any Directors, officers or employees of the Company an interest in any particular business or transaction or participation in the profits thereof or in the general profits of the Company either in addition to or in substitution for a salary or other remuneration.

(c) To resolve that the Company be deregistered in the Cayman Islands and continued in a named jurisdiction outside the Cayman Islands subject to the provisions of the Law.

100. The Board may establish any regional or local boards or agencies for managing any of the affairs of the Company in any place, and may appoint any persons to be members of such local boards, or any managers or agents, and may fix their remuneration (either by way of salary or by commission or by conferring the right to participation in the profits of the Company or by a combination of two or more of these modes) and pay the working expenses of any staff employed by them upon the business of the Company. The Board may delegate to any regional or local board, manager or agent any of the powers, authorities and discretions vested in or exercisable by the Board (other than its powers to make calls and forfeit shares), with power to sub-delegate, and may authorise the members of any of them to fill any vacancies therein and to act notwithstanding vacancies. Any such appointment or delegation may be made upon such terms and subject to such conditions as the Board may think fit, and the Board may remove any person appointed as aforesaid, and may revoke or vary such delegation, but no person dealing in good faith and without notice of any such revocation or variation shall be affected thereby.

101. The Board may by power of attorney appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Board, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these Articles) and for such period and subject to such conditions as it may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him. Such attorney or attorneys may, if so authorised under the Seal of the Company, execute any deed or instrument under their personal seal with the same effect as the affixation of the Company’s Seal.

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102. The Board may entrust to and confer upon a managing director, joint managing director, deputy managing director, an executive director or any Director any of the powers exercisable by it upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, and may from time to time revoke or vary all or any of such powers but no person dealing in good faith and without notice of such revocation or variation shall be affected thereby.

103. All cheques, promissory notes, drafts, bills of exchange and other instruments, whether negotiable or transferable or not, and all receipts for moneys paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the Board shall from time to time by resolution determine. The Company’s banking accounts shall be kept with such banker or bankers as the Board shall from time to time determine.

104.(1) The Board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the Company’s moneys to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or ex-Director who may hold or have held any executive office or any office of profit under the Company or any of its subsidiary companies) and ex-employees of the Company and their dependants or any class or classes of such person.

(2) The Board may pay, enter into agreements to pay or make grants of revocable or irrevocable pensions or other benefits to employees and ex-employees and their dependants, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex-employees or their dependants are or may become entitled under any such scheme or fund as mentioned in the last preceding paragraph. Any such pension or benefit may, as the Board considers desirable, be granted to an employee either before and in anticipation of or upon or at any time after his actual retirement, and may be subject or not subject to any terms or conditions as the Board may determine.

BORROWING POWERS

105. The Board may exercise all the powers of the Company to raise or borrow money and to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company and, subject to the Law, to issue debentures, bonds and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

106. Debentures, bonds and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued.

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107. Any debentures, bonds or other securities may be issued at a discount (other than shares), premium or otherwise and with any special privileges as to redemption, surrender, drawings, allotment of shares, attending and voting at general meetings of the Company, appointment of Directors and otherwise.

108.(1) Where any uncalled capital of the Company is charged, all persons taking any subsequent charge thereon shall take the same subject to such prior charge, and shall not be entitled, by notice to the Members or otherwise, to obtain priority over such prior charge.

(2) The Board shall cause a proper register to be kept, in accordance with the provisions of the Law, of all charges specifically affecting the property of the Company and of any series of debentures issued by the Company and shall duly comply with the requirements of the Law in regard to the registration of charges and debentures therein specified and otherwise.

PROCEEDINGS OF THE DIRECTORS

109. The Board may meet for the despatch of business, adjourn and otherwise regulate its meetings as it considers appropriate. Questions arising at any meeting shall be determined by a majority of votes. In the case of any equality of votes the chairman of the meeting shall have an additional or casting vote.

110. A meeting of the Board may be convened by the Secretary on request of a Director or by any Director. The Secretary shall convene a meeting of the Board of which notice may be given in writing or by telephone or in such other manner as the Board may from time to time determine whenever he shall be required so to do by the president or chairman, as the case may be, or any Director.

111.(1) The quorum necessary for the transaction of the business of the Board may be fixed by the Board and, unless so fixed at any other number, shall be three (3). An alternate Director shall be counted in a quorum in the case of the absence of a Director for whom he is the alternate provided that he shall not be counted more than once for the purpose of determining whether or not a quorum is present.

(2) Directors may participate in any meeting of the Board by means of a conference telephone or other communications equipment through which all persons participating in the meeting can communicate with each other simultaneously and instantaneously and, for the purpose of counting a quorum, such participation shall constitute presence at a meeting as if those participating were present in person.

(3) Any Director who ceases to be a Director at a Board meeting may continue to be present and to act as a Director and be counted in the quorum until the termination of such Board meeting if no other Director objects and if otherwise a quorum of Directors would not be present.

112. The continuing Directors or a sole continuing Director may act notwithstanding any vacancy in the Board but, if and so long as the number of Directors is reduced below the minimum number fixed by or in accordance with these Articles, the continuing Directors or Director, notwithstanding that the number of Directors is below the number fixed by or in accordance with these Articles as the quorum or that there is only one continuing Director, may act for the purpose of filling vacancies in the Board or of summoning general meetings of the Company but not for any other purpose.

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113. The Chairman of the Board shall be the chairman of all meetings of the Board. If the Chairman of the Board is not present at any meeting within five (5) minutes after the time appointed for holding the same, the Directors present may choose one of their number to be chairman of the meeting.

114. A meeting of the Board at which a quorum is present shall be competent to exercise all the powers, authorities and discretions for the time being vested in or exercisable by the Board.

115.(1) The Board may delegate any of its powers, authorities and discretions to committees (including, without limitation, the Audit Committee), consisting of such Director or Directors and other persons as it thinks fit, and they may, from time to time, revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes. Any committee so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations which may be imposed on it by the Board.

(2) All acts done by any such committee in conformity with such regulations, and in fulfilment of the purposes for which it was appointed, but not otherwise, shall have like force and effect as if done by the Board, and the Board (or if the Board delegates such power, the committee) shall have power to remunerate the members of any such committee, and charge such remuneration to the current expenses of the Company.

116. The meetings and proceedings of any committee consisting of two or more members shall be governed by the provisions contained in these Articles for regulating the meetings and proceedings of the Board so far as the same are applicable and are not superseded by any regulations imposed by the Board under the last preceding Article, indicating, without limitation, any committee charter adopted by the Board for purposes or in respect of any such committee.

117. A resolution in writing signed by all the Directors except such as are temporarily unable to act through ill-health or disability shall (provided that such number is sufficient to constitute a quorum and further provided that a copy of such resolution has been given or the contents thereof communicated to all the Directors for the time being entitled to receive notices of Board meetings in the same manner as notices of meetings are required to be given by these Articles) be as valid and effectual as if a resolution had been passed at a meeting of the Board duly convened and held. Such resolution may be contained in one document or in several documents in like form each signed by one or more of the Directors and for this purpose a facsimile signature of a Director shall be treated as valid.

118. All acts bona fide done by the Board or by any committee or by any person acting as a Director or members of a committee, shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any member of the Board or such committee or person acting as aforesaid or that they or any of them were disqualified or had vacated office, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director or member of such committee.

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AUDIT COMMITTEE

119. Without prejudice to the freedom of the Directors to establish any other committees, for so long as the shares of the Company (or depositary receipts therefor) are listed or quoted on the Designated Stock Exchange, the Board shall establish and maintain an Audit Committee as a committee of the Board, the composition and responsibilities of which shall comply with the NASD Rules and the rules and regulations of the SEC.

120.(1) The Board shall adopt a formal written audit committee charter and review and assess the adequacy of the formal written charter on an annual basis.

(2) The Audit Committee shall meet at least once every financial quarter, or more frequently as circumstances dictate.

121. For so long as the shares of the Company (or depositary receipts therefor) are listed or quoted on the Designated Stock Exchange, the Company shall conduct an appropriate review of all related party transactions on an ongoing basis and shall utilize the Audit Committee for the review and approval of potential conflicts of interest. Specially, the Audit Committee shall approve any transaction or transactions between the Company and any f the following parties: (i) any shareholder owning an interest in the voting power of the Company or any subsidiary of the Company that gives such shareholder significant influence over the Company or any subsidiary of the Company, (ii) any director or executive officer of the Company or any subsidiary of the Company and any relative of such director or executive officer, (iii) any person in which a substantial interest in the voting power of the Company is owned, directly or indirectly, by any person described in (i) or (ii) or over which such a person is able to exercise significant influence, and (iv) any affiliate (other than a subsidiary) of the Company.

OFFICERS

122.(1) The officers of the Company shall consist of the Chairman of the Board, the Directors and Secretary and such additional officers (who may or may not be Directors) as the Board may from time to time determine, all of whom shall be deemed to be officers for the purposes of the Law and these Articles.

(2) The Directors shall, as soon as may be after each appointment or election of Directors, elect amongst the Directors a chairman and if more than one Director is proposed for this office, the election to such office shall take place in such manner as the Directors may determine.

(3) The officers shall receive such remuneration as the Directors may from time to time determine.

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123.(1) The Secretary and additional officers, if any, shall be appointed by the Board and shall hold office on such terms and for such period as the Board may determine. If thought fit, two or more persons may be appointed as joint Secretaries. The Board may also appoint from time to time on such terms as it thinks fit one or more assistant or deputy Secretaries.

(2) The Secretary shall attend all meetings of the Members and shall keep correct minutes of such meetings and enter the same in the proper books provided for the purpose. He shall perform such other duties as are prescribed by the Law or these Articles or as may be prescribed by the Board.

124. The officers of the Company shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Directors from time to time.

125. A provision of the Law or of these Articles requiring or authorising a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same person acting both as Director and as or in place of the Secretary.

REGISTER OF DIRECTORS AND OFFICERS

126. The Company shall cause to be kept in one or more books at its Office a Register of Directors and Officers in which there shall be entered the full names and addresses of the Directors and Officers and such other particulars as required by the Law or as the Directors may determine. The Company shall send to the Registrar of Companies in the Cayman Islands a copy of such register, and shall from time to time notify to the said Registrar of any change that takes place in relation to such Directors and Officers as required by the Law.

MINUTES

127.(1) The Board shall cause minutes to be duly entered in books provided for the purpose:

(a) of all elections and appointments of officers;

(b) of the names of the Directors present at each meeting of the Directors and of any committee of the Directors;

(c) of all resolutions and proceedings of each general meeting of the Members, meetings of the Board and meetings of committees of the Board and where there are managers, of all proceedings of meetings of the managers.

(2) Minutes shall be kept by the Secretary at the Office.

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SEAL

128.(1) The Company shall have one or more Seals, as the Board may determine. For the purpose of sealing documents creating or evidencing securities issued by the Company, the Company may have a securities seal which is a facsimile of the Seal of the Company with the addition of the word “Securities” on its face or in such other form as the Board may approve. The Board shall provide for the custody of each Seal and no Seal shall be used without the authority of the Board or of a committee of the Board authorised by the Board in that behalf. Subject as otherwise provided in these Articles, any instrument to which a Seal is affixed shall be signed autographically by one Director and the Secretary or by two Directors or by such other person (including a Director) or persons as the Board may appoint, either generally or in any particular case, save that as regards any certificates for shares or debentures or other securities of the Company the Board may by resolution determine that such signatures or either of them shall be dispensed with or affixed by some method or system of mechanical signature. Every instrument executed in manner provided by this Article shall be deemed to be sealed and executed with the authority of the Board previously given.

(2) Where the Company has a Seal for use abroad, the Board may by writing under the Seal appoint any agent or committee abroad to be the duly authorised agent of the Company for the purpose of affixing and using such Seal and the Board may impose restrictions on the use thereof as may be thought fit. Wherever in these Articles reference is made to the Seal, the reference shall, when and so far as may be applicable, be deemed to include any such other Seal as aforesaid.

AUTHENTICATION OF DOCUMENTS

129. Any Director or the Secretary or any person appointed by the Board for the purpose may authenticate any documents affecting the constitution of the Company and any resolution passed by the Company or the Board or any committee, and any books, records, documents and accounts relating to the business of the Company, and to certify copies thereof or extracts therefrom as true copies or extracts, and if any books, records, documents or accounts are elsewhere than at the Office or the head office the local manager or other officer of the Company having the custody thereof shall be deemed to be a person so appointed by the Board. A document purporting to be a copy of a resolution, or an extract from the minutes of a meeting, of the Company or of the Board or any committee which is so certified shall be conclusive evidence in favour of all persons dealing with the Company upon the faith thereof that such resolution has been duly passed or, as the case may be, that such minutes or extract is a true and accurate record of proceedings at a duly constituted meeting.

DESTRUCTION OF DOCUMENTS

130.(1) The Company shall be entitled to destroy the following documents at the following times:

(a) any share certificate which has been cancelled at any time after the expiry of one (1) year from the date of such cancellation;

(b) any dividend mandate or any variation or cancellation thereof or any notification of change of name or address at any time after the expiry of two (2) years from the date such mandate variation cancellation or notification was recorded by the Company;

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(c) any instrument of transfer of shares which has been registered at any time after the expiry of seven (7) years from the date of registration;

(d) any allotment letters after the expiry of seven (7) years from the date of issue thereof; and

(e) copies of powers of attorney, grants of probate and letters of administration at any time after the expiry of seven (7) years after the account to which the relevant power of attorney, grant of probate or letters of administration related has been closed;

and it shall conclusively be presumed in favour of the Company that every entry in the Register purporting to be made on the basis of any such documents so destroyed was duly and properly made and every share certificate so destroyed was a valid certificate duly and properly cancelled and that every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered and that every other document destroyed hereunder was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company. Provided always that: (1) the foregoing provisions of this Article shall apply only to the destruction of a document in good faith and without express notice to the Company that the preservation of such document was relevant to a claim; (2) nothing contained in this Article shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any case where the conditions of proviso (1) above are not fulfilled; and (3) references in this Article to the destruction of any document include references to its disposal in any manner.

(2) Notwithstanding any provision contained in these Articles, the Directors may, if permitted by applicable law, authorise the destruction of documents set out in sub-paragraphs (a) to (e) of paragraph (1) of this Article and any other documents in relation to share registration which have been microfilmed or electronically stored by the Company or by the share registrar on its behalf provided always that this Article shall apply only to the destruction of a document in good faith and without express notice to the Company and its share registrar that the preservation of such document was relevant to a claim.

DIVIDENDS AND OTHER PAYMENTS

131. Subject to the Law, the Board may from time to time declare dividends in any currency to be paid to the Members but no dividend shall be declared in excess of the amount recommended by the Board.

132. Dividends may be declared and paid out of the profits of the Company, realised or unrealised, or from any reserve set aside from profits which the Directors determine is no longer needed. The Board may also declare and pay dividends out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Law.

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133. Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provide:

(a) all dividends shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid, but no amount paid up on a share in advance of calls shall be treated for the purposes of this Article as paid up on the share; and

(b) all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid.

134. The Board may from time to time pay to the Members such interim dividends as appear to the Board to be justified by the profits of the Company and in particular (but without prejudice to the generality of the foregoing) if at any time the share capital of the Company is divided into different classes, the Board may pay such interim dividends in respect of those shares in the capital of the Company which confer on the holders thereof deferred or non-preferential rights as well as in respect of those shares which confer on the holders thereof preferential rights with regard to dividend and provided that the Board acts bona fide the Board shall not incur any responsibility to the holders of shares conferring any preference for any damage that they may suffer by reason of the payment of an interim dividend on any shares having deferred or non-preferential rights and may also pay any fixed dividend which is payable on any shares of the Company half-yearly or on any other dates, whenever such profits, in the opinion of the Board, justifies such payment.

135. The Board may deduct from any dividend or other moneys payable to a Member by the Company on or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

136. No dividend or other moneys payable by the Company on or in respect of any share shall bear interest against the Company.

137. Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address or, in the case of joint holders, addressed to the holder whose name stands first in the Register in respect of the shares at his address as appearing in the Register or addressed to such person and at such address as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the Register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company notwithstanding that it may subsequently appear that the same has been stolen or that any endorsement thereon has been forged. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

138. All dividends or bonuses unclaimed for one (1) year after having been declared may be invested or otherwise made use of by the Board for the benefit of the Company until claimed. Any dividend or bonuses unclaimed after a period of six (6) years from the date of declaration shall be forfeited and shall revert to the Company. The payment by the Board of any unclaimed dividend or other sums payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof.

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139. Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared, the Board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind and in particular of paid up shares, debentures or warrants to subscribe securities of the Company or any other company, or in any one or more of such ways, and where any difficulty arises in regard to the distribution the Board may settle the same as it thinks expedient, and in particular may issue certificates in respect of fractions of shares, disregard fractional entitlements or round the same up or down, and may fix the value for distribution of such specific assets, or any part thereof, and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board and may appoint any person to sign any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend, and such appointment shall be effective and binding on the Members. The Board may resolve that no such assets shall be made available to Members with registered addresses in any particular territory or territories where, in the absence of a registration statement or other special formalities, such distribution of assets would or might, in the opinion of the Board, be unlawful or impracticable and in such event the only entitlement of the Members aforesaid shall be to receive cash payments as aforesaid. Members affected as a result of the foregoing sentence shall not be or be deemed to be a separate class of Members for any purpose whatsoever.

140.(1) Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared on any class of the share capital of the Company, the Board may further resolve either:

(a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the Members entitled thereto will be entitled to elect to receive such dividend (or part thereof if the Board so determines) in cash in lieu of such allotment. In such case, the following provisions shall apply:

(i) the basis of any such allotment shall be determined by the Board;

(ii) the Board, after determining the basis of allotment, shall give not less than ten (10) days’ Notice to the holders of the relevant shares of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective;

(iii) the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded; and

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(iv) the dividend (or that part of the dividend to be satisfied by the allotment of shares as aforesaid) shall not be payable in cash on shares in respect whereof the cash election has not been duly exercised (“the non-elected shares”) and in satisfaction thereof shares of the relevant class shall be allotted credited as fully paid up to the holders of the non-elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company (including profits carried and standing to the credit of any reserves or other special account, share premium account, capital redemption reserve other than the Subscription Rights Reserve) as the Board may determine, such sum as may be required to pay up in full the appropriate number of shares of the relevant class for allotment and distribution to and amongst the holders of the non-elected shares on such basis; or

(b) that the Members entitled to such dividend shall be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Board may think fit. In such case, the following provisions shall apply:

(i) the basis of any such allotment shall be determined by the Board;

(ii) the Board, after determining the basis of allotment, shall give not less than ten (10) days’ Notice to the holders of the relevant shares of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective;

(iii) the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded; and

(iv) the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable in cash on shares in respect whereof the share election has been duly exercised (“the elected shares”) and in lieu thereof shares of the relevant class shall be allotted credited as fully paid up to the holders of the elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company (including profits carried and standing to the credit of any reserves or other special account, share premium account, capital redemption reserve other than the Subscription Rights Reserve) as the Board may determine, such sum as may be required to pay up in full the appropriate number of shares of the relevant class for allotment and distribution to and amongst the holders of the elected shares on such basis.

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(2)	(a)	The shares allotted pursuant to the provisions of paragraph (1) of this Article shall rank pari passu in all respects with shares of the same class (if any) then in issue save only as regards participation in the relevant dividend or in any other distributions, bonuses or rights paid, made, declared or announced prior to or contemporaneously with the payment or declaration of the relevant dividend unless, contemporaneously with the announcement by the Board of their proposal to apply the provisions of sub-paragraph (a) or (b) of paragraph (2) of this Article in relation to the relevant dividend or contemporaneously with their announcement of the distribution, bonus or rights in question, the Board shall specify that the shares to be allotted pursuant to the provisions of paragraph (1) of this Article shall rank for participation in such distribution, bonus or rights.
	(b)	The Board may do all acts and things considered necessary or expedient to give effect to any capitalisation pursuant to the provisions of paragraph (1) of this Article, with full power to the Board to make such provisions as it thinks fit in the case of shares becoming distributable in fractions (including provisions whereby, in whole or in part, fractional entitlements are aggregated and sold and the net proceeds distributed to those entitled, or are disregarded or rounded up or down or whereby the benefit of fractional entitlements accrues to the Company rather than to the Members concerned). The Board may authorise any person to enter into on behalf of all Members interested, an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made pursuant to such authority shall be effective and binding on all concerned.

(3) The Company may upon the recommendation of the Board by ordinary resolution resolve in respect of any one particular dividend of the Company that notwithstanding the provisions of paragraph (1) of this Article a dividend may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

(4) The Board may on any occasion determine that rights of election and the allotment of shares under paragraph (1) of this Article shall not be made available or made to any shareholders with registered addresses in any territory where, in the absence of a registration statement or other special formalities, the circulation of an offer of such rights of election or the allotment of shares would or might, in the opinion of the Board, be unlawful or impracticable, and in such event the provisions aforesaid shall be read and construed subject to such determination. Members affected as a result of the foregoing sentence shall not be or be deemed to be a separate class of Members for any purpose whatsoever.

(5) Any resolution declaring a dividend on shares of any class, whether a resolution of the Company in general meeting or a resolution of the Board, may specify that the same shall be payable or distributable to the persons registered as the holders of such shares at the close of business on a particular date, notwithstanding that it may be a date prior to that on which the resolution is passed, and thereupon the dividend shall be payable or distributable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect of such dividend of transferors and transferees of any such shares. The provisions of this Article shall mutatis mutandis apply to bonuses, capitalisation issues, distributions of realised capital profits or offers or grants made by the Company to the Members.

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RESERVES

141.(1) The Board shall establish an account to be called the share premium account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any share in the Company. Unless otherwise provided by the provisions of these Articles, the Board may apply the share premium account in any manner permitted by the Law. The Company shall at all times comply with the provisions of the Law in relation to the share premium account.

(2) Before recommending any dividend, the Board may set aside out of the profits of the Company such sums as it determines as reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied and pending such application may, also at such discretion, either be employed in the business of the Company or be invested in such investments as the Board may from time to time think fit and so that it shall not be necessary to keep any investments constituting the reserve or reserves separate or distinct from any other investments of the Company. The Board may also without placing the same to reserve carry forward any profits which it may think prudent not to distribute.

CAPITALISATION

142. The Company may, upon the recommendation of the Board, at any time and from time to time pass an ordinary resolution to the effect that it is desirable to capitalise all or any part of any amount for the time being standing to the credit of any reserve or fund (including a share premium account and capital redemption reserve and the profit and loss account) whether or not the same is available for distribution and accordingly that such amount be set free for distribution among the Members or any class of Members who would be entitled thereto if it were distributed by way of dividend and in the same proportions, on the footing that the same is not paid in cash but is applied either in or towards paying up the amounts for the time being unpaid on any shares in the Company held by such Members respectively or in paying up in full unissued shares, debentures or other obligations of the Company, to be allotted and distributed credited as fully paid up among such Members, or partly in one way and partly in the other, and the Board shall give effect to such resolution provided that, for the purposes of this Article, a share premium account and any capital redemption reserve or fund representing unrealised profits, may be applied only in paying up in full unissued shares of the Company to be allotted to such Members credited as fully paid.

143. The Board may settle, as it considers appropriate, any difficulty arising in regard to any distribution under the last preceding Article and in particular may issue certificates in respect of fractions of shares or authorise any person to sell and transfer any fractions or may resolve that the distribution should be as nearly as may be practicable in the correct proportion but not exactly so or may ignore fractions altogether, and may determine that cash payments shall be made to any Members in order to adjust the rights of all parties, as may seem expedient to the Board. The Board may appoint any person to sign on behalf of the persons entitled to participate in the distribution any contract necessary or desirable for giving effect thereto and such appointment shall be effective and binding upon the Members.

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SUBSCRIPTION RIGHTS RESERVE

144. The following provisions shall have effect to the extent that they are not prohibited by and are in compliance with the Law:

(1) If, so long as any of the rights attached to any warrants issued by the Company to subscribe for shares of the Company shall remain exercisable, the Company does any act or engages in any transaction which, as a result of any adjustments to the subscription price in accordance with the provisions of the conditions of the warrants, would reduce the subscription price to below the par value of a share, then the following provisions shall apply:

(a) as from the date of such act or transaction the Company shall establish and thereafter (subject as provided in this Article) maintain in accordance with the provisions of this Article a reserve (the “Subscription Rights Reserve”) the amount of which shall at no time be less than the sum which for the time being would be required to be capitalised and applied in paying up in full the nominal amount of the additional shares required to be issued and allotted credited as fully paid pursuant to sub-paragraph (c) below on the exercise in full of all the subscription rights outstanding and shall apply the Subscription Rights Reserve in paying up such additional shares in full as and when the same are allotted;

(b) the Subscription Rights Reserve shall not be used for any purpose other than that specified above unless all other reserves of the Company (other than share premium account) have been extinguished and will then only be used to make good losses of the Company if and so far as is required by law;

(c) upon the exercise of all or any of the subscription rights represented by any warrant, the relevant subscription rights shall be exercisable in respect of a nominal amount of shares equal to the amount in cash which the holder of such warrant is required to pay on exercise of the subscription rights represented thereby (or, as the case may be the relevant portion thereof in the event of a partial exercise of the subscription rights) and, in addition, there shall be allotted in respect of such subscription rights to the exercising warrantholder, credited as fully paid, such additional nominal amount of shares as is equal to the difference between:

(i) the said amount in cash which the holder of such warrant is required to pay on exercise of the subscription rights represented thereby (or, as the case may be, the relevant portion thereof in the event of a partial exercise of the subscription rights); and

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(ii) the nominal amount of shares in respect of which such subscription rights would have been exercisable having regard to the provisions of the conditions of the warrants, had it been possible for such subscription rights to represent the right to subscribe for shares at less than par and immediately upon such exercise so much of the sum standing to the credit of the Subscription Rights Reserve as is required to pay up in full such additional nominal amount of shares shall be capitalised and applied in paying up in full such additional nominal amount of shares which shall forthwith be allotted credited as fully paid to the exercising warrantholders; and

(d) if, upon the exercise of the subscription rights represented by any warrant, the amount standing to the credit of the Subscription Rights Reserve is not sufficient to pay up in full such additional nominal amount of shares equal to such difference as aforesaid to which the exercising warrantholder is entitled, the Board shall apply any profits or reserves then or thereafter becoming available (including, to the extent permitted by law, share premium account) for such purpose until such additional nominal amount of shares is paid up and allotted as aforesaid and until then no dividend or other distribution shall be paid or made on the fully paid shares of the Company then in issue. Pending such payment and allotment, the exercising warrantholder shall be issued by the Company with a certificate evidencing his right to the allotment of such additional nominal amount of shares. The rights represented by any such certificate shall be in registered form and shall be transferable in whole or in part in units of one share in the like manner as the shares for the time being are transferable, and the Company shall make such arrangements in relation to the maintenance of a register therefor and other matters in relation thereto as the Board may think fit and adequate particulars thereof shall be made known to each relevant exercising warrantholder upon the issue of such certificate.

(2) Shares allotted pursuant to the provisions of this Article shall rank pari passu in all respects with the other shares allotted on the relevant exercise of the subscription rights represented by the warrant concerned. Notwithstanding anything contained in paragraph (1) of this Article, no fraction of any share shall be allotted on exercise of the subscription rights.

(3) The provision of this Article as to the establishment and maintenance of the Subscription Rights Reserve shall not be altered or added to in any way which would vary or abrogate, or which would have the effect of varying or abrogating the provisions for the benefit of any warrantholder or class of warrantholders under this Article without the sanction of a special resolution of such warrantholders or class of warrantholders.

(4) A certificate or report by the auditors for the time being of the Company as to whether or not the Subscription Rights Reserve is required to be established and maintained and if so the amount thereof so required to be established and maintained, as to the purposes for which the Subscription Rights Reserve has been used, as to the extent to which it has been used to make good losses of the Company, as to the additional nominal amount of shares required to be allotted to exercising warrantholders credited as fully paid, and as to any other matter concerning the Subscription Rights Reserve shall (in the absence of manifest error) be conclusive and binding upon the Company and all warrantholders and shareholders.

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ACCOUNTING RECORDS

145. The Board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the Law or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

146. The accounting records shall be kept at the Office or, at such other place or places as the Board decides and shall always be open to inspection by the Directors. No Member (other than a Director) shall have any right of inspecting any accounting record or book or document of the Company except as conferred by law or authorised by the Board or the Company in general meeting.

147. Subject to Article 148, a printed copy of the Directors’ report, accompanied by the balance sheet and profit and loss account, including every document required by law to be annexed thereto, made up to the end of the applicable financial year and containing a summary of the assets and liabilities of the Company under convenient heads and a statement of income and expenditure, together with a copy of the Auditors’ report, shall be sent to each person entitled thereto at least ten (10) days before the date of the general meeting and laid before the Company at the annual general meeting held in accordance with Article 56 provided that this Article shall not require a copy of those documents to be sent to any person whose address the Company is not aware or to more than one of the joint holders of any shares or debentures.

148. Subject to due compliance with all applicable Statutes, rules and regulations, including, without limitation, the rules of the Designated Stock Exchange, and to obtaining all necessary consents, if any, required thereunder, the requirements of Article 147 shall be deemed satisfied in relation to any person by sending to the person in any manner not prohibited by the Statutes, a summary financial statement derived from the Company’s annual accounts and the directors’ report which shall be in the form and containing the information required by applicable laws and regulations, provided that any person who is otherwise entitled to the annual financial statements of the Company and the directors’ report thereon may, if he so requires by notice in writing served on the Company, demand that the Company sends to him, in addition to a summary financial statement, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

149. The requirement to send to a person referred to in Article 147 the documents referred to in that article or a summary financial report in accordance with Article 148 shall be deemed satisfied where, in accordance with all applicable Statutes, rules and regulations, including, without limitation, the rules of the Designated Stock Exchange, the Company publishes copies of the documents referred to in Article 147 and, if applicable, a summary financial report complying with Article 148, on the Company’s computer network or in any other permitted manner (including by sending any form of electronic communication), and that person has agreed or is deemed to have agreed to treat the publication or receipt of such documents in such manner as discharging the Company’s obligation to send to him a copy of such documents.

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AUDIT

150. Subject to applicable law and rules of the Designated Stock Exchange:

(1) The Board shall appoint an auditor to audit the accounts of the Company and such auditor shall hold office until the Board appoints another auditor. Such auditor may be a Member but no Director or officer or employee of the Company shall, during his continuance in office, be eligible to act as an auditor of the Company.

(2) A person, other than a retiring Auditor, shall not be capable of being appointed Auditor by the Board unless notice in writing of an intention to nominate that person to the office of Auditor has been given not less than fourteen (14) days prior to such appointment and furthermore, the Company shall send a copy of any such notice to the retiring Auditor.

(3) The Board may remove the Auditor at any time before the expiration of his term of office and shall appoint another Auditor in his stead for the remainder of his term.

151. Subject to the Law the accounts of the Company shall be audited at least once in every year.

152. The remuneration of the Auditor shall be fixed by the Company in general meeting or in such manner as the Members may determine.

153. If the office of auditor becomes vacant by the resignation or death of the Auditor, or by his becoming incapable of acting by reason of illness or other disability at a time when his services are required, the Directors shall fill the vacancy and determine the remuneration of such Auditor.

154. The Auditor shall at all reasonable times have access to all books kept by the Company and to all accounts and vouchers relating thereto; and he may call on the Directors or officers of the Company for any information in their possession relating to the books or affairs of the Company.

155. The statement of income and expenditure and the balance sheet provided for by these Articles shall be examined by the Auditor and compared by him with the books, accounts and vouchers relating thereto; and he shall make a written report thereon stating whether such statement and balance sheet are drawn up so as to present fairly the financial position of the Company and the results of its operations for the period under review and, in case information shall have been called for from Directors or officers of the Company, whether the same has been furnished and has been satisfactory. The financial statements of the Company shall be audited by the Auditor in accordance with generally accepted auditing standards. The Auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the Auditor shall be submitted to the Members in general meeting. The generally accepted auditing standards referred to herein may be those of a country or jurisdiction other than the Cayman Islands. If so, the financial statements and the report of the Auditor should disclose this act and name such country or jurisdiction.

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NOTICES

156. Any Notice or document, whether or not, to be given or issued under these Articles from the Company to a Member shall be in writing or by cable, telex or facsimile transmission message or other form of electronic transmission or communication and any such Notice and document may be served or delivered by the Company on or to any Member either personally or by sending it through the post in a prepaid envelope addressed to such Member at his registered address as appearing in the Register or at any other address supplied by him to the Company for the purpose or, as the case may be, by transmitting it to any such address or transmitting it to any telex or facsimile transmission number or electronic number or address or website supplied by him to the Company for the giving of Notice to him or which the person transmitting the notice reasonably and bona fide believes at the relevant time will result in the Notice being duly received by the Member or may also be served by advertisement in appropriate newspapers in accordance with the requirements of the Designated Stock Exchange or, to the extent permitted by the applicable laws, by placing it on the Company’s website and giving to the member a notice stating that the notice or other document is available there (a “notice of availability”). The notice of availability may be given to the Member by any of the means set out above. In the case of joint holders of a share all notices shall be given to that one of the joint holders whose name stands first in the Register and notice so given shall be deemed a sufficient service on or delivery to all the joint holders.

157. Any Notice or other document:

(a) if served or delivered by post, shall where appropriate be sent by airmail and shall be deemed to have been served or delivered on the day following that on which the envelope containing the same, properly prepaid and addressed, is put into the post; in proving such service or delivery it shall be sufficient to prove that the envelope or wrapper containing the notice or document was properly addressed and put into the post and a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board that the envelope or wrapper containing the notice or other document was so addressed and put into the post shall be conclusive evidence thereof;

(b) if sent by electronic communication, shall be deemed to be given on the day on which it is transmitted from the server of the Company or its agent. A notice placed on the Company’s website is deemed given by the Company to a Member on the day following that on which a notice of availability is deemed served on the Member;

(c) if served or delivered in any other manner contemplated by these Articles, shall be deemed to have been served or delivered at the time of personal service or delivery or, as the case may be, at the time of the relevant despatch or transmission; and in proving such service or delivery a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board as to the act and time of such service, delivery, despatch or transmission shall be conclusive evidence thereof; and

(d) may be given to a Member either in the English language or the Chinese language, subject to due compliance with all applicable Statutes, rules and regulations.

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158.(1) Any Notice or other document delivered or sent by post to or left at the registered address of any Member in pursuance of these Articles shall, notwithstanding that such Member is then dead or bankrupt or that any other event has occurred, and whether or not the Company has notice of the death or bankruptcy or other event, be deemed to have been duly served or delivered in respect of any share registered in the name of such Member as sole or joint holder unless his name shall, at the time of the service or delivery of the notice or document, have been removed from the Register as the holder of the share, and such service or delivery shall for all purposes be deemed a sufficient service or delivery of such Notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share.

(2) A notice may be given by the Company to the person entitled to a share in consequence of the death, mental disorder or bankruptcy of a Member by sending it through the post in a prepaid letter, envelope or wrapper addressed to him by name, or by the title of representative of the deceased, or trustee of the bankrupt, or by any like description, at the address, if any, supplied for the purpose by the person claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death, mental disorder or bankruptcy had not occurred.

(3) Any person who by operation of law, transfer or other means whatsoever shall become entitled to any share shall be bound by every notice in respect of such share which prior to his name and address being entered on the Register shall have been duly given to the person from whom he derives his title to such share.

SIGNATURES

159. For the purposes of these Articles, a cable or telex or facsimile or electronic transmission message purporting to come from a holder of shares or, as the case may be, a Director, or, in the case of a corporation which is a holder of shares from a director or the secretary thereof or a duly appointed attorney or duly authorised representative thereof for it and on its behalf, shall in the absence of express evidence to the contrary available to the person relying thereon at the relevant time be deemed to be a document or instrument in writing signed by such holder or Director in the terms in which it is received.

WINDING UP

160.(1) The Board shall have power in the name and on behalf of the Company to present a petition to the court for the Company to be wound up.

(2) A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

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161.(1) Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares (i) if the Company shall be wound up and the assets available for distribution amongst the Members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company shall be wound up and the assets available for distribution amongst the Members as such shall be insufficient to repay the whole of the paid-up capital such assets shall be distributed so that, a nearly as may be, the losses shall be borne by the Members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.

(2) If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Law, divide among the Members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of properties of one kind or shall consist of properties to be divided as aforesaid of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of the Members as the liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

(3) In the event of winding-up of the Company in the People’s Republic of China, every Member of the Company who is not for the time being in the People’s Republic of China shall be bound, within 14 days after the passing of an effective resolution to wind up the Company voluntarily, or the making of an order for the winding-up of the Company, to serve notice in writing on the Company appointing some person resident in the People’s Republic of China and stating that person’s full name, address and occupation upon whom all summonses, notices, process, orders and judgments in relation to or under the winding-up of the Company may be served, and in default of such nomination the liquidator of the Company shall be at liberty on behalf of such Member to appoint some such person, and service upon any such appointee, whether appointed by the Member or the liquidator, shall be deemed to be good personal service on such Member for all purposes, and, where the liquidator makes any such appointment, he shall with all convenient speed give notice thereof to such Member by advertisement as he shall deem appropriate or by a registered letter sent through the post and addressed to such Member at his address as appearing in the register, and such notice shall be deemed to be service on the day following that on which the advertisement first appears or the letter is posted.

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INDEMNITY

162.(1) The Directors, Secretary and other officers for the time being of the Company and the liquidator or trustees (if any) for the time being acting in relation to any of the affairs of the Company and everyone of them, and everyone of their heirs, executors and administrators, shall be indemnified and secured harmless out of the assets and profits of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their or any of their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, in their respective offices or trusts; and none of them shall be answerable for the acts, receipts, neglects or defaults of the other or others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto; PROVIDED THAT this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of said persons.

(2) Each Member agrees to waive any claim or right of action he might have, whether individually or by or in the right of the Company, against any Director on account of any action taken by such Director, or the failure of such Director to take any action in the performance of his duties with or for the Company; PROVIDED THAT such waiver shall not extend to any matter in respect of any fraud or dishonesty which may attach to such Director.

AMENDMENT TO MEMORANDUM AND ARTICLES OF ASSOCIATION

AND NAME OF COMPANY

163. No Article shall be rescinded, altered or amended and no new Article shall be made until the same has been approved by a special resolution of the Members. A special resolution shall be required to alter the provisions of the Memorandum of Association or to change the name of the Company.

INFORMATION

164. No Member shall be entitled to require discovery of or any information respecting any detail of the Company’s trading or any matter which is or may be in the nature of a trade secret or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Directors it will be inexpedient in the interests of the members of the Company to communicate to the public.

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EX-3.3

Exhibit 3.3

VOTING AGREEMENT

This VOTING AGREEMENT (the “Agreement”) is entered into as of                     , 2006 by and among 3SBio Inc., a Cayman Island corporation (the “Company”) and the entities listed on Exhibit A hereto (the “Holders”).

RECITALS

WHEREAS, the Holders are the beneficial owners of that number of shares (collectively, the “Shares”) of the Company’s ordinary shares (the “Common Stock”) set forth opposite their names on Exhibit A;

WHEREAS, pursuant to the equity transfer agreement dated as of                     , 2006, Collected Mind Limited, a wholly owned subsidiary of the Company, purchased the entire equity interests of Shenyang Sunshine Pharmaceutical Co., Ltd. (“Sunshine”) pursuant to a plan of reorganization of Sunshine (the “Reorganization”);

WHEREAS, immediately prior to the Reorganization, the beneficial shareholders of the Holders were shareholders of Shenyang Keweier High Technology Co., Ltd. (“Keweier”), which owns 50.88% of Sunshine;

WHEREAS, the Reorganization is treated as a recapitalization under common control under the applicable accounting standards and the Holders agree to vote all their respective shares as a single block as if they together were a successor to Keweier; and

WHEREAS, the Company and each of the Holders have agreed to provide for the voting of their Shares as a single block for all matters of the Company that require shareholder approvals as set forth below;

NOW, THEREFORE, in consideration of the promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledge, the parties hereto agree as follows:

ARTICLE I

1. VOTING

1.1 Holder Shares. Each Holder agrees on behalf of itself and any assignee or transferee of Holder Shares to hold all shares of voting capital stock of the Company registered in their respective names or beneficially owned by them as of the date hereof, and any and all other securities of the Company legally or beneficially acquired by each of the Holders after the date hereof (collectively referred to as (the “Holder Shares”)) subject to, and to vote the Holder Shares in accordance with, the provisions of this Agreement.

1.2 Voting. Each Holder agrees that, during the time that this Agreement is in effect, at any meeting of the shareholders of the Company (the “Company Shareholders’ Meeting”) such Holder (i) shall appear at the Company Shareholders’ Meeting or otherwise cause its Holder Shares to be counted as present thereat for purposes of establishing a quorum; and (ii) vote, or execute consents in respect of such Holder Shares or cause such Holder Shares to be voted, or consents to be executed in respect thereof, in accordance with such resolutions as approved or adopted by a majority in interest of the Holders.

1.3 Transfer. The Company shall not permit the transfer of any of the Holder Shares on its books or issue a new certificate representing any of the Holder Shares unless and until the person to whom such security is to be transferred shall have agreed to be bound by all the provisions hereof as if such person were a Holder.

1.4 Other Rights. Except as provided by this Agreement, each Holder shall exercise the full rights of a shareholder with respect to the Holder Shares, respectively.

ARTICLE II

2. TERMINATION

2.1 This Agreement shall continue in full force and effect from the date hereof through the earlier of the following dates, on which it shall terminate in its entirety: (i) the date that is 180 days after the closing of the Company’s first underwritten public offering of its Common Stock (or American Depositary Shares representing the Common Stock); and (ii) August 31, 2007.

ARTICLE III

3. MISCELLANEOUS

3.1 Ownership. Each Holder represents and warrants that (a) he, she or it now owns Holder Shares, free and clear of liens or encumbrances, and except as set forth on Exhibit A has opposite such Holder’s name, has not, prior to or on the date of this Agreement, executed or delivered any proxy or entered into any other voting agreement or similar arrangement other than one which has expired or terminated prior to or on the date hereof, and (b) such Holder has full power and capacity to execute, deliver and perform this Agreement, which has been duly executed and delivered by, and evidences the valid and binding obligation, such Holder enforceable in accordance with its terms.

3.2 Further Action. If and whenever the Holder Shares are sold, the Holders (or the personal representative of the Holders) shall do all things and execute and deliver all documents and make all transfers and cause any transferee of the Holder Shares to do all things and execute and deliver all documents, as may be necessary to consummate such sale consistent with this Agreement.

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3.3 Specific Performance. The parties hereto hereby declare that is impossible to measure in money the damages which will accrue to a party hereto or to their heirs, personal representatives, or assigns by reason of a failure to perform any of the obligations under Agreement and agree that the terms of this Agreement shall be specifically enforceable. If any party hereto or his heirs, personal representatives, or assigns institutes any action or proceeding to specifically enforce the provisions hereto, any person against whom such action or proceeding is brought hereby waives the claim or defense therein that such party or such personal representative has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law exists.

3.4 Entire Agreement. This Agreement and all Exhibits hereto and thereto constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

3.5 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Holder Shares from time to time. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

3.6 Governing Law. This Agreement shall be governed in all respects by the laws of the Cayman Islands, without regard to conflicts of laws principles thereof.

3.7 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

3.8 Amendment and Waiver. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and a majority in interest of the Holders; provided, however, that any amendment of Section 1.2 shall require the written consent of the Investors.

3.9 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address as set forth on the signature page hereof and to each Holder at the address set forth opposite his, her or its name on Exhibit A or at such other address as the Company or such Holder may designate by ten (10) days advance written notice to the other parties hereto.

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3.10 Titles and Subtitles. The titles of the Sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

3.11 Counterparts. This Agreement may be executed in or more counter parts, each of which will be deemed an original but all of which together shall constitute one and the same agreement.

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IN WITNESS WHEREOF, the parties hereto have executed the Voting Agreement as of the date set forth in the first paragraph hereof.

3SBio Inc.
By:	/s/
Lou Jing
Chief Executive Officer

[SIGNATURE PAGE TO VOTING AGREEMENT]

HOLDERS:
Achieve Well International Limited
By:	/s/ Xu Liping
Name:
Title:

Happyview Finance Limited
For and on behalf of
Happyview Finance Limited
By:	/s/ Su Ou
	Authorized signature(s)
Name:
Title:

Witty Mind International Limited
By:	/s/ Lou Dan
Name:
Title:

[SIGNATURE PAGE TO VOTING AGREEMENT]

EXHIBIT A

LIST OF HOLDERS

NAME AND ADDRESS	PERCENTAGE OF SHARE OWNERSHIP IN THE COMPANY AS OF THE DATE OF THIS AGREEMENT
Achieve Well International Limited P.O. Box 957 Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands	29.35%
Happyview Finance Limited Palm Grove House, P.O. Box 438, Road Town, Tortola, British Virgin Islands	16.24%
Witty Mind International Limited P.O. Box 957 Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands	6.0%

EX-4.1

Exhibit 4.1

3SBio Inc.

Matter : 722900 Issued to:

Type of Share :

Certificate # : Date of Record :

# of Shares : Transfer to cert. # :

Amount Paid : # of Shares :

Par Value : US$0.0001 Transfer Date :

Incorporated in the Cayman Islands

3SBio Inc.

This is to certify that [name of shareholder]

of [address]

is the registered shareholder of:

No. of Shares Type of Share Par Value

US$0.0001

Date of Record Certificate Number% Paid

The above shares are subject to the Memorandum and Articles of Association of the Company and transferrable in accordance therewith and the provisions appearing on the reverse hereof.

Given under the Common Seal of the Company

Director Director/Secretary

EX-4.2

Exhibit 4.2

3SBIO INC.

AND

JPMORGAN CHASE BANK, N.A.,

As Depositary

AND

HOLDERS OF AMERICAN DEPOSITARY RECEIPTS

Deposit Agreement

Dated as of [DATE]     , 2007

TABLE OF CONTENTS

		Page
PARTIES		1
RECITALS		1
Section 1.	Certain Definitions	1
(a)	ADR Register	1
(b)	ADRs; Direct Registration ADRs	1
(c)	ADS	1
(d)	Custodian	1
(e)	Deliver, execute, issue et al	1
(f)	Delivery Order	1
(g)	Deposited Securities	1
(h)	Direct Registration System	1
(i)	Holder	2
(j)	Securities Act of 1933	2
(k)	Securities Exchange Act of 1934	2
(l)	Shares	2
(m)	Transfer Office	2
(n)	Withdrawal Order	2
Section 2.	ADRs	2
Section 3.	Deposit of Shares	3
Section 4.	Issue of ADRs	3
Section 5.	Distributions on Deposited Securities	3
Section 6.	Withdrawal of Deposited Securities	4
Section 7.	Substitution of ADRs	4
Section 8.	Cancellation and Destruction of ADRs	4
Section 9.	The Custodian	4
Section 10.	Co-Registrars and Co-Transfer Agents	4
Section 11.	Lists of Holders	5
Section 12.	Depositary's Agents	5
Section 13.	Successor Depositary	5
Section 14.	Reports	5
Section 15.	Additional Shares	5
Section 16.	Indemnification	5
Section 17.	Notices	6
Section 18.	Miscellaneous	7
Section 19.	Consent to Jurisdiction	7
TESTIMONIUM		8
SIGNATURES		9

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			Page
		EXHIBIT A
FORM OF FACE OF ADR			A-1
	Introductory Paragraph		A-1
	(1)	Issuance of ADRs	A-2
	(2)	Withdrawal of Deposited Securities	A-2
	(3)	Transfers of ADRs	A-3
	(4)	Certain Limitations	A-3
	(5)	Taxes	A-4
	(6)	Disclosure of Interests	A-4
	(7)	Charges of Depositary	A-5
	(8)	Available Information	A-6
	(9)	Execution	A-6
	Signature of Depositary		A-6
	Address of Depositary’s Office		A-6
FORM OF REVERSE OF ADR			A-7
	(10)	Distributions on Deposited Securities	A-7
	(11)	Record Dates	A-7
	(12)	Voting of Deposited Securities	A-8
	(13)	Changes Affecting Deposited Securities	A-8
	(14)	Exoneration	A-9
	(15)	Resignation and Removal of Depositary; the Custodian	A-9
	(16)	Amendment	A-10
	(17)	Termination	A-10
	(18)	Appointment	A-10

- ii -

DEPOSIT AGREEMENT dated as of [DATE] , 2007 (the “Deposit Agreement”) among 3SBIO INC. and its successors (the “Company”), JPMORGAN CHASE BANK, N.A., as depositary hereunder (the “Depositary”), and all holders from time to time of American Depositary Receipts issued hereunder (“ADRs”) evidencing American Depositary Shares (“ADSs”) representing deposited Shares (defined below). The Company hereby appoints the Depositary as depositary for the Deposited Securities and hereby authorizes and directs the Depositary to act in accordance with the terms set forth in this Deposit Agreement. All capitalized terms used herein have the meanings ascribed to them in Section 1 or elsewhere in this Deposit Agreement. The parties hereto agree as follows:

1. Certain Definitions.

(a) “ADR Register” is defined in paragraph (3) of the form of ADR.

(b) “ADRs” mean the American Depositary Receipts executed and delivered hereunder. ADRs may be either in physical certificated form or Direct Registration ADRs. ADRs in physical certificated form, and the terms and conditions governing the Direct Registration ADRs (as hereinafter defined), shall be substantially in the form of Exhibit A annexed hereto (the “form of ADR”). The term “Direct Registration ADR” means an ADR, the ownership of which is recorded on the Direct Registration System. References to “ADRs” shall include certificated ADRs and Direct Registration ADRs, unless the context otherwise requires. The form of ADR is hereby incorporated herein and made a part hereof; the provisions of the form of ADR shall be binding upon the parties hereto.

(c) Subject to paragraph (13) of the form of ADR, each “ADS” evidenced by an ADR represents the right to receive one Share and a pro rata share in any other Deposited Securities.

(d) “Custodian”means the agent or agents of the Depositary (singly or collectively, as the context requires) and any additional or substitute Custodian appointed pursuant to Section 9.

(e) The terms “deliver”, “execute”, “issue”, “register”, “surrender”, “transfer” or “cancel”, when used with respect to Direct Registration ADRs, shall refer to an entry or entries or an electronic transfer or transfers in the Direct Registration System, and, when used with respect to ADRs in physical certificated form, shall refer to the physical delivery, execution, issuance, registration, surrender, transfer or cancellation of certificates representing the ADRs.

(f) “Delivery Order” is defined in Section 3.

(g) “Deposited Securities” as of any time means all Shares at such time deposited under this Deposit Agreement and any and all other Shares, securities, property and cash at such time held by the Depositary or the Custodian in respect or in lieu of such deposited Shares and other Shares, securities, property and cash.

(h) “Direct Registration System” means the system for the uncertificated registration of ownership of securities established by The Depository Trust Company (“DTC”) and utilized by the Depositary pursuant to which the Depositary may record the ownership of ADRs without the issuance of a certificate, which ownership shall be evidenced by periodic statements issued by the Depositary to the Holders entitled thereto. For purposes hereof, the Direct Registration System shall include access to the Profile Modification System maintained by DTC which provides for automated transfer of ownership between DTC and the Depositary.

(i) “Holder” means the person or persons in whose name an ADR is registered on the ADR Register.

(j) “Securities Act of 1933” means the United States Securities Act of 1933, as from time to time amended.

(k) “Securities Exchange Act of 1934” means the United States Securities Exchange Act of 1934, as from time to time amended.

(l) “Shares” mean the ordinary shares of the Company, and shall include the rights to receive Shares specified in paragraph (1) of the form of ADR.

(m) “Transfer Office” is defined in paragraph (3) of the form of ADR.

(n) “Withdrawal Order” is defined in Section 6.

2. ADRs. (a) ADRs in certificated form shall be engraved, printed or otherwise reproduced at the discretion of the Depositary in accordance with its customary practices in its American depositary receipt business, or at the request of the Company typewritten and photocopied on plain or safety paper, and shall be substantially in the form set forth in the form of ADR, with such changes as may be required by the Depositary or the Company to comply with their obligations hereunder, any applicable law, regulation or usage or to indicate any special limitations or restrictions to which any particular ADRs are subject. ADRs may be issued in denominations of any number of ADSs. ADRs in certificated form shall be executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary. ADRs in certificated form bearing the facsimile signature of anyone who was at the time of execution a duly authorized officer of the Depositary shall bind the Depositary, notwithstanding that such officer has ceased to hold such office prior to the delivery of such ADRs.

(b) Direct Registration ADRs. Notwithstanding anything in this Deposit Agreement or in the form of ADR to the contrary, ADSs shall be evidenced by Direct Registration ADRs, unless certificated ADRs are specifically requested by the Holder.

(c) Holders shall be bound by the terms and conditions of this Deposit Agreement and of the form of ADR, regardless of whether their ADRs are Direct Registration ADRs or certificated ADRs.

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3. Deposit of Shares. In connection with the deposit of Shares hereunder, the Depositary or the Custodian may require the following in form reasonably satisfactory to it: (a) a written order directing the Depositary to issue to, or upon the written order of, the person or persons designated in such order a Direct Registration ADR or ADRs evidencing the number of ADSs representing such deposited Shares (a “Delivery Order”); (b) proper endorsements or duly executed instruments of transfer in respect of such deposited Shares; (c) instruments assigning to the Depositary, the Custodian or a nominee of either any distribution on or in respect of such deposited Shares or indemnity therefor; and (d) proxies entitling the Custodian to vote such deposited Shares. As soon as practicable after the Custodian receives Deposited Securities pursuant to any such deposit or pursuant to paragraph (10) or (13) of the form of ADR, the Custodian shall present such Deposited Securities for registration of transfer into the name of the Depositary, the Custodian or a nominee of either, to the extent such registration is practicable, at the cost and expense of the person making such deposit (or for whose benefit such deposit is made) and shall obtain evidence satisfactory to it of such registration. Deposited Securities shall be held by the Custodian for the account and to the order of the Depositary at such place or places and in such manner as the Depositary shall determine. Deposited Securities may be delivered by the Custodian to any person only under the circumstances expressly contemplated in this Deposit Agreement. To the extent that the provisions of or governing the Shares make delivery of certificates therefor impracticable, Shares may be deposited hereunder by such delivery thereof as the Depositary or the Custodian may reasonably accept, including, without limitation, by causing them to be credited to an account maintained by the Custodian for such purpose with the Company or an accredited intermediary, such as a bank, acting as a registrar for the Shares, together with delivery of the documents, payments and Delivery Order referred to herein to the Custodian or the Depositary.

4. Issue of ADRs. After any such deposit of Shares, the Custodian shall notify the Depositary of such deposit and of the information contained in any related Delivery Order by letter, first class airmail postage prepaid, or, at the request, risk and expense of the person making the deposit, by cable, telex or facsimile transmission. After receiving such notice from the Custodian, the Depositary, subject to this Deposit Agreement, shall properly issue at the Transfer Office, to or upon the order of any person named in such notice, an ADR or ADRs registered as requested and evidencing the aggregate ADSs to which such person is entitled.

5. Distributions on Deposited Securities. To the extent that the Depositary determines in its discretion that any distribution pursuant to paragraph (10) of the form of ADR is not practicable with respect to any Holder, the Depositary may make such distribution as it so deems reasonably practicable, including the distribution of foreign currency, securities or property (or appropriate documents evidencing the right to receive foreign currency, securities or property) or the retention thereof as Deposited Securities with respect to such Holder’s ADRs (without liability for interest thereon or the investment thereof).

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6. Withdrawal of Deposited Securities. In connection with any surrender of an ADR for withdrawal of the Deposited Securities represented by the ADSs evidenced thereby, the Depositary may require proper endorsement in blank of such ADR (or duly executed instruments of transfer thereof in blank) and the Holder’s written order directing the Depositary to cause the Deposited Securities represented by the ADSs evidenced by such ADR to be withdrawn and delivered to, or upon the written order of, any person designated in such order (a “Withdrawal Order”). Directions from the Depositary to the Custodian to deliver Deposited Securities shall be given by letter, first class airmail postage prepaid, or, at the request, risk and expense of the Holder, by cable, telex or facsimile transmission. Delivery of Deposited Securities may be made by the delivery of certificates (which, if required by law shall be properly endorsed or accompanied by properly executed instruments of transfer or, if such certificates may be registered, registered in the name of such Holder or as ordered by such Holder in any Withdrawal Order) or by such other means as the Depositary may deem practicable, including, without limitation, by transfer of record ownership thereof to an account designated in the Withdrawal Order maintained either by the Company or an accredited intermediary, such as a bank, acting as a registrar for the Deposited Securities.

7. Substitution of ADRs. The Depositary shall execute and deliver a new Direct Registration ADR in exchange and substitution for any mutilated certificated ADR upon cancellation thereof or in lieu of and in substitution for such destroyed, lost or stolen certificated ADR, unless the Depositary has notice that such ADR has been acquired by a bona fide purchaser, upon the Holder thereof filing with the Depositary a request for such execution and delivery and a sufficient indemnity bond and satisfying any other reasonable requirements imposed by the Depositary.

8. Cancellation and Destruction of ADRs. All ADRs surrendered to the Depositary shall be cancelled by the Depositary. The Depositary is authorized to destroy ADRs in certificated form so cancelled in accordance with its customary practices.

9. The Custodian. Any Custodian in acting hereunder shall be subject to the directions of the Depositary and shall be responsible solely to it. The Depositary may from time to time appoint one or more agents to act for it as Custodian hereunder. Each Custodian so appointed (other than JPMorgan Chase Bank, N.A.) shall give written notice to the Company and the Depositary accepting such appointment and agreeing to be bound by the applicable terms hereof. Any Custodian may resign from its duties hereunder by at least 30 days prior written notice to the Depositary. The Depositary may, after consultation with the Company if practicable, discharge any Custodian at any time upon notice to the Custodian being discharged. Any Custodian ceasing to act hereunder as Custodian shall deliver, upon the instruction of the Depositary, all Deposited Securities held by it to a Custodian continuing to act.

10. Co-Registrars and Co-Transfer Agents. The Depositary may appoint and remove (i) co-registrars to register ADRs and transfers, combinations and split-ups of ADRs and to countersign ADRs in accordance with the terms of any such appointment and (ii) co-transfer agents for the purpose of effecting transfers, combinations and split-ups of ADRs at designated transfer offices in addition to the Transfer Office on behalf of the Depositary. Each co-registrar or co-transfer agent (other than JPMorgan Chase Bank, N.A.) shall give notice in writing to the Company and the Depositary accepting such appointment and agreeing to be bound by the applicable terms of this Deposit Agreement.

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11. Lists of Holders. The Company shall have the right to inspect transfer records of the Depositary and its agents and the ADR Register, take copies thereof and require the Depositary and its agents to supply copies of such portions of such records as the Company may request. The Depositary or its agent shall furnish to the Company promptly upon the written request of the Chief Executive Officer of the Company, a list of the names, addresses and holdings of ADSs by all Holders as of a date within seven days of the Depositary’s receipt of such request.

12. Depositary’s Agents. The Depositary may perform its obligations under this Deposit Agreement through any agent appointed by it, provided that the Depositary shall notify the Company of such appointment and shall remain responsible for the performance of such obligations as if no agent were appointed.

13. Successor Depositary. The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Company. The Depositary may at any time be removed by the Company by thirty days prior written notice of such removal. Notwithstanding anything to the contrary contained herein, in case at any time the Depositary acting hereunder shall resign or be removed, it shall continue to act as Depositary for the purpose of terminating this Deposit Agreement pursuant to paragraph (17) of the form of ADR. Any bank or trust company into or with which the Depositary may be merged or consolidated, or to which the Depositary shall transfer substantially all its American depositary receipt business, shall be the successor of the Depositary without the execution or filing of any document or any further act.

14. Reports. On or before the first date on which the Company makes any communication available to holders of Deposited Securities or any securities regulatory authority or stock exchange, by publication or otherwise, the Company shall transmit to the Depositary a copy thereof in English or with an English translation or summary. The Company has delivered to the Depositary, the Custodian and any Transfer Office, a copy of all provisions of or governing the Shares and any other Deposited Securities issued by the Company or any affiliate of the Company and, promptly upon any change thereto, the Company shall deliver to the Depositary, the Custodian and any Transfer Office, a copy (in English or with an English translation) of such provisions as so changed. The Depositary and its agents may rely upon the Company’s delivery thereof for all purposes of this Deposit Agreement.

15. Additional Shares. Neither the Company nor any company controlling, controlled by or under common control with the Company shall issue additional Shares, rights to subscribe for Shares, securities convertible into or exchangeable for Shares or rights to subscribe for any such securities or shall deposit any Shares under this Deposit Agreement, except under circumstances complying in all respects with the Securities Act of 1933. The Depositary will use reasonable efforts to comply with written instructions of the Company not to accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company’s compliance with securities laws in the United States.

16. Indemnification. The Company shall indemnify, defend and save harmless each of the Depositary and its agents against any loss, liability or expense (including reasonable fees and expenses of counsel) which may arise out of acts performed or omitted, in connection with the provisions of this Deposit Agreement and of the ADRs, as the same may be amended, modified or supplemented from time to time in accordance herewith (i) by either the Depositary or its agents or their respective directors, employees, agents and affiliates, except, subject to the penultimate paragraph of this Section 16, for any liability or expense directly arising out of the negligence or bad faith of the Depositary, or (ii) by the Company or any of its directors, employees, agents or affiliates.

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The indemnities set forth in the preceding paragraph shall also apply to any liability or expense which may arise out of any misstatement or alleged misstatement or omission or alleged omission in any registration statement, proxy statement, prospectus (or placement memorandum), or preliminary prospectus (or preliminary placement memorandum) relating to the offer or sale of ADSs, except to the extent any such liability or expense arises out of (i) information relating to the Depositary or its agents (other than the Company), as applicable, furnished in writing by the Depositary and not changed or altered by the Company expressly for use in any of the foregoing documents or (ii) if such information is provided, the failure to state a material fact necessary to make the information provided not misleading.

Except as provided in the next succeeding paragraph, the Depositary shall indemnify, defend and save harmless the Company against any loss, liability or expense (including reasonable fees and expenses of counsel) incurred by the Company in respect of this Deposit Agreement to the extent such loss, liability or expense is due to the negligence or bad faith of the Depositary.

Notwithstanding any other provision of this Deposit Agreement or the form of ADR to the contrary, neither the Company nor the Depositary, nor any of their agents, shall be liable to the other for any indirect, special, punitive or consequential damages (collectively “Special Damages”) except (i) to the extent such Special Damages arise from the gross negligence or willful misconduct of the party from whom indemnification is sought or (ii) to the extent Special Damages arise from or out of a claim brought by a third party (including, without limitation, Holders) against the Depositary or its agents, except to the extent such Special Damages arise out of the gross negligence or willful misconduct of the party seeking indemnification hereunder

The obligations set forth in this Section 16 shall survive the termination of this Deposit Agreement and the succession or substitution of any indemnified person.

17. Notices. Notice to any Holder shall be deemed given when first mailed, first class postage prepaid, to the address of such Holder on the ADR Register or received by such Holder. Notice to the Depositary or the Company shall be deemed given when first received by it at the address or facsimile transmission number set forth in (a) or (b), respectively, or at such other address or facsimile transmission number as either may specify to the other by written notice:

(a) JPMorgan Chase Bank, N.A.

Four New York Plaza

New York, New York 10004

Attention: ADR Administration

Fax: (212) 623-0079

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(b) 3SBio Inc.

No. 3 A1, Road 10

Shenyang Economy and Technology Development Zone

Shenyang 110027

People’s Republic of China

Attention: [CONTACT PERSON]

Fax: [FACSIMILE]

18. Miscellaneous. This Deposit Agreement is for the exclusive benefit of the Company, the Depositary, the Holders, and their respective successors hereunder, and shall not give any legal or equitable right, remedy or claim whatsoever to any other person. The Holders and owners of ADRs from time to time shall be parties to this Deposit Agreement and shall be bound by all of the provisions hereof. If any such provision is invalid, illegal or unenforceable in any respect, the remaining provisions shall in no way be affected thereby. This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one instrument.

19. Consent to Jurisdiction. The Company irrevocably agrees that any legal suit, action or proceeding against the Company brought by the Depositary or any Holder, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may be instituted in any state or federal court in New York, New York, and irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company also irrevocably agrees that any legal suit, action or proceeding against the Depositary brought by the Company, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York. The Company has appointed                                     , New York, New York, as its authorized agent (the “Authorized Agent”) upon which process may be served in any such action arising out of or based on this Deposit Agreement or the transactions contemplated hereby which may be instituted in any state or federal court in New York, New York by the Depositary or any Holder, and waives any other requirements of or objections to personal jurisdiction with respect thereto. The Company represents and warrants that the Authorized Agent has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to the Company shall be deemed, in every respect, effective service of process upon the Company. If, for any reason, the Authorized Agent named above or its successor shall no longer serve as agent of the Company to receive service of process in New York, the Company shall promptly appoint a successor acceptable to the Depositary, so as to serve and will promptly advise the Depositary thereof. In the event the Company fails to continue such designation and appointment in full force and effect, the Company hereby waives personal service of process upon it and consents that any such service of process may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices hereunder, and service so made shall be deemed completed five (5) days after the same shall have been so mailed. Notwithstanding the foregoing, any action based on this Agreement may be instituted by the Depositary or any Holder in any competent court in the Cayman Islands or the People’s Republic of China.

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To the extent that the Company or any of its properties, assets or revenues may have or may hereafter be entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or other matter under or arising out of or in connection with the Shares or Deposited Securities, the ADSs, the ADRs or this Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and enforcement.

8

IN WITNESS WHEREOF, 3SBIO INC. and JPMORGAN CHASE BANK, N.A. have duly executed this Deposit Agreement as of the day and year first above set forth and all holders of ADRs shall become parties hereto upon acceptance by them of ADRs issued in accordance with the terms hereof.

3SBIO INC.
By:
Name:
Title:
JPMORGAN CHASE BANK, N.A.
By:
Name:
Title:	Vice President

9

EXHIBIT A

ANNEXED TO AND INCORPORATED IN

DEPOSIT AGREEMENT

[FORM OF FACE OF ADR]

No. of ADSs:

Number

Each ADS represents

One Share

CUSIP:

AMERICAN DEPOSITARY RECEIPT

evidencing

AMERICAN DEPOSITARY SHARES

representing

ORDINARY SHARES

of

3SBIO INC.

(Incorporated under the laws of the Cayman Islands)

JPMORGAN CHASE BANK, N.A., a national banking association organized under the laws of the United States of America , as depositary hereunder (the “Depositary”), hereby certifies that              is the registered owner (a “Holder”) of      American Depositary Shares (“ADSs”), each (subject to paragraph (13)) representing one ordinary share (including the rights to receive Shares described in paragraph (1), “Shares” and, together with any other securities, cash or property from time to time held by the Depositary in respect or in lieu of deposited Shares, the “Deposited Securities”), of 3SBIO INC., a corporation organized under the laws of the Cayman Islands (the “Company”), deposited under the Deposit Agreement dated as of [DATE] , 2007 (as amended from time to time, the “Deposit Agreement”) among the Company, the Depositary and all Holders from time to time of American Depositary Receipts issued thereunder (“ADRs”), each of whom by accepting an ADR becomes a party thereto. The Deposit Agreement and this ADR (which includes the provisions set forth on the reverse hereof) shall be governed by and construed in accordance with the laws of the State of New York.

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(1) Issuance of ADRs. This ADR is one of the ADRs issued under the Deposit Agreement. Subject to paragraph (4), the Depositary may so issue ADRs for delivery at the Transfer Office (defined in paragraph (3)) only against deposit with the Custodian of: (a) Shares in form satisfactory to the Custodian; (b) rights to receive Shares from the Company or any registrar, transfer agent, clearing agent or other entity recording Share ownership or transactions; or, (c) other rights to receive Shares (until such Shares are actually deposited pursuant to (a) or (b) above, “Pre-released ADRs”) only if (i) Pre-released ADRs are fully collateralized (marked to market daily) with cash, government securities or such other collateral as the Depositary deems appropriate held by the Depositary for the benefit of Holders (but such collateral shall not constitute “Deposited Securities”), (ii) each recipient of Pre-released ADRs represents and agrees in writing with the Depositary that such recipient or its customer (a) beneficially owns such Shares, (b) assigns all beneficial right, title and interest therein to the Depositary, (c) holds such Shares for the account of the Depositary and (d) will deliver such Shares to the Custodian as soon as practicable and promptly upon demand therefor and (iii) all Pre-released ADRs evidence not more than 30% of all ADSs (excluding those evidenced by Pre-released ADRs), provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate. The Depositary may retain for its own account any earnings on collateral for Pre-released ADRs and its charges for issuance thereof. At the request, risk and expense of the person depositing Shares, the Depositary may accept deposits for forwarding to the Custodian and may deliver ADRs at a place other than its office. Every person depositing Shares under the Deposit Agreement represents and warrants that such Shares are validly issued and outstanding, fully paid, nonassessable and free of pre-emptive rights, that the person making such deposit is duly authorized so to do and that such Shares (A) are not “restricted securities” as such term is defined in Rule 144 under the Securities Act of 1933 unless at the time of deposit they may be freely transferred in accordance with Rule 144(k) and may otherwise be offered and sold freely in the United States or (B) have been registered under the Securities Act of 1933. Such representations and warranties shall survive the deposit of Shares and issuance of ADRs. The Depositary will not knowingly accept for deposit under the Deposit Agreement any Shares required to be registered under the Securities Act of 1933 and not so registered; the Depositary may refuse to accept for such deposit any Shares identified by the Company in order to facilitate the Company’s compliance with such Act.

(2) Withdrawal of Deposited Securities. Subject to paragraphs (4) and (5), upon surrender of (i) a certificated ADR in form satisfactory to the Depositary at the Transfer Office or (ii) proper instructions and documentation in the case of a Direct Registration ADR, the Holder hereof is entitled to delivery at, or to the extent in dematerialized form from, the Custodian’s office of the Deposited Securities at the time represented by the ADSs evidenced by this ADR. At the request, risk and expense of the Holder hereof, the Depositary may deliver such Deposited Securities at such other place as may have been requested by the Holder. Notwithstanding any other provision of the Deposit Agreement or this ADR, the withdrawal of Deposited Securities may be restricted only for the reasons set forth in General Instruction I.A.(1) of Form F-6 (as such instructions may be amended from time to time) under the Securities Act of 1933.

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(3) Transfers of ADRs. The Depositary or its agent will keep, at a designated transfer office (the “Transfer Office”), (a) a register (the “ADR Register”) for the registration, registration of transfer, combination and split-up of ADRs, and, in the case of Direct Registration ADRs, shall include the Direct Registration System, which at all reasonable times will be open for inspection by Holders and the Company for the purpose of communicating with Holders in the interest of the business of the Company or a matter relating to the Deposit Agreement and (b) facilities for the delivery and receipt of ADRs. The term ADR Register includes the Direct Registration System. Title to this ADR (and to the Deposited Securities represented by the ADSs evidenced hereby), when properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer, is transferable by delivery with the same effect as in the case of negotiable instruments under the laws of the State of New York; provided that the Depositary, notwithstanding any notice to the contrary, may treat the person in whose name this ADR is registered on the ADR Register as the absolute owner hereof for all purposes and neither the Depositary nor the Company will have any obligation or be subject to any liability under the Deposit Agreement to any holder of an ADR, unless such holder is the Holder thereof. Subject to paragraphs (4) and (5), this ADR is transferable on the ADR Register and may be split into other ADRs or combined with other ADRs into one ADR, evidencing the aggregate number of ADSs surrendered for split-up or combination, by the Holder hereof or by duly authorized attorney upon surrender of this ADR at the Transfer Office properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer and duly stamped as may be required by applicable law; provided that the Depositary may close the ADR Register at any time or from time to time when reasonably deemed expedient by it or reasonably requested by the Company. At the request of a Holder, the Depositary shall, for the purpose of substituting a certificated ADR with a Direct Registration ADR, or vice versa, execute and deliver a certificated ADR or a Direct Registration ADR, as the case may be, for any authorized number of ADSs requested, evidencing the same aggregate number of ADSs as those evidenced by the certificated ADR or Direct Registration ADR, as the case may be, substituted.

(4) Certain Limitations. Prior to the issue, registration, registration of transfer, split-up or combination of any ADR, the delivery of any distribution in respect thereof, or, subject to the last sentence of paragraph (2), the withdrawal of any Deposited Securities, and from time to time in the case of clause (b)(ii) of this paragraph (4), the Company, the Depositary or the Custodian may require: (a) payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of Shares or other Deposited Securities upon any applicable register and (iii) any applicable charges as provided in paragraph (7) of this ADR; (b) the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, compliance with applicable law, regulations, provisions of or governing Deposited Securities and terms of the Deposit Agreement and this ADR, as it may deem necessary or proper; and (c) compliance with such regulations as the Depositary may establish consistent with the Deposit Agreement. The issuance of ADRs, the acceptance of deposits of Shares, the registration, registration of transfer, split-up or combination of ADRs or, subject to the last sentence of paragraph (2), the withdrawal of Deposited Securities may be suspended, generally or in particular instances, when the ADR Register or any register for Deposited Securities is closed or when any such action is deemed advisable by the Depositary.

A-3

(5) Taxes. If any tax or other governmental charge shall become payable by or on behalf of the Custodian or the Depositary with respect to this ADR, any Deposited Securities represented by the ADSs evidenced hereby or any distribution thereon, such tax or other governmental charge shall be paid by the Holder hereof to the Depositary. The Depositary may refuse to effect any registration, registration of transfer, split-up or combination hereof or, subject to the last sentence of paragraph (2), any withdrawal of such Deposited Securities until such payment is made. The Depositary may also deduct from any distributions on or in respect of Deposited Securities, or may sell by public or private sale for the account of the Holder hereof any part or all of such Deposited Securities (after attempting by reasonable means to notify the Holder hereof prior to such sale), and may apply such deduction or the proceeds of any such sale in payment of such tax or other governmental charge, the Holder hereof remaining liable for any deficiency, and shall reduce the number of ADSs evidenced hereby to reflect any such sales of Shares. In connection with any distribution to Holders, the Company will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Company; and the Depositary and the Custodian will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Depositary or the Custodian. If the Depositary determines that any distribution in property other than cash (including Shares or rights) on Deposited Securities is subject to any tax that the Depositary or the Custodian is obligated to withhold, the Depositary may dispose of all or a portion of such property in such amounts and in such manner as the Depositary reasonably deems necessary and practicable to pay such taxes, by public or private sale, and the Depositary shall distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes to the Holders entitled thereto. Each Holder of an ADR or an interest therein agrees to indemnify the Depositary, the Company, the Custodian and any of their respective directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.

(6) Disclosure of Interests. To the extent that the provisions of or governing any Deposited Securities may require disclosure of or impose limits on beneficial or other ownership of Deposited Securities, other Shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, Holders and all persons holding ADRs agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable Company instructions in respect thereof. The Company reserves the right to instruct Holders to deliver their ADSs for cancellation and withdrawal of the Deposited Securities so as to permit the Company to deal directly with the Holder thereof as a holder of Shares and Holders agree to comply with such instructions. The Depositary agrees to cooperate with the Company in its efforts to inform Holders of the Company’s exercise of its rights under this paragraph and agrees to consult with, and provide reasonable assistance without risk, liability or expense on the part of the Depositary, to the Company on the manner or manners in which it may enforce such rights with respect to any Holder.

A-4

(7) Charges of Depositary. The Depositary may collect from (i) each person to whom ADSs are issued, including, without limitation, issuances against deposits of Shares, issuances in respect of Share Distributions, Rights and Other Distributions (as such terms are defined in paragraph (10)), issuances pursuant to a stock dividend or stock split declared by the Company, or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or the Deposited Securities, and (ii) each person surrendering ADSs for withdrawal of Deposited Securities or whose ADSs are cancelled or reduced for any other reason, U.S.$5.00 for each 100 ADSs (or portion thereof) issued, delivered, reduced, cancelled or surrendered (as the case may be). The Depositary may sell (by public or private sale) sufficient securities and property received in respect of Share Distributions, Rights and Other Distributions prior to such deposit to pay such charge. The following additional charges shall be incurred by the Holders, by any party depositing or withdrawing Shares or by any party surrendering ADSs, to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the ADSs or the Deposited Securities or a distribution of ADSs pursuant to paragraph (10)), whichever is applicable (i) a fee of U.S.$0.02 or less per ADS (or portion thereof) for any Cash distribution made pursuant to the Deposit Agreement, (ii) to the extent not prohibited by the rules of the primary stock exchange upon which the ADSs are listed, a fee of U.S.$1.50 per ADR or ADRs for transfers made pursuant to paragraph (3) hereof, (iii) a fee for the distribution or sale of securities pursuant to paragraph (10) hereof, such fee being in an amount equal to the fee for the execution and delivery of ADSs referred to above which would have been charged as a result of the deposit of such securities (for purposes of this paragraph (7) treating all such securities as if they were Shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the Depositary to Holders entitled thereto, (iv) a fee of up to U.S.$0.03 per ADS (or portion thereof) in each calendar year for the services performed by the Depositary in administering the ADRs (which fee shall be assessed against Holders as of the record date or dates set by the Depositary not more than once each calendar year and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions), and (v) such fees and expenses as are incurred by the Depositary (including without limitation expenses incurred on behalf of Holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in delivery of Deposited Securities or otherwise in connection with the Depositary’s or its Custodian’s compliance with applicable law, rule or regulation. The Company will pay all other charges and expenses of the Depositary and any agent of the Depositary (except the Custodian) pursuant to agreements from time to time between the Company and the Depositary, except (i) stock transfer or other taxes and other governmental charges (which are payable by Holders or persons depositing Shares), (ii) cable, telex and facsimile transmission and delivery charges incurred at the request of persons depositing, or Holders delivering Shares, ADRs or Deposited Securities (which are payable by such persons or Holders), (iii) transfer or registration fees for the registration or transfer of Deposited Securities on any applicable register in connection with the deposit or withdrawal of Deposited Securities (which are payable by persons depositing Shares or Holders withdrawing Deposited Securities; there are no such fees in respect of the Shares as of the date of the Deposit Agreement), (iv) expenses of the Depositary in connection with the conversion of foreign currency into U.S. dollars (which are paid out of such foreign currency), and (v) any other charge payable by any of the Depositary, any of the Depositary’s agents, including, without limitation, the Custodian, or the agents of the Depositary’s agents in connection with the servicing of the Shares or other Deposited Securities (which charge shall be assessed against Holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions). Such charges may at any time and from time to time be changed by agreement between the Company and the Depositary.

A-5

(8) Available Information. The Deposit Agreement, the provisions of or governing Deposited Securities and any written communications from the Company, which are both received by the Custodian or its nominee as a holder of Deposited Securities and made generally available to the holders of Deposited Securities, are available for inspection by Holders at the offices of the Depositary and the Custodian and at the Transfer Office. The Depositary will distribute copies of such communications (or English translations or summaries thereof) to Holders when furnished by the Company. The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and accordingly files certain reports with the United States Securities and Exchange Commission (the “Commission”). Such reports and other information may be inspected and copied at public reference facilities maintained by the Commission located at the date hereof at 100 F Street, NE, Washington, DC 20549.

(9) Execution. This ADR shall not be valid for any purpose unless executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary.

Dated:

JPMORGAN CHASE BANK, N.A., as Depositary
By
	Authorized Officer

The Depositary’s office is located at 4 New York Plaza, New York, New York 10004.

A-6

[FORM OF REVERSE OF ADR]

(10) Distributions on Deposited Securities. Subject to paragraphs (4) and (5), to the extent practicable, the Depositary will distribute to each Holder entitled thereto on the record date set by the Depositary therefor at such Holder’s address shown on the ADR Register, in proportion to the number of Deposited Securities (on which the following distributions on Deposited Securities are received by the Custodian) represented by ADSs evidenced by such Holder’s ADRs: (a) Cash. Any U.S. dollars available to the Depositary resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof authorized in this paragraph (10) (“Cash”), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain Holders, and (iii) deduction of the Depositary’s expenses in (1) converting any foreign currency to U.S. dollars by sale or in such other manner as the Depositary may determine to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the Depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. (b) Shares. (i) Additional ADRs evidencing whole ADSs representing any Shares available to the Depositary resulting from a dividend or free distribution on Deposited Securities consisting of Shares (a “Share Distribution”) and (ii) U.S. dollars available to it resulting from the net proceeds of sales of Shares received in a Share Distribution, which Shares would give rise to fractional ADSs if additional ADRs were issued therefor, as in the case of Cash. (c) Rights. (i) Warrants or other instruments in the discretion of the Depositary representing rights to acquire additional ADRs in respect of any rights to subscribe for additional Shares or rights of any nature available to the Depositary as a result of a distribution on Deposited Securities (“Rights”), to the extent that the Company timely furnishes to the Depositary evidence satisfactory to the Depositary that the Depositary may lawfully distribute the same (the Company has no obligation to so furnish such evidence), or (ii) to the extent the Company does not so furnish such evidence and sales of Rights are practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Rights as in the case of Cash, or (iii) to the extent the Company does not so furnish such evidence and such sales cannot practicably be accomplished by reason of the nontransferability of the Rights, limited markets therefor, their short duration or otherwise, nothing (and any Rights may lapse). (d) Other Distributions. (i) Securities or property available to the Depositary resulting from any distribution on Deposited Securities other than Cash, Share Distributions and Rights (“Other Distributions”), by any means that the Depositary may deem equitable and practicable, or (ii) to the extent the Depositary deems distribution of such securities or property not to be equitable and practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Other Distributions as in the case of Cash. Such U.S. dollars available will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the Depositary in accordance with its then current practices.

(11) Record Dates. The Depositary may, after consultation with the Company if practicable, fix a record date (which, to the extent applicable, shall be as near as practicable to any corresponding record date set by the Company) for the determination of the Holders who shall be responsible for the fee assessed by the Depositary for administration of the ADR program and for any expenses provided for in paragraph (7) hereof as well as for the determination of the Holders who shall be entitled to receive any distribution on or in respect of Deposited Securities, to give instructions for the exercise of any voting rights, to receive any notice or to act in respect of other matters and only such Holders shall be so entitled or obligated.

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(12) Voting of Deposited Securities. As soon as practicable after receipt from the Company of notice of any meeting or solicitation of consents or proxies of holders of Shares or other Deposited Securities, the Depositary shall distribute to Holders a notice stating (a) such information as is contained in such notice and any solicitation materials, (b) that each Holder on the record date set by the Depositary therefor will, subject to any applicable provisions of Cayman Island law, be entitled to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by the ADSs evidenced by such Holder’s ADRs and (c) the manner in which such instructions may be given, including instructions to give a discretionary proxy to a person designated by the Company. Upon receipt of instructions of a Holder on such record date in the manner and on or before the date established by the Depositary for such purpose, the Depositary shall endeavor insofar as practicable and permitted under the provisions of or governing Deposited Securities to vote or cause to be voted the Deposited Securities represented by the ADSs evidenced by such Holder’s ADRs in accordance with such instructions. The Depositary will not itself exercise any voting discretion in respect of any Deposited Securities. There is no guarantee that Holders generally or any Holder in particular will receive the notice described above with sufficient time to enable such Holder to return any voting instructions to the Depositary in a timely manner.

(13) Changes Affecting Deposited Securities. Subject to paragraphs (4) and (5), the Depositary may, in its reasonable discretion, amend this ADR or distribute additional or amended ADRs (with or without calling this ADR for exchange) or cash, securities or property on the record date set by the Depositary therefor to reflect any change in par value, split-up, consolidation, cancellation or other reclassification of Deposited Securities, any Share Distribution or Other Distribution not distributed to Holders or any cash, securities or property available to the Depositary in respect of Deposited Securities from (and the Depositary is hereby authorized to surrender any Deposited Securities to any person and, irrespective of whether such Deposited Securities are surrendered or otherwise cancelled by operation of law, rule, regulation or otherwise, to sell by public or private sale any property received in connection with) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of the Company, and to the extent the Depositary does not so amend this ADR or make a distribution to Holders to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results from any of the foregoing shall constitute Deposited Securities and each ADS evidenced by this ADR shall automatically represent its pro rata interest in the Deposited Securities as then constituted.

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(14) Exoneration. The Depositary, the Company, their agents and each of them shall: (a) incur no liability (i) if any present or future law, rule, regulation, fiat, order or decree of the United States, the People’s Republic of China, the Cayman Islands or any other country, or of any governmental or regulatory authority or any securities exchange or market or automated quotation system, the provisions of or governing any Deposited Securities, any present or future provision of the Company’s charter, any act of God, war, terrorism or other circumstance beyond its control shall prevent, delay or subject to any civil or criminal penalty any act which the Deposit Agreement or this ADR provides shall be done or performed by it or them (including, without limitation, voting pursuant to paragraph (12) hereof), or (ii) by reason of any exercise or failure to exercise any discretion given it in the Deposit Agreement or this ADR; (b) assume no liability except to perform its obligations to the extent they are specifically set forth in this ADR and the Deposit Agreement without gross negligence or bad faith; (c) in the case of the Depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR; (d) in the case of the Company and its agents hereunder be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required; or (e) not be liable for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, or any other person believed by it to be competent to give such advice or information. The Depositary, its agents and the Company may rely and shall be protected in acting upon any written notice, request, direction or other document believed by them to be genuine and to have been signed or presented by the proper party or parties. The Depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, for the manner in which any such vote is cast or for the effect of any such vote. The Depositary and its agents may own and deal in any class of securities of the Company and its affiliates and in ADRs. Notwithstanding anything to the contrary set forth in the Deposit Agreement or an ADR, the Depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the Deposit Agreement, any Holder or Holders, any ADR or ADRs or otherwise related hereto to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. The Company has agreed to indemnify the Depositary and its agents under certain circumstances and the Depositary has agreed to indemnify the Company under certain circumstances. Neither the Company nor the Depositary nor any of their respective agents shall be liable to Holders or beneficial owners of interests in ADSs for any indirect, special, punitive or consequential damages. No disclaimer of liability under the Securities Act of 1933 is intended by any provision hereof.

(15) Resignation and Removal of Depositary; the Custodian. The Depositary may resign as Depositary by prior written notice of its election to do so delivered to the Company, or be removed as Depositary by the Company by thirty days prior written notice of such removal delivered to the Depositary. The Depositary may appoint substitute or additional Custodians and the term “Custodian” refers to each Custodian or all Custodians as the context requires.

A-9

(16) Amendment. Subject to the last sentence of paragraph (2), the ADRs and the Deposit Agreement may be amended by the Company (such amendment to be signed by any two of the following officers: Chief Executive Officer, Chief Financial Officer, Vice President and the Depositary, provided that any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or that shall otherwise prejudice any substantial existing right of Holders, shall become effective 30 days after notice of such amendment shall have been given to the Holders. Every Holder of an ADR at the time any amendment to the Deposit Agreement so becomes effective shall be deemed, by continuing to hold such ADR, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right of the Holder of any ADR to surrender such ADR and receive the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law. Any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act of 1933 or (b) the ADSs or Shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Holders, shall be deemed not to prejudice any substantial rights of Holders. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the Deposit Agreement or the form of ADR to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and the ADR at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the Deposit Agreement in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance.

(17) Termination. The Depositary may, and shall at the written direction of the Company, terminate the Deposit Agreement and this ADR by mailing notice of such termination to the Holders at least 30 days prior to the date fixed in such notice for such termination. After the date so fixed for termination, the Depositary and its agents will perform no further acts under the Deposit Agreement and this ADR, except to receive and hold (or sell) distributions on Deposited Securities and deliver Deposited Securities being withdrawn. As soon as practicable after the expiration of six months from the date so fixed for termination, the Depositary shall sell the Deposited Securities and shall thereafter (as long as it may lawfully do so) hold in a segregated account the net proceeds of such sales, together with any other cash then held by it under the Deposit Agreement, without liability for interest, in trust for the pro rata benefit of the Holders of ADRs not theretofore surrendered. After making such sale, the Depositary shall be discharged from all obligations in respect of the Deposit Agreement and this ADR, except to account for such net proceeds and other cash. After the date so fixed for termination, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary and its agents.

(18) Appointment. Each Holder and each person holding an interest in ADSs, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the Deposit Agreement shall be deemed for all purposes to (a) be a party to and bound by the terms of the Deposit Agreement and the applicable ADR(s), and (b) appoint the Depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the Deposit Agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the Depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the Deposit Agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

A-10

EX-5.1

Exhibit 5.1

[•] 2007

3SBio Inc. No. 3 A1, Road 10 Shenyang Economy & Technology Development Zone Shenyang 110027 People’s Republic of China DIRECT LINE:            2842 9523
E-MAIL: Hanifa.Ramjahn@conyersdillandpearman.com
OUR REF:                    HR/rc/228223 (M#871005)
YOUR REF:

Dear Sirs,

3SBio Inc. (the “Company”)

We have acted as special Cayman legal counsel to the Company in connection with a public offering of certain common shares in the Company in the form of American Depositary Shares (the “Shares”) as described in the prospectus contained in the Company’s registration statement on Form F-1 (the “Registration Statement” which term does not include any exhibits thereto) to be filed by the Company under the United States Securities Act 1933 (the “Securities Act”) with the United States Securities and Exchange Commission (the “Commission”).

For the purposes of giving this opinion, we have examined and relied upon copies of the following documents:

(i) the Registration Statement; and

(ii) a draft of the prospectus (the “Prospectus”) contained in the Registration Statement.

We have also reviewed and relied upon (1) the memorandum of association and the articles of association of the Company, (2) copies of written resolutions passed by the directors of the Company on [•] 2007, (3) the register of members of the Company, and (4) such other documents and made such enquiries as to questions of law as we have deemed necessary in order to render the opinion set forth below.

We have assumed (i) the genuineness and authenticity of all signatures, stamps and seals and the conformity to the originals of all copies of documents (whether or not certified) examined by us and the authenticity and completeness of the originals from which such copies were taken; (ii) the accuracy and completeness of all factual representations made in the Prospectus and Registration Statement and other documents reviewed by us, (iii) that there is no provision of the law of any jurisdiction, other than the Cayman Islands, which would have any implication in relation to the opinions expressed herein; (iv) the validity and binding effect under the laws of the United States of America of the Registration Statement and the Prospectus and that the Registration Statement will be duly filed with or declared effective by the Commission; and (v) that the Prospectus, when published, will be in substantially the same form as that examined by us for purposes of this opinion.

3SBio Inc.

[•] 2007

Page 2

We have made no investigation of and express no opinion in relation to the laws of any jurisdiction other than the Cayman Islands. This opinion is to be governed by and construed in accordance with the laws of the Cayman Islands and is limited to and is given on the basis of the current law and practice in the Cayman Islands.

On the basis of and subject to the foregoing, we are of the opinion that:

(1) The Company is duly incorporated and existing under the laws of the Cayman Islands.

(2) The issue of the Shares has been duly authorised, and when the Shares have been issued, delivered and paid for in the manner described in and pursuant to the terms of the Prospectus and Registration Statement will be validly issued, fully paid and non-assessable (meaning that no further sums are payable to the Company with respect to the holding of such Shares).

We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and to the references to us under the headings “Taxation”, “Enforcement of Civil Liabilities” and “Legal Matters” in the Prospectus contained in the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act, or the Rules and Regulations of the Commission thereunder.

Yours faithfully,

Conyers Dill & Pearman

EX-10.1

Exhibit 10.1

3S BIO INC.

2006 STOCK PLAN

ADOPTED                     , 2006

TABLE OF CONTENTS

		Page
SECTION 1. ESTABLISHMENT AND PURPOSE.		1
SECTION 2. ADMINISTRATION.		1
(a)	Committees of the Board of Directors; Authority of Board of Directors; Restructuring of Grants or Awards.	1
(b)	Authority of the Board of Directors.	1
SECTION 3. ELIGIBILITY.		2
(a)	General Rule.	2
(b)	Ten Percent Shareholders.	2
SECTION 4. SHARES SUBJECT TO PLAN.		2
(a)	Basic Limitation.	2
(b)	Additional Shares.	2
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.		3
(a)	Stock Award Agreement and Stock Purchase Agreement.	3
(b)	Duration of Offers and Nontransferability of Rights.	3
(c)	Purchase Price.	3
(d)	Withholding Taxes.	3
(e)	Restrictions on Transfer of Shares.	3
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.		4
(a)	Stock Option Agreement.	4
(b)	Number of Shares.	4
(c)	Exercise Price.	4
(d)	Exercisability.	4
(e)	Term.	4
(f)	Execution of Shareholders Agreement.	5
(g)	Restrictions on Transfer of Shares.	5
(h)	Transferability of Options.	5
(i)	Withholding Taxes.	5
(j)	No Rights as a Shareholder.	5
(k)	Modification, Extension and Assumption of Options.	5
SECTION 7. PAYMENT FOR SHARES.		6
(a)	General Rule.	6
(b)	Surrender of Shares.	6
(c)	Services Rendered.	6
(d)	Exercise/Sale.	6
(e)	Exercise/Pledge.	6
(f)	Other Forms of Payment.	7
SECTION 8. ADJUSTMENT OF SHARES.		7
(a)	General.	7
(b)	Mergers and Consolidations.	7
SECTION 9. SECURITIES LAW REQUIREMENTS.		8
SECTION 10. NO RETENTION RIGHTS.		8
SECTION 11. DURATION AND AMENDMENTS.		8
(a)	Term of the Plan.	8

i

(b)	Right to Amend or Terminate the Plan.	9
(c)	Effect of Amendment or Termination.	9
SECTION 12. CHOICE OF LAW		9
SECTION 13. DEFINITIONS.		9
SECTION 1. GRANT OF OPTION.		1
(a)	Option.	1
(b)	Plan and Defined Terms.	1
SECTION 2. RIGHT TO EXERCISE.		1
SECTION 3. VESTING SCHEDULE.		1
(a)	This option shall vest and may be exercised according to the following schedule:	1
SECTION 4. NO TRANSFER OR ASSIGNMENT OF OPTION.		2
SECTION 5. EXERCISE PROCEDURES.		2
(a)	Notice of Exercise.	2
(b)	Issuance of Shares.	2
(c)	Withholding and Taxes.	2
SECTION 6. PAYMENT.		3
(a)	Cash.	3
(b)	Surrender of Shares.	3
(c)	Exercise/Sale.	3
(d)	Exercise/Pledge.	3
SECTION 7. TERM AND EXPIRATION.		4
(a)	Basic Term.	4
(b)	Termination of Service (Except by Death).	4
(c)	Death of the Optionee.	4
(d)	Part-Time Employment and Leaves of Absence.	5
(e)	Repurchase Rights.	5
SECTION 8. Legality Of Initial Issuance.		5
(a)	It and the Optionee have taken any actions required to register the Shares under all applicable securities law or to perfect an exemption from the registration requirements thereof;	5
(b)	Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and	5
(c)	Any other applicable provision of federal, state or foreign law has been satisfied.	5
SECTION 9. No Registration Rights.		6
SECTION 10. RESTRICTIONS ON TRANSFER.		6
(a)	Securities Law Restrictions.	6
(b)	Market Stand-Off.	6
(c)	Investment Intent at Grant.	7
(d)	Investment Intent at Exercise.	7
(e)	Legends.	7
(f)	Removal of Legends.	8
(g)	Administration.	8
SECTION 11. ADJUSTMENT OF SHARES.		8
SECTION 12. MISCELLANEOUS PROVISIONS.		8
(a)	Rights as a Shareholder.	8
(b)	No Retention Rights.	8

ii

(c)	Notice.	9
(d)	Entire Agreement.	9
(e)	Choice of Law.	9
(f)	Plan and Option Discretionary.	9
(g)	Extraordinary Compensation.	9
(h)	Termination of Service.	10
(i)	Authorization to Disclose.	10
(j)	Personal Data Authorization.	10
(k)	Independent Tax Advice.	11
(l)	Specific Performance.	11
(m)	[Dispute Resolution.	11
SECTION 13. DEFINITIONS.		11

iii

3S BIO INC. 2006 STOCK PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

The purpose of the Plan is to offer selected persons an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by purchasing Shares. The Plan provides both for the direct award or sale of Shares and for the grant of Options to purchase Shares. Options granted under the Plan may include Nonqualified Options as well as ISOs intended to qualify under Section 422 of the Code.

It is acknowledged that complex multi-jurisdictional tax considerations (which might not be fully appreciated at an initial date of grant) may adversely impact a grant or award and the benefit intended to be provided to an Awardee, Optionee or Purchaser thereby, and that accordingly the Plan and any grants or awards made thereunder may be restructured as may be decided by the Board of Directors in good faith.

Capitalized terms are defined in Section 12.

SECTION 2. ADMINISTRATION.

(a) Committees of the Board of Directors; Authority of Board of Directors; Restructuring of Grants or Awards.

Subject to those matters reserved for determination by the Board of Directors as set forth in this Plan and to the manner for determination of the Exercise Price of Stock Options set forth in Section 6(c), the Plan may be administered by one or more Committees. Who shall receive Options or Shares, the exercise or purchase price thereof (subject to Section 6(c)), if any, and the allocation thereof among participants shall be determined by the Board of Directors. Whether Options shall be granted or Shares awarded or sold and the restructuring (subject to Section 6(c)) of any outstanding grants or awards shall be determined by the Board of Directors. Notwithstanding the foregoing, the vesting schedule and the other terms and conditions applicable to Options or Shares shall be as set forth in the form Stock Option Agreement, Stock Purchase Agreement or Stock Award Agreement agreed upon by the Board of Directors. Each Committee shall consist of one or more members of the Board of Directors who have been appointed to the Committee by the Board of Directors. Each Committee shall have such authority and be responsible for such functions as the Board of Directors has assigned to it. If no Committee has been appointed, the entire Board of Directors shall administer the Plan. Any reference to the Board of Directors in the Plan, except in this Section 2(a), shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function.

(b) Authority of the Board of Directors.

Subject to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan. All decisions, determinations, interpretations and other actions of the Board of Directors shall be final and binding on the Company, all Purchasers, all Awardees, all Optionees and all persons deriving their rights from a Purchaser or Optionee, so long as such decisions, determinations, interpretations or other actions were made in good faith.

SECTION 3. ELIGIBILITY.

(a) General Rule.

Only Employees, Outside Directors and Consultants shall be eligible for the grant of Nonqualified Options or the direct award or sale of Shares. Only Employees shall be eligible for the grant of ISOs.

(b) Ten Percent Shareholders.

A person who owns more than 10% of the total combined voting power of all classes of outstanding shares of the Company, its Parent or any of its Subsidiaries shall not be eligible for the grant of an ISO unless (i) the Exercise Price is at least 110% of the Fair Market Value of a Share on the Date of Grant and (ii) such ISO by its terms is not exercisable after the expiration of five years from the Date of Grant. For purposes of this Subsection (b), in determining share ownership, the attribution rules of Section 424(d) of the Code shall be applied.

SECTION 4. SHARES SUBJECT TO PLAN.

(a) Basic Limitation.

Not more than 10,000,000 Shares plus a number of shares equal to 10% of any additional shares capital of the Company issued following the date of the adoption of the Plan by the Board of Directors may be issued under the Plan (subject to Subsection (b) below). The number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the number of Shares that then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times keep available sufficient Shares to satisfy the requirements of the Plan. If at any time the number of authorized but unissued Shares shall not be sufficient to satisfy the requirements of the Plan, the Company shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Shares to such number of Shares as shall be sufficient for such purposes, including, without limitation, engaging in commercially reasonable efforts to obtain the requisite shareholder approval of any necessary amendment to its Memorandum and Articles of Association. Shares offered under the Plan may be authorized but unissued Shares or treasury Shares.

(b) Additional Shares.

In the event that Shares previously issued under the Plan are reacquired by the Company, the number of such Shares shall be added to the number of Shares then available for issuance under the Plan. In the event that an outstanding Option or other right for any reason expires or is canceled, the number of Shares allocable to the unexercised portion of such Option or other right shall be added to the number of Shares then available for issuance under the Plan.

2

SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.

(a) Stock Award Agreement and Stock Purchase Agreement.

Each award of Shares under the Plan shall be evidenced by a Stock Award Agreement between the Awardee and the Company, and each sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Award Agreement or Stock Purchase Agreement. The provisions of the various Stock Award and Stock Purchase Agreements entered into under the Plan need not be identical.

(b) Duration of Offers and Nontransferability of Rights.

Any right to acquire Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 60 days after the grant of such right was communicated to the Purchaser by the Company. Such right shall not be transferable and shall be exercisable only by the Purchaser to whom such right was granted.

(c) Purchase Price.

The Purchase Price of Shares to be offered under the Plan, if newly issued, shall not be less than [the par nominal value of such Shares]. Subject to the preceding sentence and to Section 2(a), the Board of Directors shall determine the Purchase Price. The Purchase Price shall be payable in a form described in Section 7.

(d) Withholding Taxes.

As a condition to the purchase of Shares, the Purchaser shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, or local Cayman Islands, People’s Republic of China, United States, or any other applicable withholding tax obligations, if any, that may arise in connection with such purchase.

(e) Restrictions on Transfer of Shares.

Any Shares awarded or sold under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as set forth in the applicable Stock Award or Stock Purchase Agreement and in the Shareholder Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally. A Stock Award or Stock Purchase Agreement may provide for accelerated vesting in the event of the Purchaser’s death, disability or retirement or other events.

3

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement.

Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

(b) Number of Shares.

Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 8. In case of a grant to a United States citizen or resident, the Stock Option Agreement or related notice of grant shall also specify whether the Option is an ISO or a Nonqualified Option.

(c) Exercise Price.

Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an Option shall be not less than the Fair Market Value of a Share on the Date of grant (and in the case of ISO, 110% of the Fair Market Value of a Share on the Date of Grant if the Optionee owns more than 10% of the total combined voting power of all classes of outstanding shares of the Company, its Parent or any of its Subsidiaries). The Exercise Price shall be payable in a form described in Section 7.

(d) Exercisability.

Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. No Option shall be exercisable unless the Optionee has delivered an executed copy of the Stock Option Agreement and a completed notice of exercise to the Company. All of an Optionee’s Options shall become exercisable in full if Section 8(b)(iv) applies or as set forth in the applicable Stock Option Agreement.

(e) Term.

The Stock Option Agreement shall specify the term of the Option. The term shall be not greater than five (5) years from the date of grant, but in the case of an ISO a shorter term may be required by Section 3(b). A Stock Option Agreement may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service, disability or death, subject to the post-termination exercise periods set forth in the Stock Option Agreement.

4

(f) Execution of Shareholders Agreement.

As a condition to the exercise of any portion of the Option, each Optionee shall become a party to the Shareholders Agreement by delivering a duly executed joinder thereto, in a form satisfactory to the Company, if such Optionee is not already a party to the Shareholders Agreement. All Shares acquired under any Stock Award Agreement or Stock Purchase Agreement will be subject to the Shareholders Agreement.

(g) Restrictions on Transfer of Shares.

Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as set forth in the Stock Option Agreement and the Shareholders Agreement. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

(h) Transferability of Options.

An Option shall be transferable by the Optionee only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as provided in the next sentence. A Nonqualified Option shall also be transferable by domestic relations order to a Family Member of the Optionee. An ISO may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative.

(i) Withholding Taxes.

As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or non-U.S. withholding tax obligations, if any, that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or non-U.S. withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

(j) No Rights as a Shareholder.

An Optionee, or a transferee of an Optionee, shall have no rights as a shareholder with respect to any Shares covered by the Optionee’s Option until such person becomes entitled to receive such Shares by filing a notice of exercise and paying the Exercise Price pursuant to the terms of such Option.

(k) Modification, Extension and Assumption of Options.

Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations under such Option.

5

SECTION 7. PAYMENT FOR SHARES.

(a) General Rule.

The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as otherwise provided in this Section 7.

(b) Surrender of Shares.

At the discretion of the Board of Directors, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Option is exercised. The Optionee shall not surrender Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (beyond the expense which would have to be recognized if there was no right to surrender or attest to ownership of Shares) with respect to the Option for financial reporting purposes.

(c) Services Rendered.

At the discretion of the Board of Directors, Shares may be awarded under the Plan in consideration of services to the Company or a Subsidiary.

(d) Exercise/Sale.

To the extent that a Stock Option Agreement so provides, and if the Shares are publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

(e) Exercise/Pledge.

To the extent that a Stock Option Agreement so provides, and if the Shares are publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

6

(f) Other Forms of Payment.

At the discretion of the Board of Directors, the Purchase Price or Exercise Price of Shares issued under the Plan may be paid in any other form permitted by Cayman Islands law.

SECTION 8. ADJUSTMENT OF SHARES.

(a) General.

In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares or a combination or consolidation of the outstanding Shares into a lesser number of Shares, corresponding adjustments shall automatically be made in each of (i) the number of Shares available for future grants or awards under Section 4, (ii) the number of Shares covered by each outstanding Option and (iii) the Exercise Price under each outstanding Option. In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Shares, a recapitalization, a spin-off, a reclassification or a similar occurrence, the Board of Directors shall make appropriate adjustments in one or more of (i) the number of Shares available for future grants or awards under Section 4, (ii) the number of Shares covered by each outstanding Option or (iii) the Exercise Price under each outstanding Option.

(b) Mergers and Consolidations.

In the event that the Company is subject to a corporate transaction, including (without limitation) a merger, consolidation, acquisition, sale of shares or assets, sale of the business or similar transaction, this option shall be subject to the agreement evidencing such corporate transaction. Such agreement shall provide for one or more of the following:

(i) The continuation of such outstanding Options by the Company (if the Company is the surviving corporation).

(ii) The assumption of such outstanding Options by the surviving corporation or its parent in a manner that complies with Section 424(a) of the Code (whether or not such Options are ISOs).

(iii) The substitution by the surviving corporation or its parent of new options for such outstanding Options in a manner that complies with Section 424(a) of the Code (whether or not such Options are ISOs).

(iv) Full exercisability of such outstanding Options and full vesting of the Shares subject to such Options, followed by the cancellation of such Options. The full exercisability of such Options and full vesting of the Shares subject to such Options may be contingent on the closing of such merger or consolidation. The Optionees shall be able to exercise such Options during a period of not less than five full business days preceding the closing date of such merger or consolidation, unless (A) a shorter period is required to permit a timely closing of such merger or consolidation and (B) such shorter period still offers the Optionees a reasonable opportunity to exercise such Options. Any exercise of such Options during such period may be contingent on the closing of such merger or consolidation.

7

(v) The cancellation of such outstanding Options and a payment to the Optionees equal to the excess of (A) the Fair Market Value of the Shares subject to such Options (whether or not such Options are then exercisable or such Shares are then vested) as of the closing date of such merger or consolidation over (B) their Exercise Price. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. As to the unvested portion of Options, such payment may be made in installments which are deferred until the date or dates when such Options would have become exercisable or such Shares would have vested. Such payment may be subject to vesting based on the Optionee’s continuing Service, provided that the vesting schedule shall not be less favorable to the Optionees than the schedule under which such Options would have become exercisable or such Shares would have vested. If the Exercise Price of the Shares subject to such Options exceeds the Fair Market Value of such Shares, then such Options may be cancelled without making a payment to the Optionees. For purposes of this Paragraph (v), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

SECTION 9. SECURITIES LAW REQUIREMENTS.

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) Cayman Islands law, the laws of the People’s Republic of China, the United States Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, the applicable law of any other jurisdiction, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.

SECTION 10. NO RETENTION RIGHTS.

Nothing in the Plan or in any right or Option granted under the Plan shall confer upon the Purchaser or Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Purchaser or Optionee) or of the Purchaser or Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

SECTION 11. DURATION AND AMENDMENTS.

(a) Term of the Plan.

The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors, subject to the approval of the Company’s shareholders. Subject to extension by amendment pursuant to Subsection (b) below, the Plan shall terminate automatically 10 years after the later of (i) its adoption by the Board of Directors or (ii) the most recent increase in the number of Shares reserved under Section 4 that was approved by the Company’s shareholders. The Plan may be terminated on any earlier date pursuant to Subsection (b) below.

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(b) Right to Amend or Terminate the Plan.

The Board of Directors may amend, suspend or terminate the Plan at any time and for any reason; provided, however, that any amendment of the Plan shall be subject to the approval of the Company’s shareholders if it (i) increases the number of Shares available for issuance under the Plan (except as provided in Section 8) or (ii) materially changes the class of persons who are eligible for the grant of ISOs. Shareholder approval shall not be required for any other amendment of the Plan.

(c) Effect of Amendment or Termination.

No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously granted under the Plan.

SECTION 12. CHOICE OF LAW

This Plan shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 13. DEFINITIONS.

“Awardee” shall mean a person to whom the Board of Directors has awarded Shares under the Plan.

“Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Committee” shall mean a committee of the Board of Directors, as described in Section 2(a).

“Company” shall mean 3S Bio Inc., a Cayman Islands company.

“Consultant” shall mean a person (including an entity or principals or employees of an entity which serve as consultants to the Company) who performs bona fide services for the Company or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

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“Date of Grant” shall mean the date of grant of the Option as set forth in the Notice of Stock Option Grant.

“Employee” shall mean any individual who is a common law employee of the Company or a Subsidiary.

“Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of an Option, as determined pursuant to Section 6(c) and specified in the applicable Stock Option Agreement.

“Fair Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

“Family Member” shall mean (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, (ii) any person sharing the Optionee’s household (other than a tenant or employee), (iii) a trust in which persons described in Clause (i) or (ii) have more than 50% of the beneficial interest, (iv) a foundation in which persons described in Clause (i) or (ii) or the Optionee control the management of assets and (v) any other entity in which persons described in Clause (i) or (ii) or the Optionee own more than 50% of the voting interests.

“ISO” shall mean an employee incentive stock option described in Section 422(b) of the Code.

“Nonqualified Option” shall mean an option to purchase Shares not described in Sections 422(b) or 423(b) of the Code.

“Option” shall mean an ISO or Nonqualified Option granted under the Plan and entitling the holder to purchase Shares.

“Optionee” shall mean a person who holds an Option.

“Outside Director” shall mean a member of the Board of Directors who is not an Employee.

“Parent” shall mean any corporation (other than the Company) or other entity in an unbroken chain of corporations or entities ending with the Company, if each of the corporations or entities other than the Company owns equity securities or interests possessing 50% or more of the total combined voting power of all classes of equity securities or interests in one of the other corporations or entities in such chain. A corporation or other entity that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

“Plan” shall mean this 3S Bio Inc. 2006 Stock Plan.

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“Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option).

“Purchaser” shall mean a person to whom the Company has offered the right to acquire Shares under the Plan (other than upon exercise of an Option or award of Shares).

“Service” shall mean service as an Employee, Outside Director or Consultant.

“Share” shall mean one Common Share of the Company, as adjusted in accordance with Section 8 (if applicable).

“Stock Award Agreement” shall mean the agreement between the Company and an Awardee that contains the additional terms, conditions and restrictions pertaining to the award of such Shares, which in all cases shall be in a form previously approved by the Board of Directors.

“Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the additional terms, conditions and restrictions pertaining to the Optionee’s Option, which in all cases shall be in a form previously approved by the Board of Directors.

“Stock Option Plans” shall mean the Plan and all other stock option or similar plans of the Company.

“Stock Purchase Agreement” shall mean the agreement between the Company and a Purchaser who acquires Shares under the Plan that contains the additional terms, conditions and restrictions pertaining to the acquisition of such Shares, which in all cases shall be in a form previously approved by the Board of Directors.

“Subsidiary” shall mean any corporation or other entity (other than the Company) in an unbroken chain of corporations or entities beginning with the Company, if each of the corporations or entities other than the last corporation or entity in the unbroken chain owns equity securities or interests possessing 50% or more of the total combined voting power of all classes of equity securities or interests in one of the other corporations or entities in such chain, including, without limitation, Collected Mind Limited and Shenyang Sunshine Pharmaceutical Co., Ltd. A corporation or entity that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

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3S BIO INC. 2006 STOCK PLAN

NOTICE OF STOCK OPTION GRANT

You have been granted the following option to purchase shares of the Common Stock of 3S Bio Inc., a Cayman Islands company (the “Company”):

Name of Optionee:	[                    ]
Total Number of Shares subject to Option Granted:	[                    ]
[Type of Option:]	[Nonqualified Stock Option / ISO]1
Exercise Price Per Share:	[                    ]2
Date of Grant:	[                    ]
Date Exercisable:	This option may be exercised to the extent it has become vested and only in accordance with the provisions of the Stock Option Agreement and the Plan.
Vesting Commencement Date:	[                            ]
Expiration Date:	[                    ] (ten years from the Date of Grant), provided that this option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 7 of the Stock Option Agreement, or otherwise as may be provided in the Plan.

By your signature and the signature of the Company’s representative below, you and the Company agree that this option is granted under and governed by the terms and conditions of the 3S Bio 2006 Stock Plan and the Stock Option Agreement, which are attached to and made a part of this document.

OPTIONEE:	3S BIO INC.
	By:
	Title:

¹ For U.S. citizens or residents only.

² Fair market value of a single Share at the time of execution of the Option Agreement.

TABLE OF CONTENTS

		Page
SECTION 1 GRANT OF OPTION		1
(a)	Option	1
(b)	Plan and Defined Terms	1
SECTION 2 RIGHT TO EXERCISE		1
SECTION 3 VESTING SCHEDULE		1
SECTION 4 NO TRANSFER OR ASSIGNMENT OF OPTION		2
SECTION 5 EXERCISE PROCEDURES		2
(a)	Notice of Exercise	2
(b)	Issuance of Shares	2
(c)	Withholding and Taxes	2
(d)	Shareholders Agreement	3
SECTION 6 PAYMENT		3
(a)	Cash	3
(b)	Surrender of Shares	3
(c)	Exercise/Sale	3
(d)	Exercise/Pledge	4
SECTION 7 TERM AND EXPIRATION		4
(a)	Basic Term	4
(b)	Termination of Service (Except by Death)	4
(c)	Death of the Optionee	5
(d)	Part-Time Employment and Leaves of Absence	5
(e)	Repurchase Rights	5
SECTION 8 LEGALITY OF INITIAL ISSUANCE		5
SECTION 9 NO REGISTRATION RIGHTS		6
SECTION 10 RESTRICTIONS ON TRANSFER		6
(a)	Securities Law Restrictions	6
(b)	Market Stand-Off	6
(c)	Investment Intent at Grant	7
(d)	Investment Intent at Exercise	7
(e)	Legends	7
(f)	Removal of Legends	8
(g)	Administration	8
SECTION 11 ADJUSTMENT OF SHARES		8
SECTION 12 MISCELLANEOUS PROVISIONS		8
(a)	Rights as a Shareholder	8
(b)	No Retention Rights	8
(c)	Notice	9
(d)	Entire Agreement	9
(e)	Choice of Law	9
(f)	Plan and Option Discretionary	9
(g)	Extraordinary Compensation	9
(h)	Termination of Service	10
(i)	Authorization to Disclose	10

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(j)	Personal Data Authorization	10
(k)	Independent Tax Advice	11
(l)	Specific Performance	11
(m)	Dispute Resolution	11
SECTION 13 DEFINITIONS		12

Exhibit A

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THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OR REGULATIONS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT, OR OTHER SUCH OTHER LAWS OR REGULATIONS, OR AN APPLICABLE EXEMPTION FROM REGISTRATION. PRIOR TO ANY SUCH SALE OR OTHER TRANSFER, THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL CONFIRMING THAT SUCH REGISTRATION IS NOT REQUIRED.

3S BIO INC. 2006 STOCK PLAN:

STOCK OPTION AGREEMENT

SECTION 1. GRANT OF OPTION.

(a) Option.

On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant, subject to adjustment as set forth in the Plan. [This option is intended to be a Nonqualified Option, as provided in the Notice of Stock Option Grant.]³

(b) Plan and Defined Terms.

This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Capitalized terms are defined in Section 13 of this Agreement or in the Plan.

SECTION 2. RIGHT TO EXERCISE.

Subject to the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant.

SECTION 3. VESTING SCHEDULE.

(a) This option shall vest and may be exercised according to the following schedule:

³ For U.S. citizens or residents only.

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(i) [This option shall vest with respect to one-quarter ( ¹/4) of the Shares subject hereto on the date which is twelve (12) months after the Date of Grant (the “Vesting Commencement Date”);

(ii) This option shall vest with respect to one-sixteenth (1/16) of the Shares subject hereto on the last day of each three (3)- month period following the Vesting Commencement Date;]

in each case, subject to the Optionee’s continuing to provide Service.

SECTION 4. NO TRANSFER OR ASSIGNMENT OF OPTION.

Except as otherwise provided in the Plan or in this Agreement, this option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment, levy or similar process.

SECTION 5. EXERCISE PROCEDURES.

(a) Notice of Exercise.

The Optionee or the Optionee’s representative may exercise this option by delivering an Exercise Notice, a copy of which is attached as Exhibit A. The notice shall specify the election to exercise this option, the number of Shares for which it is being exercised and the form of payment. The person exercising this option shall sign the notice. In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option. The Optionee or the Optionee’s representative shall deliver to the Company, at the time of giving the notice, payment in a form permissible under Section 6 for the full amount of the Purchase Price.

(b) Issuance of Shares.

Subject to Section 5(c), after receiving a proper notice of exercise, the Company shall cause to be issued one or more certificates evidencing the Shares for which this option has been exercised. Such Shares shall be registered in the name of the person exercising this option. The Company shall cause such certificates to be delivered to or upon the order of the person exercising this option.

(c) Withholding and Taxes.

In the event that the Company or the Affiliate that employs the Optionee determines that it is required to withhold any tax in connection with this option, including (without limitation) as a result of the grant, exercise, vesting or disposition of this option or the Shares subject to this option, the Optionee agrees that the Optionee shall make arrangements reasonably satisfactory to the Company or the Affiliate that employs the Optionee to enable the Company or such Affiliate to satisfy all applicable withholding requirements, including (without limitation) the employee portion of any and all income tax, social contribution or social security taxes or other payroll taxes or deductions. These arrangements may include (without limitation) the withholding of any applicable taxes from any amounts of compensation that the Optionee has earned by virtue of his/her employment or service as a consultant, including (without limitation) salary, remuneration, bonuses, expenses and commissions. Where such compensation is insufficient to cover the payment of the taxes arising in connection with this option, the Optionee hereby confirms that the balance of such taxes will be paid in cash by the Optionee. The Optionee cannot exercise this option or dispose of this option or any Shares subject to this option without satisfying any and all applicable tax liability (for employee) to the satisfaction of the Company or the Affiliate that employs the Optionee. The Optionee also hereby agrees to indemnify the Company and the Affiliate that employs the Optionee with respect to the employee portion of any tax liability that arises in connection with this option, including (without limitation) as a result of the grant, exercise, vesting or disposition of this option or the Shares subject to this option.

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SECTION 6. PAYMENT.

(a) Cash.

All or part of the Purchase Price may be paid in cash or cash equivalents.

(b) Surrender of Shares.

With the prior written consent of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Previously owned Shares being used to pay the Exercise Price shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when this option is exercised. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Purchase Price if such action would cause the Company to recognize compensation expense (beyond the expense which would have to be recognized if there was no right to surrender or attest to ownership of Shares) with respect to this option for financial reporting purposes, as determined in the Company’s sole discretion.

(c) Exercise/Sale.

All or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company. However, payment pursuant to this Subsection (c) shall be permitted only if (i) Stock then is publicly traded and (ii) such payment does not violate applicable law.

(d) Exercise/Pledge.

All or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan to Optionee, and to deliver all or part of the loan proceeds to the Company. However, payment pursuant to this Subsection (d) shall be permitted only if (i) Stock then is publicly traded and (ii) such payment does not violate applicable law.

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SECTION 7. TERM AND EXPIRATION.

(a) Basic Term.

This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant.

(b) Termination of Service (Except by Death).

If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

(i) The expiration date determined pursuant to Subsection (a) above;

(ii) The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

(iii) The date six months after the termination of the Optionee’s Service by reason of Disability.

The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option had become vested and exercisable before the Optionee ceased to provide Service. When the Optionee’s Service terminates, this option shall expire immediately with respect to the number of Shares for which this option is not yet vested and exercisable. This option will not become vested and exercisable for any additional Shares following the date on which the Optionee ceases to provide Service. In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration, as described in clauses (i)—(iii) above) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become vested and exercisable before the Optionee ceased to provide Service.

(c) Death of the Optionee.

If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

(i) The expiration date determined pursuant to Subsection (a) above; or

(ii) The date 12 months after the Optionee’s death.

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All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become vested and exercisable before the Optionee’s death. When the Optionee dies, this option shall expire immediately with respect to the number of Shares for which this option is not yet vested and exercisable as of the date of the Optionee’s death.

(d) Part-Time Employment and Leaves of Absence.

If the Optionee (other than a Consultant or Outside Director) commences working on a part-time basis, then the Company may adjust the vesting schedule set forth in this Agreement in accordance with the Company’s part-time work policy or the terms of an agreement between the Optionee and the Company pertaining to his or her part-time schedule. If the Optionee goes on a leave of absence, then the Company may adjust the vesting schedule set forth in this Agreement in accordance with the Company’s leave of absence policy or the terms of such leave. Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while the Optionee is on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of Service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company). Service shall be deemed to terminate when such leave ends, unless the Optionee immediately returns to active work.

(e) Repurchase Rights.

Upon termination of Optionee’s Service, the Company shall have the right to repurchase Optionee’s Shares acquired hereunder and held by Optionee for the period required to avoid unfavorable accounting consequences (which is generally six months) at a price per Share equal to Fair Market Value at the time of such repurchase; provided that if Optionee’s employment with the Company and its Affiliates is terminated for Cause or by the Optionee without Good Reason, the repurchase price per Common Share shall be the lesser of (A) the original Exercise Price or (B) Fair Market Value.

SECTION 8. LEGALITY OF INITIAL ISSUANCE.

No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

(a) It and the Optionee have taken any actions required to register the Shares under all applicable securities law or to perfect an exemption from the registration requirements thereof;

(b) Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

(c) Any other applicable provision of federal, state or foreign law has been satisfied.

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SECTION 9. NO REGISTRATION RIGHTS.

The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with any law.

SECTION 10. RESTRICTIONS ON TRANSFER.

(a) Securities Law Restrictions.

Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any state or foreign country, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on share certificates or the imposition of stop transfer instructions) if, in the reasonable judgment of the Company, such restrictions are necessary in order to achieve compliance with the Securities Act, the securities laws of any state or foreign country or any other applicable law.

(b) Market Stand-Off.

In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. In no event, however, shall such period exceed 180 days. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act, and the Optionee or a Transferee shall be subject to this Subsection (b) only if the directors and officers of the Company are subject to similar arrangements.

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(c) Investment Intent at Grant.

The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

(d) Investment Intent at Exercise.

In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available which requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

(e) Legends.

The Shares shall be stamped or imprinted with a legend in substantially the following form (unless registered under the Act or if a Optionee delivers to the Company an opinion of counsel reasonably satisfactory in form and substance to the Company, that the Shares do not require registration under the Act or any applicable state securities laws):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE LAWS OF ANY OTHER JURISDICTION. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR A COMPARABLE DOCUMENT UNDER THE LAWS OF ANY OTHER JURISDICTION OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. THE OFFERING OF THESE SECURITIES HAVE NOT BEEN REVIEWED OR APPROVED BY ANY STATE SECURITIES ADMINISTRATOR.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT, DATED AS OF                , 2006, AMONG THE COMPANY AND CERTAIN OF ITS SHAREHOLDERS, A COPY OF WHICH IS ON FILE WITH THE COMPANY. NO SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED HEREBY SHALL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF SAID SHAREHOLDERS AGREEMENT SHALL HAVE BEEN COMPLIED WITH IN FULL.

Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public distribution pursuant to a registration statement under the Act) shall also bear such legend unless, in the opinion of counsel selected by the Optionee and reasonably acceptable to the Company, the securities represented thereby need no longer be subject to restrictions on resale under the Act.

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(f) Removal of Legends.

If, in the opinion of the Company and its counsel, any legend placed on a share certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

(g) Administration.

Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 10 shall be conclusive and binding on the Optionee and all other persons.

SECTION 11. ADJUSTMENT OF SHARES.

In the event of any transaction described in Section 8(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 8(a) of the Plan. In the event that the Company is subject to a corporate transaction, including (without limitation) a merger, consolidation, acquisition, sale of assets, sale of the business or similar transaction, this option shall be subject to the agreement evidencing such corporate transaction, as provided in Section 8(b) of the Plan.

SECTION 12. MISCELLANEOUS PROVISIONS.

(a) Rights as a Shareholder.

Neither the Optionee nor the Optionee’s representative shall have any rights as a shareholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 5 and 6.

(b) No Retention Rights.

Subject to the requirements of applicable law and the applicable employment documentation (if any), nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Affiliate employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without Cause, provided, however, that this provision will not apply if applicable employment documentation or provisions of applicable law require otherwise.

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(c) Notice.

Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon (i) personal delivery, (ii) five days after deposit with the United States Postal Service or a comparable postal service in a country other than the United States, by registered or certified mail, with postage and fees prepaid or (iii) two days after deposit with Federal Express Corporation or a comparable internationally recognized courier service, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c).

(d) Entire Agreement.

The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) which relate to the subject matter hereof.

(e) Choice of Law.

This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, as such laws are applied to contracts entered into and performed in such jurisdiction.

(f) Plan and Option Discretionary.

The Optionee understands and acknowledges that (i) the Company and the Optionee’s employer have reserved the right to amend, suspend or terminate the Plan at any time in accordance with the terms thereof, (ii) except as may be set forth in the Plan, the grant of an option does not in any way create any contractual or other right to receive additional grants of options (or benefits in lieu of options) at any time or in any amount and (iii) all determinations with respect to any additional grants, including (without limitation) the number of Shares offered to an Optionee, will be at the sole discretion of the Company (subject to the terms of the Plan).

(g) Extraordinary Compensation.

The value of this option shall be an extraordinary item of compensation outside the scope of the Optionee’s employment contract, if any, and shall not be considered a part of the Optionee’s wages, base or normal or expected compensation for any purpose, including (without limitation) the purpose of calculating any benefits, including (without limitation) severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments. The vesting in and exercisability of this option shall also not be considered a part of the Optionee’s wages, base or normal or expected compensation for any purpose, including (without limitation) the purpose of calculating any benefits, including (without limitation) severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

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(h) Termination of Service.

The Optionee understands and acknowledges that participation in the Plan ceases upon termination of his or her Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement. The Optionee understands and agrees that this option and the Shares subject to this option will only become vested and exercisable in accordance with the “Date Exercisable” schedule in the attached Notice of Stock Option Grant, while the Optionee is actually providing Service. Subject to any employment or consulting agreement they may have with the Company, Employees and Consultants by accepting this option acknowledge and agree that they have no rights to continue rendering Service to the Company or an Affiliate, and that the rights to provide Service are separate and distinct from rights to remain employed and/or rights to receive notice of termination of employment or payment in lieu of notice thereof. The Optionee’s option granted hereunder and the Shares subject hereto shall not become vested and exercisable when the Optionee is not providing Service, including (without limitation) when the Optionee is on a leave of absence, unless otherwise determined by the Company, in its sole discretion.

(i) Authorization to Disclose.

The Optionee hereby authorizes and directs the Optionee’s employer to disclose to the Company or any Affiliate or other entity any information regarding the Optionee’s employment, the nature and amount of the Optionee’s compensation and the fact and conditions of the Optionee’s participation in the Plan, as the Optionee’s employer deems necessary or appropriate to facilitate the administration of the Plan.

(j) Personal Data Authorization.

The Optionee consents to the collection, use and transfer of personal data as described in this Subsection (j). The Optionee understands and acknowledges that the Company, an Affiliate, the Optionee’s employer and the Company’s other Subsidiaries and entities hold certain personal information regarding the Optionee for the purpose of managing and administering the Plan, including (without limitation) the Optionee’s name, home address, telephone number, date of birth, national insurance number, salary, nationality, job title, any Shares or directorships held in the Company and details of all options or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor (the “Data”). The Optionee further understands and acknowledges that the Company, any Affiliate and other entities will transfer Data among themselves only as necessary for the purpose of implementation, administration and management of the Optionee’s participation in the Plan and that the Company and/or any Affiliate and other entities may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan only for the purpose of such assistance. The Optionee understands and acknowledges that the recipients of Data may be located in the United States or elsewhere. The Optionee authorizes such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering the Optionee’s participation in the Plan, including a transfer to any broker or other third party with whom the Optionee elects to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Optionee’s behalf. The Optionee may, at any time, view the Data, require any necessary modifications of Data or withdraw the consents set forth in this Subsection (j) by contacting the Human Resources Department of the Company in writing.

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(k) Independent Tax Advice.

The Optionee should obtain advice from an appropriate independent professional adviser with respect to the tax implications of the grant, exercise, assignment, release, cancellation, termination or any other disposition of this option or the Shares subject to this option pursuant to the terms of the Plan. Optionee understands and agrees that the Company has no obligation to provide any tax advice.

(l) Specific Performance.

The Company and the Optionee acknowledge that, in view of the transactions contemplated by this Agreement, each party would not have an adequate remedy at law for money damages in the event that this Agreement has not been performed in accordance with its terms, and therefore agrees that the non-breaching party shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which such non-breaching party may be entitled at law or in equity.

(m) [Dispute Resolution.

All disputes arising from the execution of, or in connection with, this Agreement shall be settled through friendly consultation between the parties. If no settlement can be reached through consultation, the dispute shall be submitted to arbitration with the responsible Labor Arbitration Commission of the People’s Republic of China (the “PRC”) within sixty (60) days after either party has given written notice to the other party of the existence of a dispute. The losing party shall bear the expenses of arbitration, unless otherwise decided by the arbitration tribunal. If one party is dissatisfied with the arbitral award, it may institute an action with the applicable People’s Court of the PRC within fifteen (15) days from the date of receipt of notice of the arbitral award. If no action is instituted within this time limit, the arbitral award shall become final and binding on both parties.]⁴

SECTION 13. DEFINITIONS.

“Affiliate” shall mean all direct and indirect Parents and Subsidiaries of the Company and all branches, representative offices and similar entities of the Company, Parents or Subsidiaries.

“Agreement” shall mean this Stock Option Agreement.

⁴ Arbitration in the PRC only if necessary based on the advice of PRC counsel.

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“Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

“Cause” shall mean:

(i) The Optionee’s gross negligence or willful misconduct in carrying out his Services to the Company or any of its Affiliates, or the Optionee’s breach of a fiduciary duty owed to the Company or any of its Affiliates;

(ii) A continuing failure by the Optionee to perform assigned duties after receiving written notification of such failure from the Board of Directors;

(iii) An unauthorized use or disclosure by the Optionee of the Company’s or any of its Affiliates’ confidential information or trade secrets, which use or disclosure causes material harm to the Company or any of its Affiliates;

(iv) A material breach by the Optionee of any material agreement between the Optionee and the Company any of its Affiliates, which breach is not cured or remedied within fifteen days after notice thereof in reasonable detail from the Company or any of its Affiliates to the Optionee (which notice shall state that such breach shall be deemed “Cause” under this Agreement); or

(v) the commission by the Optionee of a felony or any crime involving moral turpitude if the commission of such felony or crime (A) is in connection with the performance of the Optionee’s duties to the Company or its Affiliates or (B) is materially injurious to the business or reputation of the Company or any of its Affiliates.

“Committee” shall mean a committee of the Board of Directors, as described in Section 2 of the Plan.

“Company” shall mean 3S Bio Inc., a Cayman Islands company.

“Consultant” shall mean any person or entity who performs bona fide services as a consultant or advisor (excluding Employees) for the Company or an Affiliate, including, without limitation, as a principal or employee of an entity which is a Consultant.

“Date of Grant” shall mean the date specified in the Notice of Stock Option Grant, which date shall be the later of (i) the date on which the Board of Directors resolved to grant this option or (ii) the first day of the Optionee’s Service.

“Disability” shall mean that the Optionee is unable to perform the essential functions of the Optionee’s position for a period of at least 120 consecutive days because of a physical or mental impairment, as confirmed in writing by a physician acceptable to the Company in its reasonable judgment.

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“Employee” shall mean any individual who is a common law employee of the Company or an Affiliate.

“Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of this option, as specified in the Notice of Stock Option Grant.

“Fair Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

“Good Reason” shall mean a material violation by the Company or any of its Affiliates of any of its material contractual or legal obligations to the Optionee, provided that: (A) such violation has a material effect on the Optionee and (B) the Company receives written notice of such violation (by hand or by messenger to the Company) from the Optionee stating that such violation will be grounds for resignation with “Good Reason” if the Company fails to cure such violation within fifteen days following such written notice.

“Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

[“Nonqualified Option” shall mean a option to purchase Shares not described in Sections 422(b) or 423(b) of the Internal Revenue Code of 1986, as amended.]⁵

“Notice of Stock Option Grant” shall mean the document so entitled to which this Agreement is attached.

“Optionee” shall mean the person who provides Service and is named in the Notice of Stock Option Grant.

“Outside Director” shall mean a member of the Board of Directors who is not an Employee.

“Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns equity securities possessing 50% or more of the total combined voting power of all classes of equity securities in one of the other corporations in such chain.

“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, unincorporated association, trust, joint stock company or any other entity or organization.

“Plan” shall mean the 3S Bio Inc. 2006 Stock Plan, as in effect on the Date of Grant.

⁵ For U.S. citizens or residents only.

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“Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

“Securities Act” shall mean the United States Securities Act of 1933, as amended.

“Service” shall mean actual ongoing service to the Company or any of its Affiliates as an Employee, Outside Director or Consultant and specifically excludes periods of notice of termination of employment under applicable law or employment contracts whereby actual service is no longer provided, for example, when an Employee is paid in lieu of his/her notice period or when an Employee is asked to cease service immediately pursuant to a “garden leave” or a similar concept.

“Share” shall mean one share of Stock, as adjusted in accordance with Section 8 of the Plan (if applicable).

“Stock” shall mean the Common Shares of the Company.

“Subsidiary” shall mean any corporation (other than the Company) or other entity in an unbroken chain of corporations or other entities beginning with the Company, if each of the corporations or other entities other than the last corporation or other entity in the unbroken chain owns equity securities possessing 50% or more of the total combined voting power of all classes of equity securities or interests in one of the other corporations or other entities in such chain and including, without limitation,                                     .

“Transferee” shall mean any person to whom the Optionee has directly or indirectly transferred any Share acquired under this Agreement.

“Transfer Notice” shall mean the notice of a proposed transfer of Shares described in Section 7.

“Vesting Commencement Date” shall mean the date specified in the Notice of Stock Option Grant.

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EXHIBIT A

3S BIO INC.

2006 STOCK PLAN

EXERCISE NOTICE

3S Bio Inc.

[address]

Attention: [Secretary]

1. Exercise of Option. Effective as of today,                  , 2            , the undersigned (the “Optionee”) hereby elects to exercise the Optionee’s option to purchase              Shares of the Company (the “Shares”) under and pursuant to the 3S Bio Inc. 2006 Stock Plan (the “Plan”) and the Agreement dated                  , 2             (the “Agreement”).

2. Delivery of Payment. The Optionee herewith delivers to the Company the full aggregate Exercise Price in respect of such exercise (together with any amounts required to be withheld for tax withholding purposes), as set forth in the Award Agreement.

3. Representations of Optionee. (a) The Optionee acknowledges that the Optionee has received, read and understood the Plan and the Agreement and agrees to abide by and be bound by their provisions.

(b) [The Optionee is acquiring and will hold the Shares for investment for his or her account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(c) The Optionee understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom and that the Shares must be held indefinitely, unless they are subsequently registered under the Securities Act or the Optionee obtains an opinion of counsel, in form and substance reasonably satisfactory to the Company and its counsel, that such registration is not required. The Optionee further acknowledges and understands that the Company is under no obligation to register the Shares.

(d) The Optionee is aware of the adoption of Rule 144 by the Securities and Exchange Commission under the Securities Act, which permits limited public resales of securities acquired in a non-public offering, subject to the satisfaction of certain conditions, including (without limitation) the availability of certain current public information about the issuer, the resale occurring only after the holding period required by Rule 144 has been satisfied, the sale occurring through an unsolicited “broker’s transaction,” and the amount of securities being sold during any three-month period not exceeding specified limitations. The Optionee acknowledges and understands that the conditions for resale set forth in Rule 144 have not been satisfied and that the Company has no plans to satisfy these conditions in the foreseeable future.

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(e) The Optionee will not sell, transfer or otherwise dispose of the Shares in violation of the Securities Act, the Securities Exchange Act of 1934, or the rules promulgated thereunder, including Rule 144 under the Securities Act (or the securities laws or regulations of any other jurisdiction). The Optionee agrees that he or she will not dispose of the Shares unless and until he or she has complied with all requirements of the Agreement applicable to the disposition of Common Shares and he or she has provided the Company with written assurances, in substance and form reasonably satisfactory to the Company, that (A) the proposed disposition does not require registration of the Shares under the Securities Act (or the securities laws or regulations of any other jurisdiction) or all appropriate action necessary for compliance with the registration requirements of the Securities Act (or the securities laws or regulations of any other jurisdiction) or with any exemption from registration available under the Securities Act (or the securities laws or regulations of any other jurisdiction) has been taken and (B) the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Shares under any other applicable securities laws or regulations.

(f) The Optionee has been furnished with, and has had access to, such information as he or she considers necessary or appropriate for deciding whether to accept in the Shares, and the Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of the Shares.

(g) The Optionee is aware that his or her investment in the Company is a speculative investment which has limited liquidity and is subject to the risk of complete loss. The Optionee is able, without impairing his or her financial condition, to hold the Shares for an indefinite period and to suffer a complete loss of his or her investment in the Shares, including any tax obligations incurred.]⁶

4. Rights as a Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to such Shares, notwithstanding the exercise of this Option. The Shares shall be issued to the Optionee as soon as practicable after the date of this Exercise Notice. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 8 of the Plan.

⁶ These representations may not be required by the Company after a public offering. The representations in Sections 3(b) - (e) are for U.S. citizens or residents only, subject to the advise of PRC counsel.

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5. Tax Consultation. The Optionee understands that the Optionee may suffer adverse tax consequences as a result of the Optionee’s purchase or disposition of the Shares. The Optionee represents that the Optionee has consulted with any tax consultant(s) the Optionee deems advisable in connection with the purchase or disposition of the Shares and that the Optionee is not relying on the Company or an Affiliate for any tax advice.

6. Restrictive Legends and “Stop-Transfer” Instructions. (a) Legends. The Optionee understands and agrees that the Company shall cause the legends set forth in the Agreement or legends substantially equivalent thereto to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws.

(b) “Stop-Transfer” Instructions. The Optionee agrees that in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of the Plan, the Agreement or this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

Submitted by:	Accepted by:
OPTIONEE:	3S BIO INC.
Signature	Name:
	Title:
Print Name
	Date Received

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EX-10.2

Exhibit 10.2

English translation of the executed copy

Agreement No. 2006 Shenhe(bao)0001

Guarantee Agreement

Between
Guarantor (Party A):	3SBio Inc.
Residence (address):	No. 3 A1, Road 10, Economic & Technology Development Zone, Shenyang
Legal Representative:	Dan LOU
And
Creditor (Party B):	Industrial and Commercial Bank of China, Shenhe Sub-branch, Shenyang
Residence (address):	No. 19, Chaoyang Street, Shenhe District, Shenyang
Legal Representative:	Liping ZHANG

Table of Content

ARTICLE I representations and warranties of party a	3
ARTICLE II Type and amount of the guaratneed master creditor’s rights	3
ARTICLE III term of the master agreement	4
ARTICLE IV means of guarantee	4
ARTICLE V Scope of guarantee	4
ARTICLE VI term of guarantee	4
ARTICLE VII rights and obligations of party a	4
ARTICLE VIII rights and obligations of party b	6
ARTICLE IX liability for breach of this agreement	6
ARTICLE X effectiveness, amendment, termination and expiration of this agreement	6
ARTICLE XI dispute settlement	7
ARTICLE XII miscellaneous	7
ARTICLE XIII Supplemental provision	7

2

WHEREAS, Party A desires to provide guarantee security in favor of Party B with the purpose to ensure due performance of the debtor’s obligations under the Loan Agreement with the Reference No. 2006Shenhezi0006, entered into on February 20, 2006 by and between China Communications Materials Northeastern Co., Ltd., and Party B hereto (the “Master Agreement”);

WHEREAS, the Parties hereto desire to define their respective rights and obligations under this Agreement;

NOW, THEREFORE, in accordance with the PRC Contract Law, PRC Security Law and other applicable laws and regulations, and through equal negotiations, the Parties hereto agree as follows:

ARTICLE I

REPRESENTATIONS AND WARRANTIES OF PARTY A

Section 1.1 It is a guarantor duly qualified under the PRC laws and is able to provide external guarantee security.

Section 1.2 It is duly capable to bear guarantee responsibilities, which responsibilities will not be mitigated or relieved by any order, change of financial conditions, or any agreement with any entity.

Section 1.3 It understands thoroughly the use of proceeds by the borrower under the Master Agreement and provides guarantee security in favor of the borrower under the Master Agreement absolutely out of his own will; all representations and warranties made by it under this Agreement are true.

Section 1.4 Party B may hold Party A directly liable for repayment of any principal, interest or related expenses that the borrower fails to pay under the Master Agreement, and Party A authorizes Party B to make such repayment by way of deducting the funds available in Party A’s accounts with the Industrial and Commercial Bank of China and any and all offices thereof. The repayment so deducted that is denominated in foreign currency shall be translated into local currency at an exchange rate published by Party B on the day of such deduction.

ARTICLE II

TYPE AND AMOUNT OF THE GUARATNEED MASTER CREDITOR’S RIGHTS

Section 2.1 The master creditor’s rights guaranteed hereunder shall be the loan issued by Party B under the Master Agreement, the amount of which is RMB 10 million.

3

ARTICLE III

TERM OF THE MASTER AGREEMENT

Section 3.1 The term of the Master Agreement is 12 months, beginning on February 20, 2006 and ending on February 15, 2007. This term may be changed subject to any amendment to the Master Agreement.

ARTICLE IV

MEANS OF GUARANTEE

Section 4.1 The guarantee contemplated hereunder shall be provided jointly and severally.

ARTICLE V

SCOPE OF GUARANTEE

Section 5.1 The guarantee provided hereunder shall cover the principal, interest, compound interest, penalty interest, liquidated damages and compensation relating to the loan under the Master Agreement, as well as any expenses in connection with claiming creditor’s right and any other expenses payable arising from or in connection with the Master Agreement.

ARTICLE VI

TERM OF GUARANTEE

Section 6.1 The term of this Agreement shall be two years beginning on the day immediately following the loan maturity date set forth in the Master Agreement.

Section 6.2 If the loan under the Master Agreement matures in installment, the term of guarantee for each such installment shall be two years beginning on the day immediately following the maturity date of such installment as set forth in the Master Agreement.

Section 6.3 If Party B requests advance repayment of any loan pursuant to the Master Agreement, the term of guarantee for such loan shall be two years beginning on the day immediately following the repayment date set forth in the notice to the borrower from Party B.

ARTICLE VII

RIGHTS AND OBLIGATIONS OF PARTY A

Section 7.1 It shall provide relevant materials at the request of Party B and ensure the accuracy and validity of such materials.

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Section 7.2 Upon its receiving any loan collection letter or any other document to the same effect from Party B, Party A shall acknowledge by a written receipt and deliver the same to Party B within three days thereof.

Section 7.3 Party A shall keep Party B promptly informed of:

(a) Any change to Party A’s operations, such as any contract, lease, joint venture, merger, acquisition, division, share restructuring, and cooperation with foreign investor;

(b) Any change to Party A’s scope of businesses, registered capital or shareholding structure;

(c) Any change materially adverse to Party A’s financial conditions or any material economic dispute relating to Party A;

(d) Any bankruptcy, winding up, dissolution, business suspension for rectification, revocation or cancellation of business license, in each case relating to Party A; or

(e) Any change to the residence, telephone information or legal representative of Party A.

Section 7.4 Party A shall notify Party B 30 days in advance of occurrence of any event set forth in Section 7.3 (a) and (b); Party A shall notify Party B within five days upon occurrence of any event set forth in Section 7.3 (c), (d) and (e).

Section 7.5 Party B and the borrower may make amendment to the Master Agreement without consent of Party A, provided that such amendment is unrelated to extension of the term or increase of loan amount under the Master Agreement. Party A shall continue to be jointly and severally liable for any guarantee provided by it within the original guarantee scope.

Section 7.6 Party A shall continue to be jointly and severally liable for any guarantee provided by it within the original guarantee scope if Party B transfers the master creditor’s rights to any third party within the term of this Agreement.

Section 7.7 Party B may not provide to any third party any security whatsoever that is harmful to the interest of Party B during the term of this Agreement.

Section 7.8 Party A shall ensure due performance of any and all security obligations under this Agreement if any division, merger, shareholding restructuring or any other event relating to Party A occurs during the term of this Agreement.

Section 7.9 Party A shall be relieved from any guarantee obligation upon satisfaction of all obligations by the borrower under the Master Agreement.

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ARTICLE VIII

RIGHTS AND OBLIGATIONS OF PARTY B

Section 8.1 It may request Party A to provide relevant document evidencing Party A’s legal status.

Section 8.2 It may request Party A to provide financial report and other information necessary for representing Party A’s credibility.

Section 8.3 It may request Party A to perform guarantee obligations under this Agreement if all or any part of the repayment owing to Party B under the Master Agreement is not performed as at the expiration of the term of the Master Agreement.

Section 8.4 Party B may notify Party A to perform guarantee obligation in advance and Party A shall do so within 10 days upon receipt of such notice if:

(a) Party B terminates the Master Agreement according to relevant provisions of thereof and applicable laws; or

(b) Party B collects the loan in advance under such circumstances set forth in the Master Agreement.

Section 8.5 Party B shall keep Party A promptly informed if Party B transfers the master creditor’s rights to any third party according to law during the term of this Agreement.

ARTICLE IX

LIABILITY FOR BREACH OF THIS AGREEMENT

Section 9.1 Party A shall indemnify Party B for any loss sustained by Party B due to any false representation made by Party A in Article I hereof.

Section 9.2 The Parties shall perform the obligations under this Agreement as of the effective date of this Agreement. In case of failure to perform all or any part of the obligations under this Agreement by either party, the failing party shall be liable for any liability for breach of this Agreement and also for any loss sustained by the other party arising from such failure.

Section 9.3 Party A shall indemnify Party B within the scope of guarantee hereunder against any and all loss suffered by Party B due to invalidity of this Agreement caused by Party A.

ARTICLE X

EFFECTIVENESS, AMENDMENT, TERMINATION AND EXPIRATION OF THIS AGREEMENT

Section 10.1 This Agreement shall become effective after it is executed and affixed with seal by the Parties hereto, and shall expire on such date when the principal, interest, compound interest, penalty interest, liquidated damages, compensation relating to the debt under the Master Agreement, as well as the expenses relating to claiming creditor’s rights and any other expenses payable under the Master Agreement, are fully repaid.

6

Section 10.2 This Agreement is independent from the Master Agreement and will not become void due to the invalidity of the Master Agreement. Party A shall continue to perform its obligations hereunder if the Master Agreement becomes null and void.

Section 10.3 Neither Party hereto may amend or terminate this Agreement at his own discretion after it becomes effective. Any necessary amendment to or termination of this Agreement shall be made with written agreement of the Parties. This Agreement shall continue to be in full force and effect before execution of such written agreement.

ARTICLE XI

DISPUTE SETTLEMENT

Section 11.1 Any dispute between the Parties hereto arising from performance of this Agreement shall be firstly settled by way of negotiation; if such negotiation fails, it shall be settled by such way set forth in              as follows:

(a) Arbitration by                     ; or

(b) Litigation before the competent court at the residence of Party B.

ARTICLE XII

MISCELLANEOUS

Section 12.1	__________________________________________
Section 12.2	__________________________________________
Section 12.3	__________________________________________

ARTICLE XIII

SUPPLEMENTAL PROVISION

Section 13.1 This Agreement is in              copies and each Party shall hold one copy, each of which shall be equally authentic.

Party A (common seal):	Party B (common seal):
Seal of 3SBio Inc.	Seal of Industrial and Commercial Bank of China, Shenhe Sub-branch, Shenyang

7

Legal representative (or authorized agent):	Legal representative (person in charge):
/s/ Dan LOU (hand signature and seal)	/s/ (name in hand signature)
February 20, 2006	February 20, 2006

8

EX-10.3

Exhibit 10.3

English translation of the executed copy

Agreement Regarding Transfer of Equity Interest In

Shenyang Sunshine Pharmaceutical Co., Ltd.

By and Between

China Transport Resources Northeast Co., Ltd.

and

Collected Mind Limited

Equity Interest Transfer Agreement

This Agreement is entered into on 18 July 2006 in Shenyang by and between:

Transferor: China Transport Resources Northeast Co., Ltd.

Legal Address: 96 Wenhua Road, Dongling District, Shenyang Municipality

Legal Representative: Liu Xin

And

Transferee: Collected Mind Limited

Legal Address: P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands

Authorized Representative: Lou Dan

WHEREAS:

1. The Transferor is a limited liability company incorporated and validly existing pursuant to the laws of the People’s Republic of China (hereinafter referred to as “China”), and legally holds a 6.67% equity interest (hereinafter referred to as the “Subject Equity Interest”) of Shenyang Sunshine Pharmaceutical Co., Ltd. (hereinafter referred to as “Sunshine Pharmaceutical”);

2. The Transferee is a company duly incorporated and validly existing pursuant to the laws of British Virgin Islands. It is validly qualified to be transferred of the equity interest in Sunshine Pharmaceutical pursuant to relevant laws;

3. Sunshine Pharmaceutical is a Sino-foreign equity joint venture duly incorporated in Shenyang and validly existing pursuant to the laws of China. Its principal business is to research, develop, manufacture and sell biologically-engineered products and biochemical pharmaceuticals. It has a registered capital of RMB 62,974,046 which has already been fully contributed. Its existing shareholders are Chinese investors Shenyang Keweier Hi-Tech Co., Ltd. (hereinafter referred to as “Keweier”), the Transferor, Zhang Lisha as well as foreign investors Montgomery Biomedicine Lab Inc. of the USA (hereinafter referred to as “Montgomery”), Lans Holdings Ltd. (hereinafter referred to as “Lans Holdings”) and Starry Investment Ltd. (hereinafter referred to as “Starry Investment”), among which Keweier holds a 50.88% equity interest in Sunshine Pharmaceutical; the Transferor, 6.67%; Zhang Lisha, 8.23%; Montgomery, 17.89%; Lans Holdings 13.01% and Starry Investment, 3.33%.

1

4. The Transferor desires to sell, and the Transferee desires to purchase, the Subject Equity Interest under the terms and conditions hereof.

NOW THEREFORE, the Transferor and the Transferee agree as follows:

Article 1: Equity Interest Transfer

1. The Transferor hereby agrees to transfer the Subject Equity Interest to the Transferee pursuant to the stipulations hereof.

2. The Transferee shall be transferred of the Subject Equity Interest pursuant to the stipulations hereof.

3. As of the later of the date on which this Agreement becomes effective and the date on which Sunshine Pharmaceutical completes its registration with relevant government administration offices industry and commerce for the transfer of the Subject Equity Interest, the Transferee shall immediately become the legal owner of the Subject Equity Interest and be entitled to and assume all the rights and obligations in relation to the Subject Equity Interest. The Transferor shall no longer be entitled to any rights in relation to the Subject Equity Interest or assume any obligations or liabilities in relation to the Subject Equity Interest, unless otherwise provided herein. The Transferor shall be obliged to assist the Transferee and Sunshine Pharmaceutical in completing all necessary legal procedures in relation to the transfer of the Subject Equity Interest.

Article 2: Purchase Price and Payment

1. As agreed by the Transferor and the Transferee upon negotiations, the consideration payable by the Transferee for the Subject Equity Interest shall be RMB 4,198,270;

2. It is agreed that the Transferee shall pay the transfer price in Hong Kong Dollar or US Dollar and pay 60% of the purchase price within six months from the date on which the Transferee is registered as a shareholder of Sunshine Pharmaceutical with the industrial and commercial registration, and the remaining purchase price shall be paid in full within one year;

2

3. Taxes payable in connection with this equity interest transfer shall be paid by both parties as required by relevant laws and regulations.

Article 3: Binding Effect

This Agreement shall be binding upon the Parties at the time this Agreement is signed by the authorized representatives of both parties and approved by the competent foreign trade and economic cooperation authority.

Article 4: Representations and Warranties of Transferor

The Transferor hereby represents and warrants to the Transferee that:

1. The Transferor is a corporate legal person duly established and validly existing pursuant to the laws of China, and has the corporate power and authority to execute and perform this Agreement; and this Agreement once executed is legal, valid and binding upon the Transferor.

2. The Transferor is the owner of, and has legal and equitable title to the Subject Equity Interest, free and clear of any pledge or any other security interest or any claims by any third party. The Transferor has the right to execute this Agreement and dispose of the entire Subject Equity Interest or any parts thereof. Such equity interest or any interest in relation thereto is not subject to any preferential right or other similar rights. Upon completion of the equity interest transfer contemplated hereunder, the Transferee will be entitled to all the rights entitled to an owner of the Subject Equity Interest pursuant to laws, and may transfer or dispose of such equity interest pursuant to laws, and such equity interest is free from any liens, charges, claims, encumbrances, rights of others and restrictions on transfer under the incorporation documents of Sunshine Pharmaceutical or stipulations of the laws of China.

3. The execution, delivery and performance of this Agreement by the Transferor is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferor , nor in breach of any contracts, rules and regulations, court judgment or arbitration award which are binding upon the Transferor or its property.

3

4. Sunshine Pharmaceutical has obtained all approvals, consents, authorizations and licenses necessary for its establishment and business operation. All such approvals, consents, authorizations and licenses are valid and binding. To the knowledge of the Transferor, no event has ever occurred in connection with its business operation that affects the interest of the Transferee or is in breach of the laws and regulations of China.

5. No such fact regarding Sunshine Pharmaceutical that might change the original intent for the execution of this Agreement or any clauses hereof has not been disclosed.

6. Such representations, warranties and undertakings shall still remain in force and effect upon the completion of the transfer of the Subject Equity Interest to the Transferee.

Article 5: Representations and Warranties of Transferee

The Transferee hereby represents and warrants to the Transferor that:

1. The Transferee is a limited company duly established and validly existing pursuant to the laws of British Virgin Islands, and possesses all the rights, authorities and capabilities necessary for entering into and performing all the obligations and liabilities hereunder; and once executed the Agreement is legally and validly binding upon the Transferee.

2. The execution, delivery and performance of this Agreement by the Transferee is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferee nor in breach of any contracts, rules and regulations, court judgment or arbitration award, which are binding upon the Transferee or its property.

3. Such representations, warranties and undertakings shall still remain in force and effect after completion of the transfer of the Subject Equity. .

4

Article 6: Confidentiality

Unless required by the relevant laws and regulations of China or relevant competent government departments, none of the parties may, prior to completion of the transaction contemplated herein, disclose any particular of this Agreement to any third party that is not involved in such transaction without the consent of the other party.

Article 7: Matters not Covered by this Agreement

The Transferor and the Transferee hereby agree that upon signing of this Agreement, they may further negotiate any matters that is not covered hereunder and may reach a supplemental agreement thereon. Such supplemental agreement shall constitute an inseparable integral part of this Agreement.

Article 8: Liability for Breach of Contract

Either party shall be in breach of contract if it violates any of its representations, warranties or undertakings herein or any clauses hereof. The defaulting party shall indemnify the non-defaulting party in whole and in full.

Article 9: Dispute Resolution

The parties to the Agreement shall resolve any disputes arising from the performance of this Agreement and in connection therewith through friendly negotiations, failing which either party shall have the right to institute legal proceedings before a Chinese court with jurisdiction.

Article 10: Governing Law

This Agreement is entered into pursuant to and shall be governed, construed and controlled by the laws of China.

Article 11: Rights under the Agreement

None of the parties may transfer its rights entitled hereunder without the written consent of the other party. This Agreement shall be binding upon th respective successors and assigns of the Parties.

5

Article 12: Counterparts

This Agreement is written in Chinese. The original copy is prepared in quadruplicate, with one copy held by the Transferor and one by the Transferee respectively, one copy retained by Sunshine Pharmaceutical and one copy submitted to the approval authorities, each of which shall be deemed original, and all of which shall constitute one and the same instrument.

IN WITNESS HEREOF, the Transferor and the Transferee have caused their respective authorized representatives to sign this Agreement on the day and at the place first written above.

Transferor: China Transport Resources Northeast Co., Ltd.

/affixed with seal of China Transport Resources Northeast Co., Ltd./

/s/:Liu Xin ( Authorized Representative)

Transferee: Collected Mind Limited

Authorized Representative:

For and on behalf of

COLLECTED MIND LIMITED

/s/:Lou Dan ( Authorized Representative)

Authorized Signature(s)

6

EX-10.4

Exhibit 10.4

English translation of the executed copy

Agreement Regarding Transfer of Equity Interest In

Shenyang Sunshine Pharmaceutical Co., Ltd.

By and Between

Zhang Lisha

and

Collected Mind Limited

Equity Interest Transfer Agreement

This Agreement is entered into on 18 July 2006 in Shenyang by and between:

Transferor: Zhang Lisha

Address:

Resident Identity Card No.:

And

Transferee: Collected Mind Limited

Legal Address: P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands

Authorized Representative: Lou Dan

WHEREAS:

1. The Transferor is a citizen under the People’s Republic of China (hereinafter referred to as “China”), and legally holds a 8.23% equity interest (hereinafter referred to as the “Subject Equity Interest”) of Shenyang Sunshine Pharmaceutical Co., Ltd. (hereinafter referred to as “Sunshine Pharmaceutical”);

2. The Transferee is a company duly incorporated and validly existing pursuant to the laws of British Virgin Islands. It is validly qualified to be transferred of the equity interest in Sunshine Pharmaceutical pursuant to relevant laws;

3. Sunshine Pharmaceutical is a Sino-foreign equity joint venture duly incorporated in Shenyang and validly existing pursuant to the laws of China. Its principal business is to research, develop, manufacture and sell biologically engineered products and biochemical pharmaceuticals. It has a registered capital of Renminbi 62,974,046 which has already been fully contributed. Its existing shareholders are Chinese investors Shenyang Keweier Hi-Tech Co., Ltd. (hereinafter referred to as “Keweier”), China Traffic Supplies Northeast Co., Ltd. (hereinafter referred to as “Traffic Supplies”), the Transferor as well as foreign investors Montgomery Biomedicine Lab Inc. of the USA (hereinafter referred to as “Montgomery”), Lans Holdings Ltd. (hereinafter referred to as “Lans Holdings”) and Starry Investment Ltd. (hereinafter referred to as “Starry Investment”), among which Keweier holds a 50.88% equity interest in Sunshine Pharmaceutical; Traffic Supplies, 6.67%; the Transferor, 8.23%; Montgomery, 17.89%; Lans Holdings 13.01% and Starry Investment, 3.33%.

1

4. The Transferor desires to sell, and the Transferee desires to purchase, the Subject Equity Interest under the terms and conditions hereof.

NOW THEREFORE, the Transferor and the Transferee agree as follows:

Article 1: Equity Interest Transfer

1. The Transferor hereby agrees to transfer the Subject Equity Interest to the Transferee pursuant to the stipulations hereof.

2. The Transferee shall be transferred of the Subject Equity Interest pursuant to the stipulations hereof.

3. As of the later of the date on which this Agreement becomes effective and the date on which Sunshine Pharmaceutical completes its registration with relevant government administration offices industry and commerce for the transfer of the Subject Equity Interest, the Transferee shall immediately become the legal owner of the Subject Equity Interest and be entitled to and assume all the rights and obligations in relation to the Subject Equity Interest. The Transferor shall no longer be entitled to any rights in relation to the Subject Equity Interest or assume any obligations or liabilities in relation to the Subject Equity Interest, unless otherwise provided herein. The Transferor shall be obliged to assist the Transferee and Sunshine Pharmaceutical in completing all necessary legal procedures in relation to the transfer of the Subject Equity Interest.

Article 2: Purchase Price and Payment

1. As agreed by the Transferor and the Transferee upon negotiations, the consideration payable by the Transferee for the Subject Equity Interest shall be RMB 5,180,000;

2. It is agreed that the Transferee shall pay the transfer price in Hong Kong Dollar or US Dollar and pay 60% of the purchase price within six months from the date on which the Transferee is registered as a shareholder of Sunshine Pharmaceutical with the industrial and commercial registration, and the remaining purchase price shall be paid in full within one year;

2

3. Taxes payable in connection with this equity interest transfer shall be paid by both parties as required by relevant laws and regulations.

Article 3: Binding Effect

This Agreement shall be binding upon the Parties at the time this Agreement is signed by the authorized representatives of both parties and approved by the competent foreign trade and economic cooperation authority.

Article 4: Representations and Warranties of Transferor

The Transferor hereby represents and warrants to the Transferee that:

1. The Transferor is a Chinese citizen, and has the corporate power and authority to execute and perform this Agreement; and this Agreement once executed is legal, valid and binding upon the Transferor.

2. The Transferor is the owner of, and has legal and equitable title to the Subject Equity Interest, free and clear of any pledge or any other security interest or any claims by any third party. The Transferor has the right to execute this Agreement and dispose of the entire Subject Equity Interest or any parts thereof. Such equity interest or any interest in relation thereto is not subject to any preferential right or other similar rights. Upon completion of the equity interest transfer contemplated hereunder, the Transferee will be entitled to all the rights entitled to an owner of the Subject Equity Interest pursuant to laws, and may transfer or dispose of such equity interest pursuant to laws, and such equity interest is free from any liens, charges claims, encumbrances, rights of others and restrictions on transfer under the incorporation documents of Sunshine Pharmaceutical or stipulations of the laws of China.

3. The execution, delivery and performance of this Agreement by the Transferor is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferor , nor in breach of any contracts, rules and regulations, court judgment or arbitration award which are binding upon the Transferor or its property.

3

4. Sunshine Pharmaceutical has obtained all approvals, consents, authorizations and licenses necessary for its establishment and business operation. All such approvals, consents, authorizations and licenses are valid and binding. To the knowledge of the Transferor, no event has ever occurred in connection with its business operation that affects the interest of the Transferee or is in breach of the laws and regulations of China.

5. No such fact that regarding Sunshine Pharmaceutical and that might change the original intent for the execution of this Agreement or any clauses hereof has not yet been disclosed.

6. Such representations, warranties and undertakings shall still remain in force and effect upon the completion of the transfer of the Subject Equity Interest to the Transferee.

Article 5: Representations and Warranties of Transferee

The Transferee hereby represents and warrants to the Transferor that:

1. The Transferee is a limited company duly established and validly existing pursuant to the laws of British Virgin Islands, and possesses all the rights, authorities and capabilities necessary for entering into and performing all the obligations and liabilities hereunder; and once executed the Agreement is legally and validly binding upon the Transferee.

2. The execution, delivery and performance of this Agreement by the Transferee is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferee nor in breach of any contracts, rules and regulations, court judgment or arbitration award, which are binding upon the Transferee or its property.

3. Such representations, warranties and undertakings shall still remain in force and effect after completion of the transfer of the Subject Equity. .

Article 6: Confidentiality

Unless required by the relevant laws and regulations of China or relevant competent government departments, none of the parties may, prior to completion of the transaction contemplated herein, disclose any particular of this Agreement to any third party that is not involved in such transaction without the consent of the other party.

4

Article 7: Matters not Covered by this Agreement

The Transferor and the Transferee hereby agree that upon signing of this Agreement, they may further negotiate any matters that is not covered hereof and may reach a supplemental agreement thereon. Such supplemental agreement shall constitute an inseparable integral part of this Agreement.

Article 8: Liability for Breach of Contract

Either party is in breach of contract if it violates any of its representations, warranties or undertakings herein or any clauses hereof. The default party shall indemnify the non-default party in whole and in full.

Article 9: Dispute Resolution

The parties to the Agreement shall resolve any disputes arising from the performance of this Agreement and in connection therewith through friendly negotiations, failing which either party shall have the right to institute legal proceedings before a Chinese court with jurisdiction.

Article 10: Governing Law

This Agreement is entered into under, and shall be governed, construed and controlled by the laws of China.

Article 11: Rights under the Agreement

None of the parties may transfer its rights entitled hereunder without the written consent of the other party. This Agreement shall be binding upon their respective successors and assigns of the Parties.

Article 12: Counterparts

This Agreement is written in Chinese. The original copy is prepared in quadruplicate, with one copy held by the Transferor and one by the Transferee respectively, one copy retained by Sunshine Pharmaceutical and one copy submitted to the approval authorities, each of which shall be deemed original, and all of which shall constitute one and the same instrument.

5

IN WITNESS HEREOF, the Transferor and the Transferee have caused their respective authorized representatives to sign this Agreement on the date and at the place first written above.

Transferor: Zhang Lisha

/s/: Zhang Lisha ( Authorized Representative)

Transferee: Collected Mind Limited

For and on behalf of

COLLECTED MIND LIMITED

/s/:Lou Dan ( Authorized Representative)

Authorized Signature(s)

6

EX-10.5

Exhibit 10.5

English translation of the executed copy

Agreement Regarding Transfer of Equity Interest In

Shenyang Sunshine Pharmaceutical Co., Ltd.

By and Between

Starry Investment Limited

and

Collected Mind Limited

Equity Interest Transfer Agreement

This Agreement is entered into on 18 July 2006 in Shenyang by and between:

Transferor: Starry Investment Limited

Legal Address: P. O. Box 217, Apia, Samos

Legal Representative: Liu Xiaomeng

And

Transferee: Collected Mind Limited

Legal Address: P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,

British Virgin Islands

Authorized Representative: Lou Dan

WHEREAS:

1. The Transferor is a company is a company duly incorporated and validly existing pursuant to the laws of British Virgin Islands, and legally holds a 3.33% equity interest (hereinafter referred to as the “Subject Equity Interest”) in Shenyang Sunshine Pharmaceutical Co., Ltd. (hereinafter referred to as “Sunshine Pharmaceutical”);

2. The Transferee is a company duly incorporated and validly existing pursuant to the laws of British Virgin Islands. It is validly qualified to be transferred of the equity interest in Sunshine Pharmaceutical pursuant to relevant laws;

3. Sunshine Pharmaceutical is a Sino-foreign equity joint venture incorporated in Shenyang and validly existing pursuant to the laws of China. Its principal business is to research, develop, manufacture and sell biologically-engineered products and biochemical pharmaceuticals. It has a registered capital of Renminbi 62,974,046 which has already been fully contributed. Its existing shareholders are Chinese investors Shenyang Keweier Hi-Tech Co., Ltd. (hereinafter referred to as “Keweier”), China Traffic Supplies Northeast Co., Ltd. (hereinafter referred to as “Traffic Supplies”), Zhang Lisha as well as foreign investors Montgomery Biomedicine Lab Inc. of the USA (hereinafter referred to as “Montgomery”), Lans Holdings Ltd. (hereinafter referred to as “Lans Holdings”) and the Transferor, among which Keweier holds a 50.88% equity interest in Sunshine Pharmaceutical; Traffic Supplies, 6.67%; Zhang Lisha, 8.23%; Montgomery, 17.89%; Lans Holdings, 13.01% and the Transferor, 3.33%.

1

4. The Transferor desires to sell, and the Transferee desires to purchase, the Subject Equity Interest under the terms and conditions hereof.

NOW THEREFORE, the Transferor and the Transferee agree as follows:

Article 1: Equity Interest Transfer

1. The Transferor hereby agrees to transfer the Subject Equity Interest to the Transferee pursuant to the stipulations hereof.

2. The Transferee shall be transferred of the Subject Equity Interest pursuant to the stipulations hereof.

3. As of the later of the date on which this Agreement becomes effective and the date on which Sunshine Pharmaceutical completes its registration with relevant government administration offices industry and commerce for the transfer of the Subject Equity Interest, the Transferee shall immediately become the legal owner of the Subject Equity Interest and be entitled to and assume all the rights and obligations in relation to the Subject Equity Interest. The Transferor shall no longer be entitled to any rights in relation to the Subject Equity Interest or assume any obligations or liabilities in relation to the Subject Equity Interest, unless otherwise provided herein. The Transferor shall be obliged to assist the Transferee and Sunshine Pharmaceutical in completing all necessary legal procedures in relation to the transfer of the Subject Equity Interest.

Article 2: Purchase Price and Payment

1. As agreed by the Transferor and the Transferee upon negotiations, the consideration payable by the Transferee for the Subject Equity Interest shall be US$1;

2. It is agreed that the Transferee shall pay the purchase price within ten days from the date on which the Transferee is registered as a shareholder of Sunshine Pharmaceutical with the industrial and commercial registration;

2

3. Taxes payable in connection with this equity interest transfer shall be paid by both parties as required by relevant laws and regulations.

Article 3: Binding Effect

This Agreement shall be binding upon the Parties at the time this Agreement is signed by the authorized representatives of both parties and approved by the competent foreign trade and economic cooperation authority.

Article 4: Representations and Warranties of Transferor

The Transferor hereby represents and warrants to the Transferee that:

1. The Transferor is a limited company duly established and validly existing pursuant to the laws of British Virgin Islands, and has the corporate power and authority to execute and perform this Agreement; and this Agreement once executed is legal, valid and binding upon the Transferor.

2. The Transferor is the owner of, and has legal and equitable title to the Subject Equity Interest, free and clear of any pledge or any other security interest or any claims by any third party. The Transferor has the right to execute this Agreement and dispose of the entire Subject Equity Interest or any parts thereof. Such equity interest or any interest in relation thereto is not subject to any preferential right or other similar rights. Upon completion of the equity interest transfer contemplated hereunder, the Transferee will be entitled to all the rights entitled to an owner of the Subject Equity Interest pursuant to laws, and may transfer or dispose of such equity interest pursuant to laws, and such equity interest is free from any liens, charges claims, encumbrances, rights of others and restrictions on transfer under the incorporation documents of Sunshine Pharmaceutical or stipulations of the laws of China.

3. The execution, delivery and performance of this Agreement by the Transferor is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferor , nor in breach of any contracts, rules and regulations, court judgment or arbitration award which are binding upon the Transferor or its property.

3

4. Sunshine Pharmaceutical has obtained all approvals, consents, authorizations and licenses necessary for its establishment and business operation. All such approvals, consents, authorizations and licenses are valid and binding. To the knowledge of the Transferor, no event has ever occurred in connection with its business operation that affects the interest of the Transferee or is in breach of the laws and regulations of China.

5. No such fact that regarding Sunshine Pharmaceutical and that might change the original intent for the execution of this Agreement or any clauses hereof has not yet been disclosed.

6. Such representations, warranties and undertakings shall still remain in force and effect upon the completion of the transfer of the Subject Equity Interest to the Transferee.

Article 5: Representations and Warranties of Transferee

The Transferee hereby represents and warrants to the Transferor that:

1. The Transferee is a limited company duly established and validly existing pursuant to the laws of British Virgin Islands, and possesses all the rights, authorities and capabilities necessary for entering into and performing all the obligations and liabilities hereunder; and once executed the Agreement is legally and validly binding upon the Transferee.

2. The execution, delivery and performance of this Agreement by the Transferee is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferee nor in breach of any contracts, rules and regulations, court judgment or arbitration award, which are binding upon the Transferee or its property.

3. Such representations, warranties and undertakings shall still remain in force and effect after completion of the transfer of the Subject Equity.

Article 6: Confidentiality

Unless required by the relevant laws and regulations of China or relevant competent government departments, none of the parties may, prior to completion of the transaction contemplated herein, disclose any particular of this Agreement to any third party that is not involved in such transaction without the consent of the other party.

4

Article 7: Matters not Covered by this Agreement

The Transferor and the Transferee hereby agree that upon signing of this Agreement, they may further negotiate any matters that is not covered hereof and may reach a supplemental agreement thereon. Such supplemental agreement shall constitute an inseparable integral part of this Agreement.

Article 8: Liability for Breach of Contract

Either party is in breach of contract if it violates any of its representations, warranties or undertakings herein or any clauses hereof. The default party shall indemnify the non-default party in whole and in full.

Article 9: Dispute Resolution

The parties to the Agreement shall resolve any disputes arising from the performance of this Agreement and in connection therewith through friendly negotiations, failing which either party shall have the right to institute legal proceedings before a Chinese court with jurisdiction.

Article 10: Governing Law

This Agreement is entered into under, and shall be governed, construed and controlled by the laws of China.

Article 11: Rights under the Agreement

None of the parties may transfer its rights entitled hereunder without the written consent of the other party. This Agreement shall be binding upon their respective successors and assigns of the Parties.

Article 12: Counterparts

This Agreement is written in Chinese. The original copy is prepared in quadruplicate, with one copy held by the Transferor and one by the Transferee respectively, one copy retained by Sunshine Pharmaceutical and one copy submitted to the approval authorities, each of which shall be deemed original, and all of which shall constitute one and the same instrument.

5

IN WITNESS HEREOF, the Transferor and the Transferee have caused their respective authorized representatives to sign this Agreement on the date and at the place first written above.

Transferor: Starry Investment Limited

For and on behalf of

Starry Investment Limited

/s/:Liu Xin ( Authorized Representative)

Authorized Signature(s)

Transferee: Collected Mind Limited

For and on behalf of

COLLECTED MIND LIMITED

/s/:Lou Dan ( Authorized Representative)

Authorized Signature(s)

6

EX-10.6

Exhibit 10.6

English translation of the executed copy

Agreement Regarding Transfer of Equity Interest In

Shenyang Sunshine Pharmaceutical Co., Ltd.

By and Between

Shenyang Keweier Hi-Tech Co., Ltd.

and

Collected Mind Limited

Equity Interest Transfer Agreement

This Agreement is entered into on 18 July 2006 in Shenyang by and between:

Transferor: Shenyang Keweier Hi-Tech Co., Ltd.

Legal Address: 2 Songhuahu Street, Shenyang Economic and Technological

Development Zone

Legal Representative: Xu Liping

And

Transferee: Collected Mind Limited

Legal Address: P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,

British Virgin Islands

Authorized Representative: Lou Dan

WHEREAS:

1. The Transferor is a limited liability company incorporated and validly existing pursuant to the laws of the People’s Republic of China (hereinafter referred to as “China”), and legally holds a 50.88% equity interest (hereinafter referred to as the “Subject Equity Interest”) of Shenyang Sunshine Pharmaceutical Co., Ltd. (hereinafter referred to as “Sunshine Pharmaceutical”);

2. The Transferee is a company duly incorporated and validly existing pursuant to the laws of British Virgin Islands. It is validly qualified to be transferred of the equity interest in Sunshine Pharmaceutical pursuant to relevant laws;

3. Sunshine Pharmaceutical is a Sino-foreign equity joint venture duly incorporated in Shenyang and validly existing pursuant to the laws of China. Its principal business is to research, develop, manufacture and sell biologically-engineered products and biochemical pharmaceuticals. It has a registered capital of Renminbi 62,974,046 which has already been fully contributed. Its existing shareholders are Chinese investors the Transferor, China Traffic Supplies Northeast Co., Ltd. (hereinafter referred to as “Traffic Supplies”), Zhang Lisha as well as foreign investors Montgomery Biomedicine Lab Inc. of the USA (hereinafter referred to as “Montgomery”), Lans Holdings Ltd. (hereinafter referred to as “Lans Holdings”) and Starry Investment Ltd. (hereinafter referred to as “Starry Investment”), among which the Transferor holds a 50.88% equity interest in Sunshine Pharmaceutical; Traffic Supplies, 6.67%; Zhang Lisha, 8.23%; Montgomery, 17.89%; Lans Holdings 13.01% and Starry Investment, 3.33%.

1

4. The Transferor desires to sell, and the Transferee desires to purchase, the Subject Equity Interest under the terms and conditions hereof.

NOW THEREFORE, the Transferor and the Transferee agree as follows:

Article 1: Equity Interest Transfer

1. The Transferor hereby agrees to transfer the Subject Equity Interest to the Transferee pursuant to the stipulations hereof.

2. The Transferee shall be transferred of the Subject Equity Interest pursuant to the stipulations hereof.

3. As of the later of the date on which this Agreement becomes effective and the date on which Sunshine Pharmaceutical completes its registration with relevant government administration offices industry and commerce for the transfer of the Subject Equity Interest, the Transferee shall immediately become the legal owner of the Subject Equity Interest and be entitled to and assume all the rights and obligations in relation to the Subject Equity Interest. The Transferor shall no longer be entitled to any rights in relation to the Subject Equity Interest or assume any obligations or liabilities in relation to the Subject Equity Interest, unless otherwise provided herein. The Transferor shall be obliged to assist the Transferee and Sunshine Pharmaceutical in completing all necessary legal procedures in relation to the transfer of the Subject Equity Interest.

Article 2: : Purchase Price and Payment

1. As agreed by the Transferor and the Transferee upon negotiations, the consideration payable by the Transferee for the Subject Equity Interest shall be RMB 32,038,329;

2. It is agreed that the Transferee shall pay the transfer price in Hong Kong Dollar or US Dollar and pay 60% of the purchase price within six months from the date on which the Transferee is registered as a shareholder of Sunshine Pharmaceutical with the industrial and commercial registration, and the remaining purchase price shall be paid in full within one year;

2

3. Taxes payable in connection with this equity interest transfer shall be paid by both parties as required by relevant laws and regulations.

Article 3: Binding Effect

This Agreement shall be binding upon the Parties at the time this Agreement is signed by the authorized representatives of both parties and approved by the competent foreign trade and economic cooperation authority.

Article 4: Representations and Warranties of Transferor

The Transferor hereby represents and warrants to the Transferee that:

1. The Transferor is a corporate legal person duly established and validly existing pursuant to the laws of China, and has the corporate power and authority to execute and perform this Agreement; and this Agreement once executed is legal, valid and binding upon the Transferor.

2. The Transferor is the owner of, and has legal and equitable title to the Subject Equity Interest, free and clear of any pledge or any other security interest or any claims by any third party. The Transferor has the right to execute this Agreement and dispose of the entire Subject Equity Interest or any parts thereof. Such equity interest or any interest in relation thereto is not subject to any preferential right or other similar rights. Upon completion of the equity interest transfer contemplated hereunder, the Transferee will be entitled to all the rights entitled to an owner of the Subject Equity Interest pursuant to laws, and may transfer or dispose of such equity interest pursuant to laws, and such equity interest is free from any liens, charges claims, encumbrances, rights of others and restrictions on transfer under the incorporation documents of Sunshine Pharmaceutical or stipulations of the laws of China.

3. The execution, delivery and performance of this Agreement by the Transferor is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferor, nor in breach of any contracts, rules and regulations, court judgment or arbitration award which are binding upon the Transferor or its property.

3

4. Sunshine Pharmaceutical has obtained all approvals, consents, authorizations and licenses necessary for its establishment and business operation. All such approvals, consents, authorizations and licenses are valid and binding. To the knowledge of the Transferor, no event has ever occurred in connection with its business operation that affects the interest of the Transferee or is in breach of the laws and regulations of China.

5. No such fact that regarding Sunshine Pharmaceutical and that might change the original intent for the execution of this Agreement or any clauses hereof has not yet been disclosed.

6. Such representations, warranties and undertakings shall still remain in force and effect upon the completion of the transfer of the Subject Equity Interest to the Transferee,.

Article 5: Representations and Warranties of Transferee

The Transferee hereby represents and warrants to the Transferor that:

1. The Transferee is a limited company duly established and validly existing pursuant to the laws of British Virgin Islands, and possesses all the rights, authorities and capabilities necessary for entering into and performing all the obligations and liabilities hereunder; and once executed the Agreement is legally and validly binding upon the Transferee.

2. The execution, delivery and performance of this Agreement by the Transferee is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferee nor in breach of any contracts, rules and regulations, court judgment or arbitration award, which are binding upon the Transferee or its property.

3. Such representations, warranties and undertakings shall still remain in force and effect after completion of the transfer of the Subject Equity.

4

Article 6: Confidentiality

Unless required by the relevant laws and regulations of China or relevant competent government departments, none of the parties may, prior to completion of the transaction contemplated herein, disclose any particular of this Agreement to any third party that is not involved in such transaction without the consent of the other party.

Article 7: Matters not Covered by this Agreement

The Transferor and the Transferee hereby agree that upon signing of this Agreement, they may further negotiate any matters that is not covered hereof and may reach a supplemental agreement thereon. Such supplemental agreement shall constitute an inseparable integral part of this Agreement.

Article 8: Liability for Breach of Contract

Either party is in breach of contract if it violates any of its representations, warranties or undertakings herein or any clauses hereof. The default party shall indemnify the non-default party in whole and in full.

Article 9: Dispute Resolution

The parties to the Agreement shall resolve any disputes arising from the performance of this Agreement and in connection therewith through friendly negotiations, failing which either party shall have the right to institute legal proceedings before a Chinese court with jurisdiction.

Article 10: Governing Law

This Agreement is entered into under, and shall be governed, construed and controlled by the laws of China.

Article 11: Rights under the Agreement

None of the parties may transfer its rights entitled hereunder without the written consent of the other party. This Agreement shall be binding upon their respective successors and assigns of the Parties.

5

Article 12: Counterparts

This Agreement is written in Chinese. The original copy is prepared in quadruplicate, with one copy held by the Transferor and one by the Transferee respectively, one copy retained by Sunshine Pharmaceutical and one copy submitted to the approval authorities, each of which shall be deemed original, and all of which shall constitute one and the same instrument.

IN WITNESS HEREOF, the Transferor and the Transferee have caused their respective authorized representatives to sign this Agreement as of the date and at the place first written above.

Transferor: Shenyang Keweier Hi-Tech Co., Ltd.

/affixed with company seal of Shenyang Keweier Hi-Tech Co., Ltd./

/s/:Xu Liping( Authorized Representative)

Transferee: Collected Mind Limited

For and on behalf of

COLLECTED MIND LIMITED

/s/:Lou Dan ( Authorized Representative)

Authorized Signature(s)

6

EX-10.7

Exhibit 10.7

English translation of the executed copy

Agreement Regarding Transfer of Equity Interest In

Shenyang Sunshine Pharmaceutical Co., Ltd.

By and Between

Montgomery Biomedicine Lab Inc.

and

Collected Mind Limited

Equity Interest Transfer Agreement

This Agreement is entered into on 18 July 2006 in Shenyang by and between:

Transferor: Montgomery Biomedicine Lab Inc.

Legal Address: 15200 Shady Grove Road, Suite 350, Gaithersburg, MD20850

Legal Representative: Victor Li

And

Transferee: Collected Mind Limited

Legal Address: P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands

Authorized Representative: Lou Dan

WHEREAS:

1. The Transferor is a company incorporated and validly existing pursuant to the laws of the USA, and legally holds a 17.89% equity interest (hereinafter referred to as the “Subject Equity Interest”) in Shenyang Sunshine Pharmaceutical Co., Ltd. (hereinafter referred to as “Sunshine Pharmaceutical”);

2. The Transferee is a company duly incorporated and validly existing pursuant to the laws of British Virgin Islands. It is validly qualified to be transferred of the equity interest in Sunshine Pharmaceutical pursuant to relevant laws;

3. Sunshine Pharmaceutical is a Sino-foreign equity joint venture duly incorporated in Shenyang and validly existing pursuant to the laws of China. Its principal business is to research, develop, manufacture and sell biologically-engineered products and biochemical pharmaceuticals. It has a registered capital of Renminbi 62,974,046 which has already been fully contributed. Its existing shareholders are Chinese investors Shenyang Keweier Hi-Tech Co., Ltd. (hereinafter referred to as “Keweier”), China Traffic Supplies Northeast Co., Ltd. (hereinafter referred to as “Traffic Supplies”), Zhang Lisha as well as foreign investors the Transferor, Lans Holdings Ltd. (hereinafter referred to as “Lans Holdings”) and Starry Investment Ltd. (hereinafter referred to as “Starry Investment”) among which Keweier holds a 50.88% equity interest in Sunshine Pharmaceutical; Traffic Supplies, 6.67%; Zhang Lisha, 8.23%; the Transferor, 17.89%; Lans Holdings, 13.01% and Starry Investment, 3.33%.

1

4. The Transferor desires to sell, and the Transferee desires to purchase, the Subject Equity Interest under the terms and conditions hereof.

NOW THEREFORE, the Transferor and the Transferee agree as follows:

Article 1: Equity Interest Transfer

1. The Transferor hereby agrees to transfer the Subject Equity Interest to the Transferee pursuant to the stipulations hereof.

2. The Transferee shall be transferred of the Subject Equity Interest pursuant to the stipulations hereof.

3. As of the later of the date on which this Agreement becomes effective and the date on which Sunshine Pharmaceutical completes its registration with relevant government administration offices industry and commerce for the transfer of the Subject Equity Interest, the Transferee shall immediately become the legal owner of the Subject Equity Interest and be entitled to and assume all the rights and obligations in relation to the Subject Equity Interest. The Transferor shall no longer be entitled to any rights in relation to the Subject Equity Interest or assume any obligations or liabilities in relation to the Subject Equity Interest, unless otherwise provided herein. The Transferor shall be obliged to assist the Transferee and Sunshine Pharmaceutical in completing all necessary legal procedures in relation to the transfer of the Subject Equity Interest.

Article 2: Purchase Price and Payment

1. As agreed by the Transferor and the Transferee upon negotiations, the consideration payable by the Transferee for the Subject Equity Interest shall be US$1;

2. It is agreed that the Transferee shall pay the purchase price within ten days from the date on which the Transferee is registered as a shareholder of Sunshine Pharmaceutical with the industrial and commercial authority;

3. Taxes payable in connection with this equity interest transfer shall be paid by both parties as required by relevant laws and regulations.

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Article 3: Binding Effect

This Agreement shall be binding upon the Parties at the time this Agreement is signed by the authorized representatives of both parties and approved by the competent foreign trade and economic cooperation authority.

Article 4: Representations and Warranties of Transferor

The Transferor hereby represents and warrants to the Transferee that:

1. The Transferor is a corporate legal person duly established and validly existing pursuant to the laws of British Virgin Islands, and has the corporate power and authority to execute and perform this Agreement; and this Agreement once executed is legal, valid and binding upon the Transferor.

2. The Transferor is the owner of, and has legal and equitable title to the Subject Equity Interest, free and clear of any pledge or any other security interest or any claims by any third party. The Transferor has the right to execute this Agreement and dispose of the entire Subject Equity Interest or any parts thereof. Such equity interest or any interest in relation thereto is not subject to any preferential right or other similar rights. Upon completion of the equity interest transfer contemplated hereunder, the Transferee will be entitled to all the rights entitled to an owner of the Subject Equity Interest pursuant to laws, and may transfer or dispose of such equity interest pursuant to laws, and such equity interest is free from any liens, charges claims, encumbrances, rights of others and restrictions on transfer under the incorporation documents of Sunshine Pharmaceutical or stipulations of the laws of China.

3. The execution, delivery and performance of this Agreement by the Transferor is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferor , nor in breach of any contracts, rules and regulations, court judgment or arbitration award which are binding upon the Transferor or its property.

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4. Sunshine Pharmaceutical has obtained all approvals, consents, authorizations and licenses necessary for its establishment and business operation. All such approvals, consents, authorizations and licenses are valid and binding. To the knowledge of the Transferor, no event has ever occurred in connection with its business operation that affects the interest of the Transferee or is in breach of the laws and regulations of China.

5. No such fact that regarding Sunshine Pharmaceutical and that might change the original intent for the execution of this Agreement or any clauses hereof has not yet been disclosed.

6. Such representations, warranties and undertakings shall still remain in force and effect upon the completion of the transfer of the Subject Equity Interest to the Transferee,.

Article 5: Representations and Warranties of Transferee

The Transferee hereby represents and warrants to the Transferor that:

1. The Transferee is a limited company duly established and validly existing pursuant to the laws of British Virgin Islands, and possesses all the rights, authorities and capabilities necessary for entering into and performing all the obligations and liabilities hereunder; and once executed the Agreement is legally and validly binding upon the Transferee.

2. The execution, delivery and performance of this Agreement by the Transferee is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferee nor in breach of any contracts, rules and regulations, court judgment or arbitration award, which are binding upon the Transferee or its property.

3. Such representations, warranties and undertakings shall still remain in force and effect after completion of the transfer of the Subject Equity. .

Article 6: Confidentiality

Unless required by the relevant laws and regulations of China or relevant competent government departments, none of the parties may, prior to completion of the transaction contemplated herein, disclose any particular of this Agreement to any third party that is not involved in such transaction without the consent of the other party.

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Article 7: Matters not Covered by this Agreement

The Transferor and the Transferee hereby agree that upon signing of this Agreement, they may further negotiate any matters that is not covered hereof and may reach a supplemental agreement thereon. Such supplemental agreement shall constitute an inseparable integral part of this Agreement.

Article 8: Liability for Breach of Contract

Either party is in breach of contract if it violates any of its representations, warranties or undertakings herein or any clauses hereof. The default party shall indemnify the non-default party in whole and in full.

Article 9: Dispute Resolution

The parties to the Agreement shall resolve any disputes arising from the performance of this Agreement and in connection therewith through friendly negotiations, failing which either party shall have the right to institute legal proceedings before a Chinese court with jurisdiction.

Article 10: Governing Law

This Agreement is entered into under, and shall be governed, construed and controlled by the laws of China.

Article 11: Rights under the Agreement

None of the parties may transfer its rights entitled hereunder without the written consent of the other party. This Agreement shall be binding upon their respective successors and assigns of the Parties.

Article 12: Counterparts

This Agreement is written in Chinese. The original copy is prepared in quadruplicate, with one copy held by the Transferor and one by the Transferee respectively, one copy retained by Sunshine Pharmaceutical and one copy submitted to the approval authorities, each of which shall be deemed original, and all of which shall constitute one and the same instrument.

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IN WITNESS HEREOF, the Transferor and the Transferee have caused their respective authorized representatives to sign this Agreement as of the date and at the place first written above.

Transferor: Montgomery Biomedicine Lab Inc.

/s/:Lou Jing( Authorized Representative)

Transferee: Collected Mind Limited

For and on behalf of

COLLECTED MIND LIMITED

/s/:Lou Dan ( Authorized Representative)

Authorized Signature(s)

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EX-10.8

Exhibit 10.8

English translation of the executed copy

Agreement Regarding Transfer of Equity Interest In

Shenyang Sunshine Pharmaceutical Co., Ltd.

By and Between

Lans Holdings Limited

and

Collected Mind Limited

Equity Interest Transfer Agreement

This Agreement is entered into on 18 July 2006 in Shenyang by and between:

Transferor: Lans Holdings Limited

Legal Address: Akara Bldg., 24 De Castro Street, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands

Legal Representative: Liu Xiaobing

And

Transferee: Collected Mind Limited

Legal Address: P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands

Authorized Representative: Lou Dan

WHEREAS:

1. The Transferor is a company duly incorporated and validly existing pursuant to the laws of [British Virgin Islands], and legally holds a 13.01% equity interest (hereinafter referred to as the “Subject Equity Interest”) of Shenyang Sunshine Pharmaceutical Co., Ltd. (hereinafter referred to as “Sunshine Pharmaceutical”);

2. The Transferee is a company duly incorporated and validly existing pursuant to the laws of British Virgin Islands. It is validly qualified to be transferred of the equity interest in Sunshine Pharmaceutical pursuant to relevant laws;

3. Sunshine Pharmaceutical is a Sino-foreign equity joint venture incorporated in Shenyang and validly existing pursuant to the laws of China. Its principal business is to research, develop, manufacture and sell biologically-engineered products and biochemical pharmaceuticals. It has a registered capital of Renminbi 62,974,046 which has already been fully contributed. Its existing shareholders are Chinese investors Shenyang Keweier Hi-Tech Co., Ltd. (hereinafter referred to as “Keweier”), China Traffic Supplies Northeast Co., Ltd. (hereinafter referred to as “Traffic Supplies”), Zhang Lisha as well as foreign investors Montgomery Biomedicine Lab Inc. of the USA (hereinafter referred to as “Montgomery”), the Transferor and Starry Investment Ltd. (hereinafter referred to as “Starry Investment”) among which Keweier holds a 50.88% equity interest in Sunshine Pharmaceutical; Traffic Supplies, 6.67%; Zhang Lisha, 8.23%; Montgomery, 17.89%; the Transferor, 13.01% and Starry Investment, 3.33%.

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4. The Transferor desires to sell, and the Transferee desires to purchase, the Subject Equity Interest under the terms and conditions hereof.

NOW THEREFORE, the Transferor and the Transferee agree as follows:

Article 1: Equity Interest Transfer

1. The Transferor hereby agrees to transfer the Subject Equity Interest to the Transferee pursuant to the stipulations hereof.

2. The Transferee shall be transferred of the Subject Equity Interest pursuant to the stipulations hereof.

3. As of the later of the date on which this Agreement becomes effective and the date on which Sunshine Pharmaceutical completes its registration with relevant government administration offices industry and commerce for the transfer of the Subject Equity Interest, the Transferee shall immediately become the legal owner of the Subject Equity Interest and be entitled to and assume all the rights and obligations in relation to the Subject Equity Interest. The Transferor shall no longer be entitled to any rights in relation to the Subject Equity Interest or assume any obligations or liabilities in relation to the Subject Equity Interest, unless otherwise provided herein. The Transferor shall be obliged to assist the Transferee and Sunshine Pharmaceutical in completing all necessary legal procedures in relation to the transfer of the Subject Equity Interest.

Article 2: Purchase Price and Payment

1. As agreed by the Transferor and the Transferee upon negotiations, the consideration payable by the Transferee for the Subject Equity Interest shall be US$1;

2. It is agreed that the Transferee shall pay the purchase price within ten days from the date on which the Transferee is registered as a shareholder of Sunshine Pharmaceutical with the industrial and commercial authority;

3. Taxes payable in connection with this equity interest transfer shall be paid by both parties as required by relevant laws and regulations.

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Article 3: Binding Effect

This Agreement shall be binding upon the Parties at the time this Agreement is signed by the authorized representatives of both parties and approved by the competent foreign trade and economic cooperation authority.

Article 4: Representations and Warranties of Transferor

The Transferor hereby represents and warrants to the Transferee that:

1. The Transferor is a corporate legal person duly established and validly existing pursuant to the laws of British Virgin Islands, and has the corporate power and authority to execute and perform this Agreement; and this Agreement once executed is legal, valid and binding upon the Transferor.

2. The Transferor is the owner of, and has legal and equitable title to the Subject Equity Interest, free and clear of any pledge or any other security interest or any claims by any third party. The Transferor has the right to execute this Agreement and dispose of the entire Subject Equity Interest or any parts thereof. Such equity interest or any interest in relation thereto is not subject to any preferential right or other similar rights. Upon completion of the equity interest transfer contemplated hereunder, the Transferee will be entitled to all the rights entitled to an owner of the Subject Equity Interest pursuant to laws, and may transfer or dispose of such equity interest pursuant to laws, and such equity interest is free from any liens, charges claims, encumbrances, rights of others and restrictions on transfer under the incorporation documents of Sunshine Pharmaceutical or stipulations of the laws of China.

3. The execution, delivery and performance of this Agreement by the Transferor is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferor , nor in breach of any contracts, rules and regulations, court judgment or arbitration award which are binding upon the Transferor or its property.

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4. Sunshine Pharmaceutical has obtained all approvals, consents, authorizations and licenses necessary for its establishment and business operation. All such approvals, consents, authorizations and licenses are valid and binding. To the knowledge of the Transferor, no event has ever occurred in connection with its business operation that affects the interest of the Transferee or is in breach of the laws and regulations of China.

5. No such fact that regarding Sunshine Pharmaceutical and that might change the original intent for the execution of this Agreement or any clauses hereof has not yet been disclosed.

6. Such representations, warranties and undertakings shall still remain in force and effect upon the completion of the transfer of the Subject Equity Interest to the Transferee,.

Article 5: Representations and Warranties of Transferee

The Transferee hereby represents and warrants to the Transferor that:

1. The Transferee is a limited company duly established and validly existing pursuant to the laws of British Virgin Islands, and possesses all the rights, authorities and capabilities necessary for entering into and performing all the obligations and liabilities hereunder; and once executed the Agreement is legally and validly binding upon the Transferee.

2. The execution, delivery and performance of this Agreement by the Transferee is neither in breach of any laws, administrative regulations, articles of association or other organizational documents of the Transferee nor in breach of any contracts, rules and regulations, court judgment or arbitration award, which are binding upon the Transferee or its property.

3. Such representations, warranties and undertakings shall still remain in force and effect after completion of the transfer of the Subject Equity. .

Article 6: Confidentiality

Unless required by the relevant laws and regulations of China or relevant competent government departments, none of the parties may, prior to completion of the transaction contemplated herein, disclose any particular of this Agreement to any third party that is not involved in such transaction without the consent of the other party.

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Article 7: Matters not Covered by this Agreement

The Transferor and the Transferee hereby agree that upon signing of this Agreement, they may further negotiate any matters that is not covered hereof and may reach a supplemental agreement thereon. Such supplemental agreement shall constitute an inseparable integral part of this Agreement.

Article 8: Liability for Breach of Contract

Either party is in breach of contract if it violates any of its representations, warranties or undertakings herein or any clauses hereof. The default party shall indemnify the non-default party in whole and in full.

Article 9: Dispute Resolution

The parties to the Agreement shall resolve any disputes arising from the performance of this Agreement and in connection therewith through friendly negotiations, failing which either party shall have the right to institute legal proceedings before a Chinese court with jurisdiction.

Article 10: Governing Law

This Agreement is entered into under, and shall be governed, construed and controlled by the laws of China.

Article 11: Rights under the Agreement

None of the parties may transfer its rights entitled hereunder without the written consent of the other party. This Agreement shall be binding upon their respective successors and assigns of the Parties.

Article 12: Counterparts

This Agreement is written in Chinese. The original copy is prepared in quadruplicate, with one copy held by the Transferor and one by the Transferee respectively, one copy retained by Sunshine Pharmaceutical and one copy submitted to the approval authorities, each of which shall be deemed original, and all of which shall constitute one and the same instrument.

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IN WITNESS HEREOF, the Transferor and the Transferee have caused their respective authorized representatives to sign this Agreement as of the date and at the place first written above.

Transferor: Lans Holdings Limited

For and on behalf of

Lans Holdings Limited

/s/: Liu Xiaobing ( Authorized Representative)

Authorized Signature(s)

Transferee: Collected Mind Limited

For and on behalf of

COLLECTED MIND LIMITED

/s/:Lou Dan ( Authorized Representative)

Authorized Signature(s)

6

EX-10.9

Exhibit 10.9

EMPLOYMENT AND CONFIDENTIALITY AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into effective as of [•], 2006, (the “Effective Date”), by and between 3Sbio, Inc. (the “Company”), and [•], an individual residing in [•] (the “Employee”).

WITNESSETH:

WHEREAS, the Company desires to employ the Employee, and the Employee desires to accept such employment, on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the parties hereto covenant and agree as follows:

1. EMPLOYMENT

The Company hereby employs Employee in the position of [•], and the Employee hereby accepts such employment, upon the terms and conditions set forth in this Agreement.

2. TERM

The initial term of the Employment shall be [•] years, commencing on [•] (the “Effective Date”), until [•].

3. DUTIES AND RESPONSIBILITIES

The Employee agrees to serve as the [•] of the Company. In this position, the Employee will be responsible for [                                         ]. Employee’s duties at the Company will also include other relevant jobs assigned by the Company’s Board of the Directors (the “Board”) or the Chairman/CEO.

The Employee shall devote all of his or her working time, attention and skills to the performance of his or her duties and shall faithfully and diligently serve the Company in accordance with this Agreement, and the guidelines, policies and procedures of the Company as approved from time to time by the Board.

The Employee shall use his or her best endeavor to perform the duties hereunder. The Employee shall not, without the prior consent of the Board, become an employee of any entity other than the Company and any subsidiary of the Company, and shall not be concerned or interested in any other business directly competitive with that carried on by the Company. The Company shall have the sole discretion to determine, and shall notify the Employee, from time to time, as to which other companies are deemed to be in business directly competitive with that carried on by the Company. [Notwithstanding the foregoing, nothing in this clause shall preclude the Employee from holding or being otherwise interested in any shares or other securities of such companies that are listed on any securities exchange or recognized securities market anywhere, provided that the Employee shall notify the Company in writing of his or her existing interest in such shares or securities in a timely manner and with such details and particulars as the Company may reasonably require, provided further that before the Employee obtains such additional interest or such additional shares, the Employee shall first notify the Company in writing and with such details and particulars as the Company may reasonably require.]

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4. LOCATION

The Employee will be based in the Company’s office in [Shenyang] or such other locations that the Company may consider necessary for carrying out his or her duties.

5. COMPENSATION AND BENEFITS

(a) Annual Salary. In consideration for the service rendered by the Employee to the Company and any of its subsidiary, the Employee’s compensation shall consist of (X) an annual salary of [•]for the first year of the Employment, subject to annual review and adjustment by the Company in [•] every year and (Y) a discretionary performance bonus based on his or her performance.

(b) Stock Options. [The Employee will be entitled to participate in the stock options plan adopted by the Company.]

(c) Benefits. The Employee are eligible for participation in any standard employee benefits plan of the Company that currently exists or may be adopted by the Company in the future, including, but not limited to, any retirement plan, life insurance plan, health insurance plan and travel/holiday plan.

(d) Vacation. The Employee shall be entitled to [•] weeks paid vacation each year during the term of the Employee’s employment hereunder. Unused vacation from the prior year can [not] be carried over to the succeeding year.

(e) Taxation. The Employee is responsible to report his or her compensation to relevant tax authority in accordance with relevant laws and regulations. The Company or any of its subsidiary should report his or her compensation to relevant tax authority and withhold an adequate portion of his or her salary for the relevant tax if required by relevant laws and regulations.

(f) Working Hours. The Employee shall work 8 hours per day and five days per week except on public holidays and annual paid leave, or such other numbers of working hours as agreed between the Employee and the Company.

6. TERMINATION OF THE AGREEMENT

(a) By the Company. The Company may terminate the Employment for cause, at any time, without notice or remuneration, if (1) the Employee is convicted or pleads guilty or nolo contendere to a felony or to an act of fraud, misappropriation or embezzlement, (2) the Employee has been negligent or acted dishonestly to the detriment of the Company, or (3) the Employee has engaged in actions amounting to misconduct or failed to perform his or her duties hereunder and such failure continues after the Employee are afforded a reasonable opportunity to cure such failure. In addition, the Company may terminate the Employment without cause at any time. In the case of termination by the Company without cause, the Company will pay the Employee a compensation equal to [•] months of his or her salary.

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(b) By Employee. The Employee may terminate the Employment at any time upon [•] months written notice to the Company, provided that, in the event that the Employee provides less than [•] months written notice, the Employee is required to pay to the Company a damage in the amount equal to [•] months of his or her salary.

7. CONFIDENTIALITY AND NON-DISCLOSURE

In the course of the Employee’s services, the Employee may have access to the Confidential Information (as defined below) of the Company, its subsidiaries or any other third party, including but not limited to those embodied in memoranda, manuals, letters or other documents, computer disks, tapes or other information storage devices, hardware, or other media or vehicles, pertaining to the businesses of the Company, its subsidiaries or such other third party. All materials containing any such Confidential Information are the property of the Company, its subsidiaries, and/or such third party, and shall be returned to the Company, its subsidiaries, and/or such third party upon expiration or earlier termination of this Agreement. The Employee shall not directly or indirectly disclose or use any such Confidential Information, except as required in the performance of his or her duties in connection with the Employment.

During and after the Employment, the Employee shall hold the Confidential Information in strict confidence; the Employee shall not disclose the Confidential Information to anyone except other employees of the Company who have a need to know the Confidential Information in connection with the Company’s business. The Employee shall not use the Confidential Information other than for the benefits of the Company.

“Confidential Information” means information deemed confidential by the Company and its subsidiaries, treated by the Company and its subsidiaries or which the Employee knows or ought reasonably to have known to be confidential, and trade secrets, including without limitation designs, processes, pricing policies, methods, inventions, conceptions, technology, technical data, financial information, corporate structure and know-how, relating to the business and affairs of the Company and its subsidiaries, affiliates and business associates, whether embodied in memoranda, manuals, letters or other documents, computer disks, tapes or other information storage devices, hardware, or other media or vehicles. Confidential Information does not include information generally known or released to public domain through no fault of the Employee.

This Section 7 shall survive the termination of this Agreement for any reason.

8. INVENTIONS ASSIGNMENT

The Employee understands that the Company and its subsidiaries are engaged in research and development and other activities in connection with its business and that, as an essential part of the Employment, the Employee is expected to make new contributions to and create inventions of value for the Company and its subsidiaries.

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From and after the Effective Date, the Employee shall disclose in confidence to the Company and its subsidiaries all inventions, improvements, designs, original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works and trade secrets (collectively, the “Inventions”), which the Employee may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of his or her employment at the Company. The Employee acknowledges that copyrightable works prepared by him or her within the scope of and during the period of his or her employment with the Company are “works for hire” and that the Company and its subsidiaries will be considered the author thereof. The Employee agrees that all the Inventions shall be the sole and exclusive property of the Company and its subsidiaries and the Employee hereby assigns all his or her right, title and interest in and to any and all of the Inventions to the Company and its subsidiaries or its successor in interest without further consideration.

The Employee agrees to assist the Company and its subsidiaries in every proper way to obtain for the Company and its subsidiaries and enforce patents, copyrights, mask work rights, trade secret rights, and other legal protection for the Inventions. The Employee will execute any documents that the Company and its subsidiaries may reasonably request for use in obtaining or enforcing such patents, copyrights, mask work rights, trade secrets and other legal protections. His or her obligations under this paragraph will continue beyond the termination of his or her employment with the Company, provided that the Company will compensate the Employee at a reasonable rate after such termination for time or expenses actually spent by the Employee at the Company’s request on such assistance. The Employee appoints the Secretary of the Company as his or her attorney-in-fact to execute documents on his or her behalf for this purpose.

This Section 8 shall survive the termination of this Agreement for any reason.

9. NON-COMPETITION

In consideration of the salary paid to the Employee by the Company, the Employee agrees that during the term of the Employment and for a period of [•] years following the termination or expiration of this Agreement (for whatever reason):

(a) the Employee will not approach clients, customers or contacts of the Company or other persons or entities introduced to the Employee in his or her capacity as a representative of the Company for the purposes of doing business with such persons or entities and will not interfere with the business relationship between the Company and such persons and/or entities;

(b) unless expressly consented to by the Company, the Employee will not assume employment with or provide services as a director or otherwise for any competitor of the Company, or engage, whether as principal, partner, licensor or otherwise, in any business which is in direct or indirect competition with the business of the Company and its subsidiaries; and

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(c) unless expressly consented to by the Company, the Employee will not seek directly or indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any employee of the Company and its subsidiaries employed as at or after the date of such termination, or in the year preceding such termination.

The provisions provided in Section 9 shall be separate and severable, enforceable independently of each other, and independent of any other provision of this Agreement.

The provisions contained in Section 9 are considered reasonable by the Employee and the Company but, in the event that any such provisions should be found to be void under applicable laws but would be valid if some part thereof was deleted or the period or area of application reduced, such provisions shall apply with such modification as may be necessary to make them valid and effective.

This Section 9 shall survive the termination of this Agreement for any reason.

10. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement and understanding between the Employee and the Company regarding the terms of the Employment. The Employee acknowledges that the Employee has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. Any amendment to this Agreement must be in writing and signed by the Employee and the Company.

11. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of [PRC].

IN WITNESS WHEREOF, this Agreement has been executed.

3Sbio Inc.	Employee
Signature:	Signature:
Name:	Name:
Title:

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EX-10.10

Exhibit 10.10

REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

English translation of the executed copy

National Agency Agreement for Tietai

Party A: Shenyang Borui Pharmaceutical Co., Ltd

Party B: Liaoning Sunshine Pharmaceutical Co., Ltd

In accordance with the relevant Chinese laws and regulations, Chengdu Borui Pharmaceutical Technology and Development Co., Ltd (hereinafter referred to as Party A) and Liaoning Sunshine Pharmaceutical Co., Ltd (hereinafter referred to as Party B), for the purpose of taking full advantages of each party and exploiting more market opportunities, have reached this agreement on the basis of mutual benefits and common development through friendly negotiations of both parties.

1. Party A entrusts Party B to take charge of selling and marketing Party A’s product Tietai (Iron Sucrose Injection) as the national sole agent. Party A shall not sell this product to any third-party during the term of this agreement.

2. The specifications of the product contemplated hereunder (hereinafter referred to as the Product, the prices include tax, denominated in RMB Yuan):

Name	Specifications	Unit	Wholesale Price	Retail Unit Price	Supply Unit Price	Best before
Tietai Iron Sucrose Injection	0.1g Iron & 1.6g Sucrose: 5 ml	Dose	85.21	98	***	Within 2 years

3. Agency Period: from May 1st, 2006 to July 30th, 2011, during which a period starting from May 2006 to July 2006 shall be the period for market succession and no sales target shall be imposed.

4. Market succession. Market succession shall take place within three months after the date of this agreement. During such period, Party A shall provide the signed regional agency agreement and assist Party B in its coordination with existing regional agents. Party B may continue to retain those regional agents in those regions where such agency is well-performed or withdraw the same through mutual consultations after due compensation. Those regional agents that have failed to perform its agency shall be terminated as provided thereunder and the sales in such region shall be taken over by Party B. All the inventories at the place of the agents, commercial sites and hospitals shall be recorded as Party B’s sales volume after the succession period.

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REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

5. The sales target and schedule of the agency:

1) Party B shall guarantee its purchase quantity up to 300,000 pieces of injection, with 30,000 pieces as the first purchase from August 2006 to July 2007 (i.e. the first agency year).

2) The sales target of the second agency year will be agreed upon as supplemental provisions hereto through the consultations of both parties within 6 months after date of this agreement.

3) The annual sales target of the years during the rest of the agency period will be determined according to, among other things, the sales volume of the previous year, the market potentials and developments, and will be written into the supplemental provisions hereto through the consultations of both parties.

6. The deposit and its use: After signing this agreement, Party B will pay RMB *** as deposit. The deposit shall be used as follows:

1) In connection with assessment of the sales volume (periodical sales targets, periodical IMS market share):

If Party B achieves more than 90% of the sales target in the first agency year, the deposit will not be deducted by the Party A. If Party B achieves less than 90% but more than 60% of the sales target, the deposit will be deducted pro rata based on the unachieved sales volume. For instance, if Party B achieves 80% of the sales target, then 20% of the deposit will be deducted. If Party B achieves no more than 60% of the sales target, all its deposit will be deducted.

At the same time Party B shall make up for the deducted part of deposit upon to RMB ***.

In the following agency year, if Party B over-fulfils the sales target and the over-fulfilled part of sales volume (over the annual sales target of that year) set offs the unachieved part of sales volume in the first agency year or its previous year, Party A shall refund the deducted deposit to Party B.

If Party B fulfills the annual sales target at least for two consecutive agency years, Party A shall refund all the deposit (including the deducted part) to Party B on the day of such achievement and shall not charge deposit from Party B again during the rest of the agency period.

If the medical market is adversely affected by any change of government regulations and government guided prices, and consequently causes Party B’s failure to achieve the annual sales target, Party A shall take the circumstances into consideration and reduce the deduction of deposit.

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REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

If IMS data indicates that Tietai has no less than the second largest market share for the like products (vena iron preparations), Party A shall take the circumstances into consideration and reduce the deduction of deposit.

2) Party B’s breach of agreement in other aspects.

3) Party B shall comply with the Chinese national laws and regulations.

4) Party B shall favorably hand over the markets upon the expiry of the agency period.

7. No credit facility. Payment shall be made by the parties upon delivery.

8. Delivery terms:

1) Party B shall fill the purchase form affixed with Party B’s seal or contract seal and fax the same together with the TMO telegraph money order to Party A.

2) Party A shall deliver the product to the place designated by the Party B within 3 working days after receipt of the payment and ensure that the product be received by Party B within 10 days.

3) If Party B places the order one month in advance, Party A shall guarantee that the shelf period of the product is no less than 21 months. In other circumstances, the shelf period of the product shall be no less than 18 months.

9. The rights and duties of both parties:

1) The rights and duties of Party A:

a. The quality of the product supplied by Party A shall be in accordance with the national quality standards. If any economic or legal liabilities result from the bad quality of the product, Party A shall unconditionally refund Party B and recall the bad quality product.

b. Party A is prohibited from supplying the Product to other unit or individual in the agency region of Party B. If it happens, Party A shall compensate Party B an amount equivalent to the retail unit price listed above multiplied by average sales volume in the respective region to Party B, and shall also cease such act immediately. Party A shall indicate the product number on the packing of the product (large size and middle size) for ease of management by Party B.

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REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

c. Party A has the responsibility to provide the full essential information, including without limitation the approval certificate of the product, new medicine certificate, information relating to the local commodity prices and enterprises’ GMP, non-market-oriented tendentious data, in each case relating to the product and its manufacturer to Party B for market exploitation of the product.

d. Party A has the responsibility to promptly provide the product index and the files and information of the medical insurance to Party B.

e. Party A has the responsibility to ensure the safe delivery of the product. After the confirmation of the logistic company, Party B may request for any damages caused by the improper delivery from Party A in 15 days after receipt of the product.

f. If Party A needs to do clinic experiments for scientific research, it shall consult with Party B and formulate plans jointly.

2) The rights and duties of Party B:

a. Party B shall do all its best to exploit the relevant market and fulfill the sales target set herein. Party B has right to freely develop its own sales methods.

b. Party B shall be responsible for the price, medical insurance and public biding of the product.

c. Party B has the responsibility to send market feedback and the use of the product to Party A and keep Party A duly informed of the market conditions of the product.

d. Party B shall legally manage and keep in confidence the product technology information offered by Party A. Party B shall be liable for any violation of the laws or disclosure of confidential information in breach of this agreement.

e. Party B shall consult with Party A if it needs to take clinic experiments for extending the market and formulate plans jointly. The samples needed in the clinic experiments shall be supplied by Party A, and all copyrights of the clinic observation results, research papers, relevant books belong to Party A. Party B has the access to use them during the agency period.

f. Party B will have the priority to renew the contract and obtain the agency of other new products, provided that it can duly perform this agreement and achieve the sales target set herein.

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10. Both parties need to organize the special consultation team for the mutual communication and information exchange, and notify or report in writing to the sales principals of both parties.

11. Termination of the agreement:

Any party has the right to terminate this agreement if:

1) The agreement can not be performed because of any force majeure;

2) Party A has the right to terminate this agreement if Party B violates Article 5 herein and fail to fulfill the sales task or achieve the sales target.

3) Party A has the right to terminate this agreement if Party B sells similar competitive product in the agent regions.

4) Party B has the right to terminate this agreement if the quality problems of the product supplied by Party A have damaged the interests of Party B.

Any party terminating this agreement according to the above conditions shall notify the other party in writing. The date of the termination will be the day that the termination notice is received by the other party.

12. Incentive scheme: If Party B successfully achieves the sales target by 100%, Party A will pay Party B RMB One Yuan per piece as bonus for the over-fulfilled sales part. These prizes can be used as the payment for the product or in the form of return of profit.

13. Liabilities for breach of contract: Both parties shall comply with each of the provisions under this agreement. Any party in breach of this agreement shall be liable for any damages of the other party subject to arbitration at the other party’s domicile.

14. For any issue not covered herein, the parties can negotiate by mutual benefit to an agreement and sign supplemental agreements. If agreement is not made and dispute is caused, such dispute shall be settled by the court or arbitral committee at the place where this agreement is signed.

15. This agreement is signed in duplicate and each party shall keep one copy. This agreement shall be effective when it is sealed by both parties and Party B starts the purchase.

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Party A: Shenyang Borui Pharmaceutical Co., Ltd

Legal representative:

Authorized Agent: /s/ Gang Wu

Address:

Zip code:

Tel:

Fax:

(Sealed by Shenyang Borui Pharmaceutical Co., Ltd)

Party B: Liaoning Sunshine Pharmaceutical Co., Ltd

Legal representative:

Authorized Agent: /s/ Hognbing Wei

Address:

Zip code: 110027

Tel: 024-25811820

Fax: 024-25811821

(Sealed by Liaoning Sunshine Pharmaceutical Co., Ltd)

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National Agency Agreement of Tietai

Supplemental Memo

Party A: Shenyang Borui Pharmaceutical Co., Ltd

Party B: Liaoning Sunshine Pharmaceutical Co., Ltd

The following supplemental memo is reached by the both parties on the basis of the National Agency Agreement of Tietai.

1. The term of the agency agreement is from June 1^st, 2006 to Aug 31^st, 2011. The first two months therein shall be market succession period and consequently the terms under the agency agreement shall be extended for one month.

2. The agreement shall be effective upon Party A’s receipt of Party B’s deposit. The first purchase quantity is 15,000 pieces.

3. Within one week after the effectiveness of the agreement, Party A shall duly provide the following information to Party B:

1) the delivery details after the product is launched into the market, including, among other things, the date, name of the customers, quantities, prices, and approval number.

2) copies of the contracts or agreements that Party A signed with the regional agents and the contact information including, among other things, name, address and telephone number of each regional agent.

3) detailed information about the bidding, winner of the bidding, bidding prices for places where the bidding process has been launched, and the existing price information (retail prices).

4. During the market succession period, both parties shall confirm the inventories at the place of the regional agents, dealers and hospitals. The data of the inventories shall be confirmed by regional agents and Party B by signature and seal. Consumption of the inventories shall be subject to agreement between Party A and regional agents.

5. Party B shall provide monthly, regional and annual sales plan (sales target) to Party A at the 4^th month after the date of this agreement.

6. Both parties shall confirm their representatives that are in charge of this project and his contact information, so as to ensure smooth communication about the logistics, quality, sales and marketing between each party as soon as possible.

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7. Party B shall place the order one month in advance so as to ensure timely production by Party A to avoid product shortage on the market. Meanwhile, Party A shall have a reasonable stock of 20,000 pieces.

8. Any regional agent that signed the contracts with Party A shall maintain the agency after the confirmation of the three parties. In this case, Party A should transfer the deposit obtained from the regional agent to Party B.

9. This agreement constitutes a supplementary document to the National Agency Agreement of Tietai. If any conflict exists between these two agreements, this agreement shall prevail.

Party A: Shenyang Borui Pharmaceutical Co., Ltd

Legal representative:

Authorized Agent:

Address:

Zip code:

Tel: 024-24159443

Fax: 024-24159533

(Sealed by Shenyang Borui Pharmaceutical Co., Ltd)

Party B: Liaoning Sunshine Pharmaceutical Co., Ltd

Legal representative:

Authorized Agent:

Address:

Zip code: 110027

Tel: 024-25811820

Fax: 024-25811821

(Sealed by Liaoning Sunshine Pharmaceutical Co., Ltd)

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B-1

EX-10.11

Exhibit 10.11

REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

English translation of the executed copy

Sole Agency Agreement for Baolijin

Party A: Chengdu Institute of Biological Products

Party B: Liaoning Sunshine Pharmaceutical Co., Ltd.

Chengdu Institute of Biological Products (hereinafter referred to as “Party A”) and Liaoning Sunshine Pharmaceutical Co., Ltd. (hereinafter referred to as “Party B”) have entered into this Agreement on the basis of the principles of mutual benefits and joint development pursuant to the relevant Chinese laws and regulations and upon friendly negotiations between the two parties, for the purpose of making full use of their respective advantages and further expanding the market.

1. Party A has appointed Party B as the nationwide exclusive and sole agent for its product “Recombinant Human Granulocyte Colony Stimulating Factor” injection (product name “Baolijin”) to be fully responsible for the sale and promotion of the product in the China market. During the term of this agency agreement, Party A may not sell the product directly or indirectly to a third party, or delegate any third party to sell the product.

2. The product “Recombinant Human Granulocyte Colony-Stimulating Factor” shall include but not limited to the specifications and the types of injection set out in the table below (the amount below is in Renminbi. The prices are exclusive of tax. Unit: Yuan).

Product Name/Type	Specifications	Unit	Wholesale Unit Price (Yuan)	Retail Unit Price	Supply Unit Price	Credit Period
Baolijin/Injection	75ug/0.3ml	Piece	156.52	180 Yuan	***	60 days
Baolijin/Injection	150ug/0.6ml	Piece	253.04	291 Yuan	***	60 days
Baolijin/Injection	300ug/1.2ml	Piece	454.78	523 Yuan	***	60 days

3. Term of agency: From August 1, 2006 to December 31, 2011, which period shall be divided into five agency years. The first agency year shall commence from August 1, 2006 to December 31, 2007, while the remaining four agency years shall be divided by calendar year. Upon expiry of the term of agency, Party B may have the priority to renew this agreement under the same terms. A renewed agreement shall be entered into one quarter before the expiry of the term of agency. If both parties fail to agree upon the renewal of the Agreement, they shall enter into a supplemental agreement in connection with the goods left unsold by Party B upon negotiation.

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4. Market succession: Market succession shall commence immediately upon coming into effect of the Agreement. Party A shall provide specific and detailed information including without limitations on sales, hospitals, commodity prices and invitation of tenders in the ready sales regions in writing or by electronic means or otherwise to assist Party B in taking over and continuing the market sales promptly.

5. Agency sales target and progress:

i. From August 2006 to December 2007 (i.e. the first agency year), Party B shall warrant that the purchase quantities shall reach 150,000 pieces (total of all specifications).

ii. During the term of agency, the sales target of each agency year shall increase by 30% from the actual amount of sales completed in the previous agency year.

iii. During the term of agency, in the event of any major changes in prices, sales, market potentials, and market development, both parties shall enter into a supplemental agreement after negotiations to amend the relevant terms.

6. Market deposit and method of use: Party B shall, within seven days after this agreement becomes effective, pay Party A a market deposit of Renminbi *** as security for the receivables to Party A from Party B. Party A shall, within seven days of the expiry of the term of agency, return the same to Party B.

7. Credit limit: The credit limit granted by Party A to Party B in the first year shall be within the amount of the deposit paid by Party B.

8. Shipment of goods and method of payment:

i. Party B shall fill in an order form, affix its official or contractual seal thereto and fax the same to Party A.

ii. Party A shall, within three working days after receipt of the order form, ship the goods to the address designated by Party B. An invoice shall be mailed along with the goods. The fee for shipment of the goods shall be borne by Party A. Party A shall use its best endeavors to procure that the goods shall be receivable by Party B within five working days but in any event no later than seven working days after such shipment.

iii. If Party B places an order 30 days in advance, Party A shall warrant that the goods to be shipped shall have a valid period equal to or more than 21 months. If Party B places an order less than 30 days in advance, Party A shall warrant that the goods to be shipped shall have a valid period of more than 18 months.

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iv. The payment period of Party B shall be within 60 days from the date of shipment of goods by Party A. The payment shall be made by means of telegraphic transfer or bill of exchange or otherwise.

Details of the designated account number for receipt of payment by Party A are as follows:

Name: Chengdu Institute of Biological Products

Correspondent Bank: Bank of Industry and Commerce, Zhiquan Branch

Account No.: 4402205009004600681

Party A shall notify Party B in writing of any change in the above details.

9. Rights and obligations of both parties:

i. Rights and obligations of Party A:

a. Party A shall have the right to request Part B to carry out marketing activities pursuant to this Agreement and the relevant Chinese laws and regulations.

b. The quality of products supplied by Party A shall meet the relevant Chinese quality standards. Any legal and financial liability arising from the quality or legality of products shall be assumed by Party A and the manufacturer or science research institute in relation thereto. Party A shall be unconditionally responsible for return or replacement of goods as a result of any product quality problems.

c. Party A shall not supply goods to any third party in any region where Party B acts as an agent for Party A. Party A shall forward to Party B any price enquiry or order in respect of products received by Party A in the region where Party B acts an agent for Party A. Once Party A is found to have supplied goods to any third party in the region where Party B acts an agent for Party A, it shall immediately cease such act and pay a default fine to Party B the amount of which shall be calculated on the basis of the following formula: Default fine = retail unit price set out in Article 2 hereof X monthly average sales volume in the region where Party A supplied the goods to a third party. In addition, Party A shall also print the product serial numbers on the large and medium packages of the goods to facilitate market management by Party B.

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d. Party A shall provide Party B with the necessary and sufficient basic information on products and relevant manufacturers (including but not limited to approval documents of the products, certificates of new pharmaceuticals, local commodity prices, and CMP details of enterprise, but excluding marketing materials). If Party B deems necessary, Party A shall provide Party B with the technological and professional training in respect of the products.

e. Party A shall ensure that it will promptly provide Party B with the accurate information and documents necessary for invitation of tenders and medical insurance for Baolijin products. Party A shall be held liable to Party B if the sales volume of Party B is affected by the invitation of tenders and medical insurance for any reason on the part of Party A.

f. Party A shall warrant that the shipment is safe. Party B shall raise any problem relating to goods damage within 15 days after receipt of the goods. Party A shall indemnify Party B accordingly upon confirmation by the shipping company.

g. Party A shall negotiate with Party B about relevant clinical tests necessary for scientific research, and jointly work out a relevant scheme therefor.

h. Party A shall be held liable for any infringement of intellectual property rights by its products.

ii. Rights and obligations of Party B:

a. Party B shall provide Party A with the relevant information and documents regarding its qualification for sales approved by relevant Chinese authorities. From the date on which this agreement becomes effective, Part B shall act as an agent for only the products of Party A in the regions where it acts in such agency, and may not sell other similar product which are competitive with the products of Party A.

b. Party B shall strive to expand the market in the region where it acts as an agent for Party A and achieve the sales target as agreed by both parties.

c. Party B shall be responsible for the pricing, medical insurance and invitation and submission of tenders in respect of the products.

d. Given that the production cycle of Baolijin products covers four months, Party B shall submit to Party A, in the mid-August of each agency year, an estimated sales volume of the next year, and prior to 10 December, a more accurate annual and quarterly demand (quantity, specifications, etc.) of the next year to facilitate arrangement for production by Party A. In the event of any major change in such plan, Party B shall notify Party A four months in advance.

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e. Party B shall provide feedback regarding market sales and use of products to Party A on monthly basis to enable Party A to gain a better understanding on the market of the products.

f. Party B shall operate according to law and keep confidential the technological information provided by Party A. Party B shall be held liable for any breach of law or disclosure of secret by Party B.

g. Party B shall negotiate with Party A regarding any clinical observation necessary for product promotion and jointly work out a scheme therefor. Samples necessary for such medical observation shall be provided by Party A free of charge. Any finding, article, writing and any other copyrightable works in connection with such clinical observation shall belong to Party A, and Party B shall have priority right to use the same free of charge during the term of agency.

h. If Party B complies with the terms and conditions of the agreement during the term of agency and accomplishes the sales target contemplated hereunder, Party B shall be granted a priority right to renew the agreement with Party A, and to the agency right for other new products.

10. Communications between both parties: Both parties shall respectively designate a person in charge of setting up a coordination team for communicating messages and preparing a written report on monthly basis to be submitted to the staff of the other party in charge of sales.

11. Termination of the Agreement:

i. Either party may request terminating this agreement if it is unable to continue performing the agreement as a result of force majeure.

ii. Party A may terminate the Agreement if Party B fails to achieve sales progress or target due to breach of Article 5 hereof on the part of Party B.

iii. Party A may terminate the agreement if Party B acts as an agent for any similar product which is competitive with the product for which Party B acts as an agent for Party A in the designated regions where Party B acts as an agency for Party A.

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iv. Party B shall have the right to terminate the agreement and be indemnified pursuant to laws as a result of quality problem of the products of Party A.

v. Party B shall have the right to terminate the agreement and request Party A to pay a default fine as agreed hereunder as a result of the supply of products by Party A to any third party in the regions where Party B acts as an agent for Party A.

Either party shall notify the other party in writing if it terminates the agreement pursuant to the above stipulations. The Agreement shall be terminated at the time the notice reaches the other party.

12. Incentive scheme: If Party B achieves the sales target in excess, Party A may offer Party B appropriate incentives according to the actual circumstances. The specific scheme therefor may be specified in a supplemental agreement.

13. Agency in international market (outside Mainland China): A first-come-first-served principle shall be adopted. For countries or regions first developed by Party B, Party B shall act as an exclusive agent in such countries or regions. Part B shall, under the same terms, have priority right to act as an agent for Party A in one particular country or region.

14. Liability for breach of contract: Both parities shall comply with all the terms and conditions hereof. The defaulting party shall indemnify the other party for any financial loss arising therefrom. Any dispute between both parties over the amount of a default fine shall be submitted to the Beijing Arbitration Commission for arbitration.

15. For any matter not covered hereunder, both parties may negotiate to decide thereon and enter into a supplemental agreement on the basis of mutual benefits, failing which the matter may be submitted to the Beijing Arbitration Commission for arbitration.

16. This agreement shall be executed in quadruplicate, with each party holding two copies. This agreement shall take effect upon being signed and sealed by both parties.

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Party A: Chengdu Institute of Biological Products (affixed with contractual seal)	Party B: Liaoning Sunshine Pharmaceutical Co., Ltd. (affixed with company seal)
Legal Representative: Lifeng Wang (seal)	Legal Representative: Dan Lou (seal)
Authorized Representative:	Authorized Representative:
/s/ Jie Wang	/s/ Hongbing Wei
Address: No. 379, Lot 3, Jinhua Road, Chengdu Municipality	Address: Jia 3, No. 10 Road, Economic and Technological Development Zone, Shenyang
Postal Code: 610023	Postal Code: 110027
Tel: 028-84418219	Tel: 024-25811820
Fax: 028-84418201	Fax: 024-25811821
Date of Signing:	Date of Signing:
31 August 2006	Day Month Year

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1

EX-10.12

Exhibit 10.12

REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

English translation of the executed copy

Purchase Agreement

No.: 20060308

Buyer: Shenyang Sunshine Pharmaceutical Co., Ltd (hereinafter “Sunshine Company”)

Seller: Invitrogen Hong Kong Co., Ltd. (hereinafter “Invitrogen Company”)

The Buyer and the Seller agree as follows through full negotiations:

1. Invitrogen US Inc. shall produce BPT-6 culture medium according to the formulation provided by Sunshine Company, and Invitrogen Company, the branch of Invitrogen US Inc. in the Asia-Pacific region, shall be responsible for entering into this agreement and delivering the goods.

2. The formulation of BPT-6 culture medium is a piece of intellectual property of Sunshine Company, and Invitrogen Company hereby guarantees that it may not disclose any information about the culture medium to any third party.

3. Quantity, price and amount of the ordered product:

a. Sunshine Company places an order of 285 barrels of BPT-6 culture medium without blood serum (Totally 285 barrels).

b. Invitrogen Company shall provide BPT-6 culture medium without blood serum to Sunshine Company at the fixed price of USD*** per 50L (50L/barrel), and Invitrogen Company shall collect the freight charge for this batch of ordered products at amount of USD 1000.00, which is the CIF price to Shenyang.

c. The total amount of the ordered products is 285 X *** + 1000 = *** to be paid to Invitrogen Company).

4. Invitrogen Company guarantees to provide the products with stable quality to Sunshine Company and offer all-round technical support and after-sales service.

5. Invitrogen Company shall be responsible for transporting the goods to Shenyang Port. In case that the goods are damaged due to transportation, Invitrogen Company shall be solely liable therefor. Sunshine Company shall be responsible for Customs declaration and receipt of goods and paying all relevant expenses (including without limitations to tariff, value-added tax and commissions). The transportation within the PRC and its related expenses shall be undertaken by Sunshine Company.

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6. Within 15 days after this agreement becomes effective, Sunshine Company shall pay 30% of the payment for goods in advance to the account designated by Invitrogen Company; the payment shall be remitted to the following account:

The Hong Kong and Shanghai Banking Corporation

Texaco Road Branch

U.S $A/C No.: 004-195-1-600244

H.K.S A/C No.: 004-018-229831-001

Namely USD *** (T/T)

7. Term of delivery: The products shall be delivered to the Shenayng Port within 3 months after the later of the date on which this agreement is signed or the date on which Invitrogen Company receives 30% of the payment for goods. After the products are accepted by Sunshine Company, Sunshine Company shall pay the remaining 70% of the payment for goods and the freight charge, which shall be USD*** to the account designated by Invitrogen Company by T/T.

8. In case that the products are not accepted by Sunshine Company upon inspection, Sunshine Company has the right to reject the goods or exchange the goods. In case the products are rejected, Invitrogen Company shall return the 30% down payment for goods to Sunshine Company, and the seller shall be responsible for paying the freight charge in connection with transportation of the goods so rejected.

9. Sunshine Company promises to keep the price of goods in confidence and not to resell the products of Invitrogen Company to any third party.

The culture medium mentioned in this agreement was in form of common dry powder.

Any matter not covered hereunder shall be settled by both parties through friendly negotiation.

This agreement shall become effective after it is signed by both parties.

Buyer: Shenyang Sunshine Pharmaceutical Co., Ltd. (seal)

/s/: Hu Nai

Signed on: March 8, 2006

Seller: Invigrogen Hong Hong Co., Ltd. (seal)

/s/: Yan Xiaojun

Signed on: March 8, 2006

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CONFIDENTIAL TREATMENT

1

EX-10.13

Exhibit 10.13

REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

English translation of the executed copy

PURCHASE CONTRACT

ORIGINAL

Contract No. WK20050311SS

Date: [    ]

Contracting Parties:

The Supplier: Shanghai WeiKe Biochemical Reagent Company

Address:         Room 3205, No.172 Yu Yuan Road, Jing’an District, Shanghai

The Purchaser: Shenyang Sunshine Pharmaceutical Co., Ltd.

Address:        Jia 3, No. 10 Road, Economic and Technological Development Zone, Shenyang

I. The Purchaser and the Supply hereby agree after consultation with the purchase and sale of the following items, and enter into the following terms for common observance.

No.	Item Name	Specification	Lot No.	Quantity (bottle)	Unit Price (Yuan)	Amount (Yuan)
A15-649	FCS-Gold	500ml	A64904-0050	400	***	***
TOTAL RMB (in words): ***

II. Supply Period:

Commencing from the day on which this Contract takes effect and ending on condition that the goods in stipulated quantity are fully delivered. After formal execution of this Contract, the Supplier shall, as required by the Purchaser, arrange for shipment in batches (each shipment not less than 20 bottles).

III. Quality Requirement and Guarantee:

The Supplier guarantees that the items provided hereof are goods within their time of efficacy, and are complying with the manufacturer’s requirement and in standard quality/specification.

IV. Location and Method of Delivery:

The Supplier shall have the goods delivered to the address provided by the Purchaser.

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V. Standard and Method of Acceptance Inspection

On inspecting and accepting the goods delivered by the Supplier, the Purchaser shall have the right to refuse acceptance of the goods and have them returned if the packaging of the goods is found damaged. For goods passing the acceptance inspection, any quality problems found thereafter should be raised in written form within two months with a detailed experiment report. Otherwise, the goods concerned would not be accepted for return and handled, nor compensated by the Supplier. The Purchaser should have the goods stored and placed and used properly according to the product storage requirements and operation standards provided by the Supplier. The Purchaser shall be liable for any quality problems caused by improper storage or operation.

VI. Method and Deadline of Settlement:

The Purchaser should settle fully the price of goods in a lump-sum within 30 working days after the day on which the ordered goods are received.

Payment Method: To be settled by transfer of accounts.

VII. Force Majeure Accidents:

The Supplier shall not be held liable for the delay in shipment or non-delivery of the goods in consequence of a Force Majeure accident. However, the Supplier shall inform the Purchaser promptly of the occurrence of the accident. In case the accident lasts for more than ten weeks, the Purchaser shall have the right to revoke this Contract.

VIII. Confidentiality:

Both parties shall, during and after the term of this Contract, maintain confidence of all data and information provided and exchanged to each other. No party hereto may disclose or make public without authorization any content in this Contract to a third party. Otherwise, the non-default party shall have the right to claim against the default party in respect of all the liabilities therefrom.

IX. Liability of Default:

In case one party fails to perform any obligation stipulated in this Contract, the other party may claim against the default party for compensation. The details are set out as follows:

9.1 The Supplier shall be held liable for the goods provided by it that are not conform to the requirements provided in this Contract, and the Purchaser shall have the right to require the Supplier to return or replace the goods within the period mutually agreed by both parties hereto, totally on the expense of the Supplier. Compensation resulting from quality of the products shall be confined to the products concerned, and shall not involve any other loss.

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9.2 In case the Purchaser fails to make timely payment as scheduled in this Contract, the Supplier may charge the Purchaser at 0.5% per day as fine for delaying payment of the overdue price of the goods.

X. Completion Terms of this Contract

Both parities shall not alter or revoke this Contract at will during the term of this Contract. For matters not covered hereunder, both parties shall enter into supplementary provisions through mutual consultation. The supplementary provisions and the appendixes hereto are of the same legal effect as this Contract. This Contract is made in duplicate, with each party holding one copy. This Contract shall take effect after it is signed and sealed by both parties and their authorized representatives.

The Supplier		The Purchaser
Company Name (company seal): /affixed with company sealed/		Company Name (company seal):
Legal Representative:		Legal Representative:
Appointed Agent:	/s/ Zhang Xiaojun	Appointed Agent:	/s/ Hu Nai
Tel: 021-62490335 Correspondent Bank: CCB, Jing’an Sub-branch Account Number: 05508300020008995 Postal Code: 200040 Address: Room 3205, No.172, Yu Yuan Road, Jing’an District, Shanghai		(12/4/1005) Tel: 024-25810471 Correspondent Bank: Account Number: Postal Code: 110027 Address: Jia 3, No. 10 Road, Economic and Technological Development Zone, Shenyang

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1

EX-10.14

Exhibit 10.14

REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

Agreement between Shenyang Sunshine Pharmaceutical Company and

Epitomics, Inc.

License and Co-development of anti-TNFalpha monoclonal antibody therapeutics

Terms:

This term sheet is between Shenyang Sunshine Pharmaceutical Co. Ltd (Sunshine) and Epitomics Inc. (Epitomics). This document is to describe a developing and anticipated ongoing formal Licensing and Co-development relationship between the two companies in the field of commercializing anti-TNFalpha monoclonal antibodies to be used as therapeutic agents.

Background:

Anti-TNFalpha therapies account for $6.5B last year and is expected to grow to $10B by 2010. Anti-TNFalpha therapies are effective in treating Rheumatoid arthritis, Psoriasis, Psoriatic arthritis, Ankylosing spondylis and Crohn’s diseases. Currently, monoclonal antibodies Remicade and Humira dominate the market. There are several clinical trials for anti-TNFalpha antibodies.

Epitomics, Inc. is an emerging biotechnology company that is dedicated to developing breakthrough monoclonal antibody technology for research, diagnostic and therapeutic applications. The Company utilizes a proprietary and patented technology in the development and production of Rabbit Monoclonal Antibodies (RabMAb technology). Compared to currently available antibody technologies, this RabMAb technology can generate antibodies more efficiently and ones that have superior binding affinities. Equally, many of the RabMAb antibodies that have been produced demonstrate bioactivity in a wide variety of biological assays. The Company is headquartered in Burlingame, California, USA and has manufactured more 1,000 monoclonal antibodies with greater than 100 publications utilizing their antibody platform. Other core capabilities and Intellectual Property surround both the large-scale manufacturing and the humanization of Monoclonal antibodies.

Area of Specific Interest for both Parties:

Epitomics has developed a panel of 50 novel anti-TNFalpha rabbit monoclonal antibodies that are highly potent compared with Remicade and Humira in in-vitro assays. Sunshine Pharmaceutical Co. Ltd is one of the largest bio-generic Companies in China. Currently, it has three bio-generic products on the market and has more products in the pipeline. Sunshine pharmaceutical has the capability of large scale production and clinical development capability. It is anticipated that both parties will bring their respective areas of expertise to the Co-development endeavor in the pursuit of commercializing the various anti-TNFalpha rabbit monoclonal antibodies and potential other biologically activity compounds.

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License grant:

Epitomic grants Sunshine an exclusive, royalty bearing, non-transferable, perpetual license in the field of Therapeutic usage in order to develop and conduct clinical trials to achieve Chinese FDA (SFDA) approval of the rabbit anti-TNFalpha monoclonal antibody compounds. Under these rights, Epitomics grants both the manufacturing and distribution rights of anti-TNFalpha monoclonal antibody therapeutics covered under the intellectual properties rights owned by Epitomics.

Territory of Commercialization:

The territory defined for the Therapeutic rights granted to Sunshine Pharmaceutical Co. shall be the People’s Republic of China. Sunshine will have the rights to sell, market and distribute the therapeutic agents in the territory as defined. Sunshine will have the right to utilize a third party for distribution within the territory. It is not intended nor granted that the rights shall be sub-licensed by Sunshine to a third party.

Diligence Requirement:

Sunshine shall use commercially reasonable efforts to diligently perform its obligations under a Development Program agreed by both parties and to further develop and commercialize the Therapeutic Product(s). The Development Program details will be completed under a separate agreement. Breach of contract could be attained by Sunshine if certain milestones in the Development Program are not achieved. Such a breach may result in revocation of the exclusive license granted by Epitomics to Sunshine Pharmaceutical Company pertaining to the use, distribution, manufacture and general commercialization of the agreed upon targeted Therapeutic Products (anti-TNFalpha) or any other agreed upon targets.

Licensing Fee:

Upon signing of this agreement, Sunshine shall pay a one time licensing fee of *** to Epitomics. The fee will be paid in US dollars and wired via an agreed upon mechanism.

Development Funding & Responsibilities of each Participating Parties:

1) Epitomics, Inc. will provide “Humanized Rabbit anti-TNFalpha monoclonal antibodies” to Sunshine Pharmaceutical Company. It is anticipated that the approximate delivery of the humanized Rabbit anti-TNFalpha monoclonal antibodies to Sunshine will occur within nine (9) months from the signing of this agreement. Epitomics, Inc. will be solely responsible for the delivering of the “Humanized Rabbit anti-TNFalpha monoclonal antibodies” and Sunshine Pharmaceuticals will cover the cost of humanization up to ***. In addition, Epitomics will provide 100 mg humanized antibodies.

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2) Sunshine Pharmaceutical Company shall be solely responsible for performing (and paying for) the following:

a. Creating a Stable Cell line for the production of anti-TNFalpha monoclonal antibodies

b. Performing appropriate animal studies on the anti-TNFalpha monoclonal antibodies

c. Producing the anti-TNFalpha monoclonal antibodies in both quality and yield so as to “support” a Therapeutic grade product

d. Develop and implement a strategy to get the anti-TNFalpha monoclonal antibodies into clinical trials within the Chinese Therapeutic market

e. Will pay for the appropriate studies, licenses, production and documentation to support getting the anti-TNFalpha monoclonal antibodies through and “Approved and Released Status” as a registered Therapeutic agent under an SFDA Approval status. Sunshine will have the rights to sell, market and distribute the therapeutic agents in the territory as defined. Sunshine will have the right to utilize a third party for distribution within the territory.

f. It is anticipated that Sunshine will fund and begin development of their responsibilities upon receipt of the “Humanized Rabbit anti-TNFalpha monoclonal antibodies” from Epitomics, Inc. Failure for Sunshine to take pro-active and timely steps in the development and creation of the items listed above may be recognized as “breach” to this agreement. If a “breach” is determined by Epitomics, they will communicate the “breach” formally in writing and Sunshine will have thirty (30) to rectify the situation. After thirty (30) days if the “breach” has not been resolved, Epitomics may terminate the agreement. If that decision is reached, Epitomics, Inc. will formally notify Sunshine in writing regarding the decision to terminate the agreement. If termination occurs, the rights that have been granted Sunshine in the use, distribution, manufacture and all others regarding the targeted therapeutics will terminate. If termination of this agreement occurs, Sunshine agrees to return all of Epitomics clones, antibodies, reagents, etc., that were used in connection with and /or for the development and commercialization of the intended purpose of this agreement.

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3) Both parties are responsible for sending a detailed progress report on development of the Therapeutic Product. Such a report should be sent at least every six months.

Royalty:

A *** royalty on the net sales of the Therapeutics shall be paid by Sunshine to Epitomics. The royalty payments will be paid quarterly and made payable to Epitomics, Inc. in US dollars. The exact mechanism will be determined at a later date.

Intellectual Property:

Sunshine grants Epitomics the right to use all intellectual properties generated during the development of the Therapeutic Product under this agreement. If Epitomics uses these intellectual properties for the development of the same Therapeutic Product outside of Sunshine’s territory, Epitomics shall pay Sunshine *** royalty on the financial benefit including licenses and product sales. Any new developments or agents that are created due to Co-Development relationship, Sunshine will grant to Epitomics the “first right of refusal” for the commercialization of such agents. It is anticipated if such development occurs, both parties will work in good faith to establish and create fair and equitable licensing terms on the newly created agents. Later documentation and agreements should support this philosophy and mechanism.

Confidentiality:

The term “Confidential Information” shall mean the terms of this Agreement and any other information identified by Epitomics as being confidential information of Epitomics, that is provided by Epitomics to Sunshine pursuant to this Agreement. This Agreement imposes no obligation upon Sunshine with respect to Confidential Information that: (a) was in Sunshine’ possession before receipt from Epitomics; (b) is or becomes a matter of public knowledge or part of the public domain through no fault of Sunshine; (c) is rightfully received by Sunshine from a third party who was not obligated to keep such information confidential; (d) is independently developed by Sunshine without reference to Confidential Information as evidenced by written documentation and by persons that had not had access to Confidential Information; or (e) is disclosed by Sunshine with Epitomics’s prior written approval. Upon Epitomics’s request, Sunshine shall either return or destroy within ten (10) days of such request all records and copies of Confidential Information and provide written notice certifying the same to Epitomics.

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Indemnification:

(a) Sunshine shall indemnify Epitomics against any and all liability, loss, damages, cost and expenses, including, without limitation, reasonable attorneys’ fees, arising from any claim, suit or proceeding arising out of breach of Sunshine’s confidentiality obligations hereunder or brought by any third party, solely to the extent that the claim, suit or proceeding is based upon a claim that the manufacture by Sunshine of the Products delivered hereunder violates any issued patent or other intellectual property protection or contract. Epitomics shall promptly notify Sunshine in writing of any such claim or action and give Sunshine full information and assistance, at Sunshine’s expense, in connection therewith. Sunshine has the sole right to control the defense of such claim or action.

(b) Notwithstanding the foregoing, Sunshine has no liability for any claim, suit or proceeding based upon a claim that Confidential Information provided by Epitomics hereunder for such Products infringes any third party intellectual property rights. Further, Sunshine has no liability to Epitomics for any claim of infringement to the extent such infringement is a result of (i) Epitomics’s or any third party’s use of a Sunshine Product in combination with any items not supplied by Sunshine; and/or (ii) any modification of a Sunshine Product by Epitomics or any third party.

(c) Sunshine shall indemnify Epitomics against any and all liability, damages, cost and expenses, including, without limitation, reasonable attorneys’ fees, finally awarded against Epitomics based upon any claim, suit or proceeding brought by any third party, solely to the extent that the claim, suit or proceeding is based upon a claim that the Confidential Information provided by Sunshine hereunder (or the manufacture of the Products that include such Confidential Information thereof) infringe any third party intellectual property rights. Epitomics shall promptly notify Sunshine in writing of any such claim or action and give Sunshine full information and assistance, at Sunshine’s expense, in connection therewith. Sunshine shall have the sole right to control the defense of such claim.

Disclaimer:

EXCEPT AS EXPRESSLY SET FORTH IN SECTION 3 HEREIN, NEITHER PARTY MAKES ANY WARRANTY, EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) WITH RESPECT TO THE CONFIDENTIAL INFORMATION OR THE PRODUCTS. SUNSHINE IS NOT LIABLE FOR ANY USE OF THE CONFIDENTIAL INFORMATION BY EPITOMICS, OR FOR ANY LOSS, CLAIM, DAMAGE OR LIABILITY, OF ANY KIND OR NATURE, OTHER THAN AS EXPRESSLY STATED IN THIS AGREEMENT, WHICH MAY ARISE FROM OR IN CONNECTION WITH THIS AGREEMENT OR FROM THE USE, HANDLING OR STORAGE OF THE ANTIGENS OR RELATED MATERIALS BY EPITOMICS. EXCEPT AS SET FORTH IN THIS AGREEMENT, EPITOMICS IS NOT LIABLE FOR ANY LOSS, CLAIM, DAMAGE OR LIABILITY OF ANY KIND OR NATURE, WHICH MAY ARISE FROM OR IN CONNECTION WITH THE USE, HANDLING OR STORAGE OF THE PRODUCTS BY SUNSHINE.

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REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

Limitation of Liability:

EXCEPT WITH RESPECT TO INDEMNIFICATION OBLIGATIONS OF EACH PARTY PURSUANT TO THIS AGREEMENT, IN NO EVENT DOES EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY OR ANY OTHER THIRD PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES ARISING OUT OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, LOST OPPORTUNITY, LOST PROFITS, AND COSTS OF PROCUREMENT OF SUBSTITUTE GOODS, UNDER ANY CAUSE OR THEORY OF LIABILITY, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. EXCEPT WITH RESPECT TO INDEMNIFICATION OBLIGATIONS OF EACH PARTY, NEITHER PARTY’S LIABILITY UNDER THIS AGREEMENT SHALL EXCEED THE AMOUNT PAYABLE TO EPITOMICS PURSUANT TO SECTION 2 OF THIS AGREEMENT.

Miscellaneous:

(a) This Agreement is governed by and enforced according to the laws of the State of California without giving effect to its or any other jurisdiction’s conflict of laws provisions.

(b) In the event that either Party hereto is prevented from or delayed in the performance of any of its obligations hereunder by reason of acts of God, war, strikes, riots, storms, fires or any other cause whatsoever beyond the reasonable control of the party, the party so prevented or delayed is excused from the performance of any such obligation to the extent and during the period of such prevention or delay.

(c) Neither Party to this Agreement may assign or transfer any rights or obligations arising from this Agreement without the prior written consent of the other. Any assignment in violation of this Paragraph 11(c) shall be null and void.

(d) Epitomics and Sunshine are independent contractors and may not be deemed to be partners, joint ventures or each other’s agents, and neither Party has the right to act on behalf of the other except as is expressly set forth in this Agreement.

(e) If any provision of this Agreement is finally held to be invalid, illegal or unenforceable by a court of competent jurisdiction, the remaining provisions hereof continue in full force and effect.

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REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

(f) This Agreement sets forth and constitutes the final and entire agreement between the Parties with respect to the subject matter hereof. All prior negotiations, understandings, promises and agreements, oral or written, are superseded hereby.

(g) This Agreement may not be amended or modified except by a written instrument signed by authorized representatives of both Parties.

(h) All notices required or permitted to be given under this Agreement must be in writing and must be sent either by; (i) prepaid registered or certified mail (return receipt requested); (ii) prepaid overnight courier service; or (iii) by facsimile (and promptly confirmed by such registered or certified mail or overnight courier service) to the address of the recipient Party set forth below, or at such other address as may from time to time be furnished by similar written notice by such Party. Any such communication shall be deemed to have been given (i) when delivered, if personally delivered or sent by telecopier on a business day, (ii) on the business day after dispatch, if sent by nationally-recognized overnight courier, and (iii) on the third business day following the date of mailing, if sent by mail. It is understood and agreed that this Section is not intended to govern the day-to-day business communications necessary between the Parties in performing their duties, in due course, under the terms of this Agreement.

Notices to Sunshine Pharmaceutical must be addressed to:

13^th Floor, Tower B, Grand Place,

5 Huizhong Road, Chaoyang District, Beijing 100101

Tel: +86-10-8489 2211

Fax: +86 10 8489 2951

Attu: Dr. Jing Lou

Notices to Epitomics must be addressed to:

Epitomics, Inc.

863 Mitten Road, Suite 103

Burlingame, CA 94010

Fax: 01-650-583-6680

Attn: Dr. Guo-Liang Yu

(i) The headings of the sections and subsections of this Agreement have been added for the convenience of the Parties and may not be deemed a part hereof.

(j) Any delay in enforcing a party’s rights under this Agreement or any waiver as to a particular default or other matter does not constitute a waiver of a party’s right to the future enforcement of its rights under this Agreement.

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REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN***.

(k) Each Party warrants that it has the right to enter into this Agreement, and that this Agreement is a legal and valid obligation binding upon such party and enforceable in accordance with its terms.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives.

SUNSHINE PHARMCETICAL Co. Ltd		EPITOMICS, INC.
By	/s/ Jing Lou	By:	Guoliang Yu
JING LOU			/s/ Guoliang Yu
Printed Name		Printed Name
CEO      3/2/2006		CEO      3/4/2006
Title	Date Signed	Title	Date Signed

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EX-10.15

Exhibit 10.15

English translation

Ref. No.                

Liaoning Sunshine Pharmaceutical Co., Ltd.

Sales (Distribution) Agreement 2006

Party A: Liaoning Sunshine Pharmaceutical Co., Ltd. (hereinafter referred to as Party A)

Party B:                 

In accordance with the relevant Chinese laws and regulations, Party A and Party B have reached this agreement regarding sales (distribution) of Party A’s products by Party B on the basis of mutual benefits and common development through friendly negotiations of both parties.

1. Specifications and Price of the products supplied by Party A to Party B:

Product / Specification Price Product / Specification Price

In the event of any price change during the term of this Agreement due to bidding invitation or restrictive pricing imposed by the government, the parties shall negotiate in respect of the price of any supply on the basis of mutual benefit and enter into a supplemental agreement thereof. The parties shall negotiate to settle any loss of the inventories of Party B caused by the change of price after formal implementation of the new supply price.

The retail prices of the aforesaid products are subject to the national prices and the prices approved by drug regulatory authority or the local price regulatory authority to which Party B is subject.

2. The sales region of Party B designated by Party A is:                         ; Party B shall be (exclusive/non-exclusive) distributor for Party A in the designated region.

3. Party B’s term of sales: From 1 January 2006 until 31 December 2006.

Delivery address designated by Party B:                     

Any change of delivery address of Party B shall be made by written notice of Party B. If Party B fails to so notify Party A promptly, Party B shall be solely liable for any loss so incurred.

5. Mode and charge of transportation

5.1 Mode of transportation:                     

5.2 Charge of transportation: Party A shall pay for the charge of transportation from the point of delivery to the agreed destination city, and Party B shall pay for the charge of unloading and in-town short-distance transportation.

6. Payment and Delivery: Each order placed by Party B shall be affixed with the seal specifically for agreement or the common seal and delivered by way of fax. Party B adopt the way of payment / delivery set forth under                 :

6.1 Cash payment: Party A shall deliver the goods within 3 working days upon receipt of payment from the client to Party A’s bank account.

6.2 Delivery against payment: delivery shall be made within 3 working days after Party A receives the purchase order from Party B, and the payment terms of Party B shall be                  days after receipt of the goods. Party A has granted a credit line of                      yuan to Party B (including price of goods owed by Party B to Party A before the date of this Agreement); any amount in excess of such credit line shall be firstly paid in whole or in part by Party B before Party A delivers the goods.

6.3 Mutual confirmation: Party A shall notify Party B immediately after the goods are shipped to the carrier. Party B shall accept the goods on site after inspection and notify Party A by fax after receipt of goods. If Party A fails to receive any written confirmation from Party B within 10 days after the goods are shipped, Party A may deem the bill of lading issued by the carrier as confirmation from Party B, and that Party B shall be deemed to have received and accepted the goods after inspection.

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6.4 Any payment shall be made to the following bank account designated by Party A:

Correspondent Bank:                     

Account Number:                         

Any change of Party A’s bank account shall be made by Party A in writing.

6.5 Party B is obliged to assist the financial personnel of Party A in their normal audit of corresponding accounts.

7. If Party B finds that any goods are in shortage or damaged upon receipt, it shall require the carrier to provide valid certificate and notify Party A in writing within 3 working days, the failure of which shall be deemed acceptance of such goods by Party B upon inspection.

8. It is agreed by the parties that Party B undertakes to accomplish turnover of              yuan (including payment of              yuan actually received) in the year 2006.

9. If Party B requests to return the goods due to any reason other than the quality of the goods, it shall obtain prior written approval from Party A; otherwise Party B is not entitled to return any goods.

10. Party B shall not deliver and sell the products mentioned in this Agreement outside the area designated hereunder without the written consent of Party A.

11. If Party B is the exclusive distributor for Party A’s product in the designated area, Party B shall not act as the agent or distributor of any product competing against Party A’s products. Failure to do so will empower Party A to deprive Party B’s exclusive distributorship for Party A and hold Party B liable for its breach of this Agreement.

12. Any goods accepted by Party B upon inspection shall be duly stored and delivered in accordance with PRC regulations, industry practices, regulatory requirements or specifications of the goods, otherwise Party B shall be liable for any problems arisen in regard to the quality of the goods.

13. Breach of this Agreement: Unless otherwise agreed upon by the parties, in case of any breach of this Agreement, the non-breaching party may claim a liquidated damages to the breaching party at the amount of 20% of the total purchase price under this Agreement.

14. Means of dispute settlement: If any dispute arises in connection with performance of this Agreement, the parties shall settle such dispute through negotiation. If such negotiation fails, either party shall file a suit before the People’s Court with jurisdiction over the area where Party A is located.

15. This Agreement shall take effect after it is signed and sealed by both parties. Unless otherwise expressly agreed by both parties, this Agreement applies to all business transactions entered into between Party A and Party B during the term of this Agreement. For matters not covered hereunder, the parties shall enter into supplementary agreement or schedule attached hereto after mutual consultation. The supplementary agreements and the appendixes hereto are of the same legal effect as this Agreement.

16. This Agreement is made in duplicate, with each party holding one copy.

Party A: Liaoning Sunshine Pharmaceutical Co., Ltd.

Address: Rm.1A3, 10, Shenyang Economic-Technological Development Area

Postal Code: 110027

Telephone: 024-25811820

Fax: 024-25813703

Representative:

Date:

Party B:

Address:

Postal Code:

Telephone:

Fax:

Representative:

Date:

EX-10.16

Exhibit 10.16

English translation of the executed copy

The Equity Transfer Agreement Regarding

Beijing Sunshine Bio-product Sales Company Limited

Entered Into Between

Shenyang Sunshine Pharmaceutical Company Limited

and

Dongmei Su

EQUITY TRANSFER AGREEMENT

THIS AGREEMENT is entered into between the following parties in Shenyang on September 2, 2006:

Party A: Shenyang Sunshine Pharmaceutical Company Limited

Legal Address: No. 3 A1, Road 10, Shenyang Economy & Technology Development Zone

Legal Representative: Dan Lou

Party B: Dongmei Su

Identity Card Number: 2201041970011011543

Whereas,

1. Party A is company with limited liability established and validly existing according to the laws of the People’s Republic of China (hereinafter the “PRC”), which is legally holding 45% equity of Beijing Sunshine Bio-product Sales Company Limited (hereinafter the “Beijing Sunshine”);

2. Party B is a legitimate Chinese citizen with complete civil right and civil action capabilities, who is legally qualified to acquire the equity of Beijing Sunshine according to relevant laws;

3. Beijing Sunshine is a company with limited liability incorporated and validly existing in Beijing according to the laws of the PRC, which is mainly engaged in the technology development, technology transfer, technology consultation, technology services of bio-pharmaceuticals; the sale of developed products (excluding non-patented products), medical equipment, chemical products, bio-products, extracorporeal diagnosis reagent; information consultation (excluding intermediary engagements); and the provision of labor services on commission basis. Its registered capital is RMB 1.01 million, which is fully paid up, with Party A and Shenyang Keweier Advanced Technology Co., Ltd. as existing shareholders, and its equity is held as to 45% by Party A, 55% by Shenyang Keweier Advanced Technology Co., Ltd.;

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4. Party A agrees to transfer and Party B agrees to acquire the Subject Equity according to the stipulated terms and conditions hereof.

Accordingly, Party A and Party B reach an agreement as follows:

Article 1 Definitions

Unless otherwise provided or stipulated in the laws and regulations of the PRC, or in other legally binding rules, documents, orders or notices, and in this Agreement, the terms and expressions hereof shall have the following definitions and meanings:

1.1 Subject Equity refers to the 45% equity of Beijing Sunshine to be transferred by Party A to Party B according to this Agreement.

1.2 Effective Date of this Agreement refers to the day on which this Agreement is signed by the Parties hereto.

1.3 Equity Transfer Completion Date refers to the day on which the Parties hereto complete relevant registration procedures with the industrial and commercial administration in respect of the changes related to this equity transfer.

Article 2 Subject Equity

2.1 Party A agrees to transfer, and Party B agrees to acquire the Subject Equity held by Party A together with all rights, interests, and propositions in relation to the Subject Equity, as well as all rights entitled according to law.

2.2 Party A agrees that, with effect from the Equity Transfer Completion Date, Party B shall forthwith enjoy and bear the rights and obligations in relation to the Subject Equity, whereas Party A shall no longer enjoy and bear the rights and obligations in relation to the Subject Equity.

Article 3 Transfer Price

3.1 As agreed after consultation by Party A and Party B, the price for the transfer of the Subject Equity is ascertained to be RMB 454,500, which is equivalent to the capital contribution made by Party A;

3.2 The Parties hereto agree that Party B shall settle the transfer price in RMB, the specific payment method of which is that it shall be fully paid up within 6 months from the Effective Date hereof.

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Article 4 Equity Transfer Timing

The Parties hereto agree to complete registration procedures with the industrial and commercial administration in respect of the changes related to this equity transfer within 30 days from the Effective Date hereof.

Article 5 Validity

This Agreement shall take effect from the day on which it is signed by the Parties hereto.

Article 6 Confidentiality

Unless otherwise expressly provided or required by relevant laws and regulations of the PRC, or by relevant articles of association of the company, without the consent of the other party, no party shall, before the completion of the transaction contemplated hereof, disclose any content hereof to any third party other than the parties involved in such transaction.

Article 7 Default Liability

The Parties hereto shall abide by all stipulations hereof. In case the behavior of either party causes losses (including economic losses and expenses) of the other party, the defaulting party shall compensate the non-defaulting party fully and adequately.

Article 8 Settlement of Disputes

Any dispute over this Agreement arisen in the performance of the same shall be settled by the Parties hereto through friendly consultation or mediation. In case the dispute cannot be settled through consultation, either party may, in respect of the dispute, file a lawsuit with a court of competent jurisdiction for settlement.

Article 9 Open Terms of this Agreement

The Parties hereto agree that, after signing this Agreement, any open terms hereof are subject to further negotiation and a supplementary agreement. Such supplementary agreement shall form an integral part of this Agreement and shall be of the same legal effect.

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Article 10 Miscellaneous

10.1 Without the written consent of the other party, no party shall transfer its rights and obligations hereunder to a third party.

10.2 The original hereof is made in triplicate, with the Party A, Party B and Beijing Sunshine each retaining one copy thereof, respectively. Each original shall be of the same legal effect.

Party A: Shenyang Sunshine Pharmaceutical Company Limited

Authorized Representative: /s/ Dan Lou (affixed with the company seal of Shenyang Sunshine Pharmaceutical Company Limited)

Party B: Dongmei Su
Signature:	/s/ Dongmei Su

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EX-10.17

Exhibit 10.17

English translation of the executed copy

The Equity Transfer Agreement Regarding

Liaoning Sunshine Bio-Pharmaceutical Company Limited

Between

Shenyang Sunshine Pharmaceutical Company Limited

And

Dan Lou

EQUITY TRANSFER AGREEMENT

THIS AGREEMENT is entered into by and between the following parties in Shenyang City of Liaoning Province on November 10, 2006:

The Transferor: Shenyang Sunshine Pharmaceutical Company Limited

Legal Address: No. 3 A1, Road 10, Shenyang Economy & Technology Development Zone

Legal Representative: Dan Lou

The Transferee: Dan Lou

Identity Cared Number: 210102193503076017

Whereas:

1. The Transferor is a foreign invested wholly owned enterprise established and validly subsisted according to the laws of the People’s Republic of China (hereinafter the “PRC”), which is holding 90% equity of Liaoning Sunshine Pharmaceutical Company Limited (hereinafter the “Liaoning Sunshine”) (hereinafter the “Subject Equity”);

2. The Transferee is a legitimate Chinese citizen, who is legally qualified to take up the transferred equity of Beijing Sunshine according to relevant laws;

3. Liaoning Sunshine is a company with limited liability incorporated and validly subsisted according to the laws of the PRC, the business scope of which covers the sale of bio-products (including bio-pharmaceuticals), biochemical medicines, chemical preparations, antibiotics, prepared traditional Chinese medicines (efficacious before 31 December 2009) and diagnostic medicines; the sale of three types of medical equipment (excluding throwaway aseptic medical appliances (efficacious before 31 December 2009); the manufacture, sale of special nutrition food; the self-operation and agency of various commodities and technologies and their export and import (excluding those under restricted operation or prohibited to import and export by the State). Its registered capital is RMB 15 million, which is fully paid up, with the Transferor and Shenyang Keweier Advanced Technology Co., Ltd. as existing shareholders, Shenyang Keweier Advanced Technology Co., Ltd. holding 10% equity interest and the Transferor 90% in Liaoning Sunshine;

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4. The Transferor agrees to transfer and the Transferee agrees to acquire the Subject Equity according to the stipulated terms and conditions of this Agreement.

Accordingly, the Transferor and the Transferee reach an agreement as follows:

I Equity Transfer

1. The Transferor shall transfer the Subject Equity to the Transferee according to the stipulations of this Agreement.

2. The Transferee shall acquire the Subject Equity according to the stipulations of this Agreement.

3. With effect from the day on which this Agreement takes effect and Liaoning Sunshine has completed the procedures for change of industrial and commercial registration, the Transferee shall become the legal owner of the Subject Equity, enjoying and bearing all rights and obligations in relation to the Subject Equity; whereas the Transferor shall no longer enjoy any rights in relation to the Subject Equity, nor bear any obligations and liabilities in relation to the Subject Equity, except with those agreed separately by the Parties hereto. The Transferor shall have the obligation to render assistance in the completion of all necessary legal procedures relating to the transfer of Subject Equity by the Transferee and Liaoning Sunshine.

II Equity Transfer Price and its Settlement

1. As agreed after consultation by the Transferor and the Transferee, the price for the transfer of the Subject Equity is ascertained to be RMB 13.5 million;

2. The Parties hereto agree that the Transferee shall settle the transfer price in RMB, the specific payment method of which shall be that the Transferee shall make full payment within 6 months after the signing of this Agreement;

3. Taxes due to be paid in relation to this transfer of equity shall be paid by the Parties hereto according to relevant laws and regulations.

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III Validity

This Agreement shall take effect from the day on which it is signed by the respective authorized representatives of both parties.

IV Representations and Warranties of the Transferor

The Transferor hereby represents and warrants as follows:

1. The Transferor is the legal person of the enterprise duly established and validly subsisted according to the laws of the PRC, and it has all necessary rights, powers and capacity to execute and perform any obligations and liabilities under this Agreement; and this Agreement shall be of legal and effective binding force on the Transferor once it is signed.

2. The Transferor undertakes that the equity to be transferred is free from any pledge or other guarantee, or any third party claim.

3. The Transferor and Liaoning Sunshine have not withheld any fact relating to Liaoning Sunshine that if disclosed would hinder the execution of this Agreement, or would cause the change of meaning of any clause in this Agreement.

4. After the transfer of the Subject Equity to the Transferee, the above representations, warranties and commitments shall persist and take effect.

V Representations and Warranties of the Transferee

The Transferee hereby represents and warrants as follows:

1. The Transferee is a legitimate Chinese citizen, and has all necessary rights, powers and capacity to execute and perform any obligations and liabilities under this Agreement; and this Agreement shall be of legal and effective binding force on the Transferee once it is signed.

2. The execution, delivery and performance of this Agreement by the Transferee contravene no law, administrative regulation, transferee’s constitution or other similar documents, nor do they breach any contract, rule, verdict or adjudication made by any court or arbitration body that are binding on the Transferee or its property.

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3. After the completion of transfer of the Subject Equity, the above representations, warranties and commitments shall persist and take effect.

VI Confidentiality

Unless as required by relevant laws and regulations of the PRC, or by relevant competent government departments, without the consent of the other party, either party shall not, before the completion of the transaction contemplated in this Agreement, disclose any content of this Agreement to any third person other than the parties involved in such transaction.

VII Open Terms of this Agreement

Both the Transferor and the Transferee agree that, after signing this Agreement, any open terms of this Agreement is subject to further negotiation and a supplementary agreement. Such supplementary agreement shall form an integral part of this Agreement.

VIII Default Liability

Either party breaching any representation, warranty or undertaking made by it under this Agreement, or any article in this Agreement shall constitute a default. The defaulting party shall compensate the non-defaulting party fully and adequately.

IX Settlement of Disputes

Any dispute over this Agreement arisen in the performance of the same shall be settled by the Parties hereto through friendly consultation. In case the dispute cannot be settled through consultation, either party may sue at a court in the PRC with competent jurisdiction against the other party.

X Governing Law

The execution, validity, interpretation, performance of this Agreement, and the settlement of disputes hereof, all are governed by the laws of the PRC.

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XI Rights under this Agreement

Without the written consent of the other party, either party shall not transfer its rights under this Agreement. This Agreement shall be binding on the successors and approved transferees of both parties.

XII Language of the Context

This Agreement is written in Chinese. The original is made in triplicate, with the Transferor, the Transferee and Liaoning Sunshine each retaining one copy thereof, respectively. Each original shall be of the same legal validity.

IN WITNESS WHEREOF, the Transferor and the Transferee hereby formally authorize their respective representatives to sign this Agreement as of the date and in the place first above written.

The Transferee: Shenyang Sunshine Pharmaceutical Company Limited

Authorized Representative: /s/ Dan Lou (affixed with the company seal of Shenyang Sunshine Pharmaceutical Company Limited)

The Transferee: Lou Dan
Signature:	/s/ Dan Lou

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EX-10.18

Exhibit 10.18

English translation of the executed copy

Purchase Agreement for Acquisition of Equity Interest

In

Liaoning Sunshine Bio-Pharmaceutical Company Limited

Between

Shenyang Sunshine Pharmaceutical Company Limited

And

Dan Lou

PURCHASE AGREEMENT FOR ACQUISITION OF EQUITY INTEREST

THIS AGREEMENT is entered into between the following parties in Shenyang City, Liaoning Province on December 1, 2006:

Party A: Shenyang Sunshine Pharmaceutical Company Limited

Legal Address: No. 3 A1, Road 10, Shenyang Economy & Technology Development Zone

Legal Representative: Dan Lou

Party B: Dan Lou

Identity Card Number: 210102193503076017

WHEREAS,

1. Party A is a foreign invested wholly owned enterprise established and validly subsisted according to the laws of the People’s Republic of China (hereinafter the “PRC”), which was originally holding 90% equity of Liaoning Sunshine Pharmaceutical Company Limited (hereinafter “Liaoning Sunshine”), all of which was transferred to Party B pursuant to an Equity Transfer Agreement entered into with Party B on November 10, 2006;

2. Party B is a legitimate Chinese citizen. On November 10, 2006, Party B and Party A entered into an Equity Transfer Agreement pursuant to which Party B acquired from Party A 90% equity of Liaoning Sunshine; Party B also entered into another equity transfer agreement pursuant to which Party B acquired from Shenyang Keweier Advance Technology Company Limited 10% equity of Liaoning Sunshine. The registration process for the relevant transfers has been completed. As of the date hereof, Party B is legally holding 100% equity of Liaoning Sunshine (“Subject Equity”);

3. Liaoning Sunshine is a company with limited liability incorporated and validly subsisted according to the laws of the PRC, the business scope of which covers the sale of bio-products (including bio-pharmaceuticals), biochemical medicines, chemical preparations, antibiotics, prepared traditional Chinese medicines (efficacious before 31 December 2009) and diagnostic medicines; the sale of three types of medical equipment (items subject to approval by licneses (efficacious before August 17, 2010); the manufacture, sale of special nutrition food; the self-operation and agency of various commodities and technologies and their export and import (excluding those under restricted operation or prohibited to import and export by the State). Its registered capital is RMB 15 million. Party B, through equity transfer, becomes the legitimate shareholder of Liaoning Sunshine;

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4. Party B is willing to transfer to Party A the Subject Equity upon the satisfaction of the conditions under this Agreement.

After friendly consultation, the Parties hereto hereby reach an agreement as follows:

Article 1	Party B hereby agrees to transfer to Party A the Subject Equity at the price as determined under Article 2 hereof and change the title of the Subject Equity under the name of Party A upon the satisfaction of the following condition precedent: the relevant PRC government approval, if any, has been obtained to permit Party A’s holding the Subject Equity.
Article 2	Both parties agree that the price for Party A to purchase the Subject Equity is RMB15 million.
Article 3	Party A shall pay RMB13.5 million as down payment for the purchase of the Subject Equity within 30 days after the signing of this Agreement, the remaining balance of RMB 1.5 million shall be paid after the title of the Subject Equity is transferred to and under the name of Party A.
Article 4	Upon the request of Party A, Party B shall provide all necessary assistance and shall cause Liaoning Sunshine to take all necessary actions to cooperate with Party A in the legitimate and successful completion of the acquisition of the Subject Equity, including but not limited to applying for and obtaining the approval from the relevant PRC government departments regarding the acquisition. Party B shall timely provide Party A with all the correspondence with the relevant PRC government departments related to the relevant application and approval regarding the acquisition or explanation for its communication with the approval authority.

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Article 5	Party B shall carry out all necessary legal proceedings to ensure that Liaoning Sunshine is legitimately and duly existing and holding all legitimate and effective licenses, permits and certificates necessary for its business operation.
Article 6	Unless obtaining Party A’s prior written consent, Party B shall not transfer or otherwise dispose of the Subject Equity to any third party other than Party A and shall ensure that Liaoning Sunshine does not increase or decrease its registered capital or issue any bonds or debts.
Article 7	The parties agree that should Party A fail to complete all procedures under law to acquire the Subject Equity within 10 years after the signing of this Agreement as a result of restriction under PRC law or being unable to obtain PRC government approval, Party A shall have the right to terminate this Agreement unilaterally and Party B shall return any and all payment made by Party A hereunder.
Article 8	This Agreement shall take effect from the date on which it is signed by the respective authorized representatives of the Parties hereto.
Article 9	Unless otherwise provided hereunder, without the consent of the other party, either party shall not, before the completion of the transaction contemplated in this Agreement, disclose any content of this Agreement to any third person other than the parties involved in such transaction.

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Article 10	Neither party shall be deemed as disclosing any content of this Agreement under the following circumstances: (1) the confidential information comes into the public domain prior to such disclosure (except for disclosure under a breach of this provision); (2) the disclosure is mandatory required by any government authority, by the relevant securities supervision authorities or under any laws and regulations.
Article 11	Both parties agree that, after signing this Agreement, any open terms of this Agreement is subject to further negotiation and a supplementary agreement. Such supplementary agreement shall form an integral part of this Agreement.
Article 12	Either party breaching any clause in this Agreement shall constitute a default. The defaulting party shall compensate the non-defaulting party fully and adequately.
Article 13	Upon the occurrence of any of the following circumstances, Party A shall have the right to terminate this Agreement and Party B shall refund Party A all payment made hereunder by Party A: (1) Party A fails to complete all procedures under law to acquire the Subject Equity within 10 years after the signing of this Agreement due to reasons caused by Party B; (2) Liaoning Sunshine loses its legal person status as a result of cancellation or ceasing its business license; or (3) any license, permit and certificate necessary for the business operation of Liaoning Sunshine is cancelled, withdrawn or expired and cannot be extended or renewed within reasonable period of time
Article 14	Any dispute over this Agreement arisen in the performance of the same shall be settled by the Parties hereto through friendly consultation. In case the dispute cannot be settled through consultation, either party may sue at a court in the PRC with competent jurisdiction against the other party.

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Article 15	The execution, validity, interpretation, performance of this Agreement, and the settlement of disputes hereof, all are governed by the laws of the PRC.
Article 16	Without the written consent of the other party, either party shall not transfer its rights under this Agreement. This Agreement shall be binding on the successors and approved transferees of both parties.
Article 17	This Agreement is made in duplicate, with Party A and Party B each retaining one copy thereof, respectively. Each original shall be of the same legal validity.

IN WITNESS WHEREOF, the Parties hereof hereby formally authorize their respective representatives to sign this Agreement as of the date and in the place first above written.

Party A: Shenyang Sunshine Pharmaceutical Company Limited

Authorized Representative: /s/ Dan Lou (affixed with the company seal of Shenyang Sunshine Pharmaceutical Company Limited)

Party B: Dan Lou
Signature:	/s/ Dan Lou

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Schedule A

Purchase Agreement for the Acquisition of Equity Interest in Beijing Sunshine Bio-product Sales Company Limited, or Beijing Sunshine, which is substantially identical to Exhibit 10.18 except as to:

Purchasing party:	Shenyang Sunshine Pharmaceutical Company Limited
Selling parties:	Dongmei Su (holding 45% equity interest in Beijing Sunshine), and
	Shenyang Keweier Advance Technology Co., Ltd. (holding 55% equity interest in Beijing Sunshine)
Date:	December 15, 2006
Purchase price:	RMB450,000 for 45% equity interest held by Dongmei Su
	RMB550,000 for 55% equity interest held by Shenyang Keweier

EX-10.19

Exhibit 10.19

English translation of the executed copy

EQUITY PLEDGE AGREEMENT

THIS AGREEMENT is entered into between the following parties on January 1, 2007:

Party A: Shenyang Sunshine Pharmaceutical Company Limited (Pledgee)

Legal Address: No.3 1A No.10 Road of Shenyang Economic and Technological Development Zone

Party B: Dan Lou (Pledgor)

Identity Card Number: 210102193503076017

Whereas,

1. Party A is a wholly owned foreign enterprise (“WOFE”) established in Liaoning Province of the People’s Republic of China (hereinafter the “PRC”) which originally held 90% equity interesting in Liaoning Sunshine Pharmaceutical Company Limited (hereinafter the “Liaoning Sunshine”), all of which was transferred to Party B pursuant to an Equity Transfer Agreement entered into with Party B on November 10, 2006;

2. Party B is a Chinese citizen. On November 10, 2006, Party B and Party A entered into an Equity Transfer Agreement pursuant to which Party B acquired from Party A 90% equity of Liaoning Sunshine; Party B also entered into another equity transfer agreement pursuant to which Party B acquired from Shenyang Keweier Advance Technology Company Limited 10% equity of Liaoning Sunshine. The registration process for the relevant transfers has been completed. As of the date hereof, Party B is legally holding 100% equity of Liaoning Sunshine;

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3. Liaoning Sunshine is a company with limited liability incorporated and validly subsisted according to the laws of the PRC, the business scope of which covers the sale of bio-products (including bio-pharmaceuticals), biochemical medicines, chemical preparations, antibiotics, prepared traditional Chinese medicines (efficacious before 31 December 2009) and diagnostic medicines; the sale of three types of medical equipment (items subject to approval by licneses (efficacious before August 17, 2010); the manufacture, sale of special nutrition food; the self-operation and agency of various commodities and technologies and their export and import (excluding those under restricted operation or prohibited to import and export by the State). Its registered capital is RMB 15 million. Party B, through equity transfer, becomes the legitimate shareholder of Liaoning Sunshine;

4. In accordance with the Purchase Agreement for Acquisition of Equity Interest and the Voting Rights Agreement signed by Party A and B on December 1, 2006, Party A made a payment of RMB13,500,000 to Party B as the prepayment of the acquisition of 100% equity interest of Liaoning Sunshine and Party B agreed to consult with Party A prior to and follow Party A’s instruction when exercising its shareholder’s rights in Liaoning Sunshine. Given the above, Party B proposed to have its 100% equity interest in Liaoning Sunshine serve as a guarantee for the performance of the above Purchase Agreement for Acquisition of Equity Interest and the Voting Rights Agreement.

In witness thereof, through friendly negotiations, Party A (hereinafter referred to as the “Pledgee”) and Party B (hereinafter referred to as the “Pledgor”) hereby agree as follows:

1. Definition

Unless otherwise requires hereunder, the following expressions shall have the following meanings:

1.1 “Pledge”: all content set out in Article 2 of this contract.

1.2 “Equity”: 100% equity interest of Liaoning Sunshine legitimately held by the Pledgor.

1.3 “Principle Agreements”: the “Purchase Agreement for Acquisition of Equity Interest” and the “Voting Rights Agreement”.

1.4 “Default”: any circumstances set out in Article 7.1 of this contract.

1.5 “Notice of Default”: such notice made by the Pledgee under this contract to announce the Default.

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2. The Pledge

The Pledgor will make a Pledge over its 100% equity interest in Liaoning Sunshine in favor of the Pledgee as the guarantee for all of its obligations under the Principle Agreements.

3. Registration of the Pledge

3.1 The Pledgor should, within one week from the signing date of this contract, urge Liaoning Sunshine to record the Pledgee’s pledge of the equity interest in the Register of Shareholders. The copies of the Register of the Shareholders sealed with Liaoning Sunshine’s company chop, together with the original copy of the Certificate of Equity Contribution, should be delivered to and kept by the Pledgee for custody. The Pledgor should make sure that no other Register of Shareholders is kept by Liaoning Sunshine.

3.2 Both parties mutually agreed that whenever applicable, due effort will be put into, and to procure, having the record of the Pledge under this contract properly filed in the Industrial and Commercial Administration with which Liaoning Sunshine was incorporated. However, both parties confirm that unless it is mandatory required by the PRC law, such filing shall not affect the validity of this contract.

4. Rights of the Pledgee

4.1 In case the Pledgor fails to fulfill such obligations stated in the Principle Agreements, the Pledgee is entitled to, in compliance with the law of PRC and duly approved by all relevant government departments, acquire the equity interest, or demand the Pledgor to assign such equity interest to a designated third party, or enjoy priority in recovery from the selling price of equity interest set in auction or sales.

4.2 Dividends derived from the equity interest belong to the Pledgor.

5. Representations and Warranties of the Pledgee

5.1 Pledgor is the legitimate holder of the equity interest.

5.2 Except for the interest of the Pledgee, the Pledgor did not create any pledge or encumbrance on the equity interest.

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6. Undertaking of the Pledgee

6.1 Within the period of this contract, the Pledgor undertakes to the Pledgee for sake of the Pledgee’s benefits that, no equity interest will be transferred without the prior written consent of the Pledgee, and there is no such other encumbrance on the equity which might affect the rights and interests of the Pledgee.

6.2 The Pledgor undertakes to the Pledgee that, it shall sign any document related to the change in equity interest with the Pledgee or its designated third party (as and when necessary), and provide the Pledgee with all notice, orders or decision in regard to the Pledge deemed necessary.

6.3 The Pledgor undertakes to the Pledgee that for the interest of the Pledgee, the Pledgor will observe, implement all warranties and undertakings. If the Pledgor does not implement or not fully implement its warranties and undertakings the Pldegor shall compensate the Pldegee all damages caused.

7. Default Liability

7.1 The following constitutes a breach:

7.1.1     The Pledgor does not fulfill its obligations under the Principle Agreements;

7.1.2     There is substantive misleading or error in the representations or warranties in Article 5 of the contract made by the Pledgor, and/or the Pledgor breaches the warranties in Article 5 of this contract;

7.1.3     The Pledgor breaches the undertaking in Article 6 of this contract;

7.1.4     The Pedgor breaches other terms of this contract;

7.1.5     The Pledgor disposes of the pledged equity or transfer the pledged equity without written consent of the Pledgee.

7.2 If any event in Article 7.1 is noticed or becomes aware or events which may lead to the above events have happened, the Pledgor shall notice the Pledgee immediately.

7.3 Unless the default in Article 7.1 is fully settled to the satisfaction of the Pledgee, the Pledgee shall, by giving breach notice to the Pledgee at the time of or any time after the occurrence of the default, request the Pledgor to exercise the Pledge in accordance to Article 8 of this contract.

8. The Exercise of the Pledge

8.1 The Pledgee shall give breach notice to Pledgor when it exercises the Pledge.

8.2 Subject to Article 7.3, the Pledgee shall have the right to dispose the Pledge at the time of any time after the issuance of the breach notice.

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8.3 As long as it is permitted by PRC law and all necessary approvals have been obtained from all relevant government departments, the Pledgee may acquire the equity interest, or demand the Pledgor to assign such equity interest to a designated third party, or enjoy priority in recovery from the selling price of equity interest set in auction or sales.

8.4 When the Pledge disposes of the Pledge pursuant to the provisions hereunder, the Pledgor shall not hinder and shall provide necessary assistance for the Pledgee to exercise its rights.

9. Transfer of the Contract

9.1 Unless obtaining prior consent from the Pledgee, the Pledgor has no right to transfer the rights and obligations hereunder.

9.2 The contract shall be binding on the Pledgor and its successor, and apply to the Pledgee and any of its successors or assignee as permitted by the Pledgee.

9.3 The Pledgee can transfer any and all rights and obligations under the Principle Agreements to a designated third party if it is permitted by law. The transferee is entitled to the rights and obligations of the Pledgee hereunder. When the Pledgee transfers the rights and obligations under the Principle Agreements, it shall give written notice to the Pledgor and the Pledgor shall sign agreement and/or documents in relation to the transfer.

9.4 The change of Pledgee as a result of transfer requires signing of a separate pledge contract by the new parties.

10. Validity and Term

The Contract shall take effect from the date first above written and the date with the equity pledge is recorded on the Register of Shareholders of Liaoning Sunshine.

11. Termination

The Contract is terminated when the Pledgor is not obligated for the responsibilities of the Principle Agreements.

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12. Confidentiality

The Parties acknowledge and confirm that any verbal and written information exchanged in relation to the contract is confidential. Both parties have to keep the confidentiality of such information. Without the written consent of the other party, either party shall not disclose any information to any third person other than for the following reasons: (a) the public becomes aware or will be aware of the information (not disclosed by the recipient of the information by breaching this provision); (b) information disclosure as required by relevant laws and regulations or stock exchanges; or (c) information disclosure to the legal or financial advisor, who shall assume the same confidentiality obligations similar to the ones hereunder. The leakage of information by employee or engaged institution of a party will be treated as the breach of the party, and have to pay damage according to the contract.

13. Settlement of Disputes

13.1 This contract shall be governed and construed by the PRC law.

13.2 Any dispute over this Agreement arisen in the performance of the same shall be settled by the Parties hereto through friendly consultation. In case the dispute cannot be settled through consultation, either party may sue at a court in the PRC with competent jurisdiction against the other party.

14. Severability of the Contract

In the event of any term is invalid or unenforceable due to inconsistency with the relevant law, the term shall be deemed as invalid only within the relevant region, and does not affect the legal validity of any other terms hereunder.

15. The Amendment and Supplement of the Contract

The parties shall amend and supplement this contract in written agreements. Any supplement agreement signed by both parties shall form an integral part of the contract and be of the same legal effect.

16. Copies of the Contract

This Agreement is written in Chinese in duplicates, with Party A and B each retaining one copy thereof, respectively. Each original shall be of the same legal effect.

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IN WITNESS WHEREOF, the Parties hereby in person or authorize their respective representatives to sign this contract as of the date first above written.

The Pledgee: Shenyang Sunshine Pharmaceutical Company Limited

Authorized Representative(s): /s/ Dan Lou (affixed with the company seal of Shenyang Sunshine Pharmaceutical Company Limited)

The Pledgor: Dan Lou
Signature:	/s/ Dan Lou

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Schedule A

Pledge Agreement of Equity Interest in Beijing Sunshine Bio-product Sales Company Limited, which is substantially identical to Exhibit 10.19 except as to:

Parties:	Shenyang Sunshine Pharmaceutical Company Limited
	Dongmei Su, and
	Shenyang Keweier Advance Technology Co., Ltd.
Date:	January 10, 2007

EX-10.20

Exhibit 10.20

English translation of the executed copy

VOTING RIGHTS AGREEMENT

THIS AGREEMENT is entered into between the following parties on December 1, 2006 in Shenyang City, Liaoning Province:

Party A: Dan Lou

Identity Card Number: 210102193503076017

Party B: Shenyang Sunshine Pharmaceutical Company Limited

Legal Address: No.3 1A No.10 Road of Shenyang Economic and Technological Development Zone

Legal Representative: Dan Lou

Whereas,

1 Party A is a citizen of the People’s Republic of China (hereinafter the “PRC”). On November 10, 2006, Party A and Party B entered into an Equity Transfer Agreement pursuant to which Party B acquired from Party B 90% equity of Liaoning Sunshine Pharmaceutical Company Limited (hereinafter the “Liaoning Sunshine”); Party B also entered into another equity transfer agreement pursuant to which Party B acquired from Shenyang Keweier Advance Technology Company Limited 10% equity of Liaoning Sunshine. The registration process for the relevant transfers has been completed. As of the date hereof, Party B is legally holding 100% equity of Liaoning Sunshine;

2 Party B is a wholly owned foreign enterprise established and validly subsisted according to the laws of the PRC and originally held 90% equity interesting in Liaoning Sunshine, all of which was transferred to Party A pursuant to the Equity Transfer Agreement dated November 10, 2006;

3 In accordance with the Purchase Agreement for Acquisition of Equity Interest signed by Party A and B on December 1, 2006, Party B intends to acquire the 100% equity of Liaoning Sunshine held by Party A.

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Through negotiations on equal basis and in the principle of willingness and fairness, it is hereby agreed as follows:

Article 1	Party A hereby undertakes that, before Party B is approved by relevant government authorities to be the sole shareholder of Liaoning Sunshine and the completion of all the legal procedures regarding to the transfer of Liaoning Sunshine’s equity in accordance with the Purchase Agreement for Acquisition of Equity Interest, it should perform any of the shareholder’s rights towards Liaoning Sunshine in accordance with rules and regulations of the PRC and the articles of associate with prior consultation of Party B, and exercise its shareholder’s rights in strict compliance with Party B’s opinion to the extent that Party B’s opinion does not violate PRC law.
Article 2	When Party A breaches any undertaking made by it under this Agreement, or any articles in this Agreement, it constitutes a default, and Party A shall compensate Party B fully and adequately.
Article 3	The Parties hereto should settle all disputes arising from the context or performance of this Agreement through friendly consultation. In case the dispute cannot be settled through consultation, either party shall have the right to sue at a People’s Court with competent jurisdiction thereover against the other party.
Article 4	Any open terms of this Agreement are subject to further negotiation between the Parties thereof and supplementary agreements. Such supplementary agreements, after being signed by the Parties thereof and affixed with their respective company seal, shall have the same legal effect as this Agreement.
Article 5	Any successor or approved assignee of each of Party A and Party B shall be binding by the provisions hereunder.
Article 6	This Agreement is made in duplicate, with both Parties each retaining one copy hereof, respectively. Each original shall be of the same legal effect.

IN WITNESS WHEREOF, Party A and Party B hereby formally sign this Agreement as of the date and in the place first above written.

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Party A: Dan Lou
Signature::	/s/ Dan Lou

Party B: Shenyang Sunshine Pharmaceutical Company Limited

Authorized Representative(s): /s/ Dan Lou (affixed with the company seal of Shenyang Sunshine Pharmaceutical Company Limited)

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Schedule A

Voting Agreement, which is substantially identical to Exhibit 10.20 except as to:

Parties:	Shenyang Sunshine Pharmaceutical Company Limited
	Dongmei Su, and
	Shenyang Keweier Advance Technology Co., Ltd.
Date:	December 15, 2006

EX-10.21

Exhibit 10.21

English translation of the executed copy

Business Cooperation Agreement

THIS BUSINESS COOPERATION AGREEMENT (hereinafter the “THIS AGREEMENT”) is entered into between the following parties on January 1, 2007 in Shanyang City, Liaoning Province:

Party A: Shenyang Sunshine Pharmaceutical Company Limited

Legal Address: No.3 1A No.10 Road of Shenyang Economic and Technological Development Zone

Legal Representative: Dan Lou

Party B: Liaoning Sunshine Bio-Pharmaceutical Company Limited

Legal Address: No.3 1A No.10 Road of Shenyang Economic and Technological Development Zone

Legal Representative: Jing Lou

Party C: 3sBio Inc.

Legal Address: Criket Square, Hutchins Drive, PO Box 2681 GT, George Town,

Grand Cayman, British West Indies.

Legal Representative: Dan Lou

WHEREAS,

1. Party A is a foreign invested wholly owned enterprise established and validly subsisted according to the laws of the People’s Republic of China (hereinafter “PRC”), which is mainly engaged in the manufacture of pharmaceuticals and have solid strength for technical support and proven experiences in market development services;

2. Party B is a company with limited liability established and validly subsisted according to the laws of PRC, which is mainly engaged in the distribution of pharmaceuticals and principally distribution of EPIAO, TPIAO, INTEFEN, INLEUSIN and other medicines manufactured by Party A;

3. Party C is a company established and validly subsisted according to the laws of the Cayman Islands and it indirectly holds the whole equity interest of Party A through Collected Mind Limited;

4. During the course of conducting business operations, Party B cooperates with Party A for business, including but not limited to, relies on Party A to provide the services for technical support and market development. Party A is willing to carry out the aforesaid business cooperation and Party C agrees to procure Party A to implement its obligations under this Agreement.

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In witness thereof, through friendly consultation and in the principle of equality and mutual benefits, it is hereby agreed as follows:

Article 1 Services for Technical Support and Market Development

1.1	All parties agrees that Party A, as an exclusive service provider for technical support and market development services, provides Party B comprehensive services for technical support and market development, including but not limited to:
1.1.1	Technical support services
1.1.1.1	Technical consulting and staff training in respect of medicine examination and acceptance, inspection, maintenance and etc.;
1.1.1.2	Establishment of quality control system for medicine operation;
1.1.1.3	Related medicine inspection, leasing, maintenance and technical guidance relating to maintenance equipment;
1.1.1.4	Other related technical consulting.
1.1.2	Market development and consulting services
1.1.2.1	Assisting in formulating market development plan;
1.1.2.2	Providing market information and client resources information;
1.1.2.3	Entrusted to conduct specified market research and investigation.
1.1.3	Party A may, based upon the operational needs of Party B, decide to appoint sales persons of Party B and establish marketing networks.
1.2	Party B shall actively support Party A to complete the abovementioned work, including but not limited to the provision of related operational documents, data, descriptions and etc.
1.3	Party A is an exclusive provider for technical support and market development services under this Agreement. Except for prior consent in writing by Party A, Party B shall not accept any services for technical support and market development provided by any third party; however, Party A shall have the right to provide any other party with the same or similar services stipulated in this Agreement.
1.4	Party A is entitled to the exclusive rights and interests in respect of any right, ownerships, interests and intellectual property rights of any kind arising from performance hereof. In case this Agreement terminates or expires for whatsoever reasons, Party B shall return Party A all information delivered as result of performance hereof, including but not limited to information, data, know-how, commercial secrets as well as any rights, ownerships, interests and intellectual property rights of any kind arisen from hereunder. All parties agree that this article shall survive any changes, rescission or termination hereof.

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Article 2 Service fees

2.1	All parties agree that Party B shall pay service fees to Party A in connection with the related business cooperation services prescribed in Article 1.1 hereunder provided by Party A to Party B. The amount of service fees shall be 70% of Party B’s entire annual sales revenues.
2.2	The time and method of payment for service fees shall be: with 7 days after each receivable is collected by Party B, it shall remit 70% of such amount to a bank account designated by Party A.
Article 3 Representations and Warranties by Part A and Party C
Party A and Party C hereby represent and warrant to Party B that:
3.1	Party A is a foreign invested wholly owned enterprise duly organized and validly subsisted according to the laws of PRC, which has all the necessary rights, powers and capacity to execute and perform all the obligations and liabilities hereunder, and upon this Agreement being signed, it shall have legally and validly binding force on Party A.
3.2	Party C is a company duly established and validly subsisted according to the laws of the Cayman Islands, which has all the necessary rights, powers and capacity to execute and perform all the obligations and liabilities hereunder, and upon this Agreement being signed, it shall have legally and validly binding force on Party C.
3.3	The execution, delivery and performance hereof by Party A and Party C do not breach any law, regulations, its articles of association or the provisions prescribed under other similar documents, nor breach any contract, rule, verdict or adjudication made by any court or arbitrion body that are binding on Party A or its property.
3.4	Party A and Party C have obtained all necessary approvals, consents, authorizations and permits required for its establishment and business operations, and all these are valid and binding.

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Article 4 Representations and Warranties by Part B

Party B hereby represents and warrants and undertakes to Party A and Party C that:
4.1	Party B is a company with limited liability duly organized and validly subsisted according to the laws of PRC, which has all the necessary rights, powers and capacity to execute and perform all the obligations and liabilities hereunder, and this Agreement shall have legally and validly binding force on Party B once it is signed.
4.2	The execution, delivery and performance hereof by Party B do not breach any law, regulation, its articles of association or the provisions prescribed under other similar documents, nor breach any contract, rule, verdict or adjudication made by any court or arbitration body that are binding on Party B or its property.
4.3	Party B has obtained all necessary approvals, consents, authorizations and permits required for its establishment and business operations, and all these are valid and binding.
Article 5 Undertakings by Part A and Party C
Party A and Party C undertake to Party B that during the term of this Agreement:
5.1	Party A hereby undertakes the performance of obligations hereunder in accordance to this Agreement.
5.2	Party C hereby undertakes to support and supervise Party A’s performance of the obligations hereunder to procure the smooth performance of this Agreement.
Article 6 Undertakings by Part B
Party B undertakes to Party A and Party C that during the term of this Agreement:
6.1	Party B shall not, without the prior written consent of the majority of independent directors of Party C:
6.1.1	Make profit distribution or dividend payment or distributions in any other form to a direct or indirect beneficial owner of Party B;
6.1.2	Make any investment in any form.
6.2	Party B undertakes, without the prior written consent of majority of the independent directors of Party C, not to proceed with capital increase or decrease, or merger with other third party (whether or not it is for the purpose of the company’s continuing subsistence), scission, dissolution, liquidation, change of corporate formation or issue of debentures.

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6.3	Except for the liabilities (including contingent liabilities) incurred and disclosed to Party A before the signing hereof, Party B undertakes, without the prior written consent of majority of the independent directors of Party C, not to create or bear any new liabilities (including contingent liabilities).
6.4	Party B shall not, without the prior written consent of majority of the independent directors of Party C, create mortgage in any form or other encumbrances in respect of all or part of its assets.
6.5	Party B shall not, without the prior written consent of majority of the independent directors of Party C, sell or bestow the major assets of Party B to any third party, or dispose of such assets in any other manner.
6.6	Party B undertakes not to be engaged in any business other than sale of pharmaceuticals, and, without the prior written consent of majority of the independent directors of Party C, in the sale of pharmaceuticals produced by any pharmaceutical production enterprise other than Party A, except for those distributed by Party B before the signing hereof.
6.7	Party B shall provide Party A with all financial and accounting information within 15 days after the end of every quarter and every fiscal year.
6.8	Party B shall, according to the requirement of Party C, provide Party C with relevant financial information timely and accurately.
6.9	Party B shall, according to the requirement of Party C, be cooperative in the auditing of its financial statements conducted by an independent accountant, and shall provide the auditor with any information or render any necessary assistance as reasonably required for the purpose of such auditing.
6.10	Party B agrees to, without its prior consent being obtained, have its name referred and business disclosed in any published report of Party C.
6.11	Party B shall pay all taxes payable by it according to law.
6.12	Except with the prior written consent of majority of the independent directors of Party C, Party C shall complete all necessary procedures to ensure the legal validity of the following matters:
6.12.1	the legitimate and valid subsistence of Party B;
6.12.2	the valid subsistence of all necessary permits, licenses and certificates held by Party B for its production and operation.
Article 7 Confidentiality
7.1	For the purpose of this Agreement, the term “confidential information” includes but not limited to all or part of the content or information of the following information: Any informtion given by any party hereto to the other parties and not stating as public information when provided for the purpose of this Agreement.

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7.2	Except with prior consent in writing by the confidential information providing party hereto, any party hereto shall not disclose the confidential information in any manner to any third party.
7.3	All parties shall adopt necessary measures to confine the circulation of the confidential information informed and known by each of them to relevant staff, agents or consultants only, and shall ask them to abide by this Article strictly and not to disclose the confidential information to any third party. All parties undertake not to disclose the confidential information obtained from the other parties to their respective unrelated staff.
7.4	In the following circumstances, any party hereto shall not be deemed as disclosing or divulging confidential information:
7.4.1	The divulged confidential information have been made public prior to the disclosure (except for those divulged in a manner that is breaching this Article);
7.4.2	Consent in writing by the confidential information providing Party have been obtained through consulation;
7.4.3	The disclosure is mandatory required by any government authority, by the relevant securities supervision authorities or under any laws and regulations.
7.5	Any party hereto breaching this Article shall indemnify the other parties against any loss which the other Parties may incur as a result of such breach.
Article 8 Liability for Default
8.1	Any Party who breaches the provision hereof shall make compensation for any loss incurred on the non-defaulting party as a result of its default.
8.2	The non-defaulting party’s waiver to any default by the defaulting Party shall be valid only in writing. Non-performance or delay in exercising of any rights or remedies hereunder shall not constitute a waiver by the non-defaulting party hereto and partical exercise of rights or remedies shall not impede it to further exercise other rights or remedies.
8.3	The validity herein shall not be affected by the termination or rescission of this Agreement.

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Article 9 Force majeure

9.1	Force majeure hereunder refers to war, fire and earthquake, flood, rainstorm, snow disaster and other act of God; or other events that are unforeseeable by the Parties hereto at the time when this Agreement is entered into and the occurrence of which is irresistible and inevitable.
9.2	In case either party hereto is incapable of performing or failed to timely perform all the obligations hereunder or part thereof due to the influence of force majeure, no party shall bear the corresponding liabilities, but the concerned party hereto shall continue to perform the same after the influence of force majeure is removed. If the influence of force majeure has made the performance thereof impossible or unnecessary, all Parties hereto shall manage to resolve the problem through friendly consultation.
Article 10 Alteration, Rescission or Termination of this Agreement
10.1	This Agreement may not be released without unanimous consent after consultation by the Parties hereto. Any alteration hereof shall be signed by the Parties hereto in writing and shall be binding on the Parties hereto.
10.2	Any alteration and rescission hereof shall not hinder the concerned party’s right to request compensation for damages. If either party hereto incur losses as a result of alteration or rescission of this Agreement, except for those may be relieved of liability according to law, the defaulting party shall be responsible for the damages.
Article 11 Applicable Laws and Settlement of Disputes
11.1	The execution, validity, interpretation, performance, amendments and settlement of disputes relating to this Agreement are governed by PRC laws.
11.2	The Parties hereto should settle all disputes arising from the performance of this Agreement through friendly consultation. In case the dispute cannot be settled through consultation, either party shall have the right to sue at a PRC court with competent jurisdiction thereover against the other party.
Article 12 Miscellaneous
12.1	This Agreement shall take effect from the date it is signed by the Parties hereto.
12.2	After this Agreement takes effect and is implemented, the Parties hereto may enter into a supplementary agreement in respect of open terms of this Agreement or new conditions occurred in the performance of the same. Such supplementary agreement forms an integral part of this Agreement and shall be of the same validity.

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12.3	The articles regarding confidentiality, settlement of disputes, and liability for default under this Agreement shall survive the rescission or termination hereof.
12.4	Without prior consent in writing from the other parties, no party shall transfer its rights or obligations hereunder in whole or in part hereof to a third party.
12.5	This Agreement is made in triplicate, with the Parties hereto each retaining one copy hereof, respectively. Each original shall be of the same legal effect.

(no text below)

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(signature page)

Party A: Shenyang Sunshine Pharmaceutical Company Limited

Authorized Representative(s): /s/ Dan Lou (affixed with the company seal of Shenyang Sunshine Pharmaceutical Company Limited)

Party B: Liaoning Sunshine Bio-Pharmaceutical Company Limited

Authorized Representative(s): /s/ Jing Lou (affixed with the company seal of Liaoning Sunshine Bio-Pharmaceutical Company Limited)

PartyC: 3SBio Inc.
Authorized Representative(s):	/s/ Dan Lou

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Schedule A

Business Cooperation Agreement, which is substantially identical to Exhibit 10.21 except as to:

Parties:	Shenyang Sunshine Pharmaceutical Company Limited
	Beijing Sunshine, and
	3SBio Inc.
Date:	January 1, 2007

EX-21.1

Exhibit 21.1

List of Subsidiaries of 3SBio Inc. (the “Registrant”)

Wholly-Owned Subsidiaries

1. Collected Mind Limited

Affiliated Entity Consolidated in the Registrant’s Financial Statement

1. Beijing Sunshine Bio-product Sales Company Limited

2. Liaoning Bio-Pharmaceutical Company Limited

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

3SBio Inc.:

We consent to the use of our report dated November 10, 2006 with respect to the consolidated balance sheets of 3SBio Inc. and subsidiaries as of December 31, 2004, 2005 and September 30, 2006, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2005 and the nine months ended September 30, 2005 and 2006, included herein and to the reference to our firm under the heading “Experts” in the prospectus.

/s/  KPMG

Hong Kong China

January 19, 2007

EX-99.1

Exhibit 99.1

December 15, 2006                    

3s Bio Inc.

and

UBS AG

CIBC World Markets

Pacific Growth Equities

c/o UBS AG

52/F, Two International Finance Center

8 Finance Street

Central, Hong Kong

Ladies and Gentlemen:

We have acted as the People’s Republic of China (“PRC”) counsel to 3s Bio Inc., a company incorporated under the laws of the Cayman Islands (the “Company”).

In connection of the proposed public offering (the “Offering”) of American Depositary Shares representing the ordinary shares of the Company and the filing of the Company’s registration statement on Form F-1 (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “Commission”), we are furnishing you this opinion concerning the Rules on the Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “Rules”) promulgated on August 8, 2006 by six PRC regulatory agencies, including the Ministry of Commerce (“MOFCOM”) and the China Securities Regulatory Commission (“CSRC”) which became effective on September 8, 2006, and the Administrative Permits with respect to Indirect Issuing or Listing and Trading of Domestic Enterprises’ Securities on Overseas Stock Exchanges (the “Administrative Permits”) promulgated by the CSRC on September 21, 2006 pursuant to the Rules and other PRC laws and regulations.

We noted that the Company acquired, through its BVI subsidiary, Collected Mind Limited, its wholly owned PRC subsidiary, Shenyang Sunshine Pharmaceutical Co., Ltd, with considerations of cash (rather than by share swap) and obtained the approval of MOFCOM’s local authority for the acquisition prior to the effective date of the Rules.

Based on the forgoing and our understanding of current PRC laws, regulations, rules and the Administrative Permits, it is our opinion that because the Company obtained the approval requisite for the acquisition of its wholly owned subsidiary in China before the effective date of the Rules, the Offering does not require the approval by or registration with the CSRC.

This opinion is rendered on the basis of the laws of the PRC effective as of the date hereof. There is no assurance that any of such laws or their interpretations or enforcement policies will not be changed, amended or replaced in the immediate future or in the longer term with or without retrospective effect and any such changes, amendments or replacements may be made by the central or local legislative, administrative and judicial authorities of the PRC and may become effective immediately on promulgation.

We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and to the use of and references to our name in the prospectus included in the Registration Statement, filed by the Company with the Commission under the Securities Act of 1933, as amended.

Very truly yours,

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