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Press release from CNW Group

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

Monday, November 07, 2011

China Health Labs & Diagnostics Ltd. announces agreement with Biosino Bio-Technology and Science Inc. to expand rural hospital total lab solution08:45 EST Monday, November 07, 2011TSX-V: CHOOTCQX: CHLBFwww.chinahealthlabs.comTORONTO, Nov. 7, 2011 /CNW/ - China Health Labs & Diagnostics Ltd. ("China Health" or the "Company") (TSXV:CHO; OTCQX:CHLBF) is pleased to announce that it has signed a five year agreement with Biosino Bio-Technology and Science Inc. ("Biosino") to cooperate in expanding the rural hospital total lab solution across China.  The companies will also cooperate to develop new proprietary products and technologies, with the intellectual property to be owned on an equal basis.  In addition, the companies will jointly apply for government research funds and grants.Biosino is a leading domestic developer, manufacturer and distributor of in-vitro diagnostic reagents in China, listed on the GEM Board of the Hong Kong Stock Exchange (8247: HK).  Biosino has established a network of 600 distributors and retailers covering approximately 75% of China, as well as a manufacturing plant and research and development center in Beijing, Haidian District.  Biosino's major stakeholders include the Chinese Academy of Sciences, Beijing Municipal Government and Shanghai Municipal Government.Under the terms of the agreement, Biosino will use its government affairs resources to lobby the Chinese national government to support the Company's national program to be named "Digital Clinlabs - Rural Hospital Total Lab Solution" and to improve access to government funding for research and development of new products and technologies.Also under the agreement, Biosino will lead the marketing of the rural lab total solution in Chinese provinces where it has a strong presence, with the provinces to be allocated among China Health and Biosino on a mutually agreed basis.  Biosino has agreed to a minimum annual average quota of 50 locations per year over the term of the five year agreement.  China Health is to provide training to the Biosino management and technical teams, and support bids in provinces allocated to the Biosino marketing team, including providing access to China Health's existing rural lab network as reference labs.  In allocated provinces where Biosino leads a winning bid to install locations, China Health will supply its rural hospital total lab solution, including diagnostic equipment and the proprietary lab management system, at a price that allows for profit sharing.  China Health will continue to independently market its rural hospital total lab solution in provinces where it has installed clinics and in provinces not allocated to Biosino.The agreement sets out that Biosino will supply most of the biochemical reagents to new and existing rural lab locations, with China Health providing most of the other types of reagents including blood cell counters, urine analysis analyzers, coagulation analyzers and electrolyte analyzers.  Also under the agreement, Biosino will sell only China Health diagnostic equipment."We have installed our rural hospital total lab solution in four provinces that have room for large expansion and we are actively marketing in three more provinces. China is a very large country and we cannot cover all provinces at this time. This agreement with Biosino will help China Health accelerate the expansion of its network of rural labs in provinces where we do not have coverage," said Wilson Yao, Chairman and CEO of China Health. "Biosino has good working relationships with decision makers in the Chinese central government healthcare sector that are expected to enhance our lobby efforts for supportive policies and research and development funding. In addition, Biosino is a low cost producer of certain diagnostic reagents. We believe that Biosino can help us maximize the value of our first mover advantage by accelerating the process of entering new areas with our rural hospital total lab solution in occupying the China market.""We look forward to working with China Health to establish a nation wide network of rural hospital diagnostic clinics that can effectively provide ongoing diagnostic services to China's rural people," said Lebin Wu, CEO of Biosino. "The rural hospital total lab solution, with its ongoing service and supply system, will provide us a new distribution channel for our existing reagents and the confidence to invest more in developing new low cost reagents for the China's rural market.  The Chinese government has the budget and policy to improve rural healthcare and China Health is the first company to provide a solution that delivers the ongoing support, training and reagents to effectively deliver diagnostics to rural hospitals and clinics."As previously announced, China Health completed installation of 587 BK Clinlabs in Jilin Province, subsequent to the second quarter ended June 30, 2011.  Jilin Province is located in Northeast China with a population of approximately 25 million.  After the completion of the Jilin installations, China Health has installed in total 797 BK Clinlabs in rural hospitals and clinics in four provinces of China (Jilin, Henan, Guizhou and Liaoning), compared to 210 locations at the end of 2010.The installation of the 587 BK Clinlabs in Jilin generated initial revenue of approximately RMB 41 million ($6.2 million) in 2011.  In addition, the Company is negotiating an agreement to provide on-going service and maintenance to the Jilin BK Clinlab network as part of its medical diagnostics total lab solution. In 2010, China Health had revenues of approximately $33.7 million, of which approximately $3 million was generated from sales of the BK Clinlab total lab solution.  Accordingly, with the Jilin agreement, China Health expects revenues from rural hospitals and clinics to grow by more than 100% in 2011, compared to 2010.The BK Clinlab was developed by China Health as a total lab solution comprising diagnostic equipment, hardware and software, installation and training and an ongoing supply of reagents and service for use in rural hospitals and clinics.  The Company believes that this approach provides added value to the rural hospitals and builds strong customer loyalty compared with selling individual products.  The BK Clinlab total lab solution includes basic in-vitro diagnostic testing equipment (and complementary reagents) such as haematology analyzers, coagulation analyzers, urine analyzers, biochemistry analyzers, and electrolyte analyzers are mostly produced at the Company's Beijing manufacturing plant.  China Health has developed and patented the Lab Management System ("LMS"), a proprietary computer hardware and software system that connects the diagnostic equipment facilitating ease of operation, quality control, management of patient information and monitoring of reagent inventory.  As part of the BK Clinlab, a network of service centres staffed with trained technicians has and is being set up to provide support to rural labs within the service area and to provide a dependable source of reagents.  As rural diagnostic facilities in China are typically underserviced and often lack even basic diagnostic capabilities, China Health believes that it is uniquely positioned to capitalize on this opportunity, as they are the first company in China to identify and create a medical laboratory solution specifically tailored to service the more than 50,000 rural hospitals throughout China.About China Health Labs & Diagnostics Ltd.China Health, operating in China as the Biochem Group, is a leading diagnostic lab solution provider for the public healthcare industry in China. The Company develops and sells Biochem Group branded and third-party medical diagnostic products and services to diagnostic facilities in China. Customers include large urban hospitals, rural hospitals, Chinese military and rescue operations, the Beijing government and third-party distributors.In 2010, China Health had revenues of approximately $33.7 million, and intends to expand its business by focusing its efforts on expanding its sales network in three areas where it provides proprietary solutions, has limited competition and which are supported by Chinese government policies and budgets: BK Clinlab total lab solutions for rural hospitals and clinics, POCT solutions for military and emergency rescue services, and food safety solutions for large cities in China.About Biosino Bio-Technology and Science IncorporationBiosino Bio-Technology and Science Incorporation, together with its subsidiaries, engages in the manufacture, sale, and distribution of in-vitro diagnostic reagent products and pharmaceutical products primarily in the People's Republic of China. Its products include biochemistry reagents, such as single reagents, liquid double reagents, dry powder double reagents, calibration set, serum product series, and cleaning agent; immunology reagents comprising immunoturbidimetric assay kits, CLIA kits, and Elisa kits; and ZS/BK-L96C chemiluminescence analyzer. The company's products also comprise rapid tests, including cTnI test, FOB test, BV test, drug abuse test (urine), and drug abuse test (saliva). The company manufactures Lumbrokinase capsule, a Class II prescription drug, which is used to treat cardio cerebrovascular diseases and also exports its products to over 20 countries in Southeast Asia, the Middle-east, North Africa, and South America. Biosino Bio-Technology and Science Incorporation was founded in 1988 and is based in Beijing, the People's Republic of China. In 2006, Biosino successfully listed on the GEM board of the Hong Kong Stock Exchange.Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.FORWARD LOOKING INFORMATIONThis press release contains forward-looking statements and information that are based on the beliefs of management and reflect China Health's current expectations.  When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.  The forward-looking statements and information in this press release includes information relating to the benefits arising from the agreement between the Company and Biosino, including the acceleration of the expansion of the Company's network of rural labs, the enhanced lobby efforts for supportive policies and R&D funding, the maximization of the Company's "first mover" advantage with its rural hospital total lab solution, revenue generation from the Company's BK Clinlabs installed in Jilin and the expansion of the Company's business through its sales network in areas where it has proprietary products, limited competition and strong government support.  The forward-looking information is based on certain assumptions, which could change materially in the future, including the assumption that the payments for the BK Clinlabs will be made within a reasonable period of time and revenue recognized, the Company and Biosino will perform all of their obligations under their agreement and the Company will be able to expand its sales network and business.  Such statements and information reflect the current view of China Health with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.  By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the risks that the Company may not be able to generate the expected revenue from its BK Clinlabs installed in Jilin, the Company or Biosino may not perform all of their obligations under the agreement or may terminate such agreement at any time, the agreement may not produce the benefits expected, and the Company may not expand its business as expected through its sales network in any of the areas in which it has proprietary products, limited competition and strong government support.  China Health cautions that the foregoing list of material factors is not exhaustive.  When relying on China Health's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.  China Health has assumed a certain progression, which may not be realized.  It has also assumed that the material factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events.  However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF CHINA HEALTH AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE.  READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE.  WHILE CHINA HEALTH MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.For further information: Judyanna Chen Chief Financial Officer China Health Labs & Diagnostics Ltd. T: (416) 865-3351 Email: jchen@chinahealthlabs.com Babak Pedram Investor Relations TMX Equicom Group T: (416) 815-0700 ext. 264 Email: bpedram@equicomgroup.com