ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) announced today that, jointly with Jointown Pharmaceutical Group Co., Ltd. (headquartered in Wuhan City, Hubei Province, P.R. China; Liu Baolin, Chairman; hereinafter “Jointown”), ITOCHU and TOHO HOLDINGS CO., LTD. (headquartered in Setagaya-ku, Tokyo; Norio Hamada, President and Representative Director; hereinafter “TOHO”) have established and commenced full-scale operations of Hubei Kyoso Pharmaceutical Co., Ltd. (headquartered in Wuhan City, Hubei Province, P.R. China; Mitsuo Morikubo, Chairman; hereinafter “Kyoso”), a joint venture company engaged in the wholesale of pharmaceutical products, medical equipment, health foods, health-related products, and other products of Japanese and other overseas manufacturers to hospitals, clinics, and chemists in China.

Jointown is the third-largest wholesaler of pharmaceutical products and medical equipment (the largest private company with net sales of approximately 22 billion yuan in fiscal year 2009) in China, and it was listed on the Shanghai Stock Exchange on November 2, 2010. It has established an extensive logistics and sales network for some 69,500 existing customers, mainly hospitals, clinics, and chemists, with its 14 large-scale logistics bases, 25 medium-scale logistics bases, and 288 sales offices in China. Taking advantage of this network, Kyoso aims to market products of Japanese and overseas manufacturers in China.

As the first series of products to be marketed, Kyoso has commenced sales of products of Kobayashi Pharmaceutical Co., Ltd. (Shanghai Kobayashi Daily Chemicals Co., Ltd.) and other manufacturers, which are aimed at chemists. Moreover, following the recent acquisition of a medical equipment business license, Kyoso will seek to expand its business to sales of medical equipment that is exported for the overseas market by Itochu and other medical equipment for hospitals and clinics.

In addition, TOHO and ITOCHU will be engaged in the following businesses through Kyoso in the future.

1. Sales of pharmaceutical products, medical equipment, health foods, health-related equipment, and other products, which are imported or the products of overseas manufacturers (operating in China), in China, mainly focusing on the inland regions

Imports of the products of Japanese and overseas manufacturers, and sales of pharmaceutical products, medical equipment, health-related products, and other products, which are manufactured by overseas manufacturers operating in China, in all regions throughout China, taking advantage of Jointown’s logistics and sales network in China, TOHO’s expertise in sophisticated and efficient logistics for pharmaceutical products, and ITOCHU’s network with Japanese and overseas medical-related manufacturers

2. Expansion of sales channels for hospitals by providing medical-related value added services

Jointown is currently selling over-the-counter drugs (*1) and other commercial drugs, as well as first and second category (*2) medical products, including thermometers and sphygmomanometers, for general chemists and other retail operators. Kyoso will also be selling third category (*2) medical products that require sophisticated handling, such as prescription drugs and catheters, offering value-added services to hospitals, clinics, and medical institutions, for instance by supporting the introduction of hospital inventory control systems for hospitals, currently being jointly developed by Jointown and TOHO.

3. Provision of a safe and reliable infrastructure to overseas manufacturers and drug stores that are developing operations in China

By adopting TOHO’s cutting-edge distribution traceability technologies for pharmaceutical products, medical equipment, and other products, Kyoso contributes to the establishment of procurement routes, the management of information about deliveries to all parties up to end users, the provision of feedback to manufacturers, the promotion of efficient and transparent distribution, and consulting on the introduction of customer support systems and other services. Moreover, by providing support to obtain licenses that are necessary to develop and sell products in China, Kyoso provides a business environment in which Japanese and overseas manufacturers of pharmaceutical products and medical equipment, drug stores, and other companies developing operations in China can develop their businesses with confidence.

The pharmaceutical products and medical equipment markets in China are growing as rapidly as 20% and 30% per annum respectively, and they are likely to continue to grow significantly in the future. Through the joint venture, ITOCHU and TOHO will assist Jointown in its operations, and support Japanese and overseas manufactures who are developing their operations in China. Kyoso will aim to achieve turnover of 300 million yuan (or approximately 4 billion yen) in 2012.

Under its slogan, “Total Commitment to Good Health,” TOHO manages medical businesses that focus on patients. In light of medical reforms that China is now initiating and their goals, TOHO is committed to dealing with urgent issues, including the streamlining of logistics, the reliability of pharmaceutical products, the improvement of regional medical systems, the development of medical systems in agricultural areas, and transparent transactions.

Based on its medium-term management plan, Frontier^e 2010, ITOCHU has been focusing on the healthcare business as one of its key business fields. Based on investments in the joint venture described above, it will aim to develop and expand new overseas healthcare businesses. In particular, while ITOCHU views China as the key country for its healthcare business, it will seek to achieve synergies between its healthcare-related affiliates in Japan and overseas, and create new businesses.

1. Over-the-counter drugs
   Drugs that can be purchased without prescriptions
2. Types of medical products
   In China, medical products are categorized into the first category, the second category and the third category, in accordance with their purposes, methods, and risks. The first category has the lowest risks.

Profile of the joint venture company, Hubei Kyoso Pharmaceutical Co., Ltd.

Profile of Jointown