Liaoning Chengda Co., Ltd. (hereinafter “Liaoning Chengda”), ITOCHU (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”), and Alfresa Holdings Corporation (hereinafter “Alfresa”) concluded a basic agreement for comprehensive business ties (hereinafter “the Agreement”). Under the Agreement, the three companies will set up a promotion committee and will consider specific ideas, such as forming a capital alliance and exchanging personnel.

1. Focus of the Agreement

1. Retail area
   ITOCHU and Alfresa will support and give advice to CDFY Pharmacy Chain Investment Co., Ltd. (hereinafter “CDFY”), a pharmacy chain and drug distribution subsidiary of Liaoning Chengda, for the advancement of its pharmacy operation and logistics. The two companies also aim to support strengthening CDFY by enhancing the supply of products, especially Japanese products through REMEJE PHARMACEUTICALS (CHINA) CO., LTD (hereinafter “REMEJE”), a joint venture of ITOCHU and Alfresa. CDFY is operating one of the largest pharmacy chain in China, with 780 pharmacy stores, and is aiming to expand their stores to become a No.1 pharmacy chain in China in the near future.
2. Distribution and wholesale
   Basing on the pharmacy chain and drug wholesale and logistics business of CDFY, the three companies will consider creating and developing new business, by establishing intermediate drug distribution as a social infrastructure.
3. Other
   Paying attention to the new healthcare reform (*1) that the Chinese government is carrying out; the three companies will jointly study and discuss about the possibility of creating new business opportunities, primarily in the medicine and healthcare area.

2. Background of the Agreement

The three companies agreed on establishing comprehensive business ties to contribute to improving healthcare in China with the strengths and experience of each company. Liaoning Chengda is a conglomerate including CDFY, the largest pharmacy chain in the northeastern part of China, as a subsidiary. CDFY became the first pharmacy chain to be certified as “Chimei-Sho-hyo” (National Brand)(*2) by the Chinese government in October last year. It has received high acclaim as a reliable and renowned corporate brand in China, operating pharmacy chain business and drug wholesale and logistics business. ITOCHU considers the Consumer-Related Sector as one of the major source of revenues with a focus on Asia, especially China. Through comprehensive business ties, ITOCHU will introduce Japanese products with high added value with security and safety, especially in drugs and healthcare products. Alfresa has established efficient and high value-added drug distribution with traceability in Japan. The company will aim to develop drug distribution business in China by using its experience and expertise.

1. Public health awareness is changing with high economic growth and improving living standards in China, and in a few years, the Chinese drug market is expected to surpass the Japanese market to become the second largest in the world, after the U.S. market. Under these circumstances, the Chinese government is implementing the “new healthcare reforms from 2009 to 2011”, aiming to introduce a universal health insurance system, enhance the separation of dispensary from medical practice, and to urgently develop social infrastructure for an accurate, secure, and safe drug distribution system.
2. “Chimei-Sho-hyo” (National Brand)
   Certification given by the State Administration for Industry & Commerce of the People’s Republic of China that a brand is nationally known, beneficial to society, and reliable.

3. Outline of relevant companies

Liaoning Chengda Co., Ltd.

CDFY Pharmacy Chain Investment Co., Ltd.

Alfresa Holdings Corporation

REMEJE PHARMACEUTICALS (CHINA) CO., LTD.