TAIHUA PLC

("Taihua" or "the Company")

TRADING UPDATE

Taihua plc a China-based pharmaceutical company which manufactures Paclitaxel, Homoharringtonine and Traditional Chinese Medicines ("TCM") would like to update its shareholders on its progress in 2009 before the release of its financial results for the 12 months ended 31 December 2009.

Overview

As disclosed in the AGM Statement of 24 July 2009 and the 2009 interim results of the Company, the first half of 2009 was very difficult for the business of Taihua. Impacted by the global financial crisis and foreign exchange rate fluctuations, the sales volume of Paclitaxel and Homoharringtonine, the Company's principal products, had decreased when compared to the same period in 2008.

The Company's customers' demands increased in the second half of 2009 compared to the first half of 2009 (Paclitaxel sales in H1: 4750 grams; Pacliataxel sales in H2: 6805 grams (an increase of 43.26%) and homoharringtonine sales in H1: 1620 grams and homoharringtonine sales in H2: 3570 grams (an increase of 120%)). However, the increase was not sufficient to arrest the decline in year end profits compared with the previous year.

Therefore, although the trading performance of the Company has improved in the second half of 2009, the sales volume of Paclitaxel and homoharringtonine in 2009, as affected by the poor performance in the first half of 2009, was still lower than that in 2008.  

Paclitaxel and Homoharringtonine

The prices of Paclitaxel and Homoharringtonine remained unchanged in the second half of 2009.

During 2009, the Company sold 11,555 grams of Paclitaxel, a decrease of 31% compared to 2008, and 5,190 grams of Homoharringtonine, a decrease of 43% compared to 2008.

TCM products

The Company has not fully recovered from the adverse influence of the suspension of TCM production in 2008. As a result, the sales revenue of TCM products in 2009  decreased by 9% compared to 2008.

Outlook

The Company is now concentrating on further discussions with potential European distributors and expects to conclude the negotiations with potential European distributors in March 2010.  

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