First China Pharmaceutical Group, Inc. (OTCBB:FCPG) is a company engaged in developing a high growth pharmaceutical distribution organization to generate significant revenue from the sale of healthcare products in China. With offices in the People's Republic of China and Wanchai, Hong Kong, First China is already well-established in the region as it previously purchased the assets Kun Ming Xin Yuan Tang Pharmacies Co. Ltd (“XYT”) and currently has a large footprint as a result of its position as a provider of approximately 5,000 drugs to nearly 5,000 hospitals, pharmacies and medical clinics in China’s Yunnan Province.
First China is looking to continue expansion to capitalize on an initiative of China’s Ministry of Health that was put forth in 2009 where hospitals have been encouraged to centralize their procurement and distribution of drug and pharmacare products by the year 2012. With supply agreements intact with Yunnan No. 1 Peoples Hospital as well as the Kunming Yanan and Lin Cang Peoples Hospitals, First China is well positioned to launch itself as a premier provider in China.
As a result of signing contracts with hospitals of the magnitude as the one’s mentioned, it was only seven days later that First China announced an immediate 6% jump in inventory of new drug varieties which represents over 300 new products available for priority distribution. Growing even faster than anticipated, First China expanded warehousing by nearly 1000 square meters of floor space and hired 29 new employees.
As a complement to the Company’s organic growth, First China possesses something that no other company in the province does; it is the only company to be fully licensed to fulfill pharmaceutical orders over the internet. Given today’s technologies, this gives First China a considerable competitive advantage over its counterparts and increases revenue potentials through not only sheer volume, but also increases margins as it is estimated that 80 to 90 percent of all customers will be able to have their pharmaceutical needs filled directly through First China.
Today, after nearly five months of negotiations, First China announced that it has signed a Letter of Intent, which outlines the plans for the acquisition of 100% of the interests of De Xin Pharmacy ("De Xin") located in Kunming City, the capital of Yunnan Province, China. With this acquisition, combined with the reach of XYT, First China will be a major presence in the Yunnan Province and its nearly 50 million citizens.
Di Xin has been in business in the area for nearly twenty years which, over the years has been redeveloped into an upscale, 535,000 square meter Golden Resources Shopping Mall in the heart of Kunming City. Upon completion of the acquisition after all customary provisions are met, First China will oversee design changes to both the store's layout and promotional materials in order to launch a public awareness campaign positioning First China as a major warehouse distributor launching a new discount retail flagship offering public access to wide varieties of medicines, health products, medical instruments and daily necessities including personal grooming, cosmetics, and food products available at high volume pricing. The acquisition is slated to be completed before the end of the year.
With the National Healthcare Reform in China is full swing, First China is forging a course to success as they are not passing on opportunities to substantially grow the Company and catapult themselves to the top of the pharmaceutical chain. Although the trading history of FCPG has been brief, the low for the stock is $.80. Currently trading at $.92, we are looking to First China with interest as with its determined actions and business strategy; it might not fall to that level again.
