THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in 麗珠醫藥集團股份有限公司 Livzon Pharmaceutical Group Inc.* , you should at once hand this circular together with the proxy form to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

**麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]**

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock code: 1513)

(I) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS (II) PROPOSED PROVISION OF FINANCING GUARANTEES BY THE COMPANY FOR ITS WHOLLY-OWNED SUBSIDIARY

AND

(III) PROPOSED APPOINTMENT OF DIRECTOR OF THE COMPANY

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

TC Capital

A letter from the Board is set out from pages 4 to 14 of this circular. A letter from the Independent Board Committee containing its advice to the Independent Shareholders in connection with the transactions contemplated under the New Joincare Purchases Agreement is set out on page 15 of this circular. A letter from TC Capital , the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, containing its advice to the Independent Board Committee and the Independent Shareholders in connection with the transactions contemplated under the New Joincare Purchases Agreement is set out from pages 16 to 29 of this circular.

The notice convening the EGM to be held at the Conference Room on the 2nd Floor of Livzon Building, 132 Guihua North Road, Gongbei, Zhuhai, Guangdong Province, China at 2 p.m. on Friday, 24 October 2014 was given by the Company on 8 September 2014. The accompanying reply slip for attendance and proxy form for the EGM, which were also despatched by the Company on 8 September 2014, are also available at the website of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and the website of the Company ( www.livzon.com.cn). If you would like to attend the EGM in person or by proxy, please complete the reply slip in accordance with the instructions printed thereon and return it to the H Share Registrar of the Company, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong in person, by post or by fax in any event on or before Saturday, 4 October 2014 . If you would like to attend the EGM by proxy, please complete the proxy form in accordance with the instructions printed thereon and return it to the H Share Registrar of the Company, Tricor Investor Services Limited as soon as possible and in any event no later than 24 hours before the holding of the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournment thereof in person if you so wish.

7 October 2014

For identification purpose only

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
I.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
II.	Revision of annual caps for continuing connected transactions . . . . . . . . . . . . .	5
III.	Proposed provision of financing guarantees by the Company for
	its wholly-owned subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
IV.	Proposed appointment of Director of the Company . . . . . . . . . . . . . . . . . . . . . .	13
V.	EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
VI.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
VII.	Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		15
Letter from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		16
Appendix	– General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30

– i –

DEFINITIONS

In this circular, the following terms shall have the meanings set out below unless the context requires otherwise:

“Announcement”

the announcement of the Company dated 5 September 2014 in relation to the New Joincare Purchases Agreement and the transactions contemplated thereunder

“associate(s)”

has the meaning ascribed to it under the Listing Rules

“Board”

the board of Directors

“Company”

麗珠醫藥集團股份有限公司 Livzon Pharmaceutical Group Inc.*, a joint stock company incorporated in the PRC with limited liability and listed on the Shenzhen Stock Exchange and the Stock Exchange

“connected person(s)”

has the meaning ascribed to it under the Listing Rules

“Director(s)”
the director(s) of the Company
“EGM”

the first extraordinary general meeting for the year 2014 of the Company to be held and, if thought fit, approve the New Joincare Purchases Agreement and the transactions contemplated thereunder, the proposed provision of financing guarantees by the Company to its wholly-owned subsidiary and the proposed appointment of Director of the Company

“Group”

the Company and its subsidiaries collectively

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee”

the independent board committee of the Company formed to consider the New Joincare Purchases Agreement and the transactions contemplated thereunder

– 1 –

DEFINITIONS

“Independent Financial Adviser” or “ TC Capital ”
“Independent Third Party(ies)”
“Independent Shareholders”
“Joincare”
“Joincare Group”
“Latest Practicable Date”
“Listing Rules”
“New Joincare Purchases Agreement”
TC Capital Asia Limited, a corporation licensed to carry on type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the New Joincare Purchases Agreement , the transactions and the proposed annual caps contemplated thereunder
a person or persons or a company or companies that is not or are not the connected person(s) of the Group
Shareholders other than Joincare, Shenzhen Haibin Pharmaceutical Co., Ltd., Topsino Industries Limited and their respective associates
健康元藥業集團股份有限公司(Joincare Pharmaceutical Industry Group Co., Ltd.*) (Shanghai Stock Exchange stock code: 600380), a joint stock company incorporated in the PRC and listed on the Shanghai Stock Exchange in 2001 and one of the Company’s controlling Shareholders
Joincare and its subsidiaries (other than the Group)
30 September 2014, being the latest practicable date prior to the printing of this circular for ascertaining certain information herein

the Rules Governing the Listing of Securities on the Stock Exchange, as the same may be amended and supplemented or otherwise modified from time to time

the framework agreement entered into between the Company and Joincare on 5 September 2014 in respect of the purchase by the Group of certain products and raw materials which are mainly used for the production of antibiotics related products from the Joincare Group

– 2 –

DEFINITIONS

“PRC”	the People’s Republic of China (for the purpose of this
	circular only, excluding Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan)
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Shanghai Stock Exchange”	上海證券交易所(the Shanghai Stock Exchange)
“Shareholder(s)”	holder(s) of the share (s) of the Company
“Shenzhen Stock Exchange”	深圳證券交易所(the Shenzhen Stock Exchange)
“Shenzhen Listing Rules”	《深圳證券交易所股票上市規則》(the Stock Listing Rules
	of the Shenzhen Stock Exchange)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“USD”	United States dollars, the lawful currency of the United
	States
“%”	per cent

For the purpose of this circular, all amounts denominated in RMB have been translated (for information only) into USD using the exchange rate of USD 1.00: RMB6.16. No representation is made that any amounts in RMB or USD can be or could have been converted at the relevant dates at the above rate or any other rates at all.

If there is any inconsistency between the Chinese names of the PRC entities mentioned in this circular and their English translations, the Chinese names shall prevail.

For identification purpose only

– 3 –

LETTER FROM THE BOARD

**麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]**

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock code: 1513)

Executive Directors:

Mr. Tao Desheng (Vice Chairman and President) Mr. Fu Daotian (Vice President)

Non-executive Directors: Mr. Zhu Baoguo (Chairman) Mr. Qiu Qingfeng Mr. Zhong Shan

Independent non-executive Directors:

Mr. Xu Yanjun Mr. Yang Bin Mr. Guo Guoqing Mr. Wang Xiaojun Mr. Yu Xiong

Registered office: Administration and Research Building, 38 Chuangye North Road, Shuang Linpian Area, Liangang Industrial Zone, Hongqi Town, Jinwan District, Zhuhai, Guangdong Province, China Principal place of business in Hong Kong: Flat 02, 17/F, Bayfield Building, 99-101 Hennessy Road, Wanchai, Hong Kong

7 October 2014

To the Shareholders

Dear Sir or Madam,

(I) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

(II) PROPOSED PROVISION OF FINANCING GUARANTEES BY THE COMPANY FOR ITS WHOLLY-OWNED SUBSIDIARY AND

(III) PROPOSED APPOINTMENT OF DIRECTOR OF THE COMPANY

I. INTRODUCTION

Reference is made to the Announcement regarding the New Joincare Purchases Agreement and the transactions contemplated thereunder. We also refer to the announcement on 26 August 2014 regarding the proposed appointment of Mr. Yang Daihong (“ Mr. Yang ”) as an Executive Director .

For identification purpose only

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, amongst others, (i) further details of the New Joincare Purchases Agreement and the transactions contemplated thereunder; (ii) a letter of advice from the Independent Board Committee to the Independent Shareholders in relation to the New Joincare Purchases Agreement; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the New Joincare Purchases Agreement , the transactions and the proposed annual caps contemplated thereunder; (iv) information on the proposed appointment of Mr. Yang as an executive Director; and (v) information on the proposed provision of financing guarantees by the Company for its whollyowned subsidiary.

II. REVISION OF ANN UAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

On 10 January 2014, the Company and Joincare entered into an agreement, pursuant to which the Joincare Group shall sell certain products and raw materials which are mainly used for the production of antibiotics related drug preparation products to some members of the Group from time to time in accordance with the terms thereof for a period commencing from the listing date of the Company on the Stock Exchange and ending on 31 December 2015 (the “ Existing Joincare Purchases Agreement ”). The Company was listed on the Main Board of the Stock Exchange on 16 January 2014.

As the market demand for the Group’s antibiotics related products exceeds the original projections, the aggregate amounts of the products and raw materials to be procured from the Joincare Group for the year ending 31 December 2014 is expected to exceed the original annual cap. With the continuous business development of the Group, the Group will further develop and manufacture various antibiotics related products and new products from time to time. In view of the above, the Company and Joincare entered into the New Joincare Purchases Agreement on 5 September 2014 to revise the existing annual caps for the two years ending 31 December 2014 and 2015 and to obtain the annual cap for the year ending 31 December 2016 in order to comply with Rule 14A.54 of the Listing Rules.

– 5 –

LETTER FROM THE BOARD

THE NEW JOINCARE PURCHASES AGREEMENT

Parties

Purchaser: The Company Seller: Joincare

The New Joincare Purchases Agreement comprises the general terms and conditions upon which the relevant members of the Group may purchase products and raw materials from the relevant members of the Joincare Group. The relevant members of the Group may from time to time place purchase orders with the relevant members of the Joincare Group setting out the detailed terms for the purchase of products and raw materials, provided that such detailed terms shall not be inconsistent with the terms of the New Joincare Purchases Agreement. The products and raw materials which are mainly used for the production of antibiotics related drug preparation products refer to, amongst others, voriconazole itraconazole（伏立康唑）, 7-ACA, D7-ACA, OXAT（氟氧頭孢母核）, acetonitrile（乙睛）, 100ml moulded bottles and rubber plugs, etc. The actual quantity, types and prices of the products and raw materials to be sold to the relevant members of the Group shall be subject to the individual purchase order placed by the relevant members of the Group with the relevant members of the Joincare Group from time to time.

The prices at which the products and raw materials are to be sold by the relevant members of the Joincare Group to the relevant members of the Group shall be ( a) indicative prices (if any) prescribed by the national price administrative department; ( b) where ( a) is not available, the comparable market prices based on quotation(s) obtained from other third party suppliers; or ( c) where ( a) and ( b) are not available, the prices are to be agreed between the parties but, together with the other terms, subject to being not less favourable to the Group than the prices and terms offered by Joincare Group to third parties for similar transactions.

REASONS FOR ENTERING INTO THE NEW JOINCARE PURCHASES AGREEMENT

The Company is a PRC based pharmaceutical company which is principally engaged in the research and development, production and sales of pharmaceutical products.

Members of the Group have commenced purchasing the products and raw materials which are mainly used for the production of antibiotics related drug preparation products from members of the Joincare Group since the year ended 31 December 2007 and no material issue on the quality of the products and raw materials from members of the Joincare Group was noted. The Group has been continuously expanding its business and anticipates that more raw materials for the manufacture of the Group’s products will be required for the Group’s future business growth. Taking into account factors such as the quality and price of raw materials supplied by the relevant members of the Joincare Group and the reputation of Joincare, the Group considers that the purchase of raw materials under the New Joincare Purchases Agreement is necessary to facilitate the Group’s business development plan and will improve the competitiveness, quality and price of the Group’s products.

– 6 –

LETTER FROM THE BOARD

The Directors (including the independent non-executive Directors) are of the view that the New Joincare Purchases Agreement has been entered into on normal commercial terms, in the ordinary and usual course of business of the Group and that the terms thereof are fair and reasonable and in the interests of the Shareholders as a whole.

ANNUAL CAPS CONTEMPLATED UNDER THE NEW JOINCARE PURCHASES AGREEMENT

The annual caps under the Existing Joincare Purchases Agreement were RMB156.00 million and RMB187.20 million for the two years ending 31 December 2014 and 2015 respectively. For each of the three years ended 31 December 2011, 2012 and 2013 and the seven months ended 31 July 2014, the total amount paid to the Joincare Group in relation to the purchase of products and raw materials from the Joincare Group amounted to approximately RMB86.47 million, RMB84.63 million, RMB 149.05 million and RMB 153.62 million respectively, representing approximately 9.82%, 7.60%, 12.57% and 15.99% of the total purchases of the Group for the respective periods. The total amount paid to the Joincare Group under the Existing Joincare Purchases Agreement for the period from 1 January 2014 to the Latest Practicable Date did not exceed the existing annual cap for the year ending 31 December 2014.

Approximately 98.47% of the existing annual cap for the year ending 31 December 2014 has been utilised up to the seven months ended 31 July 2014. In order to ensure that such annual cap will not be exceeded, the Group has temporarily suspended purchasing the products and raw materials from the Joincare Group since August 2014. Moreover, the relevant production base for antibiotics related drug preparation products (a) has suspended its operations for regular annual checks; and (b) has produced other products (the raw materials of which were not sourced from the Joincare Group) since August 2014. Given the abovementioned measures, the existing annual cap for the year ending 31 December 2014 will not be breached before the approval from the Independent Shareholders is obtained at the EGM.

If the relevant resolution to approve the transactions contemplated under the New Joincare Purchases Agreement is not approved by the Independent Shareholders at the EGM, the Group will be unable to purchase any voriconazole itraconazole (伏立康唑) from the Joincare Group until 31 December 2014 in light that the Joincare Group is the sole supplier of such raw material in the market. The Group will consider purchasing 7-ACA and D7-ACA from other suppliers in the market, but there will be uncertainties in the supply of such raw materials given the mass quantity demanded by the Group.

– 7 –

LETTER FROM THE BOARD

The Directors propose to revise the existing annual caps for the two years ending 31 December 2014 and 2015 and to obtain the annual cap for the year ending 31 December 2016 under the New Joincare Purchases Agreement. The Company estimates the total purchases under the New Joincare Purchases Agreement for each of the three years ending 31 December 2014, 2015 and 2016 will not exceed RMB 260.00 million, RMB 280.00 million and RMB 460.00 million respectively.

The proposed annual caps for each of the three years ending 31 December 2014, 2015 and 2016 have been determined with reference to (a) the historical transaction amounts between members of the Group and the Joincare Group; (b) the internal projection of the development of the Group’s business (including the Group’s potential in increasing its market share in the area of bulk medicine (including cephalosporins category （頭孢類）and intermediates); (c) the prevailing market condition and demand for the Group’s products; (d) the historical growth of the PRC pharmaceutical industry; (e) the prevailing market prices for the relevant raw materials; (f) inflation; (g) the business development plans of the Group (including the expected launch of a new product, namely Flomoxef Sodium （氟氧頭孢鈉）, in the year ending 31 December 2016); and (h) the implementation by the Company’s subsidiary Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd.（珠海保稅區麗珠合成製藥有限公司）(“ Zhuhai Hecheng ”) of its recent in-depth reform in terms of, amongst others, salary incentive and staff performance assessment, aimed at increasing the sales income of Zhuhai Hecheng .

With (a) the market consolidation in the bulk medicine (including cephalosporins category （頭孢類）) area due to the more stringent requirement on GMP certification, environment and quality issues since 1 January 2014; (b) the persistently increasing demand for raw materials in the market; and (c) the recent technical improvement measures undertaken by Zhuhai Hecheng which exerted effective cost control on the production of bulk medicine (including cephalosporins category（頭孢類）), the Group was able to enhance its competitiveness, increase its market share by taking up the market share lost by its competitors and to increase its production volume of bulk medicine (including cephalosporins category（頭孢類）) to the extent exceeding original projections.

From the publication of the 2012 Notice on Governance of Corporates Engaging in Illegal Waste Emission and Protection of Public Health and Environment（《關於2012年深入開展整治違法排污企業保障群眾健康環保專項行動的通知》）and the 2013 Notice on Governance of Corporates Engaging in Illegal Waste Emission and Protection of Public Health and Environment （《關於開展2013 年整治違法排污企業保障群眾健康環保專項行動的通知》）by the relevant PRC government authorities, the Company expects the supervision of pharmaceutical enterprises on environmental aspects will become more stringent. Therefore, the competitors of the Group who are using production methods or equipment that do not satisfy the current required standards may lose out on their supply to the market. Further, since the Directors believe that the Group is more advanced in environmental control and governance than its competitors given its prior improvement effort in the environmental aspect to ensure compliance in wastes emission, the Directors expect that the Group’s market share may increase by taking up the market share which its competitors are losing out.

– 8 –

LETTER FROM THE BOARD

The Directors first became aware of the unexpectedly high increase in market demand for the cephalosporins category（頭孢類）as abovementioned since the second quarter of this year, having noted the year-on-year increase in the volume of bulk medicine (including cephalosporins category (頭孢類)) sold by Zhuhai Hecheng having exceeded the original projections. As the relevant bulk medicine (including cephalosporins category（頭孢類）) is mainly used to treat a disease which is common in winter, the Directors expect that the demand for such bulk medicine (including cephalosporins category（頭孢類）) will be stronger during the fourth quarter of 2014.

The Directors expect that the Group will launch a new product, namely Flomoxef Sodium （氟氧頭孢鈉）, in the year ending 31 December 2016. The Group has completed its research and development of Flomoxef Sodium（氟氧頭孢鈉）products, which are one of the cephalosporins category（頭孢類）products with high product safety and efficacy. The Group intends to submit an application in the fourth quarter of 2014 to seek approval from the relevant PRC authority for production of the new product. The Group expects to commence mass purchasing of OXAT（氟氧頭孢母核）, which is a raw material of Flomoxef Sodium（氟氧頭孢鈉）, since the year ending 31 December 2016 due to the expected launch of the new product at that time.

Therefore, the Directors (including the independent non-executive Directors) consider that the proposed annual caps for the three years ending 31 December 2014, 2015 and 2016 as contemplated under the New Joincare Purchases Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

PRICING PRINCIPLES

The basis of determining the prices of the products and raw materials to be purchased by members of the Group from the Joincare Group will be based on the indicative prices (if any) prescribed by the national price administrative department . If such indicative prices are not applicable, the prices of the products and raw materials will be determined in accordance with the prevailing market prices of such products and raw materials and on the following principles:

( a) by reference to the prevailing market price of the same products and raw materials, taking into account of the price of the same products and raw materials with comparable order quantities and quality offered by other third party suppliers; and
( b) if there are not sufficient comparable transactions in ( a) above (i.e. one to two quotations from independent suppliers), on normal commercial terms comparable to those offered to Independent Third Parties by the Joincare Group in respect of the same products and raw materials with comparable quantities.

– 9 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, there was no indicative price prescribed by the national price administrative department for all products and raw materials purchased by members of the Group from the Joincare Group. Set out below are the applicable pricing principles for the major products and raw materials to be purchased by members of the Group from the Joincare Group:

Pricing principle

Product

(a) Not less favourable to comparable quotations offered by other third party suppliers
7-ACA and D7-ACA
OXAT（氟氧頭孢母核）
(b) Normal commercial terms offered to – Voriconazole itraconazole （伏立康唑）
Independent Third Parties by the Joincare Group

In determining the prevailing market price of the products and raw materials for a particular purchase order, the Group will invite one to two quotations from independent suppliers (depending on the availability of quotations obtained at the particular time) to give a reference on the prevailing market prices for the relevant products and raw materials to be procured. Given that the number of independent suppliers for the relevant major products and raw materials are less than five, the Directors are of the view that one to two quotations from independent suppliers can ensure that purchase orders represent prevailing market prices. Such quotations will be reviewed and evaluated from both the technical and commercial perspectives by qualified personnel of the Group to ensure that the products and raw materials to be procured from the Joincare Group are comparable to the prices for such products and raw materials being offered by Independent Third Parties. The personnel of the Group will also review other applicable terms of the quotations from independent suppliers (including but not limited to product quality assurance, payment terms and terms on delivery timing) in order to ascertain whether the terms of the individual purchase order are on normal commercial terms.

To further ensure that the actual prices of the products and raw materials to be purchased by members of the Group from the Joincare Group are on normal commercial terms as stated above and on terms no less favourable to the Group than that available from Independent Third Party suppliers, the Group will conduct regular checks to review and assess whether the products and raw materials have been purchased in accordance with the terms of the New Joincare Purchases Agreement. Such checks will be conducted by the financial controller of the Group on a monthly basis and the secretary of the Board on a quarterly basis. In addition, the Company will engage the auditors of the Company to conduct an annual review of the transactions contemplated under the New Joincare Purchases Agreement.

The pricing principles above are in line with the historical principles adopted in the three years ended 31 December 2013.

– 10 –

LETTER FROM THE BOARD

INFORMATION ON THE JOINCARE GROUP

Joincare is a joint stock company incorporated in the PRC and was listed on the Shanghai Stock Exchange in 2001. It is principally engaged in three major business segments, namely (a) the production and sales of drug preparation products; (b) the production and sales of bulk medicines and intermediates; and (c) the research, production and sales of healthcare products. Mr. Zhu Baoguo, the chairman of the Company and a non-executive Director, is also the chairman and a director of Joincare as well as the ultimate beneficial owner of Joincare. Mr. Qiu Qingfeng, a nonexecutive Director, is also a director, general manager and the secretary to the board of directors of Joincare. Mr. Zhong Shan, a non-executive Director, is also a vice general manager of Joincare.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, Joincare directly and indirectly owned 89,462,538 A shares of the Company and 50,660,052 H shares of the Company, representing in aggregate approximately 47.38 % of the total issued share capital of the Company and therefore Joincare is a controlling Shareholder of the Company. Accordingly, Joincare and its associates are connected persons of the Company and the transactions contemplated under the New Joincare Purchases Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules. Mr. Zhu Baoguo, Mr. Qiu Qingfeng and Mr. Zhong Shan have abstained from voting in the meeting of the Board in which the New Joincare Purchases Agreement and the transactions contemplated thereunder were approved.

Given that certain applicable percentage ratios for the revised annual caps contemplated under the New Joincare Purchases Agreement exceed 5%, the transactions contemplated under the New Joincare Purchases Agreement are therefore subject to the reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

An Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Xu Yanjun, Mr. Yang Bin, Mr. Guo Guoqing, Mr. Wang Xiaojun and Mr. Yu Xiong, has been established to advise the Independent Shareholders on the terms of the New Joincare Purchases Agreement (including the annual caps) and the transactions contemplated thereunder. TC Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

– 11 –

LETTER FROM THE BOARD

III. PROPOSED PROVISION OF FINANCING GUARANTEES BY THE COMPANY FOR ITS WHOLLY-OWNED SUBSIDIARY

The Company intends to provide one-year joint liability guarantee for the application by its wholly-owned subsidiary, 麗珠集團麗珠製藥廠 Livzon Group Livzon Pharmaceutical Factory (“ Pharmaceutical Factory ”), to Australia and New Zealand Banking Group Limited Singapore Branch for credit facility of USD35,000,000 (approximately equal to RMB215,600,000) or its equivalent in other currency.

Pharmaceutical Factory , a wholly -owned subsidiary of the Company, is the major production base for the Company’s western drug preparation products . The major products it produced include Bismuth Potassium Citrate Granules（麗珠得樂）, Ilaprazole Enteric Coated Tablet（艾普拉唑腸溶片）, Urofollitropin for Injection（注射用尿促卵泡素）, Cefodizime Sodium for injection （注射用頭孢地嗪鈉）, voriconazole itraconazole for injection（注射用伏立康唑）, mouse nerve growth factor for injection（注射用鼠神經生長因子）, etc. The guarantee is provided to satisfy Pharmaceutical Factory’s working capital requirements . Accordingly, the Board considers that the provision of such guarantee is in the interests of the Company and the Shareholders as a whole.

Pursuant to the requirements of Rule 9.11 of the Shenzh en Listing Rules, the provision of such guarantee shall be proposed at the EGM for consideration after being considered and approved by the Board, and shall be subject to the approval by shareholders attending the meeting with more than two-thirds of the votes cast for the resolution.

Pursuant to the requirements of Article 65, 104 and 106 of the Articles of Association of the Company, the provision of such guarantee shall be passed by way of special resolution at the general meeting, and a special resolution shall be subject to the approval by shareholders (including proxy of shareholder) attending the general meeting with more than two-thirds of the votes cast for the resolution.

The abovementioned guarantee does not constitute a transaction under Rules 14.04(1) or 14A.24 of the Listing Rules and is not subject to any reporting, announcement, circular or shareholders’ approval requirements under the Listing Rules.

According to the relevant provisions in the Shenzh en Listing Rules and the Articles of Association of the Company, the abovementioned guarantee shall be effective upon approval by the shareholders of the Company by a special resolution. The abovementioned guarantee is based on the funds demands for the operation and development of Pharmaceutical Factory. As such, the Company proposes that the EGM approve the above guarantee, and authorise the Board and other authorised persons of the Board to negotiate with the relevant banks on the details of the guarantee within the limits and periods thereof, and to sign all relevant documents as required.

– 12 –

LETTER FROM THE BOARD

IV. PROPOSED APPOINTMENT OF DIRECTOR OF THE COMPANY

Reference is made to the announcement on 26 August 2014 relating to the proposed appointment of Mr. Yang as an Executive Director of the Company .

Mr. Yang Daihong（楊代宏先生）, aged 48, is currently the Vice President of the Group, a pharmaceutical engineer and a licenced pharmacist. From 2000 to 2002, he attended a course in enterprise management organised by Business College in Sun Yat-Sen University（中山大學）. Mr. Yang obtained qualifications as a pharmaceutical engineer and a licenced pharmacist. From 1999 to 2009, he was the deputy factory manager and factory manager of Livzon Group Livzon Pharmaceutical Factory （麗珠集團麗珠製藥廠）and has been the Vice President of the Group from May 2006 to present.

Mr. Yang does not have any relationships with any Directors, supervisors, senior management, substantial shareholders or controlling Shareholders of the Company. He also does not have any interest in the shares or underlying shares of the Company within the meaning of Part XV of the SFO.

Mr. Yang will be entitled to an annual director fee of RMB72,000, an annual salary of RMB550,000 plus discretionary bonus during his tenure. The remuneration of Mr. Yang is determined by reference to his duties and responsibilities within the Company, the Company’s remuneration policy and the market salary range for the position. The term of Mr. Yang as an Executive Director will commence on the date when the shareholders approve his appointment at the EGM and end upon the expiry of the term of the eighth session of the Board. The Company will enter into a service agreement with Mr. Yang upon the approval of his appointment at the EGM.

Save as disclosed above, there is no information that need to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules nor are there other matters related to the proposed appointment of Mr. Yang that need to be brought to the attention of the shareholders of the Company.

V. EGM

– 13 –

LETTER FROM THE BOARD

If you would like to attend the EGM in person or by proxy, please complete the reply slip in accordance with the instructions printed thereon and return it to the H Share Registrar of the Company, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong in person, by post or by fax in any event on or before Saturday, 4 October 2014 . If you would like to attend the EGM by proxy, please complete the proxy form in accordance with the instructions printed thereon and return it to the H Share Registrar of the Company, Tricor Investor Services Limited as soon as possible and in any event no later than 24 hours before the holding of the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournment thereof in person if you so wish.

VI. RECOMMENDATION

The Independent Board Committee and the Board, having taken into account the advice of the Independent Financial Adviser, consider that the terms of the New Joincare Purchases Agreement (including the annual caps) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and that the transactions contemplated under the New Joincare Purchases Agreement are in the interests of the Company and the Shareholders as a whole. In addition, the New Joincare Purchases Agreement was entered into by the Group in its ordinary and usual course of business. Accordingly, the Independent Board Committee and the Board recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM.

VII. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendix to this circular.

By order of the Board 麗珠醫藥集團股份有限公司 Livzon Pharmaceutical Group Inc.* Yang Liang Company Secretary

For identification purpose only

– 14 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

**麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]**

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock code: 1513)

7 October 2014

To the Independent Shareholders

Dear Sir or Madam,

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

We refer to the circular dated 7 October 2014 issued by the Company (the “ Circular ”), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

We have been appointed to advise the Independent Shareholders in connection with the terms of the New Joincare Purchases Agreement (including the annual caps) and the transactions contemplated thereunder. TC Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

After taking into account the advice of the Independent Financial Adviser as set out from pages 16 to 29 of the Circular, we are of the view that the terms of the New Joincare Purchases Agreement (including the annual caps) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and that the transactions contemplated under the New Joincare Purchases Agreement are in the interests of the Company and the Shareholders as a whole. In addition, the New Joincare Purchases Agreement was entered into by the Group in its ordinary and usual course of business.

Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the New Joincare Purchases Agreement and the transactions contemplated thereunder.

Yours faithfully,

Independent Board Committee

Mr. Xu Yanjun Mr. Yang Bin Mr. Guo Guoqing Mr. Wang Xiaojun Mr. Yu Xiong Independent non-executive Directors

For identification purpose only

– 15 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter received from TC Capital , the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the New Joincare Purchases Agreement and the transactions contemplated thereunder for the purpose of inclusion in this circular.

TC Capital Asia Limited

7 October 2014

The Independent Board Committee and the Independent Shareholders Livzon Pharmaceutical Group Inc.*

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the New Joincare Purchases Agreement and the transactions contemplated thereunder, whereby the Joincare Group shall sell certain products and raw materials to the Group in order to satisfy its production needs of antibiotics related drug preparation products. Details of the terms of the continuing connected transactions and the annual caps for the three years ending 31 December 2014, 2015 and 2016 are set out in the Letter from the Board (the “ Board Letter ”) contained in the circular of Livzon Pharmaceutical Group Inc. (the “ Company ”) dated 7 October 2014 issued to the Shareholders (the “ Circular* ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular, unless otherwise specified.

Since Joincare directly and indirectly holds an approximately 47.38% equity interest in the Company, Joincare is a controlling Shareholder. Accordingly, Joincare and its associates are connected persons of the Company and the transactions contemplated under the New Joincare Purchases Agreement constitute continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

Based on the applicable percentage ratios for the revised annual caps under the New Joincare Purchases Agreement which exceed 5%, the transactions contemplated under the New Joincare Purchases Agreement constitute non-exempt continuing connected transactions of the Company that are subject to the reporting, annual review, announcement and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

for identification purpose only

– 16 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In view of the interests of Joincare in the Company, Joincare, Shenzhen Haibin Pharmaceutical Co., Ltd., Topsino Industries Limited and their respective associates will abstain from voting in relation to the resolution(s) to approve the transactions contemplated under the New Joincare Purchases Agreement. In additions, Mr. Zhu Baoguo, Mr. Qiu Qingfeng and Mr. Zhong Shan have abstained from voting in the meeting of the Board in which the New Joincare Purchases Agreement and the transactions contemplated thereunder were approved.

The Independent Board Committee, comprising Mr. Xu Yanjun, Mr. Yang Bin, Mr. Guo Guoqing, Mr. Wang Xiaojun and Mr. Yu Xiong (all being the independent non-executive Directors), has been established to advise the Independent Shareholders as regards the fairness and reasonableness of the terms of the New Joincare Purchases Agreement (including the revised annual caps) and the transactions contemplated thereunder, and to make a recommendation to the Independent Shareholders in respect thereof.

We have been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders on whether (i) the terms and annual caps of New Joincare Purchases Agreement are on normal commercial terms, in the ordinary and usual course of business of the Company, fair and reasonable insofar as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole; and (ii) whether the Independent Shareholders should vote in favor of the New Joincare Purchases Agreement and the transactions contemplated thereunder.

BASIS OF OPINION

In putting forth our recommendation, we have considered, among other things, the New Joincare Purchases Agreement and other information as set out in the Circular. We have also relied on all relevant information, opinions and facts supplied and representations made to us by the Directors and the representatives of the Company.

We have assumed that all such information, opinions, facts and representations, which have been provided to us by the Directors or the representatives of the Company, for which they are fully responsible, are true, accurate and complete in all respects. The Company has also confirmed to us that no material facts have been omitted from the information supplied and we have no reason to suspect that any material information has been withheld by the Company or is misleading.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out independent verification of the information provided by the Directors and the representatives of the Company, nor have we conducted any form of in-depth investigation into the businesses, affairs, operations, financial position or future prospects of each of the Group, Joincare Group and any of their respective subsidiaries and associates.

– 17 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering whether the terms and the entering into of the New Joincare Purchases Agreement including the revised annual caps are on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable insofar as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole, we have taken into account the following principal factors and reasons:

I. Background of and reasons for entering into of the New Joincare Purchases Agreement

Background of the New Joincare Purchases Agreement

The Company is a PRC based pharmaceutical company which is principally engaged in the research and development, production and sales of pharmaceutical products.

Joincare is a joint stock company incorporated in the PRC and was listed on the Shanghai Stock Exchange in 2001. It is principally engaged in three major business segments, namely (a) the production and sales of drug preparation products; (b) the production and sales of bulk medicines and intermediates; and (c) the research, production and sales of healthcare products. After listing, Joincare has become a large and powerful private pharmaceutical group from a well-known healthcare enterprise. Joincare established its leading position in the healthcare industry with one of its wellknown products, the “Taitai Oral Liquid”.

As disclosed in the Board Letter, members of the Group have commenced purchasing the products and raw materials which are mainly used for the production of antibiotics related drug preparation products from members of the Joincare Group since the year ended 31 December 2007 . The management of the Company has represented to us that no material issue on the quality of the products and raw materials from members of the Joincare Group was noted.

Before the listing of the Company on the Main Board of the Stock Exchange on 16 January 2014, on 10 January 2014, the Company and Joincare entered into the Existing Joincare Purchases Agreement, pursuant to which the Joincare Group shall sell certain products and raw materials which are mainly used for the production of antibiotics related drug preparation products to the Group from time to time in accordance with the terms thereof for a period commencing from the listing date of the Company on the Stock Exchange and ending on 31 December 2015.

– 18 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Reasons for entering into of the New Joincare Purchases Agreement

As disclosed in the Board Letter, as the market demand for the Group’s antibiotics related products exceeds the original projection, the aggregate amounts of the products and raw materials to be procured from the Joincare Group for the year ending 31 December 2014 are expected to exceed the original annual caps. For the six months ended 30 June 2014, the Group’s unaudited revenue from antibiotics amounted to RMB168.02 million, representing an increase of RMB34.60 million or 25.94% when compared to the same period of 2013. For the seven months ended 31 July 2014, the aggregate amounts of products and raw materials procured from the Joincare Group amounted to approximately RMB153.62 million, representing 98.47% of the existing annual cap for the year ending 31 December 2014. Accordingly, raw materials to be procured from the Joincare Group for the year ending 31 December 2014 are expected to exceed the existing annual caps.

As advised by the Company, the Group expects to expand its production and market share in the area of antibiotics, in particular voriconazole itraconazole, and bulk medicines, and particular the cephalosporins category, for the three years ending 31 December 2016, in response to their increasing market demand and prospects. With the continuous business development of the Group, the Group anticipates that more products and raw materials for the manufacture of the said products, of which the Company is procuring from Joincare Group under the Existing Joincare Purchases Agreement currently, will be required for the Group’s future business growth.

Taking into account factors such as the quality and price of products and raw materials supplied by the relevant members of the Joincare Group and the reputation of Joincare, the Group considers that the purchase of products and raw materials under the New Joincare Purchases Agreement is necessary to facilitate the Group’s business development plan and will improve the competitiveness, quality and price of the Group’s products.

Accordingly, under the New Joincare Purchases Agreement, the annual caps for the years ending 31 December 2014 and 2015 are being revised and a new annual cap for the year ending 31 December 2016 is being proposed.

Having considered (i) the increasing market demand for the Group’s antibiotics related products; (ii) the continuous business development of the Group; (iii) the longestablished relationship between the Group and Joincare Group; (iv) the quality of raw materials supplied by the relevant members of the Joincare Group and the reputation of Joincare Group; (v) revised annual caps which will enable the Group to capture the anticipated increase in demand of antibiotics related products and bulk medicine and revenue of the Group; and (vi) the existing annual caps which are unlikely to satisfy the Group’s expected business needs, we concur with the Directors’ view that the

– 19 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

entering into of the New Joincare Purchases Agreement is in the ordinary and usual course of the business of the Group, and is in the interests of the Company and the Shareholders as a whole.

II. Principal terms of the New Joincare Purchases Agreement

The key terms of the New Joincare Purchases Agreement are summarized below:

Date : 5 September 2014 Parties : the Company (on behalf of the Group as purchaser); and

Joincare (on behalf of Joincare Group as seller).

Subject matter : Revision of the existing annual caps for the supply of certain products and raw materials by Joincare Group to the Group under the Existing Joincare Purchases Agreement for the two years ending 31 December 2014 and 2015 to RMB260.0 million and RMB280.0 million, respectively and obtain the annual cap of RMB460.0 million for the year ending 31 December 2016.
Term : Subject to approval by the Board and Independent Shareholders at the general meeting, the agreement shall be effective from the date of signing the agreement by contracting parties to 31 December 2016.

Pricing principles : The basis of determining the prices of the products and raw materials to be purchased by members of the Group from the Joincare Group will be based on the indicative prices (if any) prescribed by the national price administrative departments . If such indicative prices are not applicable, the prices of the products and raw materials will be determined in accordance with the prevailing market prices of such products and raw materials and on the following principles:

(a) by reference to the prevailing market price of the same products and raw materials, taking into account of the price of the same products and raw materials with comparable order quantities and quality offered by other third party suppliers; and

– 20 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) if there are not sufficient comparable transactions in ( a) above, on normal commercial terms comparable to those offered to Independent Third Parties by the Joincare Group in respect of the same products and raw materials with comparable quantities.
Implementation : The Group may, from time to time, enter into separate agreement implementation agreements for each specific transaction contemplated under the New Joincare Purchases Agreement.

Each implementation agreement will set out specific details of the transaction, including price, quantity and other relevant details, provided that such detailed terms shall not be inconsistent with the terms of the New Joincare Purchases Agreement.

Payment Terms : Payment shall be made in accordance with the terms of the implementation agreement.

The Group has advised us that it has not purchased similar products or raw materials from Independent Third Parties. Nevertheless, we note that the New Joincare Purchases Agreement has materially similar terms as the Existing Joincare Purchases Agreement which has been modified to have pricing policies more favorable to the Group.

In regards to the pricing mechanism, we have carried out an assessment of the reasonableness and fairness of the pricing mechanism under the New Joincare Purchases Agreement as follows:

(i) according to the management of the Company and our independent search on the relevant notices promulgated by the price department of the National Development and Reform Commission regarding voriconazole itraconazole, 7-ACA, D7-ACA and OXAT, there have been no indicative prices prescribed by the national price administrative department for the products under the New Joincare Purchases Agreement . However, further to our enquiry to the management of the Company and according to the New Joincare Purchases Agreement, whenever the national price administrative department prescribes any indicative prices for the applicable products or raw materials, which so far are not foreseeable, in the future, the Joincare Group and the Group will abide by such prices so that they would comply with the applicable rules and regulation;

– 21 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) pursuant to the New Joincare Purchases Agreement, if the national price administrative department does not prescribe an indicative price for a product or raw material, comparable market prices based on quotation(s) obtained from other third party suppliers should be observed. According to the Board Letter, the Group has relevant policies and procedures including 1) the Group will invite one to two quotations from independent suppliers (depending on the availability of quotations obtained at the particular time) to give a reference on the prevailing market prices for the relevant products and raw materials to be procured. Such quotations will be reviewed and evaluated from both the technical and commercial perspectives by qualified personnel of the Group to ensure that the prices of the products and raw materials to be procured from the Joincare Group no less favorable to the prices for such products and raw materials being offered by Independent Third Parties . The personnel of the Group will also review other applicable terms of the quotations from independent suppliers (including but not limited to product quality assurance, payment terms and terms on delivery timing) in order to ascertain whether the terms of the individual purchase order are on normal commercial terms; 2) the Group will conduct regular checks to review and assess whether the products and raw materials have been purchased in accordance with the terms of the New Joincare Purchases Agreement. Such checks will be conducted by the financial controller of the Group on a monthly basis and the secretary of the Board on a quarterly basis. In addition, the Company will engage the auditors of the Company to conduct an annual review of the transactions contemplated under the New Joincare Purchases Agreement. We agree that for the products sold under the New Joincare Purchases Agreement, in the absence of publicly available prices, it is most effective to reckon the market prices and compare normal commercial terms by referring to quotations obtained from independent third parties. It has been the Group’s policy to diversify its suppliers and according to the listing document of the Company dated 14 January 2014, the Group has at least two suppliers for each type of major raw materials , other than voriconazole itraconazole, which is only supplied by Joincare Group in the PRC market. As advised by the management of the Company, given the stringent quality requirements imposed by relevant Company’s policies and legal requirements for pharmaceutical products, the Company may take a long time to complete the procedures required to switch the supplier for a type of raw material. Nevertheless, the Group maintains a list of reputable suppliers for these raw materials and can alter its suppliers if appropriate after considering all relevant circumstances, such as quality, availability and administrative cost, etc. As raw materials from Joincare Group

– 22 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

have satisfied the quality requirement and the Group expects that Joincare will resume supply the necessary raw materials shortly after the necessary approval to be obtained from Independent Shareholders in the EGM, the Company’s temporary suspension of the operation due to annual inspection and purchases from Joincare Group would not immediately translate to the Group’s inability to operate independently from the Joincare Group. By conducting regular checks on the compliance of selling prices with the New Joincare Purchases Agreement, we concur with the Directors that the safeguard is strengthened and the chance of obtained unfavorable terms of supply of products from Joincare Group is minimized. Accordingly, we concur with the Directors that the Group can ensure the actual prices of the products and raw materials to be purchased by members of the Group from the Joincare Group are on normal commercial terms and on terms no less favourable to the Group than that available from suppliers which are Independent Third Party .

(iii) As disclosed in the Board Letter, the applicable pricing principles for the major products and raw materials to be purchased by members of the Group from the Joincare Group are as follows:

Pricing principle Product

(a)	Not less favorable comparable quotations	– 7-ACA and D7-ACA
	offered by other third party suppliers
		– OXAT（氟氧頭孢母核）
(b)	Normal commercial terms offered	– Voriconazole itraconazole
	to Independent Third Parties by the	（伏立康唑）
	Joincare Group

As the prices of the major products and raw materials purchased by members of the Group from the Joincare Group are either 1) comparable to the prices for such products and raw materials being offered by Independent Third Parties; or 2) on normal commercial terms offered to Independent Third Parties by the Joincare Group, the prices offered by Joincare Group to the Group are no less favorable than that available from Independent Third Parties with reference to the procedures discussed in paragraph (ii) above. Accordingly, we are of the view that the pricing principles under the New Joincare Purchases Agreement are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

– 23 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have been provided with samples of quotations from independent suppliers and samples of procurement contracts signed between the Company and Joincare in March 2014. We noted that the prices of the products and raw materials to be purchased by the Group from the Joincare Group were no less favorable to the prices for such products and raw materials being offered by Independent Third Parties and the payment terms offered by Joincare Group to the Group are no less favorable than that available from independent suppliers. We also noted that individual implementation contracts signed between the Group and Joincare Group for the purchase of products or raw materials in the past were, in all material aspects, similar to the terms of New Joincare Purchases Agreement.

With regards the payment term, the payment for purchases usually due and payable on a credit term of 60 days in accordance with the individual implementation agreements. We have been provided with sample procurement contracts signed between the Group and Joincare Group between 2011 and 2013 and noted that such a credit term has been increased from 30 days to 60 days, suggesting a more favorable payment term being offered. We are given to understand that the Group is normally granted a credit period of up to 60 days by its suppliers for any remaining outstanding payment. Accordingly, we are of the view that the payment term under the New Joincare Purchases Agreement is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

Having considered the above, we are of the opinion that the policies and procedures adopted by the Group can ensure the price charged or the terms offered by Joincare Group to the Group are not less favorable than those offered from other independent suppliers, thus we concur with the Directors’ view that the terms (including the pricing mechanism) under the New Joincare Purchases Agreement are fair and reasonable, on normal commercial terms, and in the interests of the Group and the Shareholders as a whole.

III. Historical transactions and proposed annual monetary caps

The following table sets out the historical aggregate purchase amounts under the Existing Joincare Purchases Agreement and the proposed annual caps under the New Joincare Purchases Agreement

		Historical aggregate purchase amount	Historical aggregate purchase amount	Historical aggregate purchase amount	Historical aggregate purchase amount	Proposed annual caps	Proposed annual caps	Proposed annual caps
			For the year ended 31 December		From	For the year ending 31 December
					1 Jan to
		2011	2012	2013	31 July 2014	2014	2015	2016
	(RMB	million)	(RMB million)	(RMB million)	(RMB million)	(RMB million)	(RMB million)	(RMB million)
Raw materials		86.47	84.63	149.05	153.62	260.00	280.00	460.00

– 24 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In arriving at the revised annual caps, the Directors have taken into account the following:

(i) the historical transaction amounts between members of the Group and the Joincare Group ;
(ii) the internal projection of the development of the Group’s business (including the Group’s potential in increasing its market share in the area of bulk medicine (including cephalosporins category and intermediates) ;
(iii) the prevailing market condition and demand for the Group’s products;
(iv) the historical growth of the PRC pharmaceutical industry;
( v ) the prevailing market prices for the relevant raw materials ;
(vi) inflation;
(vii) the business development plans of the Group (including the expected launch of a new product, namely Flomosef Sodium, in the new ending 31 December 2016); and
(viii) the implementation by the Company’s subsidiary Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd.（珠海保稅區麗珠合成製藥有限公司） (“ Zhuhai Hecheng ”) of its recent in-depth reform in terms of, among other things, salary incentive and staff performance assessment, aimed at increasing the sales income of Zhuhai Hecheng.

In assessing whether the proposed annual caps under the New Joincare Purchases Agreement are fair and reasonable, we have considered the following:

i) Historical amount

From the historical transaction amounts as stated in the table above, purchase of products and raw materials from Joincare Group for the seven month period ended 31 July 2014 was amounted to approximately RMB153.62 million, which is equivalent to approximately RMB263.35 million when annualized and approximates the proposed annual cap of RMB260.00 million for the year ending 31 December 2014. We consider it reasonable to annualize historical transaction amount to be the annual cap for the remaining period in 2014 as it directly makes reference to historical amount and is a generally accepted method in estimation.

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The historical purchase amount of raw materials by the Group from Joincare Group showed a robust growth, from approximately RMB86.47 million for the year ended 31 December 2011 to approximately RMB149.05 million for the year ended 2013, representing a compound annual growth rate of 31.29% over the two year period. In 2014, the purchase amount in the first seven months, being approximately RMB153.62 million, was already more than the amount in the full 2013.

There are signs that the Group’s demand in the raw materials and products from Joincare Group was driven by external needs. According to the 2014 interim results announcement of the Company dated 26 August 2014 (the “ Interim Results Announcement ”), for the six months ended 30 June 2014, the Group’s principal activities generated an operating income of RMB2,558.35 million, representing an increase of 18.81% as compared with RMB2,153.27 million for the same period in 2013. Antibiotic drugs (including imported drugs) and bulk medicines and intermediates generated operating income of approximately RMB168.02 million and RMB500.84 million for the six months ended 30 June 2014, up by 25.94% and 25.90% year-on-year, respectively.

The proposed annual cap 2015 represents a yearly increment of 7.69% to the proposed annual cap 2014, whereas the proposed annual cap 2016 represents a yearly increment of 64.29%. Given the Group’s sales of antibiotic drugs and bulk medicines and intermediates are on the rise, the trend of increase in the proposed annual caps for the purchase of products and raw materials from Joincare Group is reasonable.

ii) Prevailing market conditions and demand, including the pharmaceutical industry in the PRC

As advised by the management of the Company, the proposed annual cap increases from RMB260 million in 2014 to RMB280 million in 2015 was mainly due to the increasing demand of raw materials for the production of the Group’s voriconazole itraconazole product and cephalosporins category product.

Due to the continuous increase of market demand for the antibiotics related products and the reinforcement of marketing strategies by the Company, the Company recorded a significant increase in the sales of voriconazole itraconazole product and cephalosporins category product. According to the Company, the sales of voriconazole itraconazole products increased by 50% from approximately 250,000 bottles for the seven month period of 2013 to 375,000 bottles for the seven month period of 2014. On the other hand, the sales of cephalosporins category products increased by around 82.6%, as compared with the same period last year.

– 26 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As discussed in the Interim Results Announcement, the pharmaceutical industry is a thriving sector, thanks to favorable factors including the aging population, urbanization and health awareness. The Company will integrate the resources for bulk medicines business of the Group as and when appropriate to strengthen the research and development in biological area and relevant cooperation.

According to information from the National Development and Reform Commission of the PRC, the pharmaceutical industry in the PRC saw a steady growth, whose main business revenues in the pharmaceutical industry of the PRC amounted to approximately RMB2.17 trillion in 2013, representing a year-on-year increase of 17.9%, despite sluggish economic growth in the Europe and the America.

We also note the promulgation of government policies which are favorable to the steady and sustainable development in the pharmaceutical industry. Such government policies including the《關於促進健康服務業發展的若干意見》(Several Opinions of the State Council on Promoting the Development of the Health Service Industry) issued by the State Council in October 2013,《關於加快發展社會辦醫的若干意見》(Several Opinions on Facilitating Developments of Healthcare Institutions with Capital from Private Sectors) issued by the National Health and Family Planning Commission of the PRC in January 2014 prompt responses from pharmaceutical companies in the PRC.

The Group has assumed that the demand for the Group’s products, such as its antibiotics related products, will increase gradually in the coming years. The significant growth in the sales of antibiotics related products and bulk medicines and intermediaries of the Company have driven the corresponding increase in demand of products and raw materials from Joincare Group. Accordingly, taking into consideration the pharmaceutical industry outlook and the Group’s expectation on the market conditions, we concur with the Directors’ view to predict an increasing trend in the purchases from Joincare Group.

iii) Launch of new Flomoxef Sodium (氟氧頭孢鈉) products in 2016

As advised by the management of the Company, the Company endeavours to research and develop Flomoxef Sodium（氟氧頭孢鈉) products, which are one of the cephalosporins category products with high product safety and efficacy. The Company expects Flomoxef Sodium（氟氧頭孢鈉) products will be launched in 2016 . The management expects that there will be a demand of 40 tons of products and raw materials from Joincare Group for the production of 16 tons of Flomoxef Sodium products in 2016.

– 27 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We note from the listing document of the Company dated 14 January 2014 that the Group plans to increase its scale of operations to satisfy market demands by constructing new production facilities and upgrading its technologies. It is also the Group’s efforts to research and develop drug preparation products, bulk medicines and diagnostic reagents. As also discussed in the Interim Results Announcement, scientific research and development is a long-term strategic task of the Group.

The Company has advised us that Flomoxef Sodium products are manufactured by relatively few producers in the PRC and hence the possible early launch of the products would enable the Group to tap into a less competitive market. Given that the Group has emphasized its strategic position in research and development of new products, we consider it acceptable for the Directors to assign an extra amount of annual cap in 2016 for the purchase of raw materials of Flomoxef Sodium from Joincare Group, namely OXAT（氟氧頭孢母核）. In this respect, the Directors expect the 40 tons of OXAT from Joincare Group will cost approximately RMB170.94 million in 2016.

iv) Calculation of the proposed annual caps

In estimating of the proposed annual caps, we are given to understand that the Directors did not anticipate any material change in the unit price of the products and raw materials from Joincare Group. Therefore, the increase in the proposed annual caps is primarily contributed from the volume increase of the products and raw materials to be purchased. Specifically, the Group estimated that there will be an approximately 30% annual increment for the purchase of voriconazole itraconazole and approximately 8% annual increment for 7-ACA or D7-ACA products for each of 2015 and 2016. Further, the Group expects a purchase of OXAT of RMB170.94 million in 2016 from Joincare Group. We have reviewed the detailed calculation of the proposed annual caps as provided by the management of the Company and we concur with the Directors that the calculation has been carried out appropriately .

Having considered the above factors, we concur with the Directors that the revised annual caps under the New Joincare Purchases Agreement are fair and reasonable so far as the Independent Shareholders are considered and in the interests of the Company and the Shareholders as a whole.

– 28 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having taken into account the principal factors and reasons set out above, we are of the opinion that the terms of the New Joincare Purchases Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and Shareholders as a whole, the transactions contemplated thereunder are in the ordinary and usual course of business of the Group.

Accordingly, we would recommend that the Independent Shareholders vote, and that the Independent Board Committee advise the Independent Shareholders to vote, in favor of the ordinary resolutions to be proposed at the upcoming EGM to approve the transactions under the New Joincare Purchases Agreement within the revised annual caps.

Yours faithfully, For and on behalf of TC Capital Asia Limited Edward Wu Managing Director

Note: Mr. Edward Wu of TC Capital Asia Limited is a responsible officer licensed under the SFO to engage in Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities having over 13 years of experience in investment banking and corporate finance.

– 29 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS BY DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE OF THE COMPANY

As at the Latest Practicable Date, the interests and short positions of the Directors, supervisors and chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of the Part XV of the SFO) (1) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (2) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (3) which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules (“ Model Code ”) to be notified to the Company and the Stock Exchange, were as follows:

(1) Interest in shares of the Company

			As
			a percentage of	As
			the specific	a percentage of
		Number of	class of issued	the total issued
		shares interested	share capital	share capital
Name of Director	Capacity	(Long position)	of the Company	of the Company
			(%)	(%)
Mr. Zhu Baoguo	Interest of controlled	89,462,538 A Shares (1) (2)	48.69%	30.25%
（朱保國）	corporations	50,660,052 H Shares (1) (3)	45.23%	17.13%

– 30 –

GENERAL INFORMATION

APPENDIX

(2) Interest in shares of associated corporations of the Company

As a percentage of the equity interest Name of Name of of associated Director Capacity associated corporation Equity Interest corporation (RMB) (%) Mr. Zhu Baoguo Beneficial owner Shenzhen Baiyeyuan Investment 72,000,000 90.00% （朱保國） Co., Ltd.（深圳市百業源投資有限公司）（“ Baiyeyuan ”） Interest of controlled Joincare[( 4)] 742,415,520 48.03% corporation Interest of controlled Livzon MABPharm Inc.（珠海 245,000,000 49.00% corporations 市麗珠單抗生物技術有限公司）[(1)(5)]

Notes:

(1) Joincare is 48.30% held by Baiyeyuan which is in turn 90% held by Mr. Zhu Baoguo（朱保國）. Mr. Zhu Baoguo（朱保國）is deemed to be interested in the shares of the Company and the equity interest of its associated corporations in which Joincare is or is deemed to be interested by virtue of the SFO.
(2) Among these shares, 83,569,595 shares and 5,892,943 shares are held directly by Joincare and its wholly-owned subsidiary, Shenzhen Ha ibin Pharmaceutical Co., Ltd.（深圳市海濱製藥有限公司） (“ Shenzhen Haibin ”) respectively.
(3) These shares are directly held by Topsino Industries Limited (“ Topsino ”), a wholly-owned subsidiary of Joincare.
( 4) These shares are held by Baiyeyuan.
( 5) These shares are held by Joincare.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, supervisors and chief executive of the Company had any interest or short position in shares, underlying shares or debentures of the Company or any of its associated corporations which were recorded in the register required to be kept under Section 352 of the SFO or notified to the Company and the Stock Exchange pursuant to the Model Code.

– 31 –

GENERAL INFORMATION

APPENDIX

3. DISCLOSURE OF INTERESTS BY SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as was known to the Directors, the following persons (other than the Directors, supervisors or chief executive of the Company) has interests or short positions in the shares or underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register of substantial shareholders required to be kept by the Company under section 336 of the SFO.

			As
			a percentage	As
			of the specific	a percentage
			class of	of the total
		Number of	issued share	issued share
		shares held	capital of	capital of
Name of Shareholder	Capacity	(Long position)	the Company	the Company
			(%)	(%)
Baiyeyuan	Interest of controlled corporations	89,462,538 A Shares(1)	48.69%	30.25%
	Interest of controlled corporations	50,660,052 H Shares(2)	45.23%	17.13%
Ms. Liu Guangxia（劉廣霞）	Interest of spouse	89,462,538 A Shares(3)	48.69%	30.25%
		50,660,052 H Shares(3)	45.23%	17.13%
Joincare	Beneficial owner	77,510,167 A Shares	42.19%	26.21%
	Interest of controlled corporation	5,892,943 A Shares( 4)	3.20%	1.99%
	Person having a security interest	6,059,428 A Shares( 5)	3.30%	2.05%
	in shares
	Interest of controlled corporation	50,660,052 H Shares(2)	45.23%	17.13%
Topsino	Beneficial owner	50,660,052 H Shares(2)	45.23%	17.13%

Notes:

(1) Among these shares, 83,569,595 shares and 5,892,943 shares are held directly by Joincare and its wholly-owned subsidiary, Shenzhen Haibin respectively.
(2) These shares are held directly by Topsino, the wholly-owned subsidiary of Joincare .
( 3) Ms. Liu Guangxia（劉廣霞）is the spouse of Mr. Zhu Baoguo（朱保國）, and so she is deemed to be interested in the shares in which Mr. Zhu Baoguo is deemed to be interested.

– 32 –

GENERAL INFORMATION

APPENDIX

(4) These shares are directly held by Shenzhen Haibin , a wholly-owned subsidiary of Joincare.
( 5) These shares were directly transferred from, entrusted and pledged by Guangzhou Begol Trading Corporation （廣州市保科力貿易公司）(“ Begol ”) in favor of Joincare in accordance with a share transfer, custody and pledge agreement entered into among three parties, namely Begol, Joincare and Zhuhai Lishi Investment Co., Ltd.（珠海市麗士投資有限公司）, as well as a share transfer and custody agreement and a share pledge agreement entered into between Begol and Joincare on 2 January 2004.

Save for the shareholders as disclosed herein, the Directors are not aware of any persons, who, as at the Latest Practicable Date, were entitled to exercise or control the exercise of 5% or more of the voting power at the general meeting of the Company and were also, a practicable matter, able to direct or influence the management of the Company.

4. DIRECTORS’ AND SUPERVISORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, no service contract that cannot be terminated within one year without payment of compensation (other than statutory compensation) has been or proposed to be entered into between the Company and the Directors or the supervisors of the Company.

5. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors or proposed Directors, directly or indirectly, had any interest in any assets which had since 31 December 2013 (being the date to which the latest published audited accounts of the Group were made up) been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

There was no contract or arrangement subsisting at the Latest Practicable Date, in which any of the Directors were materially interested and which was significant to the business of the Group.

– 33 –

GENERAL INFORMATION

APPENDIX

6. COMPETING INTERESTS

As disclosed in the section headed “Relationship with our controlling shareholders” in the listing document of the Company dated 14 January 2014, the Group and the Joincare Group research, develop, produce and/or sell four different types of drugs, namely (i) cardio-cerebralvascular drugs; (ii) systemic anti-infective drugs/antibiotics; (iii) blood and hemopoietic system drugs; and (iv) blood management drugs. However the drugs that the Group researches, develops, produces and/or sells are of different categories from those researched, developed, produced and/ or sold by Joincare Group. Although both groups use similar distribution models for the sales and distribution of drug preparation products in the PRC which is in line with the industry norm, and their targeted end customers are similar such as hospitals, clinics and pharmacies, the Directors are of the view that the Group and the Joincare Group are two separate groups operating independently of each other with separate listing status. Furthermore the sales teams of the Group are separate and independent of the Joincare Group and the Group does not share its customer resources and databases. Accordingly the Directors are of the view that there is no substantial competition between the Group’s production and sales of products with that of the Joincare Group.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or proposed Directors or their respective close associates had any interest in a business which competes or may compete with the businesses of the Group (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them was a controlling shareholder of the Company).

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2013, the date to which the latest published audited accounts of the Group were made up.

8. QUALIFICATIONS AND CONSENTS OF EXPERT

The following is the qualification of the expert who has given opinion or advice which is contained in this circular:

Name Qualification

TC Capital Asia Limited a corporation licensed to carry on type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO

– 34 –

GENERAL INFORMATION

APPENDIX

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or reference to its name or opinion in the form and context in which it appears.

As at the Latest Practicable Date, the Independent Financial Adviser did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, the Independent Financial Adviser did not, directly or indirectly, had any interest in any assets which had since 31 December 2013 (being the date to which the latest published audited accounts of the Group were made up) been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

9. GENERAL

In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during business hours at the Company’s principal place of business in Hong Kong at Flat 02, 17/F, Bayfield Building, 99-101 Hennessy Road, Wanchai, Hong Kong from the date of this circular up to and including the date of the EGM:

(a) the Existing Joincare Purchases Agreement;
(b) the New Joincare Purchases Agreement;
(c) the letter from the Independent Board Committee as set out on page 15 of this circular;
(d) the letter from the Independent Financial Adviser as set out from pages 16 to 29 of this circular; and
(e) the written consent from the Independent Financial Adviser as referred to under the section headed “Qualifications and Consents of Expert” in this appendix.

– 35 –

AI assistant

Livzon Pharmaceutical Group Inc. — Proxy Solicitation & Information Statement 2014

49967_rns_2014-10-06_c0b70d3c-bf16-4f28-9de9-3c76e8b786b1.pdf

麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]

(I) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS (II) PROPOSED PROVISION OF FINANCING GUARANTEES BY THE COMPANY FOR ITS WHOLLY-OWNED SUBSIDIARY

AND

(III) PROPOSED APPOINTMENT OF DIRECTOR OF THE COMPANY

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

TC Capital

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]

(I) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

(III) PROPOSED APPOINTMENT OF DIRECTOR OF THE COMPANY

I. INTRODUCTION

LETTER FROM THE BOARD

II. REVISION OF ANN UAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

LETTER FROM THE BOARD

THE NEW JOINCARE PURCHASES AGREEMENT

Parties

REASONS FOR ENTERING INTO THE NEW JOINCARE PURCHASES AGREEMENT

LETTER FROM THE BOARD

ANNUAL CAPS CONTEMPLATED UNDER THE NEW JOINCARE PURCHASES AGREEMENT

LETTER FROM THE BOARD

LETTER FROM THE BOARD

PRICING PRINCIPLES

LETTER FROM THE BOARD

Pricing principle

Product

LETTER FROM THE BOARD

INFORMATION ON THE JOINCARE GROUP

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

III. PROPOSED PROVISION OF FINANCING GUARANTEES BY THE COMPANY FOR ITS WHOLLY-OWNED SUBSIDIARY

LETTER FROM THE BOARD

IV. PROPOSED APPOINTMENT OF DIRECTOR OF THE COMPANY

V. EGM

LETTER FROM THE BOARD

VI. RECOMMENDATION

VII. ADDITIONAL INFORMATION

麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

Independent Board Committee

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. Background of and reasons for entering into of the New Joincare Purchases Agreement

Background of the New Joincare Purchases Agreement

Reasons for entering into of the New Joincare Purchases Agreement

II. Principal terms of the New Joincare Purchases Agreement

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pricing principle Product

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

III. Historical transactions and proposed annual monetary caps

i) Historical amount

ii) Prevailing market conditions and demand, including the pharmaceutical industry in the PRC

iii) Launch of new Flomoxef Sodium (氟氧頭孢鈉) products in 2016

iv) Calculation of the proposed annual caps

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS BY DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE OF THE COMPANY

(1) Interest in shares of the Company

APPENDIX

3. DISCLOSURE OF INTERESTS BY SUBSTANTIAL SHAREHOLDERS

APPENDIX

4. DIRECTORS’ AND SUPERVISORS’ SERVICE CONTRACTS

5. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

6. COMPETING INTERESTS

7. MATERIAL ADVERSE CHANGE

8. QUALIFICATIONS AND CONSENTS OF EXPERT

Name Qualification

9. GENERAL

10. DOCUMENTS AVAILABLE FOR INSPECTION

More from Livzon Pharmaceutical Group Inc.

Livzon Pharmaceutical Group Inc. Proxy Solicitation & Information Statement 2014

**麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]**

**麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]**

**麗珠醫藥集團股份有限公司 LIVZON PHARMACEUTICAL GROUP INC.[*]**