PegBio Co., Ltd. — M&A Activity 2010

May 10, 2010

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

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BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]

(formerly known as Poly Development Holdings Limited 保興發展控股有限公司[*] ) (Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

MEMORANDUM OF UNDERSTANDING IN RESPECT OF THE POSSIBLE ACQUISITION OF 70% OF THE ENTIRE EQUITY INTEREST

IN NIHON SEIYAKU KOGYO CO., LTD.

The Board is pleased to announce that on 10 May 2010, Beijing YST Holdings, an indirect wholly-owned subsidiary of the Company, has entered into the MOU with the Proposed Seller in relation to the Possible Acquisition.

The Possible Acquisition, if it proceeds, is subject to various conditions and the entering into of legally binding documentation.

Save that the MOU constitutes legally binding obligations on, inter alia, (i) the Proposed Seller not to engage in any discussion or negotiation with any other parties in relation to an acquisition of equity interest or assets in NSK; and (ii) the parties as to confidentiality of the terms of the MOU, the terms set out in the MOU are not binding or definitive and are subject to further negotiations between the parties.

The Possible Acquisition may or may not proceed. Investors are reminded to exercise caution when dealing in the Company’s shares. Further announcements containing details of the Possible Acquisition will be made in accordance with the Listing Rules as and when appropriate.

This announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules.

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MOU IN RESPECT OF THE POSSIBLE ACQUISITION OF 70% OF THE ENTIRE EQUITY INTEREST IN NSK

The Board is pleased to announce that on 10 May 2010, Beijing YST Holdings, an indirect wholly-owned subsidiary of the Company, has entered into the MOU with the Proposed Seller in relation to the Possible Acquisition.

Certain key terms of the MOU

According to the MOU, the Proposed Seller intends to sell and Beijing YST Holdings intends to acquire 70% equity interest in the entire shareholdings of NSK and the parties intend to execute a definitive agreement on or before 15 July 2010. Upon completion of the Possible Acquisition, Beijing YST Holdings will beneficially own 70% equity interest in NSK and NSK will become a non-wholly owned subsidiary of Beijing YST Holdings and its results will be consolidated with the financial results of the Group.

Due diligence

Under the MOU, Beijing YST Holdings may conduct due diligence on the business of NSK within 60 days after the execution of the MOU. Based on the outcome of the due diligence findings (which shall be determined by Beijing YST Holdings at its sole discretion), the parties will proceed to commence negotiations of the Possible Acquisition.

Consideration

The aggregate consideration payable by Beijing YST Holdings for the Possible Acquisition shall be subject to further negotiations between the Proposed Seller and Beijing YST Holdings. It is contemplated that the total consideration for the Possible Acquisition shall be JPY700,000,000 (equivalent to approximately HK$58,823,000).

Exclusivity

It was agreed under the MOU that the Proposed Seller shall not engage in any discussion or negotiation with any other parties in relation to an acquisition of equity interest or assets in NSK for a period of three months commencing from the date of the MOU.

Termination

The MOU will terminate upon:–

• (a) Beijing YST Holdings having communicated in writing to the Proposed Seller that the outcome of its due diligence findings is not satisfactory; or

• (b) the definitive agreement in respect of the Possible Acquisition not having been executed by 15 July 2010 or any other date to be agreed between the parties.

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Binding nature of the MOU

The Possible Acquisition, if it proceeds, is subject to various conditions and the entering into of legally binding documentation.

Save that the MOU constitutes legally binding obligations on, inter alia, (i) the Proposed Seller in respect of the exclusivity provisions as stated in the paragraph headed “Exclusivity” above; and (ii) the parties as to confidentiality of the terms of the MOU, the terms set out in the MOU are not binding or definitive and are subject to further negotiations between the parties.

The Possible Acquisition may or may not proceed. Investors are reminded to exercise caution when dealing in the Company’s shares . Further announcements containing details of the Possible Acquisition will be made in accordance with the Listing Rules as and when appropriate.

INFORMATION ABOUT NSK

NSK is a wholly-owned subsidiary of the Proposed Seller. Based on the information provided by the Proposed Seller, NSK has over 60 years of experience in and is a leading producer of Kampo Medicine (漢方製藥) in Japan. NSK produces over 150 types of drugs, herbal medicines and health care products which are distributed to nationwide pharmacies and drug stores in Japan. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Proposed Seller and its ultimate beneficial owner are third parties independent of the Company and its connected persons (as defined under the Listing Rules).

DEFINITIONS

The following terms are used in this announcement with the meanings set opposite them:–

“Beijing YST Holdings”

Beijing Yu Sheng Tang Holdings Limited, a company incorporated in Hong Kong and is an indirect wholly-owned subsidiary of the Company, being the proposed purchaser under the MOU;

“Board” the board of Directors; “Company” Beijing Yu Sheng Tang Pharmaceutical Group Limited (formerly known as Poly Development Holdings Limited), a company incorporated under the laws of Bermuda with limited liability whose shares are listed on the Stock Exchange;

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

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“Group”	the Company and its subsidiaries;
“HK$”	Hong Kong dollars, the lawful currency of Hong
	Kong;
“Hong Kong”	the Hong Kong Special Administrative Region of
	the PRC;
“JPY”	Japanese Yen, being the lawful currency of Japan;
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange;
“MOU”	the memorandum of understanding dated 10 May
	2010 entered into between the Proposed Seller and
	Beijing YST Holdings in respect of the Possible
	Acquisition;
“NSK”	日本製藥工業株式會社(Nihon Seiyaku Kogyo
	Co., Ltd.*), a company incorporated in Japan with
	limited liability;
“Possible Acquisition”	the possible acquisition of the 70% equity interest
	in the entire shareholdings of NSK by Beijing YST
	Holdings pursuant to the MOU;
“PRC”	the People’s Republic of China;
“Proposed Seller”	株式會社PURE (Corporation PURE*), a company
	incorporated in Japan and the beneficial owner
	of the entire equity interest of NSK, being the
	proposed seller under the MOU; and
“Stock Exchange”	The Stock Exchange of Hong Kong Limited.

Translation of JPY into HK$ are made in this announcement, for illustration purposes only, at the rate of approximately JPY11.9 to HK$1.

By Order of the Board Suen Cho Hung, Paul Chairman

Hong Kong, 10 May 2010

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As at the date of this announcement, the Board comprises Mr. Suen Cho Hung, Paul (Chairman), Mr. Sue Ka Lok (Chief Executive Officer), Mr. Bai Jianjiang and Mr. Chau Chung Tak as Executive Directors and Mr. Wong Kwok Tai, Mr. Weng Yixiang, Mr. Lu Xinsheng and Mr. Xiong Wei as Independent Non-executive Directors.

• For identification purpose only

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