Sihuan Pharmaceutical : Voluntary Announcement - Early Completion of Patient Recruitment for Phase II Clinical Trial in China for Anaprazole Sodium, a Patented Innovative Digestive System Drug Researched and Developed by Sihuan Pharmaceutical

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Sihuan Pharmaceutical Holdings Group Ltd.

四環醫藥控股集團有限公司

(incorporated in Bermuda with limited liability)

(Stock Code: 0460)

VOLUNTARY ANNOUNCEMENT

Early Completion of Patient Recruitment for Phase II Clinical Trial in China for Anaprazole Sodium, a Patented Innovative Digestive System Drug researched and developed by Sihuan Pharmaceutical

The board of directors (the "Board") of Sihuan Pharmaceutical Holdings Group Ltd. (the "Company" or "Sihuan Pharmaceutical", together with its subsidiaries, the "Group") is pleased to announce the early completion of patient recruitment for Phase II clinical trial in China (the "Study") for Anaprazole Sodium ("Anaprazole" or the "new drug"), a patented innovative digestive system drug researched and developed by the Group. The new drug is a Class 1 innovative drug researched and developed by the Group.

The new drug is a new generation of proton pump inhibitor ("PPI"), being the only PPI researched and developed in China, and has both China and international patents. Intended indications include peptic ulcer (PUD), gastroesophageal reflux disease (GERD), and helping PUD patients to eliminate Helicobacter pylori. The new drug is in the form of enteric-coated tablets with single isomer composition for clinical oral dosage through no-enzyme or multi-enzyme metabolic pathways, which mitigates the risk of drug-drug interactions.

Currently, the new drug has already completed a series of Phase I clinical studies in China. Existing clinical information shows that common adverse reactions (which are mainly gastrointestinal reactions) are similar to drugs of the same category, pharmacokinetics are basically consistent with the linear features, pharmacodynamics show a clear dosage/effect relationship, and its acid suppression effect is comparable to pharmacodynamics of similar drugs in the market.

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The new drug is going through a multi-centered, randomized, double-blinded,double-simulation, positive drug parallel controlled Phase II clinical trial study to assess its effectiveness and safety in therapeutic effects for duodenal ulcer, with a sample size of 150, mainly for the purpose of exploring the best dosage of the new drug. The Study is being conducted in nearly 20 clinical trial centers in China, and now has early completed patient recruitment. The new drug is expected to enter Phase III clinical trial within the current year.

According to MENET database, the market for peptic ulcer drugs in China is huge with continuous growth, the sales turnover in 2017 reached approximately RMB35.8 billion. Of which, PPI drugs had dominating market share, among the top 10 anti-ulcer drugs in terms of market share, six were PPI drugs. The sales of Rabeprazole, a drug similar to Anaprazole, recorded continuous growth since it was launched in the market, and was ranked No. 1 in terms of market share in 2017 among oral anti-ulcer drugs of public hospitals in China with sales of approximately RMB3.87 billion. It is expected that the new drug will have huge market potential if it can be launched successfully in the market in future.

Meanwhile, the Group is also expanding its product portfolio in the area of digestive system products, of which Jie'ao (Roxatidine Acetate Hydrochloride for Injection), a digestive system product which has been launched in the market, is a new generation of histamine H2 receptor antagonist that has recorded good market performance. In addition, other generic drugs also form a part of the network in the area of digestive system. The clinical development of the new drug has been making smooth progress, laying a good foundation for the market network of multi-level product portfolio of the Group in the area of digestive system.

This announcement is being made by the Company on a voluntary basis to let the investing public understand the Group's latest business development, and does not constitute, and is not intended to be, an advertisement regarding the use of any medicine, surgical appliance, treatment or orally consumed product.

By order of the Board

Sihuan Pharmaceutical Holdings Group Ltd.

Dr. Che Fengsheng

Chairman and Executive Director

Hong Kong, 25 April 2019

As at the date of this announcement, the executive directors of the Company are Dr. Che Fengsheng (Chairman), Dr. Guo Weicheng (Deputy Chairman and Chief Executive Officer), Mr. Choi Yiau Chong, Dr. Zhang Jionglong and Ms. Chen Yanling; the non-executive director of the Company is Mr. Kim Jin Ha; and the independent non-executive directors of the Company are Mr. Patrick Sun, Mr. Tsang Wah Kwong and Dr. Zhu Xun.

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