On 3 December 2015, Shanghai Fosun Hospital Investment (Group) Company Limited (“Fosun Hospital Investment”), a wholly-owned subsidiary of China’s leading pharmaceutical and healthcare company Shanghai Fosun Pharmaceuticals Company Limited (“Fosun Pharma” or the “Company”), entered into the Cooperation Agreement on Establishing “Wenzhou Geriatrics Hospital Company Limited” (the “Investment Agreement”) with Wenzhou Hospital of Traditional Chinese Medicine, pursuant to which it was proposed that the parties shall jointly establish a hospital, tentatively named as Wenzhou Geriatrics Hospital. It is the first project cooperated with hospital of mixed ownership in Zhejiang Province.

The cooperation will restructure and reorganize the Dashimen Branch of Wenzhou TCM Hospital. Wenzhou Geriatrics Hospital will be jointly established in compliance with standards of 3A-level geriatrics specialty hospital, with 500 beds (unit) to be available within five years of cooperation. The registered capital of Wenzhou Geriatrics Hospital is to be RMB35,477.07, among which Fosun Pharma proposes to invest RMB25,000 in cash, accounting for 70.47% of the registered capital of the new company.

Wenzhou Hospital of Traditional Chinese Medicine, a 3A-level hospital, occupies a regional leading position in therapeutic areas including nephropathy, hepatopathy, gastroenteropathy, and combined treatment of traditional Chinese medicine and western medicine. Currently, it operates a total of four branches, namely Dashimen Headquarter, Jingshan Branch, Shuixin Branch and Liuhongqiao Branch with approved 880 beds. In 2008, Wenzhou Hospital of Traditional Chinese Medicine became an affiliated hospital of Zhejiang Chinese Medicine University.

According to data published by Wenzhou Health and Family Planning Commission, in 2014, population aged 60 and above amounted to 1.2748 million, accounting for 15.64% of the total population of Wenzhou, and ranking No. 2 in Zhejiang Province. The contradiction between the increasing demands for nursing the elderly and the lagging development of aging businesses is quite serious, and the medical and healthcare treatment for the elderly has become a pressing problem for the whole society. As currently there is no geriatrics hospital in Wenzhou, establishing such a specialty hospital is in urgent need.

Wenzhou, being a pilot city of national healthcare reform, actively encourages private capital to enter medical service industry and encourages doctors to conduct multi-sited practices with policy support. The cooperation with Wenzhou Hospital of Traditional Chinese Medicine is one step of Fosun Pharma’s exploration in establishing mixed-ownership hospitals, which will further perfect Fosun Pharma’s regional deployment in the medical service industry and push forward the development of the Group’s medical service business.

Mr. Chen Qiyu, Chairman of Fosun Pharma, introduced that, Fosun Pharma has formed a foundation for its healthcare service business segment. It is expected that the implementation of diversified ownership in the healthcare service segment is conducive to the positive collaboration between the advantages of the hospitals funded and operated by non-public resources and the resources of the public hospitals, which can benefit more patients. He expected that the cooperation will establish a “merit hospital” with good hardware facilities, excellent doctors and good management, making more contribution to Wenzhou’s medical service industry.

Being one of the enterprises entering the medical service market at the earliest stage, Fosun Pharma has preliminary established a strategic deployment of healthcare services segment with high-end healthcare institution represented by United Family Healthcare in the coastal cities and specialty and general hospitals in second-tier and third-tier cities. Chen pointed out that, the combination of strong social capital and premium healthcare resources is in compliance with national policy orientation. And he expressed that, with the acceleration of the reform, Fosun Pharma will continue to actively participate in the restructuring and reorganization of public or state-owned hospitals.