Sihuan Pharmaceutical : Voluntary Announcement - Sihuan Pharmaceutical's First Anti-diabetic Innovative Patented New Drug Janagliflozin Commenced Phase III Clinical Trial in China

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Sihuan Pharmaceutical Holdings Group Ltd.

̬ᐑᔼᖹછٰණྠϞࠢʮ̡

(incorporated in Bermuda with limited liability)

(Stock Code: 0460)

VOLUNTARY ANNOUNCEMENT

Sihuan Pharmaceutical's First Anti-diabetic Innovative Patented New Drug Janagliflozin Commenced Phase III Clinical Trial in China

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 that Janagliflozin (the "New Drug") has commenced Phase III clinical trial in China ("the Study"). Janagliflozin is the Company's first Category 1 New Drug to enter Phase III clinical trial stage.

Janagliflozin is an orally active inhibitor of the sodium-glucose transport protein subtype 2 (SGLT-2); this New Drug has acquired patents in China, United States, Europe, Japan and Korea. SGLT-2 inhibitors are a new pharmacotherapeutic class for the treatment of Type 2 Diabetes Mellitus (abbreviated "T2DM"). They work by reducing the re-absorption of glucose via the kidneys so that the excess glucose is excreted through urination, thus lowering overall glucose levels in the blood.

Compared with conventional anti-diabetic agents, SGLT-2 inhibitors exhibit some specific advantages that include a long-acting effect, low risk of hypoglycemia, weight reduction, and convenience (taken orally once a day). Significantly, based on recently released data, SGLT-2 inhibitors have demonstrated beneficial effects of reducing the risks of cardiovascular and kidney diseases in patients with T2DM, potentially ushering in the new era of treatment for patients with diabetes.

Janagliflozin was developed under pharmacometrics framework, it is the first case to domestically employ SGLT-2 Inhibitors Quantitative Pharmacologic Model to successfully assist the selection of clinical dosages. Janagliflozin has already completed multiple clinical trials involving both healthy volunteers and patients with Type 2 Diabetes. The results so far indicate that the New Drug is safe with a strong and clear dosage-efficacy relationship. The New Drug also features a long half-life, good bioavailability, convenience (oral regiment once a day), and is not easily affected by food consumption - all factors that primarily indicate a robust clinical efficacy. Currently, two subsequent Phase III clinical research trials are expected to be launched.The two trials will evaluate the safety and efficacy of Janagliflozin monotherapy, and Janagliflozin-Metformin combined regiment, respectively, on patients diagnosed with T2DM. Professor Ji Linong from Peking University People's Hospital will lead the clinical trials, and approximately 60 research sites across China will be involved.

According to the International Diabetes Federation, the adult population suffering from diabetes is expected to reach 628 million globally by 2045. China was estimated to have 114 million (ages 20 to 79) patients with diabetes in 2017, which ranked number 1 in the world. According to Mordor Intelligence, the global diabetes treatment market size in 2017 reached USD56.1 billion, and is expected to grow at a CAGR of 6.25% from 2018 to 2023. China's diabetes market size, as predicted by Frost & Sullivan, will reach RMB173.9 billion in 2028, steadily growing from RMB51.2 billion in 2017. Additionally, based on the report published by EvaluatePharma, market sales generated from SGLT-2 inhibitors will reach USD13.3 billion by 2022, making it the best-selling oral medicine for diabetes and the third largest treatment for diabetes, surpassing DPP-4 inhibitors.

SGLT-2 inhibitors can be taken as monotherapy or in combination with other anti-diabetic agents. The market for SGLT-2 inhibitors in both China and abroad is massive. The fact that SGLT-2 inhibitors have entered Phase 3 clinical trials demonstrates that the Company has made significant break-through in self-driven research and development of anti-diabetic drugs. The Company hopes that Janagliflozin will be amongst the country's top two domestically-produced SGLT-2 inhibitors on the market. In addition, the Company's Metformin Hydrochloride Tablets is the first generic drug that has passed bioequivalence test via supplementary application declaration process. The Company's long-acting Insulin Degludec and rapid-acting Insulin Aspart have both received approval for, and have already initiated, clinical trials. Having a diverse products line of anti-diabetic drugs will help the Company to advance rapidly in this field and establish a firm foundation for a comprehensive anti-diabetic platform.

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

By order of the Board

Sihuan Pharmaceutical Holdings Group Ltd.

Che Fengsheng

Chairman and Executive Director

Hong Kong, 8 January 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.