After it bought 68 drugstores from Ningbo New Century in February 26, China Nepstar Chain Drugstore Ltd. (Nepstar) announced on March 6 that it has entered into a definitive agreement with Dongguan Hui Ren Tang Pharmaceutical Co. Ltd. (Dongguan HRT). Under the agreement, the former will acquire all of the 18 directly operated chain drugstores of Dongguan HRT for RMB2.3M in cash. This is the second acquisition conducted by Nepstar since it went public.

Mr. Jiannong Qian, Chief Executive Officer of Nepstar, commented that Nepstar will accelerate its M&A pace. For the time being, negotiations of some acquisitions are in progress. Nepstar is said to have 1,050 more outlets in 2008.

The 18 drugstores operated by Dongguan HRT generated gross revenue of RMB12M in 2007. These stores are mostly located in the Dalang, Chashan and Dalingshan districts in Dongguan City, Guangdong Province. Nepstar expects to take over the operations of the 18 stores in the first half of March.

According to the Dongguan Food and Drug Administration, the total number of drugstores in Dongguan was 4,800 at the end of 2007. This acquisition will bring the total number of Nepstar drugstores in Dongguan to over 120 in early March.