Innovative Pharmaceutical Biotech : (1) TERMINATION OF THE SPONSORSHIP AGREEMENT AND (2) DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ESTABLISHMENT OF THE LIFE SCIENCE FUND

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領航醫藥及生物科技有限公司

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

1. TERMINATION OF THE SPONSORSHIP AGREEMENT AND
2. DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE

Reference is made to the announcement of the Company dated 22 May 2012 in relation to Sponsorship Agreement. On 8 November 2016, the Company, the Assignor and SBIA entered into the Termination Agreement, pursuant to which the parties mutually agreed to terminate the Sponsorship Agreement with retrospective effect from 1 January 2015 and all the rights and obligations of both parties under the Sponsorship Agreement were terminated with effect from the effective date.

As part of the termination of the Sponsorship Agreement, on 8 November 2016, the Company agreed to establish the Life Science Fund together with SBIA, the Assignor and Shanghai Fosun and make an one-off capital contribution of RMB1,000,000 to the Life Science Fund and RMB500,000 for the set up and operation of the Life Science Fund.

Since one of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Contribution exceeds 5% but are less than 25%, the Contribution constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As at the date of this announcement, the Assignor is held as to 33.5% by Dr. Mao Yu Min and Dr. Xie Yi respectively, each a substantial shareholder of the Company, the Assignor is therefore a connected person of the Company pursuant to Chapter 14A of the Listing Rules. As the applicable percentage ratios for the Contribution are less than 25% and the total consideration is less than HK$10 million, by virtue of Rule 14A.76(2)(b) of the Listing Rules, the Contribution is subject to the reporting and announcement requirements only and is exempt from the circular, independent financial advice and shareholders' approval requirements.

Reference is made to the announcement of the Company dated 22 May 2012 in relation to Sponsorship Agreement, pursuant to which the Assignor agreed to assign, and the Company agreed to take up the obligations of providing a sponsorship fee of RMB9 million under the Sponsorship Agreement.

On 8 November 2016, the Company, the Assignor and SBIA entered into the Termination Agreement, pursuant to which the parties mutually agreed to terminate the Sponsorship Agreement with retrospective effect from 1 January 2015 and all the rights and obligations of both parties under the Sponsorship Agreement were terminated with effect from the effective date. As at the date of the Termination Agreement, the Company had provided an aggregate sum of RMB4.5 million pursuant to the Sponsorship Agreement.

The Directors further confirmed that none of the parties is required to pay to the other party any penalty and/or compensation in respect of the early termination under the Sponsorship Agreement.

The entering into of the Termination Agreement which terminated the Sponsorship Agreement would allow the Group to retain additional cash flow to support its businesses and to enhance business expansion as a whole. Instead of gaining public awareness and exposure to media in the industry through its participation in the Prize under the Sponsorship Agreement, the Group will continue to support the industry through its proposed Contribution in the Life Science Fund, further detailed in the paragraph headed "Establishment of the Life Science Fund" below.

Accordingly, the Directors (including the independent non-executive Directors) are of the view that the terms of the Termination Agreement and the transactions contemplated thereunder have been arrived at after arm's length negotiations, entered into in the ordinary and usual course of business of the Company and are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. The termination will not cause any material adverse impact on the existing business, operation or financial condition of the Group.

As at the date of this announcement, no Director has a material interest in the transactions contemplated under the Termination Agreement and was required to abstain from voting on the Board resolutions approving the Termination Agreement and the transactions contemplated thereunder.

As part of the termination of the Sponsorship Agreement, on 8 November 2016, the Company agreed to establish the Life Science Fund together with SBIA, the Assignor and Shanghai Fosun and make an one-off capital contribution of RMB1,000,000 to the Life Science Fund and RMB500,000 for the cost of set up and operation of the Life Science Fund. The total capital commitment to the Life Science Fund will be contributed as follows:

The capital commitment to be made by the Company to the Life Science Fund was determined upon arm's length negotiation among the parties with reference to the expected capital requirements of the Life Science Fund, and such capital contribution will be a one-off payment and will be funded by internal resources of the Group.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, SBIA and Shanghai Fosun and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons. As at the date of this announcement, the Assignor is held as to 33.5%% by Dr. Mao Yu Min and Dr. Xie Yi respectively, each a substantial shareholder of the Company. Accordingly, the Assignor is a connected person of the Company pursuant to Chapter 14A of the Listing Rules.

The Life Science Fund will be established as a private fund and its principal objective will be to enhance the development and promote technological achievement of the life science industry in the PRC, including participation in educational and charitable events within the industry and award talents of their contribution towards the industry.

The Life Science Fund shall have seven supervisors, who shall have full control over the operation and affairs of the Life Science Fund. The Company will not appoint any of its representatives to be a supervisor or board member of the Life Science Fund.

The Company is an investment holding company and its subsidiaries are principally engaged in the provision of genetic testing services, distribution of bio-industrial products and trading of beauty equipment and products. The Group's contribution in the Life Science Fund is one of the ways for the Group to continue to support the industry upon the termination of the Sponsorship Agreement.

Accordingly, the Directors (including all the independent non-executive Directors) consider that the Contribution is on normal commercial terms and is fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

As at the date of this announcement, no Director has a material interest in the transactions contemplated under the Contribution and was required to abstain from voting on the Board resolutions approving the Contribution.