Luye Pharma : DISCLOSEABLE TRANSACTION - PROPOSED ACQUISITION OF ACINO'S TRANSDERMAL DRUG DELIVERY SYSTEMS BUSINESS

44446-01A 1..13

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LUYE PHARMA GROUP LTD.

綠 葉 製 藥 集 團 有 限 公 司

(incorporated in Bermuda with limited liability)

(Stock Code: 02186)

DISCLOSEABLE TRANSACTION PROPOSED ACQUISITION OF

ACINO'S TRANSDERMAL DRUG DELIVERY SYSTEMS BUSINESS

ACQUISITION

The Board announces that after trading hours on 25 July 2016, the Buyers (each an indirectly wholly-owned subsidiary of the Company), the Company and the Sellers entered into the Share Purchase Agreement, pursuant to which the Buyers have conditionally agreed to purchase, and the Sellers have conditionally agreed to sell, the entire issued share capital of Acino AG and Acino Supply AG. The Company has agreed to guarantee the obligations of the Buyers under the Share Purchase Agreement.

The Directors confirm that to the best of their knowledge, information and belief, having made all reasonable enquiries, the Sellers and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons.

PURCHASE PRICE

The Purchase Price for the Acquisition is €245,000,000, payable in cash and is subject to adjustments based on the cash balance, the outstanding indebtedness and the working capital level of the Target Group as at the Closing Date.

TARGET GROUP

The Target Group is a Europe based global leader in advanced transdermal drug delivery systems (TDS) and it is one of the largest independent TDS manufacturers in Europe. The product portfolio of the Target Group is focused on more sophisticated and higher margin specialty patch categories such as central nervous system (CNS), pain and hormone spaces under several successfully commercialised and hard-to-make formulations such as Rivastigmine, Buprenorphine, Fentanyl and fertility control patch. It has also developed extensive and proprietary know-how and capabilities in the subcutaneous implants space.

The Target Group possesses strong know-how in difficult-to-make formulations, applying the highest quality standards. As a partner of pharmaceutical companies worldwide, the Target Group provides in-house developed products for out-licensing and customised solutions from product development to contract manufacturing. The existing core TDS markets of the Target Group include Europe, North America, Japan and Australia. It has a proven R&D and successful product launch track record; its robust product pipeline also offers potential to deliver multiple products into the markets over the next few years.

REASONS FOR AND BENEFIT OF THE ACQUISITION

The Company believes that the Acquisition represents a valuable growth opportunity to acquire a well-established European specialised pharmaceutical platform and a leading business in niche markets, together with a strong revenue base supported by a diversified product portfolio as well as a promising pipeline of products. The Acquisition will be a significant step in the Group's international expansion strategy and will help the Group achieve various strategic goals.

After taking into consideration the above factors, the Directors (including the independent non- executive Directors) consider that the Acquisition is on normal commercial terms and that its terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the transactions contemplated under the Share Purchase Agreement exceeds 5%, and all the applicable percentage ratios are less than 25%, as calculated under Rule 14.07 of the Listing Rules, the transactions contemplated under the Share Purchase Agreement constitute a discloseable transaction for the Company under the Listing Rules, and is subject to the reporting and announcement requirements but is exempt from the Shareholders' approval requirement under the Listing Rules.

Shareholders and potential investors should note that Closing is subject to the fulfilment or waiver of certain conditions. The Acquisition may or may not proceed as contemplated or at all. Shareholders and potential investors should also note that there are risks associated with the Acquisition and they should consider and assess all the risks carefully. Shareholders and potential investors are reminded to exercise extreme caution when dealing in the Shares and other securities of the Company.

THE SHARE PURCHASE AGREEMENT

Date

25 July 2016

Parties

1. Acino International AG as Seller 1

2. Acino Pharma AG as Seller 2

3. Luye Pharma (Germany) GmbH as Buyer 1

4. Luye Pharma Switzerland AG as Buyer 2

5. The Company as Buyer Guarantor

Sellers

Parties

Place of

incorporation Principal business

Seller 1 - Acino International AG Switzerland Investment holding and the sole

shareholder of Acino AG

Seller 2 - Acino Pharma AG Switzerland Investment holding and the sole

shareholder of Acino Supply AG

The Directors confirm that to the best of their knowledge, information and belief, having made all reasonable enquiries, the Sellers and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons.

Buyers

Buyer 1 is a company incorporated in Germany and a wholly-owned subsidiary of Buyer 2. Buyer 2 is a company incorporated in Switzerland and an indirect wholly-owned subsidiary of the Company. Both of the Buyers are newly incorporated companies acquired or established by the Group for the purposes of the Acquisition.

The following diagram depicts a simplified shareholding structure of the Buyers:

Assets being acquired

Pursuant to Share Purchase Agreement:

1. Buyer 1 has agreed to purchase, and Seller 1 has agreed to sell, 82,092 shares with a nominal value of €2.5564594 each, representing the entire issued share capital, of Acino AG; and

2. Buyer 2 has agreed to purchase, and Seller 2 has agreed to sell, 1,000 shares with a nominal value of CHF100 each, representing the entire issued share capital, of Acino Supply AG.