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NeoStem Outlines to Shareholders Near-term and Long-term Business Strategies Following Acquisition of Chinese Pharmaceutical Company
Date:11/19/2009

h, development and distribution capabilities, and is on track to become one of the largest antibiotic producers in Eastern China.

The acquisition of Erye provides us a pharmaceutical distribution system in one of the world's fastest growing consumer markets and we anticipate Erye's recent robust sales and earnings growth to continue. Earlier this year, the Chinese government announced that improving the healthcare for its citizens is a major priority and, according to Forbes.com, China's State Council has approved the spending of $124 billion on its healthcare system between 2009 and 2011. Owning a controlling interest in one of the largest antibiotic producers/distributors in China positions us to take advantage of this growth with products we develop in China and products we develop or license in the US for manufacturing and distribution in China. Given our size and distribution capabilities, any significant product acquisition or development could accelerate our revenue growth.

While NeoStem will continue to offer through Erye traditional pharmaceutical products, we will advance our research and development activities in the US and China focused on stem cell-based therapies beyond hematologic malignancies which have been used therapeutically for over 40 years. The Chinese market for adult stem cell therapies is more advanced than in the US and we look forward to the expansion of these revenue opportunities

We believe that our revenues and profitability will reflect our growth from a service company to a fully integrated international biopharmaceutical company and that this will produce a positive response in the investor market.

NeoStem's market capitalization has increased since the closing of the merger by approximately $40 million to a market capitalization of approximately $59 million as of the writing of this letter. Although the merger resulted in a dilution of the management team's equity ownership
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SOURCE NeoStem, Inc.
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