Dear shareholders,

On behalf of the board of Directors (the "Board") of China Shineway Pharmaceutical Group Limited (the "Company" or "China Shineway") together with its subsidiaries (the "Group"), I am pleased to present the annual report of the Group for the year ended 31 December 2009.

The year of 2009 was a new starting point for the pharmaceutical industry. The implementation of health care reform, the introduction and launching of "Essential Drug List (Grassroots Health Care Facilities Use of Supplies) - Year 2009 Version" (the "Essential Drug List"), the adjustments of National Catalogues of Medical Insurance, the drug tendering and procurements, the regulatory audits of medicine production, the re-evaluation on Chinese medicine injections, etc. have brought the pharmaceutical industry into unease. Pharmaceutical companies were coping with scrutiny and challenges. Furthermore, negative publicity on poor quality Chinese medicine injections produced by a few shoddy manufacturers along with improper use of drugs by some grassroots hospitals had led to unprecedented crisis of confidence on Chinese medicine injections. Under such adversity, China Shineway prudently geared our focus on improving and strengthening ourselves. We overcame capacity shortages and many other constraints. At the end, we performed well and were able to generate RMB1.63 billion of sales revenue, an increase of 28.1% from last year. During the A(H1-N1) influenza outbreak, we estimated that more than 5 million people used quality products of China Shineway on a daily basis. Our Qing Kai Ling Injection, Qing Kai Ling Soft Capsule and Pediatric Qing Fei Hua Tan Granule could hardly caught up with their strong demand. Accordingly, sales of Qing Kai Ling Injection, increased by 36.4% and Shu Xue Ning Injection increased by 46.5%. Pediatric Qing Fei Hua Tan Granule, which increased by 91.1%, became our fifth product with sales surpassing RMB100 million. Our net profit for year 2009 increased by 92.7% from last year to RMB767,304,000.

In May 2009, construction of Shineway Modern Chinese Medicine Industrial Park officially commenced. The first-phase of this project, covering approximately 400 Chinese acres of land, will further solidify our leading position in modern Chinese medicine injections, soft capsules and granules. At present, construction of new composite production workshop, sewage treatment stations, power centers and a number of other projects on the industrial park are nearly completed. Furthermore, construction of new Chinese medicine extraction workshop, injection workshop, and logistic center will also commence in 2010.

Following "Shineway" accreditation as a China Famous Trademark in 2002, our "Wu Fu" trademark was certified as a China Famous Trademark during the year. We are the first in Hebei Province having two China Famous Trademarks. In addition, our "Bei Si" and "Shen Miao" trademarks were also certified as Hebei Province Famous Trademarks. Our brand influence is proliferating.

During the year, the State Food and Drug Administration officially initiated its program on re-evaluation of Chinese medicine injections. As a market leader of Chinese medicine injections, we kicked off the re-evaluation with Shen Mai Injection, which became the first medicine to participate on the program. China Shineway was also engaged by the National Development and Reform Commission to undertake a model project on standardization of quality of Chinese medicine injection, which will provide unprecedented means to implement quality controls on production of Chinese medicine injections. We also became the only modern Chinese medicine manufacturing company with regulatory approval to build the "Chinese Medicine Injection Engineering and Technology Research Center" in Hebei Province with the goal of further raising quality standards of Chinese medicine injections.

2010 is a year for China Shineway to immensely invest and capitalize business opportunities. Our goals are firm and our strategic directions are well set. China Shineway has outstanding corporate culture, famous brand names, solid execution capability and a diligent and loyal workforce. Despite the competitive environment of pharmaceutical industry, we are well prepared to deliver superb performance!

China Shineway's accomplishments are inseparable from our staff's hard work. On behalf of the Board, I would like to extend my sincere greetings and high respect to our diligent staff for their dedication and effort!

Li Zhenjiang
Chairman of the Board

Hong Kong, 29 March 2010