China Health Labs & Diagnostics Ltd (C-CHO) - News Release
China Health signs BK Clinlab contracts in Henan
2010-11-18 09:16 ET - News Release
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Mr. Wilson Yao reports
CHINA HEALTH LABS & DIAGNOSTICS LTD. ANNOUNCES CONTRACTS TO INSTALL ITS TOTAL LAB SOLUTION IN 124 RURAL CLINICS IN HENAN AND GUIZHOU PROVINCES OF CHINA
China Health Labs & Diagnostics Ltd. has signed agreements to install its total diagnostic lab solution (the BK Clinlab) in 124 rural hospitals and clinics in Henan and Guizhou provinces in China. The installation is expected to generate initial revenues of approximately 18.6 million renminbi (approximately $2.86-million (Canadian)). In addition, all of these diagnostic clinics are expected to produce continuing revenues for China Health through agreements to purchase the company's reagents, and its service and maintenance packages. After the completion of the installation, China Health will have installed its BK Clinlab in 210 rural hospitals and clinics in three provinces of China (Henan, Guizhou and Liaoning). The installations will start before the end of November and are expected to be mostly completed by the end of 2010. China Health is also finalizing arrangements with 587 rural clinics in Jilin province, and expects to sign a definitive agreement for this project and commence installations in late 2010 or early 2011.
China Health has developed a suite of standard diagnostics equipment and reagents, hardware and software, for use in rural labs, as well as developing a service network in support of such labs. The BK Clinlab total lab solution includes basic in vitro diagnostic testing equipment (and complementary reagents) such as hematology analyzers, coagulation analyzers, urine analyzers, biochemistry analyzers and electrolyte analyzers. China Health has developed proprietary computer hardware and software that connects the diagnostic equipment and assists with analysis, allowing rural labs to conduct basic diagnostic tests without having patients travel long distances. As part of the BK Clinlab, a network of service centres staffed with trained technicians has and is being set up to provide support to rural labs within the service area and to provide a dependable source of reagents. As rural diagnostic facilities in China are typically underserviced and often lack even basic diagnostic capabilities, China Health believes that it is uniquely positioned to capitalize on this opportunity, as it is the first company in China to identify and create a medical laboratory solution specifically tailored to service the approximately 50,000 rural hospitals throughout China. In addition, in 2009 the Chinese government announced plans to spend 850 billion renminbi (approximately $130-billion (Canadian)) to improve health care over a three-year period, including the construction of almost 40,000 new rural hospitals and clinics.
"These agreements are a result of noticeable improvements in health care delivered by the 86 rural diagnostic clinics in which our BK Clinlabs were installed in 2007 and 2008 in Henan and Liaoning provinces. Provincial and central government decision makers recognize reliable local diagnostics as a key success factor to achieving their policy goal of improving rural health care and we believe we are the only company in China with a proven solution for rural communities," said Wilson Yao, chief executive officer of China Health. "Our goal in 2007 when we installed our first 20 BK Clinlabs in clinics in Henan province was to deliver reliable diagnostic testing with a sustainable profitable business model. The Henan province agreement to expand their network by 110 clinics validates our rural lab solution. The agreement to install 110 clinics brings our total to 130 in Henan province, but we have plenty of room to grow in this province since Henan has approximately 2,400 rural hospitals that need improved diagnostic labs. We are also very pleased to be installing our first 14 clinics in Guizhou as it gives us an opportunity to establish a track record in another province in China. In 2009, the BK Clinlab accounted for about 2 per cent of our revenues. In 2010 and beyond we expect rural labs to one of our main sources of revenue and earnings growth."
China Health intends to expand its business by focusing its efforts on expanding its sales network to three areas where it has proprietary products, limited competition and strong government support: rural diagnostic medical facilities in China, military and emergency services, and food testing applications.
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