Sihuan Pharmaceutical believes that an effective quality management system is critical to ensuring the quality of our products and maintaining our reputation and success. We seek to ensure that our products consistently meet the highest industry standards and requirements. For certain key products, such as Chuanqing and Qu’Ao, we maintain higher quality standards than the average industry standards. We have invested extensively in researching and developing new production procedures and know-how to improve the quality standards and safety profile of our products. We received patent protections for certain production procedures, which have been adopted by the SFDA as benchmark quality standards for other manufacturers to follow. This, we believe, creates significant advantages for us over potential competitors, especially those who do not have the expertise in implementing these quality standards. In addition, in recent years the PRC government has been raising the quality standards for pharmaceutical products to ensure product safety. We expect to benefit from these more stringent regulations because of our high quality standards, which we believe give us an additional competitive advantage over potential competitors.

Our quality assurance department, or QA Department, has 26 employees, mostly with pharmaceutical or medical-related educational backgrounds. Our QA Department is comprised of a QA Division and a QC Division. Our QA Division is responsible for formulating and implementing our quality management system in accordance with the GSP and GMP requirements and ensuring that our product supply chain and production processes are in strict compliance with stipulated standards and procedures. Our QC Division is responsible for the inspection of incoming raw materials and ingredients, semi-finished products and final products, as well as reviewing the consistency in samples.

We undertake quality inspections at different stages of our production process from the procurement of raw materials to delivery of our products to our customers. In addition, since 2008, we also regularly invited external industry experts to conduct random onsite inspections of our production process without prior notice to our production staff to make sure that our production process is strictly in compliance with the current GMP standards. Any non-compliance discovered during such random inspections is corrected immediately.

We undertake quality inspections at different stages of our production process from the procurement of raw materials to delivery of our products to our customers. The Group enforces strict control over production quality, final products quality, inventory management and after-service.

Production quality control

Each stage of our production process is monitored by personnel from our QA Division to ensure that the production process conforms to our quality standards. Our production operators are required to strictly adhere to standard operating procedures and equipment operation procedures. Our production operators monitor the entire production process and our QA Division personnel inspect the production equipment and process. Any abnormalities discovered are rectified immediately and recorded.

Final product quality control

Every batch of our finished products is subject to a sample inspection by our QC Division personnel prior to dispatch to our distributors. After the inspection, our QC Division personnel issue a report on the finished products and only products that pass the inspection are sent to the warehouse. Our policy is to destroy any batches of finished products that do not meet our quality standards. Our QC Division personnel review the use of materials, production process, production control and batch records. If no defects are detected, a product approval certificate is issued. Our warehouse only releases products upon receipt of both the finished product reports and the product approval certificates.

After sales service

Our QA Department receives feedback from our distributors, hospitals, medical institutions and end customers and handles any complaints with regard to the quality of our products. We treat such feedback and complaints seriously. Upon receipt of a complaint, we conduct investigations and where necessary, interview the party concerned. As of the latest practicable date, we have not received any request for product return due to quality problems by our distributors, but only requests for product returns due to damages caused to the products during transport.