Neusoft and Philips Joint Venture Scheme Details Approved

Neusoft Digital Medical Industry Attains a Breakthrough in Internationalization Advancement

Shenyang, China - On April 20, Neusoft Co., Ltd.(SSE: 600718) announces the resolution approved by its Board of Directors in regard to the details of joint venture scheme for Philips-Neusoft Medical Systems Co. Ltd., the joint venture between Neusoft Digital Medical Systems Co., Ltd., one of its holding companies, and Philips Digital Medical Systems Co., Ltd. This marks that the joint venture has stepped into a new stage of substantial operation.

The announcement reveals that both the total investment capital and the registered capital of the joint venture is USD $29.6 million, equivalent to RMB 245 million, with Neusoft holding 49% and Philips 51% of the share capital.

It is shown in the announcement that the joint venture between Neusoft and Philips differs with other China-based joint ventures in several aspects. Firstly, the joint venture, based on the technology and business of the two companies, is targeting the international market with a focus on the research and manufacturing of digital medical equipment in the four categories of computed tomography(CT), magnetic resonance imaging(MRI), x-ray equipment and ultrasound, and is aiming at broadening the portfolio of medical products of the joint venture in short term. Secondly, the joint venture will serve as the global R&D and manufacturing base of digital medical equipment to produce high-quality digital medical products. Thirdly, the joint venture will depend on their respective sales network and use Neusoft and Philips brands respectively for domestic and international market selling, while Neusoft may continue to retain its own brand, sales and service network.

Dr. Liu Jiren, Chairman of Neusoft Co., Ltd. said, "The enormous potential of China digital medical market has attracted increasingly larger investment in China from international giants of digital medical system products, and meanwhile generated increasingly fierce market competition. In the past six years, Neusoft has been maintaining a good momentum of development and market share and accordingly good profit. However, facing the constantly changing future technology challenges, and especially facing the huge international market, Neusoft strategically chose to enhance its competitiveness and to compete at the international arena through international cooperation. And I believe this is the key to the sustainable development of digital medical industry. The joint venture between Neusoft and Philips for medical systems is a milestone for our efforts to internationalize Neusoft digital medical industry, and is sure to bring about continued, stable and high-speed development for the industry."

Mr. Zheng Quanlu, vice chairman of Neusoft Digital Medical Systems Co., Ltd. said, "through the joint venture with Philips, Neusoft Digital Medical Systems Co.,Ltd. has broadened its product portfolio in the four categories of CT, MRI, X-ray and Ultrasound and has further improved technology and quality to meet the needs of domestic and international customers. Meanwhile, on the strength of our past experience, we will continue to research and manufacture other digital medical imaging diagnosis and treatment equipment and vital components such as laser imaging equipment, electrophysiological equipment, radioactivity treatment equipment and PET." Mr. Zheng holds that the joint venture with Philips is our new turning point, which will surely promote the continued and fast development of Neusoft digital medical industry.