China Sky One Medical, Inc. (AMEX: CSY) will pay $7.1 million to acquire Peng Lai Jin Chuang Company. Jin Chuang is a new pharmaceutical company with Good Manufacturing Practice certification and rights for a portfolio of 20 approved drugs, though it has not yet begun either production or sales.

The deal is structured as a combination of cash and stock. China Sky One will make a 17 million RMB ($2.5 million) payment in cash and an additional payment of 32 million RMB ($4.6 million) in China Sky One shares. China Sky One says that Jin Chuang has assets worth a total of 70 million RMB ($10.1 million). The 20 approved products include drugs for the treatment of colds, cardiovascular disease, and depression. China Sky One expects to close the transaction by June 30, 2008.

For China Sky One, the acquisition adds production capacity, and it broadens the company’s product offerings. Until now, China Sky One has been most heavily involved in externally applied treatments (patch products and ointments). The Jin Chuang acquisition adds internal use drugs to its products.

Even though Jin Chuang is a very young company, China Sky One said the acquisition will begin adding to its profitability by the end of 2008.