BEIJING, Feb. 5 /PRNewswire-Asia-FirstCall/ -- Lotus Pharmaceuticals, Inc. (OTC Bulletin Board: LTUS) ('Lotus' or the 'Company'), a pharmaceutical products developer, manufacturer and distributor in the People's Republic of China, today announced that its contractually controlled subsidiary Beijing Liang Fang Pharmaceutical Co., Ltd. (''Liang Fang'') completed paying RMB180 million (about $26.3 million) in December 2008 for land use rights to property in the Chahaer Industrial Park, located in Inner Mongolia. This was an important step towards achieving the Company's long term growth plans.

Developing a New Facility and Pharmaceutical Park

The land use rights are for 1,000 mu (1mu = 667square meters) of land. Liang Fang plans to build a 50 mu (33,350 square meters) pharmaceutical products production, administration, storage and logistics facility on a 200 mu parcel of land. It plans to sell or rent the additional 800 mu of land to other pharmaceutical companies to create a Pharmaceutical Park of similar companies, a cluster of pharmaceutical companies which it hopes will find mutually beneficial ways of working together.

Liang Fang had its project proposal approved by the local Chayouqian county government before paying Chahaer Industrial Park for the land use rights. The Chayouqian county government has submitted Liang Fang's final project proposal documents to the National Bureau of Land and Resources, which must issue a land use permit before construction may begin on the new facility. Liang Fang expects to receive that permit in March or April of 2009. If the project is not approved and a land use permit is not issued, the full amount that Liang Fang paid for land use rights will be refunded to Liang Fang.

Lotus generated the RMB180 million that it paid for land use rights by speeding up its collection of accounts receivable in 2008.

The cost of developing Lotus' new facility and Pharmaceutical Park will require an estimated additional RMB400 million (about $58.5 million). Plans call for funding the estimated additional RMB400 million through a combination of internally generated cash, low interest local bank loans collateralized by the land, government grants distributed through China's Western Region Development Policy and Technology Sponsorship Policy, the sale or rental of land use rights to the 800 mu of land which will not be used for its new facility or Pharmaceutical Park, and other financing means.