Jointown Pharmaceutical Group

Wuhan, China Site Visit

October 15, 2012

By

Eric Xiang

Key Personnel:

Mr. Gao Dongpo, Logistics Director

Mr. Bai Hongxing, Logistics Manager

Mr. Hui Lei, Logistics Technical Supervisor

Jointown Pharmaceutical Group is a well-known medicine trading company in China with an extensive domestic distribution network. Its gross revenue was about $3.5 billion in 2010, which ranked it in the top three in China for medicine trading. It is headquartered in Wuhan, in Central China and has over 7,000 total employees including 4,000 logistics employees. Mr. Gao Dongpo is the head of logistics. Jointown established a logistics company to operate its internal warehousing and distribution.

Jointown has its own distribution network in China including 15 central distribution centers (CRCs), which cover most provinces and 27 regional distribution centers (RDCs), which cover most cities. Warehouse space is over 600,000 square meters. Its customers are hospitals and medicine stores in both the city and downtown areas. Deliveries to hospitals is about 20% of the business.

For inland transportation, Jointown uses other logistics companies’ trucks for distances over 250 km. Jointown handles all deliveries within 250 km as it has its own fleet of 800 trucks. Deliveries are made to each medicine store about three times a week.

Jointown has an internal IT team to manage its transportation management and warehouse management systems. Mr. Hui Lei is in charge of IT systems research. All deliveries are arranged by its system versus manually.

In 2008, Jointown set up a warehouse in Beijing where 400,000 cartons of medicine goods are stored. An average of 15,000 cartons, 25,000 cartons in peak season, are handled in and out of the warehouse daily.

As a medicine trading company, its suppliers are medicine manufacturers, and buyers are medicines stores. Currently, Jointown has 4,270 suppliers and 64,000 buyers. In order to match the fast growth of medicine demand in China, Jointown plans to have 25 CRCs to cover provinces, 50 RDCs to cover most of the cities and 300 representative offices throughout China in the next three years. Logistics is a very important area of growth for Jointown.

According to Mr. Gao Dongpo, Jointown is continuing to outsource the city to city transportation on distances over 250 km to third-party logistics providers. There is also interest in setting up a joint venture logistics company, preferably with an investor experienced in natural/herbal medicine logistics.