Distribution Agreement

Taihua plc

("Taihua" or the "Company")

Distribution Agreement

Taihua is pleased to announce that, on 12 November 2010, Taihua Natural Plant Pharmaceutical Co. Ltd. ("TNP") appointed Xi'an Zaolutang Pharmaceutical Group Co., Ltd. ("Zaolutang") as its sole distributor in respect of the distribution in China of Biantong Pian, a new Traditional Chinese Medicine ("TCM") product which the Company commenced marketing in October 2010, and entered into an exclusive distribution agreement ("Distribution Agreement") with Zaolutang.

Pursuant to the terms and conditions of the Distribution Agreement, Zaolutang undertakes to distribute 330,000 boxes of Biantong Pian with a total value of RMB10.395 million in the first year and its target will be increased by 20% in the second year. Zaolutang has agreed to pay a deposit of RMB500,000 to TNP. If Zaolutang fails to achieve 60% of the target in the first year or fails to achieve 80% of the targets for two consecutive years, TNP is entitled to terminate the Distribution Agreement and the deposit will be forfeited.

Commenting on this agreement, Nicholas Lyth, Non-Executive Chairman said:

"Traditional Chinese Medicines is a sector in which Taihua has considerable expertise. I am pleased that Zaolutang, a well respected TCM distributor, has recognised this. In the first 6 months of 2010 our TCM sales were RMB2.124m so on-target sales of Biantong Pian will dramatically change the scale of our TCM revenues. With a strong balance sheet the Board continues to look for opportunities to complement our current TCM range."

For more information please contact:

Nicholas Lyth, Taihua plc

0776 990 6686

Katy Mitchell, WH Ireland Limited

+44 161 832 2174