Red chip China Pharmaceutical Enterprise and Investment Corp expects a decision within two months on a proposal to merge its parent and North China Pharmaceutical. Chairman Cai Dongchen said the merger would consolidate the strength of the two Hebei-based pharmaceutical companies and eliminate production overlaps. The merger would create a pharmaceutical giant with annual sales of nine billion yuan (about HK$8.37 billion). China Pharmaceutical's parent Shijiazhuang Pharmaceutical Group generated sales of about two billion yuan last year. Mr Cai said it was likely North China Pharmaceutical would give up its Tokyo listing plan after the merger. The Hebei provincial government is vetting the merger plan. Mr Cai said China Pharmaceutical might buy assets from the merged entity but fell short of elaboration. Previous reports suggested the provincial government had agreed to allow China Pharmaceutical to buy a stake in the A-share listed arm of North China Pharmaceutical as there would be synergy between the two producers. Mr Cai would only say there would be measures taken to ensure there would not be competition between the listed arm and the future parent. North China Pharmaceutical produced 3,000 tonnes of vitamin C and 4,000 tonnes of penicillin while China Pharmaceutical churned out 6,000 tonnes of vitamin C and 1,500 tonnes of penicillin last year. The falling yen did not affect the company as its export receipts were in US dollars, Mr Cai said. He said the company was awaiting approval from the China Securities Regulatory Commission to buy into animal antibiotics and infusions production from its parent at a price-earnings ratio of less than five times, which was below analysts' estimates.