Jilin-based Chinese-medicine manufacturer Northeast Tiger Pharmaceutical will use HK$36 million net proceeds from investors to help its business expansion plans. The Growth Enterprise Market (GEM) listing candidate, whose production facilities have not yet obtained Good Manufacturing Practice (GMP) certification, is planning to invest HK$28 million in establishment of a GMP-compliant plant. The new plant initially would operate one production line, mainly for producing the company's Shi Long Blood Clean Granules, a new drug for treating slight and moderate strokes. The plant is expected to be completed and obtain GMP certification by the end of next year, allowing the company to comply with State Drug Administration (SDA) requirements. To guarantee the quality of mainland pharmaceutical products, the SDA imposed regulations in 1999 requiring all domestic pharmaceutical companies to obtain GMP certification for plants before June 2004 or face having their operations closed down. Jack Xu Zhe, chairman of Northeast Tiger Pharmaceutical, said the company's existing production facilities were applying for GMP certification. The company expects its present production plant to obtain certification this year. Northeast Tiger Pharmaceutical's present facilities produce mainly its key product Lu Lu Tong Injection, a drug used for treating circulatory blockages. It accounts for more than 80 per cent of revenue. The company reported 16.33 million yuan (about HK$15.3 million) net profit on 58.5 million yuan turnover for the first eight months of last year. However, the company also recorded a high level of outstanding debt. As of August 31, it had 42.46 million yuan net account receivables, representing 72.58 per cent of turnover during the period. In 2000, Northeast Tiger posted a 21.93 million yuan net profit on 84.43 million yuan turnover. In its GEM-listing information, the firm warned that ingredients it used for its products had not undergone scientific tests on toxicity. It also warned of the risk of liability or claims arising from its products which did not have insurance cover. Mr Xu said the Government prohibited pharmaceutical companies from insuring output in order to prevent them from escaping responsibility for quality of their products. He also stressed the company's products had undergone stringent clinical tests and quality checks. Despite the warnings, Northeast Tiger Pharmaceutical's GEM share offering was well-received, being about 10 times subscribed. It sold 180 million new shares at 26 HK cents each, at the top end of its 23 HK cents to 26 HK cents pricing range. Shares in Northeast Tiger Pharmaceutical will commence trading on the GEM board on Thursday.