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China Medical Technologies Announces the Sale of its HIFU Business to a Major Shareholder, Chengxuan International

Thursday, December 18, 2008 General News J E 4
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BEIJING, Dec. 18 China Medical Technologies,Inc. (the "Company") (Nasdaq: CMED), a leading China-based medical devicecompany that develops, manufactures and markets advanced in-vitro diagnosticproducts, today announced that the Company has entered into a definitiveagreement to sell its High Intensity Focused Ultrasound tumor therapy systembusiness (the "HIFU Business") to Chengxuan International Ltd. ("Chengxuan"),its major shareholder for US$53.5 million in cash. Chengxuan will make apayment to the Company upon the closing of the sale and two other paymentsduring the year after the closing. Chengxuan is owned by Mr. Xiaodong Wu, theChairman and Chief Executive Officer of the Company.

The HIFU Business differs from the direction of the Company's focus in thedevelopment of advanced IVD businesses. The HIFU Business, which sellshigh-priced HIFU equipment, is seasonal and volatile, while the Company'sadvanced IVD businesses generate recurring revenues and high gross margin.Given the conditions in the global financial markets, more stringentregulatory requirements on therapeutic equipment from the State Food and DrugAdministration in China and the large capital investments required to obtainU.S. and EU regulatory approvals for HIFU equipment, the Company's board ofdirectors and management believe that the sale of the HIFU Business is in thebest interests of the Company. The Company engaged an independent valuer todetermine a range of fair values for the HIFU Business. The selling price toChengxuan was within the fair value range. The Company will receive cash fromthe sale and plans to invest in developing existing advanced IVD businesses tocontinue to generate recurring and growing revenues. The Company expects torecord a gain from the sale.

"After careful analysis and considering all of our options, we have takenan important step that best serves the Company and our shareholders," said Mr.Sam Tsang, Director and Chief Financial Officer of the Company. "Now, we willbe completely focused on expanding our leading position in the advanced IVDsector in China. This transaction will strengthen our financial position,further enhancing our ability to capitalize on the opportunities we see in themolecular diagnostics in China. This will further support our efforts todevelop additional molecular diagnostics products."

"The purchase of the HIFU Business from China Medical will provide moreflexibility in developing the HIFU Business, which requires continuousinvestments and patience before broad acceptance by the global medicalcommunity. The management team of the HIFU business has more options tooperate and manage the business as a private company," said Mr. Xiaodong Wu,Director of Chengxuan. "My personal work commitment to China Medical isunaffected by this transaction because the HIFU Business will be continuouslyoperated by the existing mature and experienced management team. I stronglybelieve that China Medical is in a position to become the best moleculardiagnostic company in China."

The transaction is expected to close before the end of December 2008,subject to customary closing conditions.

Conference Call

The Company's management team will discuss this sale during the scheduledearnings conference call at 8:00 a.m., Eastern Time on December 18, 2008 (or9:00 p.m. Beijing/Hong Kong time on the same date).

A live webcast of the conference call will be available onhttp://ir.chinameditech.com .

A replay of this webcast will be available for one month on this website.

A telephone replay of the call will be available after the conclusion ofthe conference call through 10:00 a.m. Eastern Time on December 19, 2008.

About China Medical Technologies, Inc.

China Medical Technologies is a leading China-based medical device companythat develops, manufactures and markets advanced in-vitro diagnostic productsusing Enhanced Chemiluminescence (ECLIA) technology, Fluorescent in situHybridization (FISH) technology and Surface Plasmon Resonance (SPR) technologyto detect and monitor various diseases and disorders. For more information,please visit http://www.chinameditech.com .

About Chengxuan International Ltd.

Chengxuan International Ltd. is an investment holding company which hasequity interests in China Medical Technologies, Inc. Chengxuan InternationalLtd. is owned by Mr. Xiaodong Wu.

Safe Harbor Statement

This press release contains forward-looking statements. These statementsconstitute "forward-looking" statements within the meaning of Section 27A ofthe Securities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended, and as defined in the U.S. PrivateSecurities Litigation Reform Act of 1995. These forward-looking statements canbe identified by terminology such as "will," "expects," "anticipates,""future," "intends," "plans," "believes," "estimates" and similar statements.Among other things, the quotations from management in this press releasecontain forward-looking statements. Such statements involve certain risks anduncertainties that could cause actual results to differ materially from thosein the forward-looking statements. Further information regarding these andother risks is included in the Company's filings with the U.S. Securities andExchange Commission, including its annual report on Form 20-F. The Companydoes not undertake any obligation to update any forward-looking statement as aresult of new information, future events or otherwise, except as requiredunder applicable law.The dial-in details for the live conference call are as follows: -- U.S. Toll Free Number 1-800-510-0178 -- International Dial-in Number 1-617-614-3450 Passcode: CMEDCALL

SOURCE China Medical Technologies, Inc.
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