CHINA HEALTH LABS & DIAGNOSTICS LTD. ANNOUNCES INCREASED SALES AND NEW
PRODUCTS FOR CHINESE MILITARY

TORONTO, Oct. 28 /CNW/ - China Health Labs & Diagnostics Ltd. ("China Health" or the "Company") (CHO: TSXV), is pleased to announce that sales of its Point of Care Technology (POCT) will grow by more than 100% in 2010 compared to 2009 due to increased sales of its "Type A" POCT diagnostic field lab and new products developed specifically for the Chinese military. 

Prior to 2009, the Chinese military had purchased diagnostic lab equipment from the Company designed for use in hospitals and clinics in controlled laboratory wet chemistry environments. However, when the Chinese military used this lab equipment for disaster relief for the 2008 Sichuan earthquake, it did not perform well due to the need for clean rooms, lab technicians for sample handling, temperature control, and electric power outlets.  

Accordingly, in 2008 the Company began working on a solution for a field diagnostics lab in cooperation with the Chinese military. The result of that development work was the Type A total lab solution with nine integrated modules linked together by the Company's lab information system ("LIS") and housed in a transportation box built with military grade materials. The Type A employs dry chemistry that can be effectively used in disaster and military field environments. The LIS facilitates accurate and fast test results without the need for lab technicians. The Type A system and LIS are both protected by patents and copyrights in China. 

In 2009, when China Health made its first sales of the POCT Type A diagnostic field labs, sales to the military accounted for 10.8% of revenues or approximately $2.6 million of $23.8 million of total annual revenues. The Type A units purchased in 2009 have been used successfully by the Chinese military in a number of disaster relief and military exercise operations, including the recent Haiti and Yushu, Qinghai Province earthquake rescue operations. In August 2010, the Chinese military used the Type A units in the relief efforts for the mud-rock slide in Zhouqu County, Gansu Province and in the major flooding in Pakistan.  These successes have already led to a doubling of orders from the Chinese military for Type A units in 2010 compared to 2009. These units are expected to be delivered before the end of 2010. 

China Health has established a strong working relationship with the Chinese military which has led to the cooperative development of POCT products for a wide range of applications, including a smaller "Type B" field lab, a unit to be deployed in military SUVs, a naval unit (that has been designed to work in salt water and magnetic environments) and a backpack system to be used by smaller military units. While most of these new products are currently being tested by the military, the Company has already secured an order for RMB 18.9 million ($2.9 million) of the backpack units for 2010. 

"We have worked very hard to develop products with the Chinese military that meet their needs for reliable and fast test results in disaster relief and military operations and a system that can be operated by soldiers that don't have extensive medical lab training," said Wilson Yao, CEO of China Health. "Since we have a unique patented solution with no direct competitors in China and a healthy relationship with our key customer we have the confidence to invest the time and resources to develop a full range of diagnostic products and services for the military and emergency services sector. With our proprietary products and early success in delivering results in the field, we believe that POCT products will be one of our key drivers of revenue and profit growth as we build our business with the Chinese military and seek new customers."

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FORWARD-LOOKING INFORMATION AND NON-GAAP MEASURES

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect China Health's current expectations. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release includes information relating to the deployment of new POCT products by the Chinese military and the revenue and profit growth of POCT. Such statements and information reflect the current view of China Health with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the risks that the Chinese military may not deploy any of the new POCT products and that the POCT products may not be a key driver of China Health's revenue and profit growth.  China Health cautions that the foregoing list of material factors is not exhaustive. When relying on China Health's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. China Health has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

China Health has also included in this press release figures based on orders received, which is a non-GAAP measure. Readers are cautioned that such a measure is not recognized under Canadian GAAP and should not be construed to be an indicator of performance or liquidity or cash flows. China Health's method of calculating this measure may differ from the method used by other entities and accordingly China Health's measure may not be comparable to the measure used by other entities.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF CHINA HEALTH AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE CHINA HEALTH MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

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For further information:

Kim Oishi
Director
Telephone: [phone]
Email: [email protected]