CHINA HEALTH LABS & DIAGNOSTICS LTD. ANNOUNCES RESEARCH & DEVELOPMENT
AGREEMENT WITH CHINESE MILITARY

TORONTO, Dec. 8 /CNW/ - China Health Labs & Diagnostics Ltd. ("China Health" or the "Company") (CHO: TSXV), is pleased to announce a three year research and development (R&D) agreement (the "Agreement") to develop Point of Care Technology ("POCT") solutions and products for military and rescue diagnostic field lab applications. Under the Agreement China Health will work with the Chinese Military Medical Equipment Research Institute (the "Institute"), based in Tianjin, and with the Third Military Medical University (the "University"), based in Chongqing. The program has four main goals: to improve the Type B diagnostic field lab; to develop a new mobile diagnostic lab to be contained in a vehicle; to evaluate and improve reagents; and to develop a standard training program for military POCT field applications. The R&D work is expected to commence in early 2011.

The budget for the three-year program is RMB 10 million ($1.5 million) with China Health providing RMB 2 million ($0.3 million) and the Chinese military providing RMB 8 million ($1.2 million). China Health will also provide three research scientists and the core technology. The R&D will be conducted in labs provided by the Institute and the University in Tianjin and Chongqing, including full science and technology teams.  

Under the Agreement, China Health will own all intellectual property resulting from the R&D, including any improvements to the Company's existing technology and solutions. In addition, China Health will own all marketing and manufacturing rights, and will have no restrictions on China domestic and international markets.

"This R&D Agreement shows the commitment of the Chinese military to improving and expanding their rescue and military field medical diagnostic capabilities with products co-developed and manufactured by China Health," said Wilson Yao, CEO of China Health. "The Chinese military has now purchased 52 of our Type A diagnostic field labs which were developed in conjunction with the Chinese military and deployed with strong operating results in the number of rescue missions and military exercises. The R&D Agreement marks the strengthening of our relationship with the Chinese military as we work together to develop a full POCT product line for the military and strive to become the standard for all military POCT diagnostic field lab solutions. As previously announced, our sales of POCT solutions to the Chinese military have more than doubled in 2010, with most of the products delivered in the fourth quarter. With the expanded product line and success to date, we expect our POCT business with the Chinese military and other customers to be an important source of growth."

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

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 working with the Chinese military, the commencement of the R&D work, the budget and resources to be provided under the Agreement, and the POCT business as a source of growth. The forward-looking information is based on certain assumptions, which could change materially in the future, including the assumption that China Health and the Chinese military will proceed under the terms of the Agreement, that the R&D work will commence as expected, the budget and resources required under the Agreement are met, and that the POCT business will be a source of growth 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 China Health or the Chinese military may not proceed under the Agreement or may proceed under other terms, the R&D work may not commence as scheduled or at all, the parties may not be able to provide the budget and resources as set out under the Agreement, in whole or in part, or they may be provided on other terms, and the POCT business will be a source of 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.

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.

For further information:

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