Simcere Pharmaceuticals (NYSE:SCR)

In 2008, 2009 and 2010, our capital expenditures totaled RMB136.8 million, RMB141.3 million and RMB188.8 million ($28.6 million), respectively. In past years, our capital expenditures consisted primarily of the costs of obtaining land use rights and the purchases of property, plant and equipment and our research and development facilities. We estimate that our capital expenditures in 2011 will be approximately RMB197.9 million ($30.0 million), which we will use mainly for the research and development equipment purchase and facility expansion in Jiangsu Province and Shanghai, the construction of an office building in Shanghai. We expect to use cash generated by operating activities and our cash in hand to pay for our capital expenditures in 2011.

We expect cash provided from operating activities to continue to be a major source of liquidity for us and the future.