On July 16, a strategic cooperative agreement was signed by the Yunnan Daphne Pharmaceutical (Group) Co., Ltd. and the Shanghai Drug Group - China's biggest pharmaceutical enterprise. For this deal, the Daphne Pharmaceutical Group will pay its contribution in the form of net assets, while the Shanghai Drug Group will pay its contribution in cash. The contributions will be used to fund establishment of a new firm called the Panax Pseudoginseng Industrial Group Yunnan. 
The Daphne Pharmaceutical Group is located in the Wenshan prefecture, being a leading enterprise in the Yunnan panax pseudoginseng industry, a top 100 enterprise in the Yunnan province, a certified high-tech enterprise, and one of the 10 major pharmaceutical enterprises on the preemptive support list of the Provincial Government. In April 2000, the Daphne Pharmaceutical Group became the first GMP-compliant enterprise in the Yunnan province certified by the state regulations. Through development over the years, they have grown to a strong player in terms of R&D, production and sales of panax pseudoginseng drugs and health products. The Daphne Panax Pseudoginseng Industry Co., Ltd. Yunnan, a subsidiary mostly owned by the Daphne Pharmaceutical Group, is an enterprise integrating planting, production, processing and sales of panax pseudoginseng. In November 2003, Daphne's panax pseudoginseng GAP base became the first one in Yunnan and one of the first 8 GAP-compliant TCM material bases certified by the state regulator. 
The Shanghai Drug Group China, principally owned by the Huayuan Group, reported 2003 drug sales income of RMB 20 billion yuan, and profit of as high as 665 million yuan, being a strong enterprise with good economic operating quality and credit rating at AAA.
The Panax Pseudoginseng Industrial Group Yunnan between the Daphne Pharmaceutical Group and Shanghai Drug Group will, on the basis of Daphne's existing panax pseudoginseng industry, establish and strengthen the Yunnan panax pseudoginseng seed technology company, panax pseudoginseng seedling base and panax pseudoginseng GAP planting base, in a bid to expand the GAP planting area to 100000 mu (6666.67 hectares) by 2010, and bring the panax pseudoginseng GAP planting in line with the requirements of normalized and large scale operation. The new company will construct a panax pseudoginseng extraction center and herbal packages processing center in the Wenshan Panax Pseudoginseng Industrial Park. Based on the findings of herbal packages standardization research of the Shanghai Drug Group, the new production facilities will be constructed the largest ones of their kind in China and be complete with world class technology. Additionally, the new company will count on the advantage of Shanghai Drug Group in R&D, production technology and market network to extend the panax pseudoginseng industrial chain, and establish a panax pseudoginseng series drug center. In brief, the Panax Pseudoginseng Industrial Group Yunnan is expected to be forged into a leading panax pseudoginseng group in China.