**DRAFT**


**Company
                  Contact:**
              **Investor
                  Relations Contact:**Ms.
                  Huizhen Yu
              Mr.
                  Crocker Coulson, PresidentChief
                  Financial Officer
              CCG
                  Investor RelationsChinaMedicine Corp
              Tel:
                  +1-646-213-1915 (NY Office)Tel:
                  +86-20-8739-1718
              E-mail:crocker.coulson@ccgir.comE-mail:konzern08@163.com
              Website:www.ccgir.com




***FOR
      IMMEDIATE RELEASE***





**China
      Medicine** **Announces Strong Second Quarter 2008 Results**





***Revenues
      increased 40.8% to $11.6 million***


***Net
      Income increased 118.8% to $2.5 million***





**Guangzhou** **,
      China - August 13, 2008 -**  China
      Medicine Corporation (OTC BB: CHME) (“China Medicine” or “the Company”), a
      leading
      distributor and developer of prescription and over-the-counter pharmaceuticals,
      traditional Chinese medicines (“TCM”), nutritional and dietary-supplements,
      medical devices, and medical formulations in the People’s Republic of China
      (“PRC”), today
      reported strong financial results for the second quarter ended June 30,
      2008.





**Second
      Quarter 2008 Highlights:**





--
      Revenues increased 40.8% to $11.6 million


--
      Gross
      profit increased 72.8% to $4.2 million


--
      Operating income increased
      107% to $3.0 million


--
      Net
      income increased 118.8% to $2.5 million, or $0.16 per diluted share





“We
      are
      pleased to report strong revenue growth driven by an increase in sales of
      pharmaceutical products through exclusive nationwide and regional distribution
      rights, competitive pricing, timely delivery of products and excellent
      after-sales customer service,” commented Mr. Senshan Yang, Chairman and CEO of
      China Medicine.





Revenues
      for the second quarter of 2008 grew
      40.8% to $11.6 million from $8.3 million in the second quarter of 2007. The
      increase was attributable to an overall increase in sales from the Company’s
      pharmaceutical product portfolio. Sales of pharmaceutical products obtained
      though the Guangdong Sunshine Medicine Public Internet Bidding System
      contributed to 35% of total revenues. Sales of pharmaceutical products with
      national distribution rights made up 35.7% of total revenues, and sales of
      products with manufacturing license accounted for 5.6% of total revenues. Sales
      of
      pharmaceutical products with regional-level distribution rights made up 23.7%
      of
      total revenues.









Product
      sales totaled $11.1 million and accounted for 95.1% of total net revenues.
      Sales
      of Western-style prescription and over-the-counter products accounted for 66.1%
      of total revenues for the second quarter. Sales of TCM prescription and
      over-the-counter products accounted for 26.9% of total revenues. Medical formula
      sales, which totaled $0.57 million, accounted for 4.9% of total revenues,
      representing an increase of 14% over the second quarter of 2007.





Gross
      profit in the second quarter of 2008 was $4.2 million, an increase of 72.8%
      over
      the second quarter of 2007. Gross margin increased significantly in the second
      quarter to 35.7% versus 29.1% for the same period in 2007, and 33.7% in the
      first quarter or 2008. The increase in gross margin was attributable to the
      Company’s strategy of restructuring its product portfolio mix, which includes
      higher-margin prescription pharmaceutical products and less over-the-counter
      generic pharmaceutical products.





Operating
      expenses in the second quarter of 2008 were $1.2 million, up 21.5% from $0.96
      million in the second quarter of 2007. The increase was due to higher selling,
      general and administrative expenses, but was less than the increase in revenues
      for the quarter. Operating expenses represented 10.0% of total revenues in
      the
      second quarter of 2008, down from 11.6% in the second quarter of
      2007.





Operating
      income was $3.0 million in the second quarter of 2008, up 107% from $1.4 million
      in second quarter of 2007. Operating margin for the second quarter of 2008
      was
      25.7% compared to 17.5% for the second quarter of 2007.





Net
      income for the second quarter of 2008 was $2.5 million or $0.16 per diluted
      share, up 118.8% from $1.1 million, or $0.08 per diluted share in the second
      quarter of 2007. Earnings per share reflect an increase of 1.4 million diluted
      average shares compared to the second quarter of 2007, primarily due to the
      exercise of warrants and options.





**Six
      Month Results**





For
      the
      first half of 2008, revenues increased to $18.7 million, up 40% from $13.4
      million in first half of 2007. Gross profit increased 58.1% to $6.5 million
      in
      the first six months of 2008, versus $4.1 million in the first six month of
      2007. Gross margin was 34.6% in the first half of 2008 compared to 30.6% during
      the first half of 2007. Operating income in the first half of 2008 grew 84.3%
      to
      $4.4 million compared to $2.4 million in the first half 2007. Net income for
      the
      first six months of 2008 was $3.6 million or $0.23 per diluted share, up 92.6%
      from $1.9 million, or $0.15 per diluted share in the first half of
      2007.





**Financial
      Condition**





As
      of
      June 30, 2008, China Medicine had approximately $34.2 million in working
      capital, an increase of 20% from $28.5 million as of December 31, 2007. Also
      as
      of June 30, 2008, China Medicine had $2.8 million in cash and cash equivalents,
      a decrease of 51.7% from $5.8 million as of December 31, 2007. For the six
      months ended June 30, 2008, cash used in operating activities was $2.99 million,
      compared to $3.1 million for the six months ended 2007. Cash used in operating
      activities is largely related to the Company’s account receivable and advance
      payments to suppliers. Stockholders’
      equity as of June 30, 2008 was $37.0 million, an increase of 20% over the $30.9
      million recorded as of December 31, 2007.









**Business
      Outlook**





China
      Medicine is actively expanding its product portfolio to include higher margin
      products in order to increase profitability. In the first half of 2008, the
      Company maintained distribution rights, through the Guangdong Sunshine Medicine
      Public Internet Bidding System, to sell all pharmaceutical products included
      in
      its current catalogue. This enables the Company to increase gross margin since
      it reduces expenses tied to introducing new products into the market.





During
      the quarter, China Medicine also achieved a major milestone in obtaining a
      patent for recombinant aflatoxin-detoxifizyme (rADTZ) in Australia that is
      valid
      through January 13, 2025. This is in addition to a patent granted in early
      2004
      from State Intellectual Property Office of China. The Company has applied for
      rADTZ patents in 13
      different jurisdictions in 2007 (including Australia, Canada, the European
      Union, Indonesia, Israel, Japan, South Korea, Mexico, Russia, South Africa,
      the
      U.S., Hong Kong and India). China Medicine is currently testing rADTZ on animal
      feed and is scheduled to begin working with the Chinese Department of
      Agriculture on a large scale experiment in order to meet national standards
      and
      apply for production permits. Due to the 2008 Beijing Olympics Games, the
      application for a production permit will be delayed since the Chinese government
      mandated that all toxic tests and experiments be temporarily halted before
      and
      during the Olympics. Therefore, further testing on rADTZ will be suspended
      for
      approximately three months.





To
      date,
      the Company has been approached by potential customers for rADTZ, including
      a
      large scale chicken farm in Guangzhou Province; a leading international provider
      of food, agriculture and risk management products and services; and an
      international manufacturer of enzymes for the detergent, textile, and food
      and
      feed industries. “The entrance of rADTZ in the animal feed industry is
      relatively easy since we will only need approval from the Department of
      Agriculture in China, which is in contrast to entering the food industry, where
      the process might take years,” said Mr. Yang. “Therefore, our target market is
      China’s entire feed industry, which is approximately RMB 274.2 billion ($39.8
      billion, 1 RMB = $0.145). In the next three years, we hope rADTZ will capture
      20% of the animal feed market,” said Mr. Yang.





“Based
      on
      our outstanding first half 2008 performance, we feel confident that we will
      meet
      our guidance of 25%-35% revenue growth and 30%-35% gross margins for fiscal
      2008. In addition, based on our strong second quarter profitability, we expect
      to exceed our net income guidance of 20%-22% for 2008,” concluded Mr.
      Yang.











**Conference
      Call**





China
      Medicine will hold its second quarter conference call for all interested persons
      at 10:00 a.m. Eastern Time on August 13, 2008 to discuss its results. To
      participate in the live conference call, please dial the following number five
      to ten minutes prior to the scheduled conference call time: 888.482.0024.
      International callers should dial 617.801.9702. When prompted by the operator,
      mention conference passcode 38093968. If you are unable to participate in the
      call at its scheduled time, a replay will be available for seven days starting
      on Wednesday, August 13 at 12:00 p.m. Eastern Time. To access the replay, dial
      888-286-8010 **** (international
      callers dial 617-801-6888), and enter the passcode 73037488.




**About
      China Medicine Corporation**




China
      Medicine Corporation is a leading pharmaceutical company that discovers and
      develops medical formulations and distributes over 2,200 pharmaceutical products
      in China including prescription and over-the-counter drugs, traditional Chinese
      medicine products, herbs and dietary supplements. The Company distributes the
      products to wholesale distributors in 28 provinces and to more than 300
      hospitals, 500 medicine companies, and 1,788 drug stores throughout China.
      The
      Company actively develops a number of proprietary products for many uses
      including oncology, high blood pressure and the removal of toxins from food
      and
      animal feeds. For more information visit the Company's website at http://www.chinamedicinecorp.com .




*Cautionary
      Statement*




*This
      press release contains forward-looking statements concerning the Company’s
      business and products. The Company’s actual results may differ materially
      depending on a number of risk factors including, but not limited to, the
      following: general economic and business conditions, obtaining regulatory
      approval for new products, the expected contribution of higher margin products,
      government support for rural health care, competition from existing and new
      competitors, changes in technology, and various other factors beyond its
      control. All forward-looking statements are expressly qualified in their
      entirety by this Cautionary Statement and the risk factors detailed in the
      Company's reports filed with the Securities and Exchange Commission. China
      Medicine Corporation undertakes no duty to revise or update any forward-looking
      statement to reflect events or circumstances after the date of this
      release.*






-FINANCIAL
      TABLES FOLLOW-







CHINA
        MEDICINE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
        STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
 (Unaudited)
  Three
                  months ended
              
              Six
                  months endedJune,
                  30
              
              June,
                  302008
              
              2007
              
              2008
              
              2007REVENUESProduct
                  sales
              
              $
              11,067,074
              
              $
              7,764,535
              
              $
              17,918,458
              
              $
              12,647,744Medical
                  formula sales
              
              
              570,465
              
              
              499,433
              
              
              780,120
              
              
              709,219Total
                  revenues
              
              
              11,637,539
              
              
              8,263,968
              
              
              18,698,578
              
              
              13,356,963COST
                  OF GOOD SOLD
              
              
              7,481,170
              
              
              5,859,008
              
              
              12,230,189
              
              
              9,264,425GROSS
                  PROFIT
              
              
              4,156,369
              
              
              2,404,960
              
              
              6,468,389
              
              
              4,092,538OPERATING
                  EXPENSESResearch
                  and development
              
              
              107,824
              
              
              543
              
              
              196,216
              
              
              100,655Selling,
                  general and administrative
              
              
              1,060,082
              
              
              960,924
              
              
              1,872,590
              
              
              1,604,770Total
                  operating expenses
              
              
              1,167,906
              
              
              961,467
              
              
              2,068,806
              
              
              1,705,425INCOME
                  FROM OPERATIONS
              
              
              2,988,463
              
              
              1,443,493
              
              
              4,399,583
              
              
              2,387,113OTHER
                  INCOME (EXPENSE), NET
              
              
              32,104
              
              
              (7,118
              )
              
              38,087
              
              
              (10,090
              )INCOME
                  BEFORE INCOME TAXES
              
              
              3,020,567
              
              
              1,436,375
              
              
              4,437,670
              
              
              2,377,023AND
                  MINORITY INTERESTPROVISION
                  FOR INCOME TAXES
              
              
              572,176
              
              
              338,326
              
              
              840,943
              
              
              538,285INCOME
                  BEFORE MINORITY INTEREST
              
              
              2,448,391
              
              
              1,098,049
              
              
              3,596,727
              
              
              1,838,738MINORITY
                  INTEREST
              
              
              17,833
              
              
              29,085
              
              
              45,310
              
              
              52,117NET
                  INCOME
              
              
              2,466,224
              
              
              1,127,134
              
              
              3,642,037
              
              
              1,890,855OTHER
                  COMPREHENSIVE INCOMEForeign
                  currency translation adjustment
              
              
              744,658
              
              
              302,836
              
              
              2,071,824
              
              
              559,325COMPREHENSIVE
                  INCOME
              
              $
              3,210,882
              
              $
              1,429,970
              
              $
              5,713,861
              
              $
              2,450,180EARNINGS
                  PER SHAREBasic
              
              $
              0.16
              
              $
              0.09
              
              $
              0.24
              
              $
              0.18Diluted
              
              $
              0.16
              
              $
              0.08
              
              $
              0.23
              
              $
              0.15WEIGHTED
                  AVERAGE SHARES OUTSTANDINGBasic
              
              
              15,206,124
              
              
              12,160,111
              
              
              15,118,595
              
              
              10,692,414Diluted
              
              
              15,634,713
              
              
              14,232,457
              
              
              15,547,183
              
              
              12,764,759
  
  CHINA
        MEDICINE CORPORATION AND SUBSIDIARIES
  AS
          OF
          JUNE 30, 2008 AND DECEMBER 31, 2007
  ASSETS2008
              
              2007UnauditedCURRENT
                  ASSETSCash
              
              $
              2,771,459
              
              $
              5,767,774Accounts
                  receivable, trade, net of allowance for doubtful accountsof
                  $59,212 and $55,640 as of June 30, 2008 andDecember
                  31, 2007, respectively
              
              
              15,176,874
              
              
              13,626,347Notes
                  receivables
              
              
              1,718,702
              
              
              -Inventories
              
              
              5,029,693
              
              
              3,948,460Advances
                  to suppliers
              
              
              9,937,629
              
              
              5,983,277Other
                  current assets
              
              
              86,003
              
              
              81,221Total
                  current assets
              
              
              34,720,360
              
              
              29,407,079EQUIPMENT,
                  net
              
              
              1,296,716
              
              
              1,388,919OTHER
                  ASSETSDeferred
                  expenses
              
              
              541,328
              
              
              678,237Deposit
                  for patent
              
              
              622,993
              
              
              -Intangible
                  assets, net
              
              
              1,240,804
              
              
              1,166,003Total
                  other assets
              
              
              2,405,125
              
              
              1,844,240Total
                  assets
              
              $
              38,422,201
              
              $
              32,640,238LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT
                  LIABILITIESAccounts
                  payable, trade
              
              $
              104,401
              
              $
              76,907Other
                  payables and accrued liabilities
              
              
              19,686
              
              
              70,343Customer
                  deposits
              
              
              221,401
              
              
              203,281Taxes
                  payable
              
              
              115,782
              
              
              468,184Liquidated
                  damages payable
              
              
              44,003
              
              
              44,003Total
                  liabilities
              
              
              505,273
              
              
              862,718MINORITY
                  INTEREST
              
              
              904,070
              
              
              893,337SHAREHOLDERS'
                  EQUITYPreferred
                  stock, $0.0001 par value; 10,000,000 shares authorized,-
                  and 111,649 shares issued and outstandingat
                  June 30, 2008 and December 31 2007, respectively
              
              
              -
              
              
              11Common
                  stock, $0.0001 par value; 100,000,000 shares authorized,15,226,742
                  and 14,821,641 shares issued and outstandingat
                  June 30, 2008 and December 31, 2007, respectively
              
              
              1,522
              
              
              1,482Paid-in
                  capital
              
              
              12,974,863
              
              
              12,560,078Statutory
                  reserves
              
              
              2,191,230
              
              
              2,191,230Retained
                  earnings
              
              
              17,650,624
              
              
              14,008,587Accumulated
                  other comprehensive income
              
              
              4,194,619
              
              
              2,122,795Total
                  shareholders' equity
              
              
              37,012,858
              
              
              30,884,183Total
                  liabilities and shareholders' equity
              
              $
              38,422,201
              
              $
              32,640,238
  
  CHINA
        MEDICINE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
        STATEMENTS OF CASH FLOWS
 FOR
        THE
        SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Unaudited)
  2008
              
              2007CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  income
              
              $
              3,642,037
              
              $
              1,890,855Adjustments
                  to reconcile net income to cashused
                  in operating activities:Minority
                  interest
              
              
              (45,310
              )
              
              (52,117
              )Depreciation
                  and amortization
              
              
              193,572
              
              
              130,330Bad
                  debt expense
              
              
              -
              
              
              876Stock
                  issued for services
              
              
              -
              
              
              134,550Amortization
                  of stock option and warrant compensation
              
              
              52,314
              
              
              50,258Amortization
                  of deferred expenses
              
              
              175,421
              
              
              -Loss
                  on currency exchange
              
              
              -
              
              
              19,620Change
                  in operating assetsAccounts
                  receivable, trade
              
              
              (657,089
              )
              
              521,256Notes
                  receivables
              
              
              (1,670,875
              )
              
              -Inventories
              
              
              (804,759
              )
              
              (2,500,265
              )Advances
                  to suppliers
              
              
              (3,473,818
              )
              
              (3,356,149
              )Other
                  current assets
              
              
              420
              
              
              (15,919
              )Change
                  in operating liabilitiesAccounts
                  payable, trade
              
              
              21,928
              
              
              30,328Other
                  payables and accrued liabilities
              
              
              (52,364
              )
              
              (67,809
              )Other
                  payables-related parties
              
              
              -
              
              
              30,772Customer
                  deposits
              
              
              4,931
              
              
              (157,245
              )Taxes
                  payable
              
              
              (371,810
              )
              
              245,048Liquidated
                  damages payable
              
              
              -
              
              
              1,133Net
                  cash used in operating activities
              
              
              (2,985,402
              )
              
              (3,094,478
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Deposit
                  for patent
              
              
              (605,657
              )
              
              -Purchase
                  of equipment
              
              
              (17,226
              )
              
              (214,162
              )Purchase
                  of intangible asset
              
              
              -
              
              
              (132,011
              )Net
                  cash used in investing activities
              
              
              (622,883
              )
              
              (346,173
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from exercise of warrants and options
              
              
              362,500
              
              
              5,717,789Net
                  cash provided by financing activities
              
              
              362,500
              
              
              5,717,789EFFECT
                  OF EXCHANGE RATE ON CASH
              
              
              249,470
              
              
              54,060(DECREASE)
                  INCREASE IN CASH
              
              
              (2,996,315
              )
              
              2,331,198CASH,
                  beginning of period
              
              
              5,767,774
              
              
              371,480CASH,
                  end of period
              
              $
              2,771,459
              
              $
              2,702,678