China Medical Technologies (CMED)

We may not succeed in sustaining and expanding the market for our ECLIA system.

We began marketing and selling our ECLIA system in September 2004. Our ECLIA system is referred to as a “closed system” since our ECLIA analyzer can only use reagent kits manufactured by us and our reagent kits can only be used with our ECLIA analyzer. The segment income derived from ECLIA system was RMB87.2 million, RMB157.8 million and RMB277.4 million (US$39.6 million) for the fiscal years ended March 31, 2006, 2007 and 2008, respectively. In addition, through the acquisition of BBE in January 2008, we commenced the sales of ECLIA analyzer utilizing MAIA technology, which is also a closed system, and related reagent kits in January 2008. Going forward, the long-term success of our ECLIA system depends on several factors, including our ability to:

Luminescence immunoassay technology is a well established method of clinical diagnosis. As a result, our ECLIA system is competing in a market in which there are already many established industry players. We cannot assure you that we will be able to successfully market or sell our ECLIA system in the future. We also cannot assure you that our ECLIA system, or any future enhancements to our ECLIA system, will generate adequate revenue to offset our investments and costs in acquiring, developing or marketing our ECLIA system. If there is insufficient demand for our ECLIA system, our business, financial condition and results of operations may be harmed. In addition, any announcement of new products, services or enhancements by us or our competitors may cause our customers to cancel or postpone purchasing decisions for our existing products in anticipation of these new products, services or enhancements.