AXM Pharma Receives Chinese Approval to Begin Selling Sunkist Line Under Distribution Contract With China Zuellig Xin Xing

NEWPORT BEACH, CA, Jan. 25, 2005 (MARKET WIRE via COMTEX) -- AXM Pharma, Inc. (AXJ) announced today that the Company has received final approval from the Chinese government to begin selling the Sunkist brand of products in China through a distribution agreement with China Zuellig Xin Xing (Zuellig). The news comes after AXM received verbal confirmation that its state-of-the-art pharmaceutical manufacturing facility has been GMP approved by the State Food and Drug Administration ("SFDA"). The factory opening ceremonies were held on January 19th and attended by dignitaries that included David Sampson from the US Department of Commerce. Photos of the opening can be viewed at

Zuellig ( is a subsidiary of the Interpharma Group, which is the largest pharmaceutical distributor in Asia, with annual revenues exceeding US$ 3.0 billion, 125 multinational clients, more than 100,000 direct accounts and 4,000 employees. Zuellig will be importing the product into China from the United States and is expected to begin shipping product to pharmacies and supermarkets beginning on or about March 1st. The first products to be launched are AXM Pharma's Sunkist dissolve-in-the-mouth films and Chew Chew Gummy Bear vitamin products including Vitamin C, zinc lozenge, Echinacea, and other nutraceutical products that AXM Pharma can begin to immediately sell to market.

The initial range of products will include Children's vitamin and vitamin supplements. The Children's vitamin and vitamin supplement market in China is currently valued at US$ 750 million, according Financial Insight Magazine. In the U.S., total demand for chewable tablets is expected to increase 4.7 percent annually to $1.3 billion in 2007. Gains are expected to reflect health care cost containment trends promoting preventive medicine and self-treatment. These trends are anticipated to expand consumption of chewable over-the-counter drugs and nutritionals, according to The Freedonia Group. Asian markets for chewables are expected to follow a similar trend.

According to VisionGain, a market research firm, overall OTC sales volume in China reached $3 billion in 2002 and pharmaceutical sales exceeded $24 billion. These figures include bulk pharmaceuticals, OTC products, traditional Chinese medicines and ethical drugs. VisionGain estimates that by 2007 the combined market will grow to $49.4 billion. The promulgation of China's OTC administrative regulations, relevant advertisement laws, fair competitive practices and a maturing Chinese consumer consciousness have opened the door for conservative companies like Merck, Roche and Novartis to enter the Chinese market. Affirmation from global multinationals that Chinese pharmaceutical and OTC markets are ripe for impressive growth support AXM Pharma's business model in the region.

AXM Pharma's CEO, Peter Cunningham, stated, "The combined resources and management expertise of China Zuellig Xin Xing and AXM will generate rapid market penetration in major retail channels in all large cities in China. We feel that this combination will enable AXM to establish its Sunkist brand of vitamin supplements as a market leader, quickly. Further, the combined resources will enable us to establish and maintain very attractive margins through Point of Sale promotion programs."

AXM Pharma Inc.,, through its wholly owned subsidiary, Werke Pharmaceuticals, Inc., is the 100% owner of AXM Pharma Shenyang, Inc. ("AXM Shenyang"), a Wholly Foreign Owned Enterprise ("WFOE") under the laws of the People's Republic of China. AXM Shenyang is located in the City of Shenyang, in the Province of Liaoning, China. AXM Shenyang and its predecessor company Shenyang Tianwei Pharmaceutical Factory, Ltd. ("STPF"), has an operating history of approximately 10 years. AXM Shenyang historically has been a manufacturer and distributor of proprietary and generic pharmaceutical products, which include injectables, capsules, tablets, liquids and medicated skin products for export and domestic Chinese sales. For additional information on AXM Pharma Inc, please visit or call Investor Communications Company, LLC at 708 447-6834.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this news release include certain predictions and projections that may be considered forward-looking statements under securities law. These statements involve a number of important risks and uncertainties that could cause actual results to differ materially including, but not limited to, the performance of joint venture partners, as well as other economic, competitive and technological factors involving the Company's operations, markets, services, products and prices. With respect to AXM, except for the historical information contained herein, the matters discussed in this news release are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, but are not limited to, AXM's extremely limited operating history, uncertainties related to the Company's access to additional capital, competition and dependence on key management.

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