The two companies, which are based in enterprise zones in the Chinese cities of Shangju and Guangde, are involved in the manufacture of active pharmaceutical ingredients (API) and chemical intermediates. Both operate under current good manufacturing process (cGMP) accredited conditions. Zhejiang and Anhui have been making key chemicals and drug intermediates on Krka's behalf for several years. The new investment is part of Krka's strategic effort to boost its chemical synthesis capacity over the medium to long term. In a press statement Krka's CEO Joze Colaric commented that acquisition had guaranteed a competitively-priced supply of APIs and chemical intermediates for the firm's pharmaceutical manufacturing operations. At present, the Ljubljana-headquartered drugmaker owns and runs facilities in Slovenia, Croatia, Poland, Russia and Germany that make a wide range of branded and generic pharmaceuticals and cosmetic products. According to official statistics from China's customs office, the country exported APIs worth around $8.9bn in 2007, up 35.7 per cent on the previous year. With demand for APIs continuing to grow, an increasing number of European and US drugmakers are investing in Chinese manufacturers in order to secure future supplies. Positive first quarter 2008 Krka began acquiring pharmaceutical companies in November 2007 when it paid €97m for German generics group Tad Pharma, a specialist developer of drugs for cardiovascular, central nervous system and urogenital disorders. Speaking at the time Colaric said that the move would: "supplement our effective organic business development and further enhance our position in the generic pharmaceutical industry in West Europe." In May the group reported that it had achieved an operating profit of €62.7m for the first quarter, up around 23 per cent on the year-earlier period. The firm said that this was largely due to a 20 per cent hike in revenues to €244.4m. The sale of prescription pharmaceuticals, which contributed around €200m, generated around 82% of Krka total quarterly turnover. The firm reported that revenue from branded products sold outside Slovenia grew 23 per cent to €219.5m, with Western Europe and overseas markets providing the biggest gains.