The announcement, made over the weekend, sent its stock price up 1.9 percent to HK$3.18 on Monday morning, the highest since March 5. Shares were up 0.64 percent at HK$3.14 by 0338 GMT, compared with a 0.28 percent decline in the benchmark Hang Seng Index.

In its statement, Sihuan said its application to register Tylerdipine Hydrochloride, developed in-house, had been accepted by the Chinese State Food and Drug Administration (SFDA).

Pre-clinical tests in animals showed the compound to be safe and effective in curbing hypertension while protecting the heart and kidneys, it said.

The application acceptance follows SFDA's approval for the company to conduct clinical trials for its internally developed anti-infective drug Apapenem Carbapenems earlier this year, China's largest cardio-cerebral vascular (CCV) drugmaker said.

Tylerdipine Hydrochloride, which is patented, is a calcium channel blocker that aims to treat hypertension and Sihuan aims to apply for both domestic and overseas registrations, including one with the U.S. Food and Drug Administration.

Over 200 million Chinese suffer from hypertension, a number that grows by more than 3 million each year, according to the company. Overall treatment costs exceed 40 billion yuan ($6.34 billion) per year, including 30.1 billion yuan for anti-hypertensive drugs in 2011.

China's prescription drug market, set to be the world's second-largest by 2020, is estimated to be worth more than $110 billion by 2015, from $50 billion in 2010.

The market's massive potential has attracted Western drugmakers such as AstraZeneca Plc, Pfizer Inc, Abbott Laboratories and Novartis AG. These global giants have to set up huge R&D centers to take advantage of China's lower costs and large pool of scientists to develop products aimed at Asian markets.

($1 = 6.3107 Chinese yuan)

(Reporting by Donny Kwok and Tan Ee Lyn; Editing by Ron Popeski)

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