Huadong Medicine Co., Ltd.
2023 Annual Report
April 2024
A Letter to the ShareholdersDistinguished shareholders,As time flies, we usher in a new year with endless possibilities. Over the pastyear, we have witnessed and experienced profound changes brought by the era. Thepharmaceutical industry is marching towards a new track of increasingly healthy andcompliant high-quality development driven by continuous pressures it withstands,accelerated industrial clearing due to medical anti-corruption, and continuouslyincreased values of innovative medicines. We are keenly aware that we can tide overthe difficulties only by constantly fostering our resilience for development, whichwill be achieved through our down-to-earth efforts.
Since we started our innovation and transformation, we have gradually defineddevelopment strategies for our four major business segments of pharmaceuticalindustry, pharmaceutical business, aesthetic medicine and industrial microbiology.Thanks to our consistent practice, we have transformed our innovative R&D systemfrom external introduction to “self-development + introduction” step by step and havesuccessfully achieved historic breakthrough in both innovative R&D team buildingand its capacity, with an industry chain for the complete cycle of innovation medicineR&D fostered. To date, we have established over 100 pharmaceutical productpipelines, including more than 60 pipelines for innovative products, and built theR&D ecology with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. as thecore.
In 2023, our constant efforts have been bearing fruits. The Liraglutide Injectionwas successfully launched, and had its marketing authorization application fordiabetes, obesity or overweight applications approved successively, being the first ofits kind in China and playing a leading role in the GLP-1 track. In the meantime,applications for launching of multiple blockbuster products were submitted.Mirvetuximab Soravtansine Injection, a global pioneering ADC medicine, was firstly
launched in Hainan, benefiting over 30 patients. Its application for launching inChina was accepted in October 2023. Ustekinumab Injection (QX001S) was the firstof its kind in China submitting the BLA, which was already accepted. Marketingauthorization applications of Rilonacept Injection for Cryopyrin-Associated PeriodicSyndromes and recurrent pericarditis were accepted by NMPA, expecting to benefitpatients with rare diseases as soon as possible. In addition, the Company has alsoseen achievements in R&D of innovative medicines. Applications on IND ofHDM1002, a small-molecule GLP-1 receptor agonist with global innovation level,were accepted in both China and the U.S. Its clinical trials are now progressingsmoothly. The application on IND of HDM1005, a GLP-1 and GIP dual-targetinnovative medicine, in China was successfully approved, and its clinical trials havebeen officially launched. The application on IND of HDM2005, the first ADCinnovative medicine independently developed by the Company, was submitted andaccepted. A variety of independent innovation achievements of the Company havealso debuted at diverse key international academic conferences and journals, furthershowcasing our unremitting endeavors and positive results in independent innovation.All these have laid a solid foundation for our future development and expansion.
In 2023, we embraced more exchanges through opening up, expandedcooperation, and consolidated resilience for development. Zevorcabtagene AutoleucelInjection, a CAR-T product introduced in early 2023, was successfully launched in2024. The Company will continue to roll out its businesses in the field of cell therapy.The Company introduced various types of global innovative external preparationsfrom Arcutis in the U.S. and MC2 in Denmark, further enriching our pipelines ofexternal preparations in the field of immunity and fostering a “golden combination”that features a multi-target point and multi-acting mechanism in psoriasis treatment.In the aesthetic medicine field, the Company introduced ATGC-110 from ATGC inSouth Korea and YY001 from Chongqing Yuyan in China, two new botulinum toxinproducts under research, fully enriching the Company’s pipelines in facial injectionproducts through differentiated positioning. In the industrial microbiology segment,
the Company set foot in the field of animal health through its holding subsidiaryJiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd. and won the exclusiveselling right of Baoshining
?, the first new opioid veterinary drug for central analgesiain China. The Company has continued to optimize its layout of pet protectionproducts.
Looking into 2024, we will always place our focus on “development of theinnovative medicine industry”. In this year’s government work report, the term“innovative medicine” was mentioned for the first time. It will occupy anincreasingly important position in the future, validate and guide our strategicorientation. Being “scientific research-based and patient-centered”, the Company willgive priority to three core therapeutic fields of oncology, endocrinology andautoimmunity, follow the development trends of cutting-edge technologies, and focuson the field of chronic diseases with significant unmet clinical needs oriented atunmet clinical needs of global patients. In the meantime, we will keep strengtheningand improving our independent innovation and R&D abilities, consolidate establishedtechnology platforms for R&D, exploit potentialities of the featured global R&Decosystem of Huadong Medicine, and foster new quality productive forces forvigorous growth.
As for the aesthetic medicine segment, one of the Company’s core strategicareas, the Company will continue to implement its unique strategy of “globaloperation layout and dual-circulation operation & development”. Insisting on thehigh-end and natural treatment, our patent-oriented professional teams in Chinafurther enhance promotion of product brands and enterprise brands, and activelyadvance registration and launching of more high-end aesthetic medicine products inChina. As for pharmaceutical business, the Company will further optimize businessstructure, facilitate transformation of innovative businesses, keep increasingproportion of innovative businesses, and improve operating benefits. In the industrialmicrobiology segment, the Company will conduct in-depth study on trends of marketchange, optimize layout of core businesses, focus on expansion of international
market, and endeavor to foster core varieties revolving around four key businessdirections, thus injecting vitality for the Company’s vigorous development.
Taking informed and decisive actions, the Company will surely be rewarded forits unremitting endeavors. The year of 2024 is full of unknowns and variables. In theface of increasingly fierce industry competitions, the Company encounters a deep endand enters the critical stage of innovation and transformation. Therefore, we mustforge ahead steadily. This year also marks the end of our 7th three-year planning. Wemust get ready to start again from zero, define strategic goals, pool system capacities,strengthen team building, and consolidate foundation for development. In 2024, acrucial year for securing our achievements and continuing our great efforts, theCompany will remain goal-oriented and problem-oriented, benchmark our 2030vision plan, deepen transformation of diverse businesses, and advance the high-quality development through active reflection, bold challenging, and bravepioneering.
Forging ahead despite strong wind and heavy rains, the Company has nowharvested fruits. My sincere thanks go to all staff for their selfless dedication, and toour investors and shareholders for their trust and support. It is the responsibility ofHuadong Medicine, a pharmaceutical enterprise, to keep strengthening our ability increating values, to continuously improve our core values, and to maintain consistentprofitability to reward the society and shareholders. In 2024, we increase the totalamount of our annual dividend to 1 billion yuan for the first time and propose tolaunch an interim dividend distribution to reward our shareholders. We hope to boostconfidence through practical actions, forge ahead and work hard to unfold a brilliantnew chapter.
Finally, I would like to share with you a few lyrics. Let’s encourage each otherand show our respect to the new era and those who struggle ahead bravely.
“We all race ourselves for a better future and a significant victory. There is noend ahead and we will never stop our steps ...”
Lv Liang, Chairman
Huadong Medicine Co., Ltd.
April 2024
2023 Annual Report
Section I. Important Declaration, Contents and DefinitionsThe Board of Directors, Board of Supervisors, directors, supervisors andsenior managers of Huadong Medicine Co., Ltd. (hereinafter referred to as the“Company”) hereby guarantee that the information presented in this annualreport is authentic, accurate and complete and free of any false records,misleading statements or material omissions, and shall undertake individualand joint legal liabilities.
Lv Liang, the Company’s legal representative and the officer in charge ofaccounting, and Qiu Renbo, head of accounting department (accountingsupervisor) hereby declare and guarantee that the financial statements in thisannual report are authentic, accurate and complete.
All directors have attended the Board of Directors meeting to review thisannual report.
The future plans, development strategies and other forward-lookingstatements in this annual report shall not be considered as substantialcommitment of the Company to investor. Investors and related parties shouldbe fully aware of the risks, and understand the differences between plans,forecasts and commitments.
The risks the Company faces in operation including industry policy andproduct price reduction risk, new drug R&D risk, investment and M&A riskand exchange rate fluctuation risk. For details, please refer to “v. Potential
risks and responses” under “XI. Prospect of future development” in “SectionIII. Management’s Discussion and Analysis”. Therefore, investors are kindlyreminded to pay attention to possible investment risks.
The dividend distribution scheme approved at the meeting of the Board ofDirectors is as follows: On the basis of 1,754,327,548 shares of the total sharecapital of the Company, 5.8 yuan (before tax) of cash dividends per tencommon shares will be distributed to all shareholders; a total of 0 bonus share(before tax) will be issued; and no capital reserve will be converted to increasethe capital stock.
According to “Stock Listing Rules of the Shenzhen Stock Exchange”, iflisted companies have both Chinese and other language version of publicnotice, they should ensure the content of both versions are the same. In the caseof discrepancy, the original version in Chinese shall prevail.
Contents
Section I. Important Declaration, Contents and Definitions.................................. 7
Section II. Company Profile and Key Financial Indicators ................................. 14
Section III Management’s Discussion and Analysis ...... 19
Section IV. Corporate Governance ........................................................................ 95
Section V Environmental and Social Responsibilities ...... 128
Section VI. Important Matters ............................................................................ 146
Section VII. Share Change and Shareholders..................................................... 181
Section VIII. Information on Preferred Shares .................................................. 197
Section IX. Information on Bonds ....................................................................... 198
Section X. Financial Report ................................................................................. 199
Contents of Reference File
(I) Financial statements signed and stamped by the legal representative, the person in chargeof accounting work and the head of accounting institution (accounting manager).(II) Original audit report stamped by public accountants, and signed and stamped by certifiedpublic accountant.(III) The original of all Company’s documents publicly disclosed in the press designated byCSRC during the reporting period and the original of announcements.
Definitions
| Term | refers to | Definition |
| CSRC | refers to | China Securities Regulatory Commission |
| SSE | refers to | Shenzhen Stock Exchange |
| Huadong Medicine/the Company/our Company | refers to | Huadong Medicine Co., Ltd. |
| CGE | refers to | China Grand Enterprises, Inc. |
| Huadong Medicine Group | refers to | Hangzhou Huadong Medicine Group Co., Ltd. |
| Zhongmei Huadong | refers to | Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. |
| Jiangdong Company | refers to | Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. |
| Jiangsu Joyang | refers to | Joyang Laboratories |
| Xi’an Bohua | refers to | Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. |
| Jiuyuan Gene | refers to | Hangzhou Jiuyuan Gene Engineering Co., Ltd. |
| Doer Biologics | refers to | Zhejiang Doer Biologics Co., Ltd. |
| Huadong Ningbo Company | refers to | Huadong Ningbo Medicine Co., Ltd. |
| Chongqing Peg-Bio | refers to | Chongqing Peg-Bio Biopharm Co., Ltd. |
| Qyuns Therapeutics | refers to | Qyuns Therapeutics Co., Ltd. |
| Nuoling Bio | refers to | Nuoling Biomedical technology (Beijing) Co., Ltd. |
| Grand Chanrong | refers to | Shanghai Grand Industrial and Financial Investment Management Co., Ltd. |
| Grand Huachuang | refers to | Beijing Grand Huachuang Investment Co., Ltd. |
| Hangzhou Heda | refers to | Hangzhou Heda Industrial Fund Investment Co., Ltd. |
| Fuguang Hongxin | refers to | Hangzhou Fuguang Hongxin Equity Investment Partnership (Limited Partnership) |
| Meihua Hi-Tech/ Anhui Meihua | refers to | Anhui Meihua Hi-Tech Pharmaceutical Co., Ltd. |
| Wuhu Huaren | refers to | Wuhu Huaren Science and Technology Co., Ltd. |
| Magic Health | refers to | Hubei Magic Health Technology Co., Ltd. |
| CARsgen Therapeutics | refers to | CARsgen Therapeutics Holdings Limited |
| Nanjing Nongda Animal Pharmaceutical | refers to | Jiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd. |
| Hibe | refers to | Hibe Technology Co., Ltd. |
| Chongqing Yuyan | refers to | Chongqing Yuyan Pharmaceutical Co., Ltd. |
| IMPACT Therapeutics | refers to | Nanjing IMPACT Therapeutics Co., Ltd. |
| Takeda | refers to | Takeda Pharmaceuticals Company Ltd. |
| GLP-1 | refers to | Glucagon-like Peptide 1 |
| Sinclair | refers to | Sinclair Pharma Limited |
| vTv | refers to | vTv Therapeutics LLC |
| R2 | refers to | R2 Technologies, Inc. |
| MediBeacon | refers to | MediBeacon Inc. |
| ImmunoGen | refers to | ImmunoGen, Inc. |
| Provention Bio | refers to | Provention Bio, Inc. |
| RAPT | refers to | RAPT Therapeutics, Inc. |
| Kylane | refers to | Kylane Laboratories SA |
| High Tech | refers to | High Technology Products, S.L.U. |
| Heidelberg Pharma | refers to | Heidelberg Pharma AG |
| Kiniksa | refers to | Kiniksa Pharmaceuticals (UK), Ltd. |
| KiOmed | refers to | KiOmed Pharma SA |
| Daewon | refers to | Daewon Pharmaceutical Co., Ltd. |
| AKSO | refers to | AKSO Biopharmaceutical, Inc. |
| Ashvattha | refers to | Ashvattha Therapeutic, Inc. |
| SCOHIA | refers to | SCOHIA PHARMA, Inc. |
| EMA Aesthetics | refers to | EMA Aesthetics Limited |
| Julphar | refers to | Gulf Pharmaceutical Industries PJSC (JULPHAR) |
| Arcutis | refers to | Arcutis Biotherapeutics, Inc. |
| MC2 | refers to | MC2 Therapeutics Ltd. |
| ATGC | refers to | ATGC Co., Ltd. |
| GMP | refers to | Good Manufacturing Practice |
| cGMP | refers to | Current Good Manufacturing Practices |
| GSP | refers to | Good Supply Practice |
| BE | refers to | Bioequivalence |
| CDE | refers to | Center for Drug Evaluation (of National Medical Products Administration) |
| MAH | refers to | Marketing Authorization Holder |
| FDA | refers to | (U.S.) Food and Drug Administration |
| NMPA | refers to | National Medical Products Administration |
| NHSA | refers to | National Healthcare Security Administration |
| NDA | refers to | New Drug Application |
| BLA | refers to | Biologic License Application |
| ANDA | refers to | Abbreviated New Drug Application (or Generic Drug Application) |
| ICH | refers to | International Council for Harmonisation (of Technical Requirements for Pharmaceuticals for Human Use) |
| IND | refers to | Investigational New Drug |
| PK/PD | refers to | Pharmacokinetics/ pharmacodynamics |
| CMC | refers to | Chemistry, Manufacturing and Control, mainly such pharmaceutical researches as manufacturing technology, impurity research, quality research, and stability research during drug research and development. |
| CMO | refers to | Contract Manufacturing Organization, i.e. Providing such services as customized manufacturing of medical intermediates, APIs and pharmaceutical preparations entrusted by pharmaceutical companies. |
| CDMO | refers to | Contract Development and Manufacturing Organization, mainly including providing customized R&D and production services for multinational pharmaceutical companies and biotechnology companies, such as process R&D and preparation, process optimization, scale-up manufacturing, registration and verification batches manufacturing, and commercial manufacturing of medicines, especially innovative medicines. |
| QA | refers to | Quality Assurance (department) |
| ADC | refers to | Antibody-Drug Conjugates |
| EBD | refers to | Energy Based Devices |
| license-in | refers to | Product license introduction |
| license-out | refers to | Product External License Authorization |
| BD | refers to | Business Development |
| EBITDA | refers to | Earnings Before Interest, Taxes, Depreciation and Amortization |
| EHS | refers to | Environment, Health and Safety Management Systems |
| MRCT | refers to | Multi-regional Clinical Trials |
| OTC | refers to | Over The Counter, i.e. medicines published by the medical products administration under the State Council and purchased and used by consumers at their discretion without the prescription of practicing doctors or assistant practicing doctors. |
| PFS | refers to | Progression-free survival |
| Prescription Drugs | refers to | Drugs that require medical prescriptions issued by physicians to be bought and used |
| RWR/RWS | refers to | Real World Research/Study, RWR/RWS, refers to collect data related to patients in the real world environment (Real World Data), through analysis, acquiring the use value of medical products and clinical evidence of potential benefits or risks (Real World Evidence). |
| 2023 Drug Catalog | refers to | Catalogue of Drugs for Basic National Medical Insurance/Employment Injury Insurance/Birth Insurance (2023) |
| Reporting Period | refers to | From January 1, 2023, to December 31, 2023 |
Section II. Company Profile and Key Financial Indicators
I. Company information
| Stock name (abbreviation) | Huadong Medicine | Stock code | 000963 |
| Stock listed on | Shenzhen Stock Exchange | ||
| Company name in Chinese | 华东医药股份有限公司 | ||
| Company name in Chinese (abbreviation) | 华东医药 | ||
| Company name in English (if any) | Huadong Medicine Co., Ltd. | ||
| Company name in English (abbreviation, if any) | Huadong Medicine | ||
| Legal representative | Lv Liang | ||
| Registered address | Floor 4/7, No. 439, Zhongshanbei Road, Gongshu District, Hangzhou City, Zhejiang Province | ||
| Zip code of the registered address | 310006 | ||
| Changes of registered address | From the date of listing to July 2012, the registered address was “No. 439, Zhongshanbei Road, Xiacheng District, Hangzhou”. From July 2012, the registered address was changed to “Floor 9/10, Gate No. 1, Building No. 1, 468 Yan’an Road, Hangzhou”. From July 2019, the registered address was changed to “Floor 7/9/10, Gate No. 1, Building No. 1, 468 Yan’an Road, Hangzhou”. From July 2022, the registered address was changed to “Floor 9/10, Gate No. 1, Building No. 1, 468 Yan’an Road, Hangzhou”. From June 2023, the registered address was changed to “Floor 4/7, No. 439, Zhongshanbei Road, Gongshu District, Hangzhou City, Zhejiang Province”. | ||
| Office address | No. 866, Moganshan Road, Hangzhou | ||
| Zip code of the office address | 310011 | ||
| Official website | www.eastchinapharm.com | ||
| Email address | hz000963@126.com | ||
II. Contact persons and contact information
| Secretary of the Board of Directors | Securities affairs representative | |
| Name | Chen Bo | Hu Shufen |
| Contact address | No. 866, Moganshan Road, Hangzhou | No. 866, Moganshan Road, Hangzhou |
| Tel. | 0571-89903300 | 0571-89903300 |
| Fax | 0571-89903300 | 0571-89903300 |
| Email address | hz000963@126.com | hz000963@126.com |
III. Channels of disclosure and location of preparation
| Website of the stock exchange for publishing the annual report | Shenzhen Stock Exchange - www.szse.cn |
| Media and website for publishing the annual report | China Securities Journal, Securities Times, Shanghai Securities News and Cninfo (www.cninfo.com.cn) |
| Location of preparation of the Company’s annual report | Office of the Company’s Board of Directors |
IV. Registration changes
| Unified Social Credit Code | 91330000143083157E |
| Changes of the Company’s main business since its listing (if any) | None |
| Previous changes of controlling shareholder (if any) | None |
V. Other information
Certified public accountants
| Name | Pan-China Certified Public Accountants LLP |
| Office address | Huarun Building B, 1366 Qianjiang Road, Hangzhou, Zhejiang Province |
| Signing accountants | Hu Yanhua and Chen Xiaodong |
Sponsors for continuous supervision and guidance during the reporting period
□ Applicable ? N/A
Financial consultant for continuous supervision and guidance during the reporting period
□ Applicable ? N/A
VI. Key accounting data and financial indicators
Whether the Company needs to perform a retroactive adjustment or restatement of previous accounting data
□Yes ?No
| 2023 | 2022 | Percentage increase/decrease from last year to this year | 2021 | |
| Operating revenue (yuan) | 40,623,782,520.43 | 37,714,587,458.01 | 7.71% | 34,563,301,233.67 |
| Net profit attributable to shareholders of listed companies (yuan) | 2,838,860,542.80 | 2,499,214,359.57 | 13.59% | 2,301,631,347.64 |
| Net profit attributable to shareholders of listed companies after deducting non-recurring gains/losses (yuan) | 2,736,571,736.98 | 2,409,954,557.05 | 13.55% | 2,188,946,362.34 |
| Net cash flow from operating activities (yuan) | 3,929,216,706.70 | 2,381,852,668.60 | 64.96% | 3,169,757,867.95 |
| Basic earnings per share (yuan/share) | 1.6219 | 1.4283 | 13.55% | 1.3154 |
| Diluted earnings per share (yuan/share) | 1.6207 | 1.4283 | 13.47% | 1.3154 |
| Weighted average return on equity (ROE) | 13.96% | 14.21% | -0.25% | 14.75% |
| End of 2023 | End of 2022 | Percentage increase/decrease from last year to this year | End of 2021 | |
| Total assets (yuan) | 33,509,361,816.98 | 31,192,203,406.84 | 7.43% | 26,996,403,366.69 |
| Net assets attributable to shareholders of listed companies (yuan) | 21,047,609,756.66 | 18,577,919,237.39 | 13.29% | 16,579,374,323.08 |
The Company’s net profit before or after deducting non-recurring gains and losses, whichever is lower, in the last three fiscal yearsare all negative, and the audit report of last year shows doubt about the Company’s ability to continue as a going concern.
□Yes ?No
The Company’s net profit before and after deducting non-recurring gains/losses, whichever is lower, is negative.
□Yes ?No
The Company’s total share capital as of the trading day prior to disclosure:
| The Company’s total share capital as of the trading day prior to disclosure (share) | 1,754,327,548.00 |
Fully diluted earnings per share based on the latest share capital:
| Paid preference dividends | 0.00 |
| Paid perpetual bond interest (yuan) | 0.00 |
| Fully diluted earnings per share based on the latest share capital (yuan/share) | 1.6182 |
VII. Differences in accounting data under domestic and overseas accounting standards
1. Differences in net profit and net assets disclosed in financial statements under international andChinese accounting standards
□ Applicable ? N/A
There are no differences in net profit and net assets disclosed in financial statements under international and Chinese accountingstandards during the reporting period.
2. Differences in net profit and net assets disclosed in financial statements under overseas and Chineseaccounting standards
□ Applicable ? N/A
There are no differences in net profit and net assets disclosed in financial statements under overseas and Chinese accountingstandards during the reporting period.VIII. Key financial indicators by quarter
Unit: yuan
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 10,114,531,331.77 | 10,270,812,957.04 | 10,009,186,220.70 | 10,229,252,010.92 |
| Net profit attributable to shareholders of listed companies | 755,284,976.47 | 678,539,653.09 | 755,222,215.06 | 649,813,698.18 |
| Net profit attributable to shareholders of listed companies after deducting non-recurring gains/losses | 757,542,618.01 | 669,945,252.96 | 732,567,027.72 | 576,516,838.29 |
| Net cash flow from operating activities | -246,152,770.16 | 2,267,896,518.81 | 227,534,135.16 | 1,679,938,822.89 |
Whether the above financial indicators or their totals are significantly different from relevant financial indicators in previousquarterly and semiannual reports by the Company
□Yes ?No
IX. Items and amounts of non-recurring gains/losses? Applicable □ N/A
Unit: yuan
| Item | 2023 | 2022 | 2021 | Note |
| Gains/losses on disposal of non-current assets (including the written-off part of the accrued assets impairment reserve) | -823,262.36 | 2,390,031.00 | -2,354,117.13 | |
| Government grants included in current gains/losses (excluding those closely related to daily business operation, distributed constantly in accordance with defined standards in line with national policies and regulations, and constantly affecting the Company’s gains/losses) | 143,315,700.34 | 89,767,756.38 | 173,543,413.54 | See XI of the Notes to Financial Statements for details of government grants. |
| Gains/losses caused by fair value changes in financial assets and financial liabilities held by non-financial enterprises, and gains/losses incurred by disposal of financial assets and financial liabilities, excluding hedging business related to operating | -13,756,372.80 | 28,469,286.61 | 521,193.82 |
| activities | ||||
| Return of receivables impairment reserves that are individually tested for impairment | 5,566,940.29 | 953,089.60 | 4,803,651.87 | |
| One-time impact on current gains/losses caused by adjustment of tax, accounting and other laws and regulations | 136,860.05 | Reduction and exemption of house property tax | ||
| Other non-operating income and expenditures except the aforesaid items | 18,554,535.07 | -24,166,799.87 | -25,651,193.11 | |
| Other profit and loss items that satisfy the definition of non-recurring profit and loss | -11,588,239.52 | 13,980,545.50 | -21,963,653.16 | |
| Minus: Amount affected by income tax | 28,072,652.93 | 20,305,520.86 | 20,249,495.43 | |
| Impact on minority interests (post-tax) | 11,044,702.32 | 1,828,585.84 | -4,035,184.90 | |
| Total | 102,288,805.82 | 89,259,802.52 | 112,684,985.30 | -- |
Details of other items of gains/losses meet the definition of non-recurring gains/losses:
□ Applicable ? N/A
Details of other items of gains/losses meet the definition of non-recurring gains/losses.Explanation for recognizing an item listed as a non-recurring gain/loss in the Interpretative Announcement No. 1 on InformationDisclosure Criteria for Public Companies - Non-Recurring Gains/Losses as a recurring gain/loss
□ Applicable ? N/A
Explanation for recognizing an item listed as a non-recurring gain/loss in the Interpretative Announcement No. 1 on InformationDisclosure Criteria for Public Companies - Non-Recurring Gains/Losses as a recurring gain/loss.
Section III Management’s Discussion and AnalysisI. Industry Situation during the Reporting PeriodIn 2023, the world economy recovered sluggishly and struggled to move forward amid theturmoil as a result of intensified international geopolitical conflicts and complicated globaldevelopment and security situations. The year of 2023 marks the start of fully implementing theguiding principles of the 20th CPC National Congress. Superpower games and capital winter haveposed great challenges to the bio-pharmaceutical industry in China. The pharmaceutical industryin China has also entered the stage of accelerated adjustment, and the pharmaceutical R&D,production and management structure in China is undergoing a historic reconstruction. Since the18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping as the corehas always given strategic priority to safeguarding people’s health, included the deepening ofmedical reform in the all-round deepening of reform, facilitated the transformation from“centering on disease curing” to “centering on people’s health”, and launched a series ofimportant reform measures revolving around two key challenges of “difficulty and high cost ofgetting medical services”, with remarkable phased results achieved. In 2023, China’s volume-based procurement of medicines was institutionalized and normalized. The optimization of rulesfor centralized bulk purchase was gradually weakened the impacts on the industry and themechanism for dynamic adjustment of health insurance directory got increasingly mature.Medical insurance negotiations on innovative medicines were normalized, further accelerating thecommercialization of Chinese innovative medicines. The reform of payment method wasaccelerated and DRG mode further drove the revolution of the industry. Laws, regulations andpolicy systems that motivate innovation in medicines were optimized at an accelerated pace. TheNational Medical Products Administration continuously deepened the reform of review andapproval systems, accelerated the launching of new medicines in urgent need for clinical purpose,as well as medicines for rare diseases and children, and supported the pharmaceutical innovationto continuously inject vitality into R&D and innovation of medicines in China. Due to increasinginfluence from clinical values, pharmaceutical enterprises began to pay increasing attention toR&D and innovation of medicines. The development of innovative medicines is becoming an
important link that drives the new quality productive forces. Since the 14th Five-year Plan Period,the R&D input throughout the industry in China has witnessed a mean annual growth of over 20%,pushing China to the second place in the world in terms of number of new medicines. Chinawitnessed continuously enhanced strength in R&D of innovative medicines and contributed moreto global medicine R&D, receiving international recognition and seeing constantly increasedinternational competitiveness and influence. China continuously made positive progresses inoverseas registration and commercialization of its local new medicines, and hit a new high in thenumber of varieties with externally licensed technologies and transaction amount. Thepharmaceutical industry in China has stepped up a new level in international operation andentered the key period for independent innovation-driven transformation and innovation.In July 2023, ten ministries and commissions including the National Health Commission ofthe People’s Republic of China printed and issued the Guiding Opinions on Carrying out theCentralized Rectification of Corruption in the Pharmaceutical Industry in China, launching theone-year national centralized rectification of corruption in the pharmaceutical industry. Thecampaign is aimed at systematically rectify problems in production, supply, sales, use,reimbursement, “critical minorities” and other key links in the pharmaceutical industry, with allchains and fields covered. With unprecedented input, the anti-corruption campaign helps to createa compliant industry environment, regularize enterprises’ operations, facilitate the benigncompetition among enterprises, and reshape the industrial order.
In 2023, major economic indicators in China’s pharmaceutical industry witnessed year-on-year decline caused by such factors as decreased sales of products related to prevention andcontrol of special health events, reduced prices of medicines, and rising prices of raw materials.According to National Bureau of Statistics, in 2023, the added value of the pharmaceuticalindustry above designated size was about 1.3 trillion yuan, down 5.2% year on year in constantprice. Enterprises above designated size achieved 2.95525 trillion yuan of operating revenue and
412.72 billion yuan of profits, down 4% and 16.2% year on year, respectively. The growth ratesof the aforesaid three indicators were negative for the first time over the years. The businessdifferentiation of enterprises became more serious under the backdrop of overall decline in thegrowth rate of the industry.
II. Main Businesses of the Company during the Reporting PeriodFounded in 1993 and headquartered in Hangzhou, Zhejiang Province, Huadong MedicineCo., Ltd. (stock code: 000963) was listed on Shenzhen Stock Exchange in December 1999. Withits businesses covering the entire pharmaceutical industry chain thanks to over 30 years ofvigorous development, the Company has now fostered four major business segments ofpharmaceutical industry, pharmaceutical business, aesthetic medicine and industrial microbiology,and has been a large comprehensive listed pharmaceutical enterprise specialized inpharmaceutical R&D, production and marketing.Specialized in the R&D, production and marketing of specialized medicines, medicines forchronic diseases, as well as special medicines for years, the Company has established completepharmaceutical production and quality research systems, and fostered core product lines focusingon chronic nephrosis, transplantation immunity, internal secretion, digestive system and otherfields. With multiple first-line clinical medicines with market advantages in China, the Companyhas made layout in R&D of innovative and high technology barrier generic medicines in threecore therapeutic fields of oncology, endocrinology and autoimmunity through independentdevelopment, external introduction, project cooperation and by other means. To date, theCompany has formed a good rhythm in launching innovative medicines annually. The Companyhas continued to engage in international registration, international certification, consistencyevaluation, etc. of products, with successive results achieved. Moreover, the Company hasfostered a complete internationally-oriented pharmaceutical industry system, established andmaintained R&D and project cooperation with multiple international innovative R&D enterprises.Moreover, the Company has established strategic partnership with Pfizer, Takeda and othermultinational pharmaceutical companies on products in Chinese market.As for the pharmaceutical business, the Company has continuously made innovation inservices and kept upgrading in consideration of needs of upstream and downstream customers. Todate, the Company has been ranked among the top ten pharmaceutical business enterprises inChina for consecutive years. Having four business segments of Chinese & western medicine,medical devices, medicine materials and ginseng & antler, and health industry, the Company hasestablished 11 regional subsidiaries in Zhejiang Province, and three self-owned pharmaceutical
logistics bases in northern, central and southern Zhejiang Province, as well as retail chainpharmacies and outpatient departments, with its customers distributed in 11 cities and 90 districts,counties and county-level cities throughout Zhejiang Province. With full-product, full-networkand integrated wholesale-retail collaboration advantages, the Company has formed the wholeindustry chain from planting in bases to processing of prepared pieces, automatic decoction, own-brand functional products for its traditional Chinese medicine industry. As for the innovativebusiness, the Company has always focused on featured massive health, product agency andmarket expansion, pharmaceutical logistics characterized by cold chain, e-commerce of self-owned brand medicines to further facilitate the transformation of its business structure. TheCompany has always focused on strengthening its service abilities in policy affairs handling,reserve, distribution and marketing, and fostered the full-channel promotion ability to offercustomers comprehensive solutions.In terms of aesthetic medicine, the Company has created a comprehensive and differentiatedproduct matrix by following the strategy of “global operation layout and dual-circulationoperation & development” with an international vision through forward-looking layout, and nowranks in the forefront of the industry in terms of product quantity and coverage. Specifically, over20 products have been launched in China and abroad, and more than a dozen innovative globalproducts are in development. Fostering differentiated product lines that cover three majorinjectable categories of regeneration products, hyaluronic acids and botulinum toxin, theCompany is committed to becoming a global leading aesthetic medicine comprehensive solutionprovider by offering patients with more professional, efficient, comprehensive and saferintegrated solutions through diversified combined therapy techniques that combine “noninvasiveand micro-invasive”, “facial and body filling”, “products + technologies”, and “injection + energybased device”. Headquartered in the UK, the Company’s wholly-owned subsidiary Sinclair is itsglobal aesthetic medicine operation platform that has R&D centers in the UK, the Netherlands,France, Switzerland, Spain and Israel, and production bases in the Netherlands, France, the U.S.,Switzerland, Bulgaria and Israel. Promoting and marketing sustained-release microspheres forinjection, hyaluronic acid, facial thread lifting and other products in global markets, Sinclairresearches, develops and expands its energy-source aesthetic medicine devices businesses throughits wholly-owned subsidiaries High Tech and Viora. As for the aesthetic medicine segment, the
Company also has Sinclair (Shanghai), a wholly-owned subsidiary and its market operationplatform in China, as well as R2 in the U.S. and Kylane in Switzerland, two overseas technicaldevelopment type joint-stock subsidiaries.With profound industrial base and powerful industrial transformation ability thanks to over40 years of development in the industrial microbiology sector, the Company has successfullydevelopment and manufactured multiple types of microbiological medicines, and established thekey technology system for R&D and production of microbiological products, ranking in theforefront of the industry in terms of scale and technological level of microbiological fermentedproducts. Being market demand-oriented, R&D technology-driven and industrial resource-coordinative in the industrial microbiology segment, the Company has placed its focus on twobusiness scenarios of application of synthetic biology technology system and innovativedevelopment of bio-pharmaceuticals, and has fostered differentiated product lines and businesssolutions in four major fields of xRNA, featured APIs&Intermediates, massivehealth&biomaterials, and animal health. The Company has also established the R&D clusters withIndustrial Microbiology of Zhongmei Huadong, HIT Institute of Synthetic Biology, HuidaBiotech, Hizyme Biotech, Perfect mRNA and Hibe as the core, and seven industrial bases inHangzhou Xiangfuqiao, Qiantang New Area, Jiangsu Joyang Laboratories, Magic Health, AnhuiMeihua, Wuhu Huaren, and Nanjing Nongda Animal Pharmaceutical. Moreover, the Companyhas set up the largest fermentation monomer plants in Zhejiang Province, formed the industry-leading microbiological medicine production ability and high-level R&D capacity that covers allstages of microbiological engineering technologies from strain construction, metabolic regulation,enzymatic catalysis, synthetic modification to separation and purification, and built a completemanufacturing system for R&D, pilot test, commercial production, engineering and public systemguarantee of microbiological projects.III. Core Competitiveness
1. Open innovative medicine R&D system and continuously improved innovationability
The Company has always attached great importance to innovative R&D and maintainedgreat input in R&D. Being “Scientific Research-based and Patient-centered”, the Company has
fostered a sound independent innovation system for R&D of medicines that covers the wholeprocess from medicine discovery, pharmaceutical research, pre-clinical study and clinical study toindustrial production, and set up its Global R&D Center after years of vigorous development,with “clinical value, pharmacoeconomic value and commercial value” as the starting point.Focusing on three core therapeutic fields of oncology, endocrinology and autoimmunity, theCompany keeps developing and has fostered differentiated innovative product lines that cover thefull R&D cycle via independent R&D, external cooperation, license-in, etc. All these meritseffectively empower the continuous initiation and launching of innovative products, offeringimpetuses for the medium- and long-term development.
2. Diverse product lines for specialized and chronic diseases, and featured layout inthree core therapeutic fields
Focusing on specialized and chronic diseases, as well as special medicines for years, theCompany has fostered good brand effect and laid strong market foundation in such fields aschronic nephrosis, transplantation immunity, internal secretion and digestive system, continuouslykeeping in the forefront of similar products in China in terms of market share. With the world’sfirst-in-class layout in three core therapeutic fields of anti-tumor, internal secretion andautoimmunity, the Company has fostered three featured R&D matrices of ADC, GLP-1 andexternal preparation, forming differentiated advantages.
Specialized in medicines for diabetes for about two decades, the Company has fostered goodbrand effect and laid strong market foundation, continuously keeping in the forefront of similarproducts in China in terms of market share. The Company has formed comprehensive layout forinnovative medicines and differentiated generic medicines in the mainstream clinical treatmenttargets of diabetes. To date, there have been 20 products under commercialization and research.The existing and subsequently-upgraded products cover multiple clinical mainstream targets,including α-glucosidase inhibitor, DPP-4 inhibitor, SGLT-2 inhibitor, GLP-1 receptor agonist,double-target and triple-target agonists, insulin, and its analogues. The Company has fostered all-round and differentiated product lines that combine the long-acting and multi-target globalinnovative and biosimilar medicines including oral medicines and injections revolving aroundGLP-1 target.
In the field of oncology, the Company kept enriching its pipelines around the key layout ofADC products. In the meantime, the Company has successively invested in, controlled andincubated numerous biotechnology companies with leading technologies in China. Specifically,the Company successively invested in Qyuns Therapeutics, an anti-body R&D and productioncompany, Nuoling Biomedical Technology (Beijing) Co., Ltd., an ADC linker and coupling
technology company, incubated Zhejiang Huida Biotech Co., Ltd. with full product lines forADCpayloads, and held shares of Doer Biologics, a multi-antibody platform R&D company.Moreover, the Company established cooperation with Heidelberg Pharma on equity investmentand products as its second largest shareholder and introduced its advanced ATAC
? (Antibody-Amanita Conjugate) technology platform, fostering a unique ADC global R&D ecology ofHuadong Medicine and gradually creating a world-leading ADC independent R&D platform thatis unique to Huadong Medicine. The Company will keep developing ADC innovative productsvia a differentiated manner and bringing tumor patients better and more advanced solutions.
In the field of autoimmunity, the indications of the Company’s existing and under-development products include transplant immunity, systemic lupus erythematosus, psoriasis,atopic dermatitis, seborrheic dermatitis, recurrent pericarditis, Cryopyrin-Associated PeriodicSyndromes and other diseases, covering such diseases as skin, rheumatism, cardiovascular,respiratory, and transplantation. The Company has become one of the pharmaceutical companieswith comprehensive coverage in the field of autoimmunity in China. To date, the Company hashad over 10 varieties of biomedicines and small-molecule innovative products in the field ofautoimmunity. In the meantime, the Company’s Innovative Medicine R&D Center developedmultiple new target and biological mechanism immune disease early projects, which are all
smoothly advanced. With regard to autoimmunity, the Company stretched its coverage to externalpreparations, built external preparations R&D platforms, and steadily advanced the R&D andinnovation of external preparations and complicated preparations. To date, its wholly-ownedsubsidiary Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. has fostered threeproduction lines for external preparations.
3. China’s leading professional pharmaceutical service team and complete commercialformatIn the pharmaceutical industry segment, the Company has fostered a professionalpharmaceutical service and market development team. Coring at the clinical values and academicpromotion, the team vigorously promotes the marketing mode that features the online integrationof comprehensive hospitals, primary level medical institutions, retailing, third-party terminals andInternet, with its sales network covering over 30 provinces (autonomous regions andmunicipalities). To date, the Company has gradually formed multi-channel effective coverage andstrong competitive advantages.As for pharmaceutical business, the Company has made its presence in Zhejiang market foryears and boasts a complete business ecosystem with diverse categories of products and services,forming comprehensive competitive advantages in market access and coverage. Keepingimproving its four core competencies of logistics, information, finance and operation, and
offering such high-end value-added services as policy affairs, the Company has establishedbusiness partnership with over 90% mainstream pharmaceutical enterprises in and out of China,and covered all public medical institutions, key private medical institutions and retain pharmaciesin Zhejiang Province, with a leading market share in Zhejiang Province and forefront ranking inthe industry for consecutive years. In recent years, the Company has witnessed rapid developmentin innovative businesses such as products agency and market development, characteristic massivehealth industry, third-party medical logistics featuring cold chain and medical e-commerce andhas formed complete cold chain logistics service system and ability at a leading level in China.
4. High-end international aesthetic medicine product lines that cover noninvasive andmicro-invasive mainstream non-operative fields
The Company successfully made its presence in the aesthetic medicine industry by acquiringSinclair based in the UK. Acquiring international energy based aesthetic medicine deviceenterprises High Tech and Viora in 2021 and 2022 respectively, Sinclair was granted the globaldistributorship (except for Germany and the UK) of Préime DermaFacial Multi-functional facialskin management platform of EMA Aesthetics, an Irish company, in May 2022. In 2023, theCompany successively obtained the global rights of ATGC-110, a botulinum toxin product fromATGC in the Republic of Korea, and the commercial rights of YY001 by Chongqing Yuyan inChina, realizing the full coverage of three categories of injection products, i.e. regenerationproducts, hyaluronic acids, and botulinum toxin. For each category, the Company has formedmore than two differentiated product lines and built a comprehensive multi-dimensional aestheticproduct system to provide patients with one-stop integrated facial aesthetics solutions. Coveringall middle- and high-end markets of non-operative aesthetic medicine injections and energy basedaesthetic medicine devices, the Company has now held global rights of multiple patented productsin such fields as facial and body filling, facial cleansing, body shaping, thread lifting, and energybased devices and set up an international aesthetic medicine operation and BD team. To date, theCompany has developed 38 types of international high-end “noninvasive and micro-invasive”aesthetic medicine products that cover frown lines improvement, facial and body filling, threadlifting, skin management, body shaping, depilation, private repair and other non-operativemainstream aesthetic medicine fields. Specifically, 24 types of these products have been launchedin and out of China, and the other 14 types are innovative products under development. With
comprehensive product clusters formed, the Company now ranks in the forefront of the industryin terms of product quantity and coverage.
5. Building R&D industrial cluster and comprehensively improving the internationalcompetitiveness of industrial microbiology segmentSince the establishment of the Industrial Microbiology Division, the Company has led theoverall business development in the field of industrial microbiology, and formed a completeindependent management system in marketing, operation, R&D, human resources, and finance.The Company has also established R&D clusters with Industrial Microbiology of ZhongmeiHuadong, HIT Institute of Synthetic Biology, Huida Biotech, Hizyme Biotech, Perfect mRNA,and Hibe as the core, and seven industrial bases in Hangzhou Xiangfuqiao, Qiantang New Area,Jiangsu Joyang Laboratories, Magic Health, Anhui Meihua, Wuhu Huaren, and Nanjing NongdaAnimal Pharmaceutical. Moreover, the Company has set up the largest fermentation monomerplants in Zhejiang, formed the industry-leading microbiological medicine production ability andhigh-level R&D capacity that cover all stages of microbiological engineering technologies fromstrain construction, metabolic regulation, enzymatic catalysis, synthetic modification to separationand purification, and built a complete manufacturing system for R&D, pilot test, commercialproduction, engineering and public system guarantee of microbiological projects.The Company’s industrial microbiology team is rich-experienced and full of vitality. Mr. WuHui, Deputy General Manager of the Company, serves as the leader of the Company’s industrialmicrobiology segment. With profound technical foundation and over 30 years of experience in thefield of industrial microbiology, he won the second prize of National Science and TechnologyProgress Award twice. In terms of R&D, the Company’s industrial microbiology segment hasbeen committed to forming an efficient R&D team with high-quality talents as the core. To date,there are 336 R&D personnel, 26% of whom have obtained their master and/or doctoral degrees.In the industrial microorganism sector, the Company has initiated over 268 R&D projects,including 48 projects for xRNA (including 170 subprojects), 61 projects for featured APIs andpharmaceutical intermediates, 16 projects for massive health and biomaterials, and 21 projects foranimal health.
6. Prudent and pragmatic operation style, and stable returns to shareholders
Valuing innovation in management, the Company has always endeavored to satisfy thedemands for market competition by improving the quality of its operation. As a result, theCompany has achieved long-term steady development thanks to its high-quality products,excellent commercialization capability, compliant yet efficient marketing services, differentiatedmarket positioning, innovative R&D layout, and complete talent planning. Since it was listed, theCompany has distributed dividends for 21 times with the cumulative amount of 5.61 billion yuan,which is 22.44 times the fund raised during IPO. The Company brings shareholders consistentand steady returns on investment.IV. Main Businesses
1. Overview
In 2023, the Company continuously followed its operation philosophy of “high quality andefficiency” and “struggling forward for development and putting management first”, vigorouslydeepened transformation and innovation, actively advanced the management of diverse operations,and constantly motivated its business vitality and impetus for growth revolving around its annualoperation plan and 7th three-year plan. In the meantime, the Company proactively responded topolicies on volume-based procurement, external competitions and multiple challenges, keptexploring and practicing paths for innovative development, and made forward-looking andinternational layout targeting at global cutting-edge innovative technology platforms and marketswith unmet demands. Thanks to all these efforts, the Company achieved great progress in clinicalR&D and BD, further enriched its product lines, steadily improved the development quality, andpushed its business performance, R&D and innovation, and comprehensive strength to a higherlevel, embarking on a new journey toward the high-quality growth driven by scientific andtechnological innovation.
In 2023, the Company achieved the operating revenue of 40.624 billion yuan, up 7.71% yearon year. The net profit attributable to shareholders of listed companies was 2.839 billion yuan, up
13.59% year on year. The net profit after deducting non-recurring profits and losses attributable tothe parent company was 2.737 billion yuan, up 13.55% year on year. After deducting the profitsand losses of participating and holding R&D institutions, the net profit after deducting non-
recurring profit and loss attributable to shareholders of listed companies was 3.154 billion yuan,up 30.87% compared with the Company’s net profit after deducting non-recurring profits andlosses attributable to the parent company in 2022. In Q4 2023, the Company achieved theoperating revenue of 10.229 billion yuan, up 3.79% year on year. The net profit attributable toshareholders of listed companies was 650 million yuan, up 25.51% year on year. During thereporting period, the Company’s performance achieved growth against trend in a complex anddifficult environment, and maintained a stable and positive development trend. Its four majorbusiness segments of pharmaceutical industry, pharmaceutical business, aesthetic medicine andindustrial microbiology together contributed to the Company’s historical breakthrough in bothoperating revenue and achieved. The Company achieved its annual operation goals, withsatisfactory achievements made.During the reporting period, the Company kept maintaining stable and good operation, andachieved the consolidated gross margin of 32.40%, increased by 0.5% year on year. The net cashflow from operating activities of the Company was 3.929 billion yuan. The Company keptoperating at a high level throughout the year. As of the end of 2023, the Company’s total assets,net assets attributable to shareholders of listed companies, asset-liability ratio, and return onequity (ROE) were 33.509 billion yuan, 21.048 billion yuan, 35.60% and 13.96% respectively.During the reporting period, the Company satisfactorily attained its overall performance goals for2023 set in 2022 Restricted Stock Incentive Plan and is expected to attain its overall performancegoals for 2024. In 2023, the Company completed series of work specified in 2022 RestrictedStock Incentive Plan, including releasing the restricted shares for the first time, and registration ofreserved restricted shares.I. Operation and Development of the Four Business Segments of the Company duringthe Reporting Period(I) Pharmaceutical IndustryIn 2023, the Company strictly followed its operation philosophy of “StrengtheningCollaboration, Controlling Risks and Improving Speed for High Quality and High Efficiency”. Itscore subsidiary Zhongmei Huadong witnessed stable and positive growth as a whole and achievedthe operating revenue of 12.217 billion yuan, up 9.45% year on year, and the net profit
attributable to the parent company of 2.33 billion yuan, up 9.63% year on year. The return onequity was 23.98%.During the reporting period, Zhongmei Huadong kept expanding efforts in three coretherapeutic fields of oncology, endocrinology and autoimmunity, followed the innovative R&Didea of “self-research + introduction”, advanced the initiation of innovative projects andintroduction of external innovative businesses, and continuously enriched its product lines.Hangzhou Zhongmei Huadong Pharmaceutical Service Corporation constantly deepened thetransformation of pharmaceutical services and comprehensively improved its abilities inpharmaceutical services. Moreover, it endeavored to build and develop a three-dimensionalmarketing strategy by consolidating the existing marketing system, further enhanced talenttraining and external introduction, strengthened professional support, actively advanced leanmanagement and digital marketing, optimized the out-of-hospital promotion system, andcontinuously fostered multi-dimensional market access and professional promotion capacities. Itfacilitated, optimized and improved the Regional Marketing Department and the KA systemconstruction, and further strengthened the academic-driven development. While stabilizing thehospital market, it continuously expanded grassroots and out-of-hospital markets, and furtherstrengthened online markets, OTC markets, DTP stores and other market networks and channels.The Company actively explored strategies for expansion of markets of products subject tovolume-based procurement and medical insurance negotiations, endeavored to maintain retentionrate of medicines procured on volume basis and safeguard channels for patients to purchasemedicines by increasing terminal coverage and fostering brand advantages at clients and patientslevels. All these efforts contributed to stable growth of sales of the Company’s key categories.
Being “Scientific Research-based and Patient-centered”, the Company attached greatimportance to innovative R&D, resolutely practiced transformation and innovation strategies, andrapidly fostered a full-chain and international new medicine R&D system that satisfies diverseclinical demands and bears huge commercial values. In recent years, the Company hascontinuously maintained an annual R&D investment of more than 1 billion yuan in thepharmaceutical industry, which has been continuously increased as the scope of China’s volume-based procurement continues to expand. During the reporting period, the Company’s R&Dinvestment in the pharmaceutical industry (excluding equity investment) was 2.293 billion yuan,
up 23.67% year-on-year. Among them, direct R&D expenditure was 1.6 billion yuan, up 33.74%year-on-year, which accounts for 13.1% of the operating revenue of the pharmaceutical industry.With “clinical value, pharmacoeconomic value and commercial value” as the starting point, theCompany focused on three core therapeutic fields of oncology, endocrinology and autoimmunity,keeps developing and has fostered differentiated innovative product lines that cover the full R&Dcycle via independent R&D, external cooperation, license-in, etc. Having researched anddeveloped various categories of medicines including small-molecules, monoclonal antibodies,polyclonal antibodies, polypeptides and ADCs, the Company has fostered a sound independentinnovation system for R&D of medicines that covers the whole process from medicine discovery,pharmaceutical research, pre-clinical study and clinical study to industrial production, and set upits Global R&D Center. In the meantime, the Company has established in-depth strategiccooperation with leading pharmaceutical enterprises in and out of China through collaborativeproduct development, equity investment or by other means, successfully its global R&Decosystem via introduction, fusion and innovation. During the reporting period, the Company’sclinical and R&D teams rapidly promoted the implementation of existing clinical projects anddevelopment of R&D projects in early stage, and accelerated the pace to put series innovativeproducts with first-in-class (best-in-class) or differentiated/iterative development values into theclinical research stage in and out of China. As of the date of the Report, the Company has hadover 60 innovative product lines, 9 types of which are under phase III clinical trial or NDA/BLAapplication stage. To date, the Company has formed a favorable trend for continuous initiationand launching of innovative products, offering impetuses for the medium- and long-termdevelopment.In the field of endocrinology, the Company fostered product lines of innovative anddifferentiated generic medicines with GLP-1 and other clinical mainstream therapeutic targets asthe core, with over 20 products under development or put in commercial production. TheCompany fostered all-round product lines that combine the long-acting and multi-target globalinnovative and biosimilar medicines including oral medicines and injections revolving aroundGLP-1 target.In the field of autoimmunity, the Company successively established partnership with manytechnically advanced innovative R&D enterprises in and out of China, including Qyuns
Therapeutics in Jiangsu, Provention Bio, Ashvattha, Kiniksa and Arcutis based in the U.S. andMC2 in Denmark, and introduced world-leading innovative technologies and products. In themeantime, the Company continuously improved its ability in independent innovation and R&Dand had more than 10 biomedicine and small-molecule innovative products under research orlaunched overseas. Indications of the Company’s existing products and those under researchinclude transplantation immunity, systemic lupus erythematosus, psoriasis, atopic dermatitis,seborrheic dermatitis, recurrent pericarditis, and Cryo-Pyrin-Associated Periodic Syndromes,covering multiple categories of diseases related to skin, rheumatism, cardiovascular, respiratoryand transplantation. In August 2023, the Company successively introduced roflumilast externalpreparation (ZORYVE
? cream and foam) from Arcutis based in the U.S. and Wynzora
?
creamfrom MC2 in Denmark, further enriching its innovative product lines for external preparations.Among them, ZORYVE
?foam (0.3%) was approved by FDA in December 2023. With regard topsoriasis treatment, the Company has Ustekinumab Injection, oral small-molecule drugCyclosporine Soft Capsules, simple-prescription external preparations ZORYVE
?cream andfoam, as well as compound external preparation Wynzora
?
cream, forming multi-target andmulti-action mechanism psoriasis treatment product portfolio that cover all groups throughout thecycle. Moreover, the Company has established its featured external preparation platform that isspecialized in the differentiated R&D of external preparations for skin, and built a professionalR&D team. Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. fostered three externalpreparation production lines to facilitate the launching of products.In the field of oncology, the Company focused on the layout of high-barrier R&D platformsand product lines for ADC. The BLA of ELAHERE
?(mirvetuximab soravtansine-gynx), a globalfirst-in-class ADC medicine for platinum-resistant ovarian cancer co-developed with ImmunoGenfrom the U.S. was submitted and the medicine was included in the list of priority review varieties.Moreover, the Company established cooperation with Heidelberg Pharma, a global emergingtechnology company in the field of ADC based in Germany, on equity investment and products,organically integrating with its advanced ATAC
?
(Antibody Targeted Amanitin Conjugates)technology platform.Since 2023, the Company has successively commercialized numerous varieties of innovativeand biosimilar medicines, or submitted applications for launching such medicines. In 2023, the
Company’s Liraglutide Injection (trade name: Liluping
?
) was approved for treating type 2diabetes, obesity or overweight in adults, being the first GLP-1 target launched by the Companyand the first liraglutide biosimilar medicine approved in China. Since it was launched, Liluping
?
has witnessed favorable sales momentum, laying a solid foundation for the commercialization ofthe Company’s subsequent GLP-1 products. In November 2023, the BLA application of theinnovative medicine ARCALYST
?
(Rilonacept for Injection) introduced by the Company for thetreatment of Cryopyrin-Associated Periodic Syndromes in China was accepted. In March 2024,the BLA application of ARCALYST
?for the treatment of recurrent pericarditis (RP) in Chinawas accepted. Both indications were listed in the National List of Rare Diseases and the list ofpriority review varieties. In January 2024, the NDA application of Relmapirazin Injection (R&Dcode: MB-102), a new Category-I medicine submitted by Zhongmei Huadong in China wasaccepted. The Dynamic Monitoring System of Glomerular Filtration Rate used with RelmapirazinInjection was approved to enter the special examination procedure of innovative pharmaceuticaldevices in November 2021, and its registration application was accepted in July 2022. Thecombination of Relmapirazin Injection and the Dynamic Monitoring System of GlomerularFiltration Rate can realize real-time detection and continuous monitoring of glomerular filtrationrate (GFR), thus satisfying unmet clinical demands in the kidney function test market. In August2023, the BLA application of the biosimilar medicine HDM3001 (QX001S), a biological similarof Ustekinumab Injection jointly developed by the Company and Qyuns Therapeutics wasaccepted. The Company is expected to become the first Chinese enterprise that obtains theapproval for biological similar of Ustekinumab Injection. In October 2023, the BLA applicationof ELAHERE
?, a type of first-in-class ADC medicine for platinum-resistant ovarian cancerintroduced by the Company, in China was accepted. It was included in the list of priority reviewvarieties in China, and is expected to be approved in 2024 to benefit Chinese patients. In March2024, it was granted full FDA approval for the treatment of folate receptor alpha (FRα)-positive,platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal adult cancer patientstreated with up to three prior therapies. ELAHERE
?is the first and only ADC approved in theU.S. for this difficult-to-treat malignancy.
On March 1, 2024, Zevorcabtagene Autoleucel Injection (trade name: Saikaize
?; R&D code:
CT053), a CAR-T product developed by CARsgen Therapeutics, received the notice from the
National Medical Products Administration (NMPA) that it was approved for the treatment ofadult patients with relapsed or refractory multiple myeloma who have previously progressed afterat least 3 lines of therapy (including a proteasome inhibitor and immunomodulator agent). TheCompany was granted the exclusive right to commercialize zevorcabtagene autoleucel inmainland China, and has set up a professional commercialization team. The first prescription ofthis product in China was issued on the day when it was approved.During the reporting period, the Company formally set up its Scientific Advisory Board(SAB) with a view to further expand and optimize its strategic layout in innovative R&D ofmedicines. Members of the first SAB were outstanding experts and scholars enjoyinginternational prestige and making profound academic attainments in the fields of medicine andR&D in and out of China. SAB is positioned as a platform for global outstanding industry experts,scholars and scientific research forces to provide the Company with all-round, objective,professional and strategic guidance and suggestions on R&D of innovative medicines and help theCompany solve key problems in innovate R&D, thus better serving patients. During the reportingperiod, the Company organized and held two SAB meetings.Please refer to the “R&D Investment” section for details of the Company’s R&D pipelines,progress in registration, and R&D.During the reporting period, the production and quality segments of the Company resolutelyimplemented the Company’s innovation and transformation strategies, and kept improving itslevel of intensive, intelligent and green development with a view to foster an excellent productionsystem. Moreover, these segments enhanced the quality management and integrated managementof production system throughout the product life cycle and kept improving its production qualityand competitive advantage in production cost by building an inclusive production system. Effortswere also made to strengthen the quality compliance and GMP normalized management, andadvance the product quality control and effective operation of the quality system. All employeeswere encouraged to participate in lean production and total cost management by vigorouslyorganizing activities themed with “Compliant and Lean Basic Management System” to facilitatethe implementation of lean management measures. Employees’ skills and per capita laborefficiency were continuously improved by optimizing the operation mode. Energy-saving andemission reduction initiatives were organized, with remarkable achievements made in cost
reduction. Efforts were made to proactively implement the Company’s international strategies andcontinuously advance international registration and certification of products. During the reportingperiod, the Tacrolimus Capsules of Zhongmei Huadong was approved by the FDA, becominganother product of the Company that is approved following Pantoprazole Sodium for Injection,Acarbose Tablets and Daptomycin for Injection, China’s first Tacrolimus Preparation approved inthe U.S. and an important achievement of the international strategy of the Company’s preparationproducts. Moreover, the Company also continued to advance the overseas registration of manyother products, including Caspofungin Acetate for Injection and Sermaglutide API.
(II) Industrial MicrobiologyDuring the reporting period, the Company’s industrial microbiology segment achieved thetotal sales revenue of 525 million yuan after deducting that of specific commercial products, up
20.67% year on year.
The Company kept practicing the industrial microbiology development strategy, clarifyingits strategic layout focusing on four major fields of xRNA, featured APIs & intermediates,massive health & biomaterials, and animal health. In the meantime, the Company continuouslyenriched the product lines in four major strategic segments of high innovation, high technologybarrier and high added-values, and optimized its product structures with the focus placed on R&D.The field of xRNA mainly included several key products of nucleoside monomer, modifying andprotective nucleosides and cap, and was positioned as the manufacturing-end service provider ofxRNA medicines. The field of featured APIs & intermediates gave full play to the advantages ofthree technical platforms of synthetic biology, fermentation and enzyme engineering, took ADCraw material (including high-tech barrier raw material products from anti-tumor, anti-infectionand other microbial sources) as its innovative business, and was positioned as a service providerfor Highly Potent Active Pharmaceutical Ingredients (HPAPI). Focusing on such industrialorientations as bone health, brain health, antioxidation, personal care and aesthetic medicine, andimport substitution of new injectable medicinal materials, the field of massive health &biomaterials created the automatic and standard industrial manufacturing system and stepped outof C-end product markets with the technical support from the HIT Institute of Synthetic Biology.In the field of animal health, the Company focused on three orientations of pet treatment, pet
nutrition, and water nutrition and water environment, and endeavored to become a leader inChina’s pet and aquatic animal health industry driven by R&D, led by markets and guaranteed byproduction.xRNA: In January 2023, the Company established Hangzhou Perfect mRNA BiotechnologyCo., Ltd. (hereinafter referred to as “Perfect mRNA”), which is mainly engaged in thedevelopment of raw materials of mRNA enzyme and molecular diagnostic enzyme, as well asmRNA CDMO services, together with the upstream enzyme raw materials and downstreampreparation services. Perfect mRNA comprised industrial collaboration with Anhui Meihua andWuhu Huaren in the field of xRNA, further optimizing the whole-industrial chain layout of xRNA.Featured APIs & intermediates: The Company completed the layout of series products forADC raw materials of innovation businesses, and submitted DMF application documents formainstream toxin varieties. The Company also completed the overall layout of polypeptidebusiness and will proactively expand its international markets. The layout of high-activity anti-tumor, anti-parasite and microbial source API product systems was basically completed.Massive health & biomaterials: Magic Health, the Company’s subsidiary, completed thefundamental construction of its Yichang Industrial Base (Phase I) in December 2023 and obtainedthe license for production. Production validation and international registration certifications formultiple products were done in the first quarter of 2024. Hibe, the Company’s subsidiary, fostereda matrix of upstream medical high-end functional materials with its self-developed products basedon biodegradable materials together with exclusively agent varieties introduced from overseas. Itproactively laid out biological medicine and aesthetic medicine CMC R&D businesses stronglyassociated with self-owned materials and with global competitiveness, and joined hands withclients to incubate global innovative products relying on its unique preparation technologicalinnovation platform. In this field, Magic Health will further strengthen its sales manpower inoverseas markets, build the core dealers network, and put in place its channel layout in AsiaPacific, Europe, America, and China.Animal health: the Company acquired Jiangsu Nanjing Nongda Animal Pharmaceutical Co.,Ltd. (herein after referred to as “Nanjing Nongda Animal Pharmaceutical”) in April 2023, quicklysetting foot in pet and aquatic animal health segments. In October 2023, the Company obtainedthe exclusive selling right and marketing right of Butorphanol Tartrate Injection (trade name:
Baoshining
?), a kind of central analgesic medicine developed by Beijing CELS MedicalTechnology Co., Ltd., in China (including Hong Kong SAR, Macao SAR and Taiwan, China). Inthe field of aquatic animal health, the Company has always been committed to improving waterenvironment and enhancing aquatic nutrition, thus providing farms with comprehensive productsolutions and services. In this field, the Company will keep improving online and offlinetreatment links, promote and build the “Mengdi” brand online, make long-term layout, andendeavor to become a new brand specialized in pains and aged disease management in the field ofpet care.
In 2024, a crucial year for the rapid development of the Company’s industrial microbiologysegment, the Company will continue to accelerate its pace in expanding the international market.In the meantime, the Company will further advance the large variety cultivation program andincrease the ratio of its international businesses by grasping the opportunities of formal operationof Magic Health and C-end market expansion of Nanjing Nongda Animal Pharmaceutical,enhance its international competitive advantages and achieve the rapid development of its overallbusiness with R&D, quality, service and compliant registration as its main competitiveness.
(III) Pharmaceutical Business
In 2023, the Company’s pharmaceutical business segment continued its continuous andstable growth, and achieved the operating revenue of 26.981 billion yuan and the accumulativenet profit of 431 million yuan, up 5.59% and 8.74% year on year, respectively.
During the reporting period, the Company’s pharmaceutical business segment adhered tocreate new competitive advantages and build a new pattern for development in line with itsphilosophy of innovation in services and putting clients at the center. Adhering to thedevelopment principle of “High Quality + High Efficiency”, the Company’s pharmaceuticalbusiness segment actively endeavored to build itself into an enterprise with leading position inscale, network and services for the high-quality development, with the core placed on “profitsincrease and costs reduction” for high-efficient development. In the meantime, efforts were madeto advance innovation in services, enhance core competitiveness of various business fields, andcreate pharmaceutical businesses of Huadong Medicine with unique characteristics. Externally,the segment steadily improved its operation quality and efficiency, explored profit growth points,
and guaranteed its cash flow, while strengthening hospital businesses, expanding out-of-hospitalmarkets, and developing innovative businesses. As for hospitals, the segment firmly graspedopportunities brought by the policy of “long-distance settlement of medical insurance”, placed itsfocus on leading hospitals, established diverse partnerships, and steadily improved itsperformance. In the field of medicinal materials, ginseng & antler and medical devices, thesegment further expanded its businesses to lower-tier markets throughout Zhejiang Province andimproved market shares in various cities. In the field of health industry, the segment focused onrehabilitation equipment and increased its bid acceptance probability and coverage. With regardto out-of-hospital markets, the segment further expanded its coverage, gave priority to thedevelopment of Huadong Medicine’s retailing business, increased the profitability of retailingbusiness, synergize with dual-channel medicines and commercial people-benefiting insurancepolicies, and build platforms with industrial competitiveness cored at introduction of varieties andprescription reception. As for innovative businesses, the segment focused on product agent,pharmaceutical e-commerce of self-owned brands, and tripartite pharmaceutical logistics featuredby cold chain. Product pipelines were expanded from medicines to medical devices. Its self-owned brand “Xuguanghe” was continuously iterated and upgraded for more innovative products.The ratio of tripartite pharmaceutical logistics was further expanded, with authorizations for morecooperative projects and products obtained.In 2024, the Company’s pharmaceutical business segment will continue to exploreinnovation in services, always focus on clients, keep up with upgraded demands of upstream anddownstream clients, and build a new cooperation ecosystem with business partners in and out ofChina through in-depth cooperation in multiple modes, fields, and channels. The segment willkeep improving its service quality, build differentiated service brands of the Company’spharmaceutical business, and expand its scale for more profits. Envisioning improving its marketshare through stabilized scale and optimized structure, the segment will continue to consolidate itstraditional delivery business, maintain a reasonable scale, increase the ratio of leading hospitals,extend its medicinal materials and medical devices businesses to low-tier markets, and increase itsmarket shares in various cities. In the meantime, the segment will vigorously expand its out-of-hospital markets, further develop the Company’s pharmacy retail businesses, and improve theprofitability of pharmacies in hospitals and DTP stores. As for agent products, the segment placed
its focus on chemical medicines and blood products, and further extended medical devices lines toattain more profits. OTC, distribution and other departments co-established business groups forbusinesses out of Zhejiang Province. The Innovation Center proactively supported the distributionbusiness, undertook large projects from famous enterprises, introduced agent medical devices, anddirectly accessed terminals via subsidiaries in various cities. Huadong Medicine Supply ChainManagement (Hangzhou) Co., Ltd. Further optimized collaborative integration under multiplelogistics scenarios, expanded phase IV of refrigeration storage, expanded the distribution ofspecial medicines represented by high-end cold chain and vaccines, and consolidated its leadingrole in the pharmaceutical cold chain service industry.(IV) Aesthetic Medicine BusinessDuring the reporting period, the Company’s aesthetic medicine segment maintained rapidgrowth and achieved the record high total operating revenue of 2.447 billion yuan (excludinginternal offsetting factors), up 27.79% year on year. The overall profitability in the aestheticmedicine segment and ratio of contribution to the Company’s overall net profit witnessed steadyimprovement.During the reporting period, Sinclair, the Company’s wholly-owned subsidiary and theglobal operating platform of its aesthetic medicine business based in the UK, proactivelyexpanded sales of its aesthetic medicine injection, filling and EBD products globally despiteimpacts of sluggish global economic growth, and achieved the sales revenue of 149.58 millionpounds (about 1.304 billion yuan), up 14.49% year on year. Sinclair achieved its first annualprofit since it was acquired by the Company.During the reporting period, Sinclair (Shanghai), the Company’s wholly-owned subsidiary inChina for its aesthetic medicine business, achieved the accumulative revenue of 1.051 billionyuan, up 67.83% year on year, making important contribution to the growth of the Company’soverall performance.
During the reporting period, the Company actively practiced the long-term vision ofcultivating and building the world’s leading innovative aesthetic medicine enterprise, continued tosteadily promote the strategy of dual-circulation development in and out of China, focused on theglobal high-end aesthetic medicine market, strengthened its brand building, and accelerated theintegration of product resources. To date, the Company has launched 38 high-end products in the
field of “non-invasive + micro-invasive” aesthetic medicine worldwide, of which 24 have beenmarketed. The product portfolio covers non-surgical mainstream aesthetic medicine fields such asfrown lines improvement, facial and whole-body filling, energy source skin management, andbody shaping. In the meantime, the Company has formed integrated product clusters and ranks inforefront of the industry in terms of quantity of products and number of fields covered, withcontinuously improved international influence. With a professional marketing and promotionteam comprised of about 300 talents, the Company’s aesthetic medicine segment has built itsglobal aesthetic medicine marketing network with over 80 countries and regions covered.
During the reporting period, the Company signed cooperation agreements with ATGC in theRepublic of Korea and Chongqing Yuyan successively to introduce two types of innovativebotulinum toxin products under research: botulinum toxin type A ATGC-110 and recombinantbotulinum toxin type A YY001, further enriching the Company’s product lines of aestheticmedicine injections. As of the date of the Report, the application for launching of ATGC-110 wasaccepted by the Ministry of Food and Drug Safety of the Republic of Korea (MFDS) for thedeclared indication of improving moderate to severe frown lines of adult patients. The enrollmentof subjects during phase III clinical trial for YY001 was completed in China. YY001 and ATGC-110 will fully satisfy patients’ demands for rejuvenation and high security thanks to theirdifferentiated efficacies. To date, the Company achieved full coverage of three categories ofinjection products, i.e. regeneration products, hyaluronic acids, and botulinum toxin. For eachcategory, the Company formed more than two differentiated product lines and is able to providepatients with one-stop integrated facial aesthetics solutions in the future.During the reporting period, the Company actively advanced the global registration of itsaesthetic medicine products and simultaneously facilitated the registration and launching ofoverseas products in China. Actively facilitating the registration for marketing in multiplecountries across the globe, Sinclair had obtained marketing authorizations for 16 products in 37countries and regions during the reporting period. During the reporting period, the Company keptadvancing the registration and launching of its core products in China. The application forregistration of the Company’s optical RF therapy devices V20 was accepted by the Center forMedical Device Evaluation, NMPA in September 2023. The product is expected to be approvedin China in 2024. MaiLi Extreme, the Company’s novel high-end lidocaine-containing sodium
hyaluronate filler for injection, successfully achieved primary endpoint of the clinical trial inChina, with favorable product safety data shown. In December 2023, MaiLi Precise completed theenrollment of the first subject in clinical trials in China. In March 2023, Ellansé
?M, apolycaprolactone microsphere facial filler for injection, successfully completed the enrollment ofall subjects in clinical trials in China. Moreover, the Company’s V version and X version of poly-L-lactic acid (PLLA) collagen stimulant Lanluma
?
obtained the approval from Hainan MedicalProducts Administration that Lanluma
?can be used in Boao Lecheng International MedicalTourism Pilot Zone. In February 2023, the first treatment was completed in ARSMO Lecheng,Hainan. In April 2023, Lanluma
?was awarded the “the Best Injectable Body Filler” by the 2023AMWC, which vividly showcases the authoritative recognition of Lanluma
?products andtechnologies by the international aesthetic medicine industry. Please see “(8) Progress ofregistration and marketing of aesthetic medicine products” in “(III) R&D situation” below in thissection for the progress of registration of the Company’s other key aesthetic medicine products inChina.
Figure: Key Aesthetic Medicine Products of Huadong MedicineDuring the reporting period, Sinclair (Shanghai) drove collaborative development of itssubsidiary brands with the Company’s brand as the main body, launched many star programssince it set foot in Chinese market, linked global resources, improved its reputation on B and Cends, and created a brand image that features “professional”, “aesthetic” and “high-end”. Its coreproduct Ellansé
?, the only regenerative filler on the aesthetic medicine market in Chinaintroduced from Europe, brings patients natural anti-aging effects and has been extensivelyrecognized by users for its unique PCL + CMC combination for anti-aging. By the end of 2023,Sinclair (Shanghai) has signed cooperation contracts with over 600 hospitals and trained over1,100 certified physicians on Ellansé
?. As for Ellansé
?, the Sinclair (Shanghai) constantlystrengthened its brand building and consolidated the high-end orientation through diverse trans-discipline activities, being well-received by C-end markets and witnessing improved industryinfluence and competitiveness.
During the reporting period, Sinclair (Shanghai) not only kept leading the regenerative fillingmarket in China, but also actively expanded its coverage in the field of aesthetic devices. In June2023, the launch meeting of the Company’s RF therapeutic instrument Reaction
?wassuccessfully held in Shanghai, which leads the new trend of comfort anti-aging. The uniqueCORE
?
multi-channel RF technology of Reaction
?
can effectively stimulate fiber cells, thusimproving wrinkles, lifting and relieving loose skin, and bringing patients better anti-agingexperience.
During the reporting period, Sinclair successfully held Sinclair Global Forum in Milan, Italy,attracting over 200 industry leaders and medical specialists from across the world. Participantsshared with each other experience in using Ellansé
?
and discussed about application andreflections on collagen regeneration technologies based on global cases of facial features ofpatients at different ages and in different races. Famous medical experts from China and 20doctors from the delegation of aesthetic medicine in China had full and heated discussion withinternational experts. The oriental aesthetics was widely concerned and China’s experiencereceived global recognition.
The aesthetic medicine segment of the Company has always put medicine science first. In2023, the segment issued four papers on academic journals, including a piece of paper on aheavyweight journal in the aesthetic medicine industry. In the meantime, two post-launchingstudies on Ellansé
? and Reaction
?were conducted, with relevant results submitted to SCIInternational academic journals. One paper was accepted by Aesthetic Plastic Surgery (APS).
In the future, the Company’s aesthetic medicine segment will continue to focus on the high-end market of global aesthetic medicine to form an international aesthetic medicine businessintegrating R&D, manufacturing and marketing by upholding the strategy of “global operationlayout and dual-circulation operation & development” and keeping optimizing its product lines.With its core subsidiary Sinclair as the global operation platform and integrating globaltechnological and innovative resources, the Company has achieved the global operation layout forits aesthetic medicine segment and successively introduces “aesthetic medicine + cosmeticmedicine” products with great scientific connotation and huge market potential into China.Internationally, the Company empowers the rapid launching and commercialization of its superiorinternational products relying on its great registration and marketing abilities in China and
steadily expands its presence in China. Moreover, the Company will continue to foster robustbrand strength based on cutting-edge innovative technology, strive to bring comprehensivesolutions and extraordinary aesthetic experience to patients by upholding the professional andrigorous attitude as a pharmaceutical enterprise, and bring long-term values to patients, aestheticmedicine institutions, and physicians around the world.II. BD Cooperation during the Reporting PeriodIn January 2023, the Company’s wholly-owned subsidiary Huadong Medicine (Hangzhou)Co., Ltd., signed an exclusive commercialization cooperation agreement with Kaixing LifeScience and Technology (Shanghai) Co., Ltd., a wholly-owned subsidiary of CARsgenTherapeutics Holdings Limited. Huadong Medicine (Hangzhou) obtained the exclusivecommercialization rights in mainland China of Zevorcabtagene Autoleucel Injection (Saikaize
?,approved for marketing in China in 2024), a product of fully human anti-autologous BCMA (Bcell mature antigen) CAR-T owned by Kaixing for the treatment of relapsed/refractory multiplemyeloma. With great potential, Zevorcabtagene Autoleucel Injection will further enrich theCompany’s product lines in the field of blood diseases, and will also share the expert network,research and clinical resources with existing key varieties of the Company in the field in terms ofmarketing, thus achieving mutual complementary, mutual development and effectivecollaboration. The Company will form a multi-dimensional product lines of chemotherapymedicines, ADC products and CAR-T products in the field of neoplastic hematologic treatmentafter this transaction (refers to relevant announcement (Announcement No.: 2023-004) disclosedby the Company on Cninfo (http://www.cninfo.com.cn) for details).In March 2023, the Company intended to sign the Partnership Agreement of HangzhouCapital Biomedical Achievements Transformation Fund (hereinafter referred to as the“Partnership Agreement”) with Hangzhou Jianheng Enterprise Management Co., Ltd., HangzhouIndustrial Investment Co., Ltd., Hangzhou Taikun Equity Investment Fund Partnership (LimitedPartnership), Betta Pharmaceuticals Co., Ltd. and Hangzhou West Lake Industrial Fund Co., Ltd.to jointly invest in the establishment of Guoshun Jianheng Venture Capital Partnership (LimitedPartnership) with a total subscribed capital of 210 million yuan, in a bid to further enrich theCompany’s industrial investment ecosystem relying on the industrial management experience ofbusiness managers and resource advantages of other contributors by organically integrating
government’s guidance fund and excellent pharmaceutical capitals. By contributing 40 millionyuan (or a contribution ratio of 19.05%), the Company will be the limited partner (LP) of thePartnership (refers to relevant announcement (Announcement No.: 2023-008) disclosed by theCompany on Cninfo (http://www.cninfo.com.cn) for details).In April 2023, the Company’s wholly-owned subsidiary Hangzhou Zhongmei HuadongPharmaceutical Co., Ltd. signed the Agreement on Equity Transfer and Capital Increase ofJiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd. (hereinafter referred to as “NanjingNongda Animal Pharmaceutical”), with Nanjing Nongda Animal Pharmaceutical, natural personZhai Zhongshu and Nanjing Jiuheng Pharmaceutical LP (Limited Partnership). ZhongmeiHuadong will invest no more than 265,333,300 yuan in total and acquire 70% of the equity inNanjing Nongda Animal Pharmaceutical in the form of equity transfer and capital increase,becoming a controlling shareholder of the latter. This acquisition further improved the industriallayout of the Company’s industrial microbiology segment. After this transaction, Nanjing NongdaAnimal Pharmaceutical will become an important platform for Huadong Medicine to develop itsanimal health business in industrial microbiology sector, while making full use of HuadongMedicine’s advantages in industrial ecological chain and financial support capabilities to achievecoordinated development in R&D, manufacturing, marketing, selling and other dimensions (refersto relevant announcement (Announcement No.: 2023-024) disclosed by the Company on Cninfo(http://www.cninfo.com.cn) for details).In July 2023, the Company’s subsidiary Doer Biologics announced a licensing agreementwith BioNTech SE (NASDAQ: BNTX, “BioNTech”). According to clauses of the agreement,Doer Biologics will grant BioNTech a global license to use an innovative finding of DoerBiologics for research, development, production and commercialization of an innovative bio-therapeutic medicine with undisclosed target. Doer Biologics will receive advance payment andpayments for potential development, supervision and commercial milestones.
In August 2023, the Company’s wholly-owned subsidiary Zhongmei Huadong signed theExclusive Product License Agreement with the American listed company Arcutis Biotherapeutics,Inc. (hereinafter referred to as “Arcutis”). According to the agreement, Zhongmei Huadongobtained the exclusive license of the globally innovative Roflumilast external preparations(including Roflumilast Cream ZORYVE
?and Roflumilast Foam ARQ-154) of Arcutis in Greater
China (including Chinese mainland, Hong Kong SAR, Macao SAR and Taiwan, China) andSoutheast Asia (Indonesia, Singapore, Philippines, Thailand, Myanmar, Brunei, Cambodia, Laos,Malaysia and Vietnam), including rights for development, registration, production andcommercialization. Zhongmei Huadong will pay Arcutis a down payment of 30 million USdollars, a milestone payment of development, registration and sales with a maximum of 64.25million US dollars, and a graded double-digit net sales commission. The introduction ofZORYVE
?
cream and ARQ-154 will further supplement the Company’s product lines in the fieldof autoimmunity and inflammatory skin diseases, and consolidate its core competitiveness in thefield of autoimmunity (refers to relevant announcement (Announcement No.: 2023-061) disclosedby the Company on Cninfo (http://www.cninfo.com.cn) for details).
In August 2023, the Company’s wholly-owned subsidiary Zhongmei Huadong signed theExclusive Product License Agreement with MC2 Therapeutics Ltd., a wholly-owned subsidiaryof a Danish company MC2 Therapeutics A/S (hereinafter referred to as “MC2”). According to theagreement, Zhongmei Huadong obtained the exclusive license of the globally innovative productWynzora
?in Greater China (including Chinese mainland, Hong Kong, Macao and Taiwan),including rights for development, registration, production and commercialization. ZhongmeiHuadong will pay MC2 a down payment of no more than 16 million US dollars, a milestonepayment of clinical development and registration, a mile payment of sales with a maximum of 36million US dollars, and a graded double-digit net sales commission. The introduction ofWynzora
?will further enrich the Company’s innovative product lines of external preparation andcontinuously consolidates its competitiveness in the treatment of psoriasis. (Please refers torelevant announcement (Announcement No.: 2023-067) disclosed by the Company on Cninfo(http://www.cninfo.com.cn) for details).
In October 2023, the Company’s wholly-owned subsidiary Huadong Medicine AestheticsInvestment (Hong Kong) Limited (hereinafter referred to as “Aesthetics Investment”) signed theExclusive Product License Agreement with ATGC Co., Ltd. (hereinafter referred to as “ATGC”)in the Republic of Korea. According to the agreement, Aesthetics Investment obtained the globalexclusive license of ATCG-110, an injection containing botulinum toxin type A of ATGC, inChina, the U.S., Europe, etc. (excluding India), and the non-exclusive license in the Republic ofKorea, including the clinical development, registration and commercialization rights for aesthetic
medicines and all of its complications. Aesthetics Investment will pay ATGC a down payment of13 million US dollars, and a milestone payment of clinical development and registration with amaximum of 17 million US dollars. The agreement for ATGC-110 is a strategic supplement to theCompany’s global aesthetic medicine products, which is beneficial for the Company to builddiversified aesthetic medicine brand and product clusters (refers to relevant announcement(Announcement No.: 2023-072) disclosed by the Company on Cninfo (http://www.cninfo.com.cn)for details).In November 2023, Sinclair (Hangzhou) Medical Treatment Technology Co., Ltd.(hereinafter referred to as “Sinclair (Hangzhou)”), Hangzhou Industrial Investment Co., Ltd.(hereinafter referred to as “Hangzhou Industrial Investment”), Hangzhou Gongshu SDICIndustrial Development Co., Ltd. (hereinafter referred to as “Gongshu SDIC”) signed theShareholder Agreement and Series B Investment Agreement with Chongqing YuyanPharmaceutical Co., Ltd. (hereinafter referred to as “Chongqing Yuyan”) and its shareholders’representatives. All investors subscribed 2,102,260 yuan of Chongqing Yuyan’s newly-increasedregistered capital at 300 million yuan as the consideration of 8.5714% of Chongqing Yuyan’sequity after this transaction. Among them, Sinclair (Hangzhou) contributed 150 million yuan,holding 4.2857% of Chongqing Yuyan’s equity after this transaction. On the same day, theCompany signed the Exclusive Dealing Agreement with Chongqing Yuyan, agreeing that theCompany is granted with Chongqing Yuyan’s exclusive commercialization rights of recombinantbotulinum toxin type A YY001 for indications in the field of aesthetic medicine in Chinesemainland, Hong Kong SAR and Macao SAR. The Company will pay Chongqing Yuyan a downpayment of 50 million yuan and a milestone payment of registration with a maximum of 100million yuan. YY001 and ATGC-110 will fully satisfy patients’ demands for rejuvenation andhigh security thanks to their differentiated efficacies, with all consumers in the botulinum toxinmarket covered (refers to relevant announcement (Announcement No.: 2023-081) disclosed bythe Company on Cninfo (http://www.cninfo.com.cn) for details).
In December 2023, the Company’s wholly-owned subsidiary Hangzhou Zhongmei HuadongPharmaceutical Co., Ltd. (hereinafter referred to as “Zhongmei Huadong”) signed the ExclusiveMarketing Service Agreement with Shanghai Junpaiyingshi Pharmaceutical Co., Ltd., a wholly-owned subsidiary of Nanjing IMPACT Therapeutics Co., Ltd. (Hereinafter referred to as
“IMPACT Therapeutics”). According to the agreement, Zhongmei Huadong will obtain theexclusive marketing rights of Senaparib (IMP4297, with its Chinese name subject to the finalapproval document) of IMPACT Therapeutics in Chinese mainland. Zhongmei Huadong will payIMPACT Therapeutics a down payment of 100 million yuan and a milestone payment ofregistration and commercialization with a maximum of 190 million yuan. In the meantime,IMPACT Therapeutics will pay Zhongmei Huadong the marketing service fees as agreed in theagreement. The cooperation will further enrich the Company’ product lines in the field ofoncology and consolidate the Company’s market competitiveness in this field (refers to relevantannouncement (Announcement No.: 2023-099) disclosed by the Company on Cninfo(http://www.cninfo.com.cn) for details).III. ESG of the Company during the Reporting PeriodWith regard to ESG, the Company has always adhered to the concept of sustainabledevelopment. Setting up a special ESG Committee to coordinate the Company’s ESG work, theCompany integrates the core theory of ESG with the enterprise development strategy and dailyoperation management, guides and makes innovation in various work with a scientific concept ofsocial responsibility, upholds the idea of green production, actively responds to the “carbonneutrality and carbon peaking” goals, operates with integrity in strict accordance with laws, andactively fulfills its social responsibilities. By virtue of its excellent ESG governance ability, theCompany won the AAA rating for ESG by CNI Index of Shenzhen Stock Exchange and the Arating for ESG of WIND, and was awarded the 17th Top 100 Chinese Listed Companies in ESGby Securities Times, etc.
For more information about ESG, please refer to Huadong Medicine: Environmental, Socialand Governance (ESG) Report in 2023 issued by the Company.IV. Awards during the Reporting PeriodDuring the reporting period, as the Company’s comprehensive competitive strength, efficientoperation and governance, and value creation ability were recognized by the market, it won anumber of awards and honors: The Company was included in Fortune China 500 for the 14th timeand ranked 358th. It was rated as “2023 China Top 500 Private Enterprises” and “2023 China Top500 Private Manufacturing Enterprises”. It was selected in the list of “2022 Top 100Pharmaceutical Industries in China” of MENET, reelected top 10 among “2022 Top 100
Chemical Pharmaceutical Enterprises in China”. It was honored as “Top 20 Chinese ListedPharmaceutical Companies in Competitiveness in 2023” by E-medicine Agent and “Top 10Innovative Medicine Enterprises in 2023” by China Times. It was included in “2023 Top 100Chinese Enterprises in Overall Strength of Pharmaceutical Research and Development”, “2023Top 100 Chinese Enterprises in Chemical Medicines Research and Development” and “2023 Top50 Chinese Enterprises in Biomedicine Research and Development” by YaoZH. In terms ofinvestor relations management, the Company won numerous awards, including the Gold Awardfor Panoramic Investor Relations - “Outstanding IR Company”, “Outstanding IR Team”, “BestCorporate Communication Award”, “Best New Media Operation Award”, and the 14th TianmaAwards for Investor Relations of Chinese Listed Companies - “New Media Award”, etc.
2. Income and cost
(1) Composition of operating revenue
Unit: yuan
| 2023 | 2022 | Year-on-year percentage increase/decrease | |||
| Amount | Proportion in operating revenue | Amount | Proportion in operating revenue | ||
| Total operating revenue | 40,623,782,520.43 | 100% | 37,714,587,458.01 | 100% | 7.71% |
| By sector | |||||
| Business | 27,641,104,822.67 | 68.04% | 25,706,575,656.84 | 68.16% | 7.53% |
| Manufacturing | 14,834,472,398.22 | 36.52% | 13,308,829,442.90 | 35.29% | 11.46% |
| Including: Industrial | 12,663,534,159.13 | 31.17% | 11,666,006,594.38 | 30.93% | 8.55% |
| Aesthetic medicine | 2,447,076,357.48 | 6.02% | 1,914,953,889.03 | 5.08% | 27.79% |
| Including: International aesthetic medicine | 1,303,938,229.47 | 3.21% | 1,143,849,083.22 | 3.03% | 14.00% |
| Aesthetic medicine in China [Note] | 1,328,453,681.15 | 3.27% | 883,937,124.31 | 2.34% | 50.29% |
| Offset (inter-sectoral offset) | -1,851,794,700.46 | -1,300,817,641.73 | |||
| By products | |||||
| By regions | |||||
| Sales in China | 39,196,619,466.20 | 96.49% | 36,549,476,866.81 | 96.91% | 7.24% |
| Overseas sales | 1,427,163,054.23 | 3.51% | 1,165,110,591.20 | 3.09% | 22.49% |
| By sales modes | |||||
[Note] The aesthetic medicine in China includes the income from the self-operated aesthetic medicine products, the income fromthe aesthetic medicine products of the Company’s pharmaceutical commercial agency and the income from the OTC weight-lossproducts of the Company.
(2) The operating revenue or profit accounts for more than 10% of the total by industries, products, regions and salesmodes? Applicable □ N/A
Unit: yuan
| Operating revenue | Operating cost | Gross profit rate | Year-on-year percentage increase/decrease in operating revenue | Year-on-year percentage increase/decrease in operating cost | Year-on-year percentage increase/decrease in gross profit rate | |
| By sectors | ||||||
| Business | 27,641,104,822.67 | 25,712,981,178.42 | 6.98% | 7.53% | 7.88% | -0.31% |
| Manufacturing | 14,834,472,398.22 | 3,285,586,681.98 | 77.85% | 11.46% | 10.58% | 0.18% |
| By products | ||||||
| By regions | ||||||
| Sales in China | 39,196,619,466.20 | 26,982,182,311.26 | 31.16% | 7.24% | 6.44% | 0.52% |
| Overseas sales | 1,427,163,054.23 | 479,549,262.33 | 66.40% | 22.49% | 44.48% | -5.11% |
| By sales modes | ||||||
If the statistical specifications of the Company’s main business data have been adjusted during the reporting period, theCompany’s main business data of the most recent year should be adjusted according to the specifications at the end of thereporting period.
□ Applicable ? N/A
(3) Whether the Company’s income from in-kind sales is greater than that from labor services?Yes □NoReasons that year-on-year percentage increase/decrease in related data is over 30%
□ Applicable ? N/A
(4) Performance of major sales contracts and major procurement contracts signed by the Company as of the reportingperiod
□ Applicable ? N/A
(5) Composition of operating cost
Sector
Unit: yuan
| Sector | Item | 2023 | 2022 | Year-on-year percentage increase/decrease | ||
| Amount | Proportion in operating cost | Amount | Proportion in operating cost | |||
| Business | Operating cost | 25,712,981,178.42 | 93.63% | 23,833,974,287.72 | 92.80% | 7.88% |
| Manufacturing | Operating cost | 3,285,586,681. | 11.96% | 2,971,265,913. | 11.57% | 10.58% |
| 98 | 43 |
NoteN/A
(6) Whether the scope of consolidation has changed during the reporting period
?Yes □No
For details, please refer to “IX. Change of consolidation scope” in “Section X. Financial Report”.
(7) Significant changes or adjustments to the Company’s business, products or services during the reporting period
□ Applicable ? N/A
(8) Major customers and major suppliers
The Company’s major customers
| Total sales amount of the top five customers (yuan) | 7,900,667,787.76 |
| Proportion of the total sales amount of the top five customers in the total annual sales amount | 19.45% |
| Proportion of related parties’ sales amount of the top five customers’ sales amount in the total annual sales amount | 0.00% |
Information of the Company’s top five customers
| No. | Customer name | Sales amount (yuan) | Proportion in the total annual sales amount |
| 1 | Customer A1 | 3,441,266,958.78 | 8.47% |
| 2 | Customer A3 | 1,491,471,437.54 | 3.67% |
| 3 | Customer A11 | 1,150,922,662.95 | 2.83% |
| 4 | Customer A5 | 945,813,964.81 | 2.33% |
| 5 | Customer A2 | 871,192,763.68 | 2.14% |
| Total | -- | 7,900,667,787.76 | 19.45% |
Other information of major customers
□ Applicable ? N/A
Information of the Company’s major suppliers
| Total purchase amount of the top five suppliers (yuan) | 3,746,525,314.04 |
| Proportion of the total purchase amount of the top five suppliers in the total annual purchase amount | 13.64% |
| Proportion of related parties’ purchase amount of the top five customers’ purchase amount in the total annual purchase amount | 0.00% |
Information of the Company’s top five suppliers
| No. | Supplier name | Purchase amount (yuan) | Proportion in the total annual purchase amount |
| 1 | Supplier B5 | 892,682,050.91 | 3.25% |
| 2 | Supplier B6 | 857,207,409.96 | 3.12% |
| 3 | Supplier B7 | 770,300,103.44 | 2.80% |
| 4 | Supplier B8 | 640,988,014.05 | 2.33% |
| 5 | Supplier B9 | 585,347,735.68 | 2.13% |
| Total | -- | 3,746,525,314.04 | 13.64% |
Other information of major suppliers
□ Applicable ? N/A
3. Expenses
Unit: yuan
| 2023 | 2022 | Year-on-year percentage increase/decrease | Note on major changes | |
| Sales expenses | 6,645,411,414.21 | 6,334,738,928.05 | 4.90% | |
| Administrative expenses | 1,420,188,961.59 | 1,248,781,970.63 | 13.73% | |
| Financial expenses | 51,189,784.17 | 78,256,567.01 | -34.59% | Mainly due to the increase in exchange gains and losses |
| R&D expenses | 1,270,803,119.96 | 1,015,971,052.33 | 25.08% |
4. R&D input
? Applicable □ N/A
(1) Overall R&D situation
During the reporting period, being “Scientific Research-based and Patient-centered”, theCompany further devoted itself to the field of cancer and chronic disease treatment, continuouslyincreased the R&D input, kept enriching the layout of innovative medicine R&D, enhanced theconstruction of innovative R&D ecology and technological platform, and actively advanced theprogress of clinical trials, with multiple major staged achievements made. As of the date of theReport, the Company has a total of 111 pharmaceutical projects under development, including 73innovative and biosimilar medicine projects. During the reporting period, the Company’s R&Dinvestment in the pharmaceutical industry (excluding equity investment) was 2.293 billion yuan, up
23.67% year-on-year. Among them, direct R&D expenditure was 1.6 billion yuan, up 33.74% year-on-year, which accounts for 13.1% of the operating revenue of the pharmaceutical industry. R&Dtasks mainly include the following:
1) The Company continued to practice the new medicine R&D mode combining independentR&D + cooperative entrusted development + product License-in, track the latest internationalmechanism of medicine action and target, as well as the progress of clinical application research,speed up the layout of innovative medicines and introduction of innovative medicine projects at
home and abroad, clarify innovative, differentiated and iterative standards for initiation of projects,and strengthen the capabilities of independent innovation and R&D;
2) The Company insisted on its differentiated R&D strategy with the focus placed onunsatisfied clinical needs of global patients. With “clinical value, pharmacoeconomic value andcommercial value” as the starting point, the Company laid out multiple categories of innovativeproducts in fields of endocrinology, autoimmunity and oncology;
3) Focusing on clinical superior varieties and specialized medicines, the Company acceleratedthe R&D layout of high-tech barrier generic medicines and modified new medicines;
4) The Company established and fostered the industrial chain advantages of “APIs +preparations” for generic medicines, developed technical improvement and innovation of externalpreparations, and strengthened its market competitiveness;
5) The Company strengthened the comprehensive dynamic evaluation of varieties underdevelopment, strengthened the management of imported projects, especially clinical projects,accelerated the speed and quality of development of clinical projects, especially those under phaseIII clinical trials, and sped up the launching of innovative medicines;
6) The Company built its ADC global R&D ecology for win-win cooperation by fostering thePolypeptide differentiation innovative technology platform, immune disease antibody technologyplatform, microbiology fermentation cytotoxin technology platform, and innovative linker andcoupling technology platform.
(2) Innovative R&D system and lines
The Company has set up a full-chain efficient and hardworking core R&D team withinternational visions composed of 1,700 high-level developers of various levels, and has establisheda relatively sound R&D management system that covers the whole process of medicinaldevelopment from target research, early medicinal discovery, pre-clinical research, clinical trials tonew medicine registration and marketing.
The Company placed the focus of its innovative R&D on three core fields of oncology,endocrinology and autoimmunity. To date, there have been over 60 innovative product lines. As itsproduct lines are continuously enriched, the Company has constantly expanded its innovativemedicine field to the R&D of multiple types of medicines including small-molecule medicines,polypeptides, ADCs, bispecific or multispecific antibody medicines, as well as the explorationtowards innovative therapies for diseases in the fields of endocrinology, autoimmunity andoncology.
(3) Progress of R&D of innovative medicines, innovative medical devices and biosimilarmedicinesOncologyThe Company endeavored to build the world’s leading platform for R&D of innovative cancermedicines and established more than 30 innovative antineoplastic medicines covering targetedsmall-molecule medicines, ADCs, antibodies, PROTAC, etc. through discovery, screening andverification of new targets in preliminary R&D of medicines.In October 2023, the application of ELAHERE
?(R&D code: IMGN853, HDM2002), theworld’s first in class Mirvetuximab Soravtansine Injection introduced by the Company fromImmunoGen based in the U.S., was accepted in China for the treatment of folate receptor alpha(FRα)-positive, platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal adultcancer patients treated with up to three prior therapies. The product was included in the list ofpriority review varieties by CDE in July 2023. In April 2024, the Company was approved to join theinternational multi-center phase III clinical study of PSOC (platinum-sensitive ovarian cancer) toadvance the front-line treatment of ovarian cancer, for the maintenance treatment for adult patientswith FRα-positive recurrent platinum-sensitive epithelial ovarian, fallopian tube, or primaryperitoneal cancers, who have not experienced disease progression after second-line platinum-basedchemotherapy, in combination with Bevacizumab. This product was piloted in the pioneer area ofBo’ao Lecheng International Medical Tourism Pilot Zone, Hainan Province in July 2023, and itsreal-world research for platinum-resistant ovarian cancer was officially launched in Hainan Bo’aoRuijin Hospital in August 2023. In addition, in March 2024, the Company’s American partnerannounced that the approval state of ELAHERE
?in the U.S. had changed from acceleratedapproval to full approval.
Mefatinib Tablet, the Company’s first-class new medicine, was included as the variety forbreakthrough treatment in May 2023 by CDE, which is used for treating advanced non-small celllung cancer with rare EGFR mutations. Moreover, the phase III clinical trial for advanced non-smallcell lung cancer with EGFR-sensitive mutation successfully reached the primary endpoint. TheCompany is expected to submit the application of frontline EGFR-sensitive mutation of MefatinibTablet in 2024.
HDM2005, an ADC product independently developed by the Company, is proposed to be usedfor the treatment of advanced solid tumors and hematologic tumors. Its IND application in Chinawas submitted in March 2024 and was successfully accepted.
HDM2006, the Company’s first self-developed small-molecule anti-tumor medicine and thefirst self-developed HPK-1 PROTAC (proteolysis-targeting chimera), entered IND study and is
proposed to be used for the monotherapy and combination therapy of advanced solid tumors andhematologic tumors. Its IND application in China is expected to be submitted by the end of 2024.In 2024, it is expected that three self-developed innovative products for tumors will obtain PCCconfirmations and that IND applications for two self-developed products will be submitted.
EndocrinologyThe Company has created the world leading innovative medicine R&D development platformfor diabetes with GLP-1 target as the core. To date, the Company has established six under-researchand launched product lines that cover oral medicines, injections, including long-acting, single-targetand multi-target global innovative and biosimilar medicines. The Company will keep exploringinnovative projects related to GLP-1 targets, expanding its coverage to such indications as weightloss, lipid reduction, NASH and heart failure, and constantly develop innovative medicines withhigher administration compliance and more clinical advantages.HDM1002 (small-molecule GLP-1 receptor stimulant), an innovative medicine for diabeticmellitus that is developed by the Company independently, has obtained IND approvals in the U.S.and China in May 2023, with the administration of the first subject in the first in human (FIH)achieved in the beginning of June 2023. The IND application for weight management indications ofpatients with overweight or obesity in China was approved in September 2023. To date, this producthas completed SAD and MAD trials in China, with its phase II clinical trial initiated. To date, thereis no oral small-molecule GLP-1 receptor stimulant in the world. HDM1002 will further enrich theCompany’s product lines in the field of endocrine therapy, accelerate the Company’s integrationinto the global innovative pharmaceutical industry, and further enhance its comprehensivecompetitiveness.IND applications in China for two indications of weight management of patients withoverweight or obesity and type 2 diabetes of HDM1005, a GLP-1R and GIPR long-actingpolypeptide dual-target agonist developed by the Company independently, were approved in March2024. The enrollment and administration of the first subject during phase Ia clinical trial in Chinawere completed in March 2024. In addition, the Company submitted IND application of thisproduct for overweight or obesity in the U.S. in March 2024.DR10624, a kind of FGF21R/GCGR/GLP-1R target multiple agonist developed by DoerBiologics, the Company’s holding subsidiary, completed SAD studies during phase I in China andNew Zealand. The phase Ib/ Ⅱa clinical trial for obesity with hypertriglyceridemia is nowconducted in New Zealand, which is expected to be completed by the end of 2024.
Liraglutide Injection has had its BLA application for diabetes indications approved by NMPAin March 2023, and its BLA application for obese or overweight applications was approved in June2023.To date, Semaglutide Injection completed the enrollment of all subjects during phase IIIclinical study for diabetes indication. It is expected that primary endpointdata will be obtained inQ4 2024.Insulin Degludec Injection completed the enrollment of all subjects during phase III clinicalstudy. It is expected that primary endpoint data will be obtained in Q4 2024.
Autoimmunity
The Company has had over 10 varieties of biomedicines and small-molecule innovativeproducts in the field of autoimmunity.
Being listed as Overseas New Medicine in Urgent Need for Clinical Purpose (First Batch) byCDE in China, Rilonacept for Injection (ARCALYST
?
), a global innovative product introducedfrom Kiniksa in the U.S., is used for the treatment of Cryo-Pyrin-Associated Periodic Syndromes(CAPS). The BLA application for CAPS indication was accepted in November 2023 and theproduct was included in the list of priority review varieties in January 2023. Moreover, inSeptember 2023, recurrent pericarditis (RP) was included in the Second Catalogue of Rare Diseasesjointly issued by the National Health Commission and other miniseries. In March 2024, the BLAapplication of Rilonacept for Injection for RP indication was accepted in March 2024 and theproduct was included in the list of priority review varieties in December 2023.
The marketing authorization application of HDM3001 (QX001S), a biosimilar of Ustekinumab(Stelara
?
) for plaque psoriasis has been accepted by NMPA in August 2023.
The IND application of HDM3002 (PRV-3279), an innovative medicine used for the treatmentof systemic lupus erythematosus (SLE), was approved by CDE in April 2023 and was formallyincluded in phase IIa MRCT (PREVAIL-2).
In 2023, the Company introduced a series of external preparations for skin diseases, includingZoryve
?(Roflumilast Cream and Roflumilast Foam) introduced from Arcutis based in the U.S.,which is used for the treatment of plaque psoriasis, atopic dermatitis, seborrheic dermatitis andpsoriasis of scalp and body, and Wynzora
?Cream from MC2, which is used for the treatment ofplaque psoriasis. The relevant clinical registration work is vigorously advanced.
Innovative pharmaceutical devices
HD-NP-102 (Dynamic Monitoring System of Glomerular Filtration Rate and RelmapirazinInjection): The Dynamic Monitoring System of Glomerular Filtration Rate and RelmapirazinInjection jointly developed by the Company and MediBeacon, Inc. of the U.S. can continuouslymeasure the glomerular filtration rate (GFR) of patients with normal or impaired renal functions bynon-invasive monitoring of the fluorescence emitted by Relmapirazin Injection through intravenousinjection. According to Chinese laws and regulations on registration, Dynamic Monitoring Systemof Glomerular Filtration Rate and Relmapirazin Injection shall be applied for registration inaccordance with application and registration procedures for medical devices and medicineseparately. In November 2021, the Dynamic Monitoring System of Glomerular Filtration Rate wasapproved to enter the special review procedure for innovative medical devices in China. In July2022, NMPA formally accepted the medical devices registration application for the system and isnow reviewing the application. The NDA application of Relmapirazin Injection used together withthe system was accepted in January 2024. In addition, the MediBeacon
?Dynamic MonitoringSystem of Glomerular Filtration Rate that contains Relmapirazin Injection and the DynamicMonitoring System of Glomerular Filtration Rate was approved by FDA as a pharmaceutical andmechanical combination product with the device as its main action mode. MediBeacon submittedthe marketing application to FDA before, which was formally accepted in July 2023.
Figure: Pipeline Diagram of Main Innovative Medicines and Biosimilar Medicines as of the Date of the
Report
(4) Others tasks regarding innovation R&D
Exploring innovative mechanism and continuously motivating vitality for innovationIn 2023, the Company launched its early exploratory project mechanism revolving around twostrategies of innovative transformation and internationalization, showcasing huge potential.Focusing on three core fields of oncology, immunity and endocrinology, the Company conductedmore than 10 early exploratory projects and successively incubated first-in-class or best-in-classinnovative medicine molecules by identifying frontier targets piloted on the platform via targets andaccelerating innovation.
Facilitating innovation transformation and advancing clinical developmentThe Company’s clinical R&D team continued to explore the speed and coverage of innovationand break through the differentiated bottleneck in innovation in accordance with the orientation ofhigh efficiency and high quality, endeavoring to achieve the leap-forward development ofdiversified innovation in clinical R&D. The R&D team charged and supported 22 clinical projectsfrom such dimensions as clinical study, operation, biometrics, registration and pharmaco-vigilance.Advanced technical platformsThe Company successfully built medicinal R&D platforms such as new target discoveryplatform, medicine design and synthesis platform, AIDD platform, PROTAC technology platformand ADC R&D platform, aiming at accelerating the promotion of numerous pipe lines with originalinnovation (first-in-class, best-in-class) or differentiated/iterative development values. Thanks tothese platforms, the Global R&D Center accumulated seven self-dependent innovation PCCmolecules in the past three years.Among them, AI drug discovery & design (AIDD) platform is a key orientation currentlyvalued by the Company, which strengthens the construction of computing power and algorithmsystem and intelligently process the data generated and accumulated in combination with theresearch progress of the industry. In the meantime, rich data on the properties of finished medicinesaccumulated by the Company lays the foundation for continuous optimization and iterativeprediction model of the properties of finished medicines and greatly improves the R&D progress ofseveral projects at different stages. This year, the platform has increased the prediction of smallmolecule novelty, hemolysis, efflux, ADC drug solubility, and other properties. At present, theplatform is also expanding its application in the R&D of small molecule, PROTAC, ADC, protein,polypeptide, and nucleic acid medicines. In the meantime, the platform also introduced Hermite andUni-QSAR technologies, which fill the FEP precision shortcomings of the platform and enrich theprediction methods of small molecular properties. To date, the platform has submitted 34 patentapplications and got over 2,000 compounds.
With the focus placed on the Company’s core therapeutic fields, the special and futuremedicines platform actively explored the R&D of new medicine molecular forms such as cell genetherapy, nucleic acid medicines, and innovative ADCs, supporting and laying foundation for theCompany’s product line layout in the future. The liver-targeted siRNA project for metabolicdiseases that the platform is developing is expected to complete PCC certification in 2024.
Postdoctoral research workstation
Zhongmei Huadong, a wholly-owned subsidiary of the Company, was approved to set up thepostdoctoral research workstation in February 2021, which was registered as a national postdoctoralresearch workstation in September 2022. The workstation now has 13 postdoctors. Postdoctors atthe Company’s postdoctoral research workstation are devoted to frontier and translational studies onR&D of innovative medicines and join hands with moving stations at Zhejiang University, ZhejiangUniversity of Technology and other universities in combination with the Company’s developmentstrategies and product lines under research.
Other innovation results
1) Patent applications
The Company’s Global R&D Center attached great importance to the protection of intellectualproperty rights, valued the management of intellectual property rights in the whole life cycle ofmedicines and the formulation of patent strategies, and set up an intellectual property BP for theearly warning, declaration and retention of patents in and out of China, thus improving thecomprehensive competitiveness of its products. Since its establishment, the Global R&D Center hasclaimed a total of over 100 patent applications, including 44 formal and PCT patent applications.All these patents cover such aspects as structures/ sequences, salt type/ crystal type, preparationprocesses, applications and formulations of new medicines. From 2023 to date, the Company hassubmitted a total of 17 formal (Chinese) or PCT (international) patent applications. Among them,many key international patents have been applied in over 20 regions across the globe. In themeantime, the Company obtained six authorized patents, including five Chinese patents and oneJapanese patent.
2) Academic publications
From 2023 to date, the innovative medicine team successively published nine conference/journal papers in the fields of oncology and endocrinology at conferences or on journals:
KRAS
G12D-PROTAC research selected in the summary of 2023 WCLC, with an oral presentationmade; oral GLP-1 small-molecule agonist HMD1002 selected in the summary of 2023 EASD, withan oral presentation made; single-arm registration study of Mirvetuximab Soravtansine in China(R&D code: IMGN853-301) selected as the POSTER of IGCS; targeted HPK1 PROTAC research
selected as the POSTER of 2024 AACR; oral HPK1 small-molecule inhibitor HDM2004 researchselected as the POSTER of 2024-CIMT Annual Conference; positive results of phase III keyclinical study of Mefatinib (HDHY-MHTN-III-1907) and oral PTPN2 small molecule inhibitorHDM2010 selected as the POSTER and in the summary of 2024 ASCO Annual Conference,respectively; PROTAC research results targeting BTK published on RSC Medicinal ChemistryJournal, and clinical study results of Mefatinib at the first-line treatment for NSCLC published onCancer Communications.
Since 2022, Huadong Medicine has published 12 innovative research results on journals/conferences, highlighting its strength and influence in innovative transformation and furthershowcasing our unremitting endeavors and positive results in independent innovation.
3) Governmental subsidies
To date, the Company’s Global R&D Center has won the government’s approvals for initiationof 15 projects, with the certified subsidies of up to 43.052 million yuan. The Company won thehonor of “Pioneering Innovation Team” of Zhejiang Province in 2021 and obtained the fund underZhejiang Province’s Pioneer Scientific and Technology Program for three consecutive years in2021, 2022 and 2023. Meanwhile, HDM1002 and some other programs were awarded prizes forscientific and technological projects at the provincial and/or municipal level. HD-NP-102 andMefatinib won the fund from the “Special Program for High-quality Development of Bio-pharmaceutical Industry in Hangzhou”.
(5) Progress of development of major generic medicines
The Company further clarified the focused and prioritized varieties of existing genericmedicines under development by regularly organizing dynamic evaluation and analysis. As of thedate of the Report, key varieties are as follows:
| No. | Field | Item | Specification | Latest Progress |
| 1 | Endocrine | Canagliflozin Tablets | 0.1g, 0.3g | Approved by NMPA in January 2023 |
| 2 | Endocrine | Pioglitazone Hydrochloride and Metformin Hydrochloride Tablets | 15/850mg | Approved by NMPA in September 2023 |
| 3 | Immunity | Tacrolimus Ointment | 0.03%, 0.1% | Approved by NMPA in August 2023 |
| 4 | Immunity | Tacrolimus Granules | 1mg | Application accepted in January 2023 and supplementary materials submitted in January 2024 |
| 5 | Immunity | Tacrolimus Sustained-release Capsules | 5mg, 1mg, 0.5mg | 5mg version approved by NMPA in February 2024 Applications of 1mg and 0.5mg versions submitted and accepted in February 2023, and supplementary materials submitted in February |
| 2024 | ||||
| 6 | Immunity | Sirolimus Tablets | 1mg | Application accepted in February 2024 |
| 7 | Immunity | Sirolimus Gel | 0.2% | Application accepted in January 2024 |
| 8 | Immunity | Mycophenolate Mofetil for Suspension | 34.98g | Application accepted in November 2023 |
| 9 | Oncology | Olaparib Tablets | 100mg, 150mg | Application accepted in October 2022 and supplementary materials submitted in January 2024 |
| 10 | Oncology | Ibrutinib Capsules | 140mg | Application accepted in January 2024 |
| 11 | Oncology | Carfilzomib for Injection | 60mg | Application accepted in February 2024 |
| 12 | Angiocarpy | Macitentan Tablets | 10mg | Approved by NMPA in October 2023 |
| 13 | Anti-infection | Fusidic Acid Cream | 15g: 0.3g | Application accepted in May 2023 |
| 14 | Easing pain | Lornoxicam for Injection | 8mg | Application accepted in August 2023 |
| 15 | Gastroenterology | Vonoprazan Fumarate Tablets | 10mg, 20mg | Application accepted in January 2024 |
(6) Progress of international registration
The Company has actively conducted its international registration tasks. As of the date of theReport, main progress is as follows:
| No. | Field | Item | Remarks | Latest Progress |
| 1 | Endocrine | Acarbose | APIs | Officially approved in India in June 2023. Supplementary materials for registration in Taiwan, China submitted in April and June 2023. |
| 2 | Endocrine | Liraglutide Injection | 3ml: 18mg | IND Application submitted in the U.S. in October 2023 and clinical license obtained in November |
| 3 | Endocrine | Semaglutide | APIs | DMF Application submitted in the U.S. in July 2023 |
| 4 | Immunity | Tacrolimus Capsules | 0.5mg, 1mg, 5mg | Approved by FDA in the U.S. in April 2023. |
| 5 | Oncology | Exatecan Mesylate | Intermediate | Supplementary DMF application submitted in the U.S. in March 2023 |
| 6 | Oncology | Plitidepsin | APIs | DMF Application submitted in the U.S. in November 2023 |
| 7 | Oncology | CAP-2 (7413) | Intermediate | DMF Application submitted in the U.S. in August 2023 |
| 8 | Oncology | P55 | Intermediate | DMF Application submitted in the U.S. in August 2023 |
| 9 | Oncology | MMAE | Intermediate | DMF Application submitted in the U.S. in July 2023 |
| 10 | Anti-infection | Mupirocin | APIs | Approved in India in February 2023 |
| 11 | Anti-infection | Caspofungin Acetate for Injection | 50mg, 70mg | Supplementary materials for ANDA application submitted in the U.S. in May 2022 |
| 12 | Anti-infection | Polymyxin B Sulfate | APIs | CEP application for Jiangdong Site approved by EDQM in May 2023 Approved in India in February 2023 Application for registration in Brazil submitted in August 2023 |
| 13 | Anticoagulant | Fondaparinux Sodium | APIs | Registration in Taiwan, China approved. DMF defect reply submitted in the U.S. in April 2023 |
| 14 | Anticoagulant | Fondaparinux Sodium Injection | 2.5 mg/0.5 ml, 5 mg/0.4 ml, 7.5 mg/0.6 ml, 10 mg/0.8 ml | Supplementary materials for ANDA application submitted in the U.S. in February, May and August 2023 |
| 15 | Traditional Chinese Medicine | Bailing Capsule | 0.5g | Registration in Canada approved in May 2023. |
| 16 | / | Poly (lactic-co-glycolic acid) (PLGA7525) | Excipients | DMF Application submitted in the U.S. in November 2023 |
(7) Progress of consistency evaluation
As of the date of the Report, the progress of consistency evaluation on quality and efficacy ofCompany’s generic medicines is as follows:
| No. | Field | Item | Specification | Latest Progress |
| 1 | Immunity | Tacrolimus Capsules | 1mg, 0.5mg | The notification of approval for supplementary application of consistency evaluation for 1mg version obtained in July 2023 The notification of approval for supplementary application of consistency evaluation for 0.5mg version obtained in January 2024 |
| 2 | Gastroenterology | Pantoprazole Sodium Enteric Capsules | 40mg | The notification of approval for supplementary application of consistency evaluation obtained in May 2023. |
| 3 | Angiocarpy | Indobufen Tablets | 0.2g | The notification of approval for supplementary application of consistency evaluation obtained in November 2023. |
| 4 | Angiocarpy | Adenosine Injection | 20ml:60mg, 30ml:90mg, 2ml:6mg | The notification of approval for supplementary applications of consistency evaluation for 20ml:60mg, 30ml:90mg versions obtained in August 2023 Application of 2ml:6mg version accepted in August 2023 |
(8) Progress of registration and launching of aesthetic medicine products in China
| No. | Type | Product Designation | Purpose | Latest Progress |
| 1 | Injections | MaiLi Extreme Hyaluronic acid | Facial filling | Clinical trials in China successfully reached primary endpoint of the clinical trial, with favorable product safety data shown. Application for registration in China is expected to be submitted in Q2 2024. |
| 2 | Injections | MaiLi Precise Hyaluronic acid | Facial filling | Enrollment of the first subject for clinical trial in China completed in December 2023 and enrollment proceeded as planned. |
| 3 | Injections | Ellansé-M | Facial filling | Enrollment of all subjects for clinical trial in China completed in March 2023 and follow-up in progress. |
| 4 | Injections | LanlumaV Poly-l-lactic Acid | Facial filling | Ethical approval for principal investigator of clinical trial in China obtained in February 2024. |
| 5 | Energy based device | Glacial Rx (F1) | Removing benign pigmented lesions of skin, etc. | Testing for registration in China and preparation of technical data in progress. |
| 6 | Energy based device | V20 | Improvement of body and facial wrinkles, benign skin lesions, benign vascular lesions, inflammatory acne, hair removal, etc. | Application for registration accepted by the Center for Medical Device Evaluation, NMPA in September 2023; notice for supplementary advice received in December 2023; preparation of all technical data in progress. |
| 7 | Energy based device | V30 | Improvement of body and facial wrinkles, benign skin lesions, benign vascular lesions, benign pigmented lesions, inflammatory acne, hair removal, etc. | All testing for registration completed and test data sorting in progress; preparation of technical data in progress. |
| 8 | Cosmetic device | Préime DermaFacial | Facial skin management | Notice of Classification and Definition of Non-medical Devices issued by Medical Equipment Standard Management Center, NMPA received in September 2023. |
(9) Progress of patents
In recent years, the Company attached great importance to the protection of intellectualproperty and the commercialization and application of achievements, and the number of patentapplications and authorization were steadily increased. Over the years, the Company applied formore than 1,420 patents in and out of China, including over 470 authorized invention patents.Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd., the Company’s wholly-controlledsubsidiary, is a national intellectual property demonstration enterprise. In November 2014, it passedthe external audit of Zhongzhi (Beijing) Certification Co., Ltd., becoming one of the first 147companies that passed the standards implementation certification and successfully passed the re-examination of the enterprise intellectual property management system in October 2023.During the reporting period, application and renewal of patents of the Company wereprogressed smoothly, with a total of 224 patent applications submitted, including 167 patents forinvention. A total of 104 patents were granted.
| Patent type | Increase during the reporting period | Total quantity | ||
| Number of patents applied for (unit) | Number of patents received (unit) | Number of patents applied for (unit) | Number of patents received (unit) | |
| Invention patent | 167 | 47 | 1136 | 473 |
| Utility patent | 52 | 52 | 253 | 227 |
| Appearance design patent | 5 | 5 | 39 | 35 |
| Total | 224 | 104 | 1428 | 735 |
Note: Data in the above table represent the statistical patent information of main subsidiaries engaging in thepharmaceutical industry, industrial microbiology and aesthetic medicine within the Company’s consolidatedstatements.
R&D personnel of the Company
| 2023 | 2022 | Percentage change | |
| Number of R&D personnel (person) | 1,777 | 1,543 | 15.17% |
| Proportion of R&D personnel | 12.81% | 13.13% | -0.32% |
| R&D personnel structure by education | |||
| Bachelor | 733 | 735 | -0.27% |
| Master | 527 | 471 | 11.89% |
| PhD | 96 | 64 | 50.00% |
| R&D personnel structure by age | |||
| < 30 | 537 | 502 | 6.97% |
| 30-40 | 932 | 811 | 14.92% |
| > 40 | 308 | 230 | 33.91% |
R&D investment of the Company
| 2023 | 2022 | Percentage change | |
| R&D investment amount (yuan) | 1,599,987,406.05 | 1,196,309,461.22 | 33.74% |
| Proportion of R&D investment in operating revenue | 13.10% | 10.72% | 2.38% |
| Capitalized R&D investment amount (yuan) | 368,631,977.43 | 227,794,420.14 | 61.83% |
| Proportion of capitalized R&D investment in R&D investment | 23.04% | 19.04% | 4.00% |
Note: The above R&D investment is from the direct R&D expenses of the Company’s main industrial controlled subsidiary, whichis mainly used for clinical research of products under research, the upgrade of existing product process, expenses forcommissioned technological development, consistency evaluation and international registration certification. During the reportingperiod, the Company’s R&D investment in the pharmaceutical industry (excluding investment in equity) was 2.293 billion yuan,up by 23.67% year-on-year, among which the direct R&D expenses were 1.6 billion yuan, up 33.74% year-on-year. The directR&D expenditure accounted for 13.10% of the operating revenue of the pharmaceutical industry. R&D personnel of the Companyin 2023 means the number of employees in the Company’s subsidiaries engaging in R&D in R&D and manufacturing systems ofthe pharmaceutical industry and industrial microbiology. The proportion of R&D personnel means the proportion of the number ofemployees in the Company’s subsidiaries mainly engaging in R&D and manufacturing of the pharmaceutical industry andindustrial microbiology. The proportion of R&D investment in operating revenue means the proportion of the direct R&Dexpenses of Company’s pharmaceutical industry in the operating revenue of the Company’s pharmaceutical industry
Reasons and impacts of major changes in the composition of R&D personnel.
□ Applicable ? N/A
Reasons for the year-on-year significant change in the proportion of total R&D investment in operating revenue.
□ Applicable ? N/A
Reasons for the significant change in the capitalization rate of R&D investment and its rationality
□ Applicable ? N/A
5. Cash flows
Unit: yuan
| Item | 2023 | 2022 | Year-on-year percentage increase/decrease |
| Subtotal of cash inflows from operating activities | 44,170,157,818.41 | 40,637,718,289.85 | 8.69% |
| Subtotal of cash outflows for operating activities | 40,240,941,111.71 | 38,255,865,621.25 | 5.19% |
| Net cash flow from operating activities | 3,929,216,706.70 | 2,381,852,668.60 | 64.96% |
| Subtotal of cash inflows from investing activities | 243,482,795.78 | 121,638,643.17 | 100.17% |
| Subtotal of cash outflows for investing activities | 1,994,034,738.29 | 2,557,236,232.75 | -22.02% |
| Net cash flow from investing activities | -1,750,551,942.51 | -2,435,597,589.58 | 28.13% |
| Subtotal of cash inflows from financing activities | 5,099,369,770.65 | 5,149,368,399.06 | -0.97% |
| Subtotal of cash outflows for financing activities | 6,492,731,116.63 | 5,249,078,772.19 | 23.69% |
| Net cash flow from financing activities | -1,393,361,345.98 | -99,710,373.13 | -1,297.41% |
| Net increase of cash and cash equivalents | 791,249,308.58 | -163,229,935.84 | 584.75% |
Main influencing factors of significant changes in relevant data year on year? Applicable □ N/A
The cash inflows from investing activities in the current period are 243 million yuan, up
100.17% compared with that in the same period last year (122 million yuan), mainly due tocollection of large-value bank deposit certificates due in this period.
Reasons for the significant difference between the Company’s net cash flow from operating activities and the current year’s netprofit during the reporting period.
□ Applicable ? N/A
V. Analysis of non-main business? Applicable □ N/A
Unit: yuan
| Amount | Proportion in total profit | Note on reasons | Sustainable or not |
| Total return | -219,713,034.52 | -6.34% | Mainly due to long term equity investment gains measured at equity method | |
| Gains and losses from changes in fair value | -13,756,372.80 | -0.40% | No | |
| Assets Impairment | -6,519,844.03 | -0.19% | ||
| Non-operating revenue | 50,548,825.60 | 1.46% | No | |
| Non-operating expenses | 37,490,279.21 | 1.08% | No | |
| Other income | 172,492,861.66 | 4.98% | Mainly due to the confirmation of government grants in the current period | No |
VI. Assets and liabilities
1. Major changes in asset composition
Unit: yuan
| End of 2023 | Beginning of 2023 | Change of proportion | Note on major changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary funds | 4,663,378,011.64 | 13.92% | 3,996,302,178.41 | 12.81% | 1.11% | |
| Accounts receivable | 7,455,250,690.83 | 22.25% | 7,198,746,788.59 | 23.08% | -0.83% | |
| Inventories | 4,290,214,266.03 | 12.80% | 4,495,483,328.54 | 14.41% | -1.61% | |
| Investment real estate | 12,746,181.87 | 0.04% | 13,648,240.14 | 0.04% | 0.00% | |
| Long-term equity investment | 1,535,907,809.85 | 4.58% | 1,659,076,538.78 | 5.32% | -0.74% | |
| Fixed Assets | 4,140,144,817.51 | 12.36% | 3,981,653,265.52 | 12.76% | -0.40% | |
| Construction in Progress | 913,147,212.17 | 2.73% | 873,159,427.47 | 2.80% | -0.07% | |
| Right-of-use Assets | 151,175,007.16 | 0.45% | 166,505,297.17 | 0.53% | -0.08% | |
| Short-term borrowings | 822,380,292.37 | 2.45% | 947,516,383.37 | 3.04% | -0.59% | |
| Contract liabilities | 135,459,275.17 | 0.40% | 146,488,489.07 | 0.47% | -0.07% | |
| Long-term borrowings | 520,759,460.07 | 1.55% | 1,051,457,747.44 | 3.37% | -1.82% | Mainly due to repayment of debt in the current period |
| Lease liabilities | 56,695,158.59 | 0.17% | 84,610,324.98 | 0.27% | -0.10% | |
| Other non-current assets | 1,561,458,605.23 | 4.66% | 1,037,279,933.15 | 3.33% | 1.33% | |
Foreign assets account for a relatively high proportion.
□ Applicable ? N/A
2. Assets and liabilities measured at fair value
? Applicable □ N/A
Unit: yuan
| Item | Amount at the beginning of the period | Gain/loss from fair value changes in the current period | Accumulated fair value changes recognized in equity | Depreciation reserves withdrawn during the period | Purchase amount in the current period | Selling amount in the current period | Other changes | Amount at the end of the period |
| Financial assets | ||||||||
| 2. Derivative financial assets | 29,907,470.68 | -13,756,372.80 | 0.00 | 283,396.09 | 16,434,493.97 | |||
| 4. Other equity instrument investments | 360,910,876.41 | 3,419,879.00 | 3,047,483.68 | 201,794,250.00 | 4,489,536.95 | 3,588,404.22 | 565,223,872.68 | |
| Subtotal of financial assets | 390,818,347.09 | -10,336,493.80 | 3,047,483.68 | 0.00 | 201,794,250.00 | 4,489,536.95 | 3,871,800.31 | 581,658,366.65 |
| Receivables financing | 1,002,511,208.21 | 11,074,468,738.83 | 10,642,613,646.35 | 1,434,366,300.69 | ||||
| Total | 1,393,329,555.30 | -10,336,493.80 | 3,047,483.68 | 0.00 | 11,276,262,988.83 | 10,647,103,183.30 | 3,871,800.31 | 2,016,024,667.34 |
| Financial liabilities | 0.00 | 0.00 | ||||||
Other changesChanges in exchange rateWhether there are significant changes in the main asset measurement attribute of the Company during the reporting period.
□Yes ?No
3. Limitation of asset rights at the end of the reporting period
| Item | Ending book balance | Ending book value | Type of limitation | Reasons for limitation |
| Monetary funds | 44,887,976.31 | 44,887,976.31 | Deposit | The deposit is used for issuing bills, letters of credit, etc. |
| Monetary funds | 152,594,375.00 | 152,594,375.00 | Bill pledge | Certificate of deposit pledge is used for issuing bills. |
| Monetary funds | 1,000,000.00 | 1,000,000.00 | Freezing | Judicially frozen payment |
| Receivables financing | 8,022,020.00 | 8,022,020.00 | Bill pledge | Bill pledge is used for issuing bills. |
| Total | 206,504,371.31 | 206,504,371.31 |
VII. Investment
1. Overview
? Applicable □ N/A
| Investment amount in the reporting period (yuan) | Investment amount in the same period of last year (yuan) | Percentage change |
| 2,386,619,197.31 | 2,859,562,403.21 | -16.54% |
2. Significant equity investments acquired during the reporting period
? Applicable □ N/A
Unit: yuan
| Name of invested company | Main business | Way of investment | Investment amount | Shareholding ratio | Fund source | Partner | Term of investment | Product type | Progress as of the balance sheet date | Projected income | Profit or loss of investment in the current period | Involved in litigation or not | Disclosure date (if any) | Disclosure index (if any) |
| Jiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd. | R&D, production and sales of animal drugs and health care products | Capital increase + share acquisition | 255,333,300.00 | 70.00% | Equity funds | Nanjing Jiuheng Pharmaceutical LP (Limited Partnership), Zhai Zhongshu | Long term | Equity | 1. All capital increase payments were made and some equity transfer payments were made. 2. All parties completed the equity transfer on May 31, 2023. 3. In accordance with the adjustment of equity consideration payment agreed in the Investment | / | -6,786,906.94 | No | April 20,2023 | Cninfo (http://www.cninfo.com.cn) |
| Agreement and subsequent remedial measures, the parties reached the Agreement on Matters Related to Equity Transfer of Jiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd. on July 31, 2023, reducing the milestone payment amount agreed in the original investment agreement from a total of 60 million yuan to 50 million yuan, and other milestones remain unchanged. | ||||||||||||||
| Total | -- | -- | 255,333,300.00 | -- | -- | -- | -- | -- | -- | / | -6,786,906.94 | -- | -- | -- |
3. Significant non-equity investments in progress during the reporting period
? Applicable □ N/A
Unit: yuan
| Project name | Way of investment | Investment in fixed assets or not | Industry involved in the investment project | Investment amount during the reporting period | Cumulative actual investment amount by the end of the reporting period | Fund source | Project progress | Projected income | Cumulative income realized by the end of the reporting period | Reasons for not meeting the planned schedule and projected income | Disclosure date (if any) | Disclosure index (if any) |
| Huadong Medicine Biomedical Science and Technology Park Project Phase II | Self-built project | Yes | Pharmaceutical manufacturing | 18,062,441.25 | 1,801,167,985.91 | Equity funds | 98.80% | N/A | March 9, 2017 | Cninfo (http://www.cninfo.com.cn) | ||
| Huadong Medicine Life Science | Self-built project | Yes | Pharmaceutical R&D | 106,668,322.43 | 375,444,992.71 | Equity funds | 95.00% | N/A | April 21, 2021 | Cninfo (http://www.cninfo.c |
| Industrial Park (Xiangfu south plot) project | om.cn) | |||||||||||
| Total | -- | -- | -- | 124,730,763.68 | 2,176,612,978.62 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Investment in financial assets
(1) Securities Investment
? Applicable □ N/A
Unit: yuan
| Type of stock | Stock code | Stock abbreviation | Initial investment cost | Accounting measurement model | Book value at the beginning of the period | Gain/loss from fair value changes in the current period | Accumulated fair value changes recognized in equity | Purchase amount in the current period | Selling amount in the current period | Gain/loss during the reporting period | Book value at the end of the period | Accounting item | Fund source |
| Domestic and overseas stock | RAPT | RAPT | 20,207,400.00 | Measurement of Fair Value | 8,064,797.86 | 3,419,835.06 | 3,047,483.68 | 0 | 4,489,536.95 | 127,762.94 | 7,122,858.91 | Other equity instrument investments | Equity funds |
| Total | 20,207,400.00 | -- | 8,064,797.86 | 3,419,835.06 | 3,047,483.68 | 0 | 4,489,536.95 | 127,762.94 | 7,122,858.91 | -- | -- | ||
Note: Huadong Medicine Investment Holding (Hong Kong) Limited, a subsidiary of the Company, purchased 218,102 Series C-2preferred shares of RAPT Therapeutics, Inc. in a total of 3 million US dollars in 2018. RAPT Therapeutics, Inc. was listed onNASDAQ exchange on October 30, 2019 (stock code: RAPT). As of the end of the reporting period, Huadong Medicine InvestmentHolding (Hong Kong) Limited holds 39,500 shares in RAPT after it reduced its stake, accounting for 0.113% of the total shares ofRAPT Therapeutics, Inc.
(2) Derivatives investment
? Applicable □ N/A
1) Derivatives investment for hedging during the reporting period
? Applicable □ N/A
Unit: ten thousand yuan
| Type of derivatives investment | Initial investment amount | Amount at the beginning | Gain/loss from fair value | Accumulated fair value | Purchase amount | Selling amoun | Amount at the end of | Proportion of the investment |
| of the period | changes in the current period | changes recognized in equity | during the reporting period | t during the reporting period | the period | amount at the end of the period in the net assets of the Company at the end of the reporting period | ||
| Currency swap derivatives | 2,990.75 | 2,990.75 | -1,375.64 | 0 | 0 | 0 | 1,643.45 | 0.08% |
| Total | 2,990.75 | 2,990.75 | -1,375.64 | 0 | 0 | 0 | 1,643.45 | 0.08% |
| Note on accounting policies and specific principles of accounting concerning hedging business during the reporting period, and whether they change significantly when compared with that in the previous reporting period | N/A | |||||||
| Note on the actual gains and losses during the reporting period | Gains and losses from changes in fair value arising from currency swap for hedging are -13.7564 million yuan during the reporting period. | |||||||
| Note on the effect of hedging | The Company carries out foreign currency hedging business based on specific situations, which is based on normal production and operations and can effectively reduce risks on the foreign currency market. Risks facing the Company under control are bearable. | |||||||
| Capital source of derivatives investment | Equity or self-raised funds | |||||||
| Note on the risk analysis and control measures for derivatives holding during the reporting period (including but not limited to market risks, liquidity risks, credit risks, operational risks and legal risks) | Risks: 1. Market risks: The interest rate, exchange rate and other prices on the market may fluctuate due to changed domestic and overseas economic policies and situations, thus changing the price of financial derivative instruments and causing losses. 2. Liquidity risks: Transactions fail to be completed due to the market lacking liquidity and counter-parties. 3. Operational risks: Trading financial derivative instruments requires experts who can deal with complexity, which may cause operational risks due to traders or managers thinking there is an error or system failure and out of control. 4. Contractual risks: Contracts on financial derivative business expire, some of which cannot be performed on time, and thus they are breached. 5. Legal risks: Relevant legal changes lead to a contract that is not in conformity with local laws, so that the contract cannot be performed, or contractual terms are omitted and unclear; or losses are caused to the Company due to the counter-party violating relevant laws and regulations, and thus the contract cannot be performed as required.. Measures: The Company and its wholly-controlled subsidiaries avoid speculation and arbitrage when trading financial derivatives, so that strict risk control will be employed during the execution of contracts concerning financial derivatives trading. 1. The Company strictly abides by prudent investment principles, selects prudent investment types, and makes investments within the amount approved by the Board of Directors. 2. The Company carefully selects counter-parties for trading, and only trades derivatives with financial institutions featuring robust operations, sound reputation and business license for financial derivative trading. The Company may resort to external professional investment and legal service institutions if necessary to provide consulting services for the Company’s financial derivative trading, | |||||||
| as well as scientific and precise investment strategies and suggestions. 3. The Company has formulated the Management Rules for Securities Investment and Derivative Trading, setting detailed rules on the management, supervision and information closure related to the Company’s derivative trading principles, scope, decision-making authority and capital use, which can effectively prevent investment risks. Besides, the Company will strictly implement related management rules, assign special personnel to follow up on the progress of financial derivative trading. For instance, relevant measures shall be taken in time to control investment risks if there are risks that may affect the Company’s capital safety The Company’s audit department is in charge of monitoring and checking the execution of financial derivative trading and reporting to the Audit Committee of the Board of Directors. 4. The Company’s audit department is in charge of monitoring and checking the execution of financial derivative trading and reporting to the Audit Committee of the Board of Directors. | |
| In case of changing market prices or fair values of invested derivatives during the reporting period, the analysis of the derivatives’ fair values shall disclose the specific methods adopted, relevant assumptions and parameter settings. | Please refer to “Disclosure of fair value” in the “Financial Report” for details when the derivatives are measured at fair value on the market. |
| Litigation (if applicable) | N/A |
| Date of announcement of the Board of Directors on derivatives investment approval (if any) | August 16, 2023 |
| Specific opinions of independent directors on the Company’s investments in derivatives and risk control | The Company invests in derivatives for the avoidance of market fluctuation risks and hedging, which is closely associated with daily operation requirements. The Company has formulated the Management Rules for Securities Investment and Derivative Trading and enhanced trading risk management and control, which contributes to the avoidance and control of operational risks, improving the Company’s capability to withstand market risks. No loss is caused to the Company and all shareholders. |
2) Derivatives investment for speculation during the reporting period
□ Applicable ? N/A
No such case during the reporting period.
5. Use of raised funds
□ Applicable ? N/A
No such case during the reporting period.VIII. Major assets and equity sales
1. Major assets sales
□ Applicable ? N/A
No such case during the reporting period.
2. Major equity sales
□ Applicable ? N/A
IX. Analysis of controlling and shareholding companies? Applicable □ N/AMain subsidiaries and the shareholding companies that have an impact on the Company’s net profit of more than 10%
Unit: yuan
| Company Name | Company type | Main business | Registered capital | Total assets | Net assets | Operating revenue | Operating Profits | Net profits |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Subsidiary | Production and management of Traditional Chinese and Western raw medicines and preparations, and health care products | 872,308,130 | 15,374,935,980.12 | 10,918,440,795.27 | 12,216,814,339.78 | 2,665,817,065.31 | 2,298,709,933.73 |
Acquisition and disposal of subsidiaries during the reporting period? Applicable □ N/A
| Company Name | Methods of acquisition and disposal of subsidiaries during the reporting period | Impact on the overall production, operation and performance |
| Huadong Medicine Dongyang Co., Ltd. | Equity acquisition | Expand the pharmaceutical business network coverage in Zhejiang Province |
| Jiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd. | Equity acquisition, capital increase | Industrial platform of industrial microbiology |
| Hangzhou Huayi Pharmacy Co., Ltd. | Equity acquisition | Supplement to commercial retail segment network throughout Zhejiang Province |
| Zhejiang Yiqun Biology Medical Instrument Trading Co., Ltd. | Equity acquisition | Supplement to commercial retail segment network throughout Zhejiang Province |
| Hangzhou Perfect mRNA Biotechnology Co., Ltd. | Incorporation | Technology innovation platform in the field of industrial microbiology and pharmaceuticals |
| Hibe Technology Co., Ltd. | Incorporation | Technology innovation platform in the field of industrial microbiology |
| Shaoxing Huadong Yueren Pharmacy Chain Co., Ltd. | Cancellation of registration |
Information of major shareholding companies
X. Structured entities controlled by the Company
□ Applicable ? N/A
XI. Prospect of Future Development(I) Prospect of macro-economy and trend of the pharmaceutical industryFrom the perspective of macro-economic background, the world is still in a period ofturbulence and change in 2023, with intensified international geopolitical conflicts and continuedhigh inflation. The growth of most major economies slowed down, global economic developmentfaced rising complexity, severity and uncertainty, and adverse impacts of external environment onChina’s development continued to increase. Nevertheless, China’s economy withstood severeexternal situation and downward pressure. In 2023, China’s national economy moved forwardsteadily and the overall economy showed a favorable trend of recovery despite multipleinfluences of geopolitical conflicts, economic downturn and shrinking demands. According to thestatistics of the National Bureau of Statistics, the gross domestic product (GDP) in 2023 was
126.0582 trillion yuan, up 5.2% year on year.
With regard to the demands of the pharmaceutical industry, people’s health care awarenesswas enhanced and medical insurance systems of various countries were continuously improved asthe world economy develops, the total population grows, population aging keeps accelerating, andthe prevalence of chronic non-communicable diseases continuously increases. The globalpharmaceutical markets showed a trend of continuous growth.
IQVIA data shows that the global medicine expenditures were about 1.6 trillion US dollarsin 2023, and it is estimated that the figure will reach 2.3 trillion US dollars in 2028, with acompound annual growth rate of 5–8% (including increase of expenditures for COVID-19vaccines and treatment. Main factors driving the growth include: the contribution of newmedicines, the impact of expiration of patents, and the growing impact of biosimilar medicines.The key growth area in the next five years is biomedicine that accounts for 39% of the globalexpenditures. Although the growth rate slowed down to 9.5–12.5%, the global biomedicineexpenditure is expected to exceed 890 billion US dollars by 2028. By 2028, the CAGRs of theworld’s top two therapeutic fields — anti-tumor medicines and immune system medicines — willincrease by 14–17% and 2–5% respectively. It is expected that about 100 new therapies will
emerge in the anti-tumor field within five years and the market size of anti-tumor medicines isexpected to be 440 billion US dollars by 2028. Affected by the steady increase in the number ofpatients and launching of new medicines, the market size of autoimmune medicines is expected toreach 192 billion US dollars by 2028 as competitions brought by the launching of biosimilarmedicines are continuously offset. GLP-1 agonist has been extensively applied in the fields ofdiabetes and obesity. By 2028, the expenditure on diabetes will reach about 184 billion US dollars,being expected to be the world’s third largest treatment field. The growth rate in the next fiveyears is expected to reach 3–6%.As estimated by IQVIA, the expenditures of medicines in China will increase from 103billion US dollars in 2014 to about 163 billion US dollars in 2023. In 2023, RLD accounted for 29%of the total medicine expenditure, the proportion being 20% five years ago. In the next five years,it is expected that the update of China’s medical insurance reimbursement list will promote morenewly launched RLDs to be included in the medical insurance, promoting higher expenditurescale. More and more RLDs are developed by local enterprises in China rather than multinationalpharmaceutical companies. Such a mode reshapes the Chinese market and has influenced Chinaand other countries. Over the past five years, the CAGR of RLDs in China was up to 8.5%. It isestimated that the CAGR of RLDs will exceed 7.5% in the next five years, while the CAGR ofother medicines will be 6% or lower, slowing down the total growth rate to 2–5%. Non-RLDbrand medicines are the second largest part of medicine expenditures in China. It is estimated thatthese medicine expenditures will increase by less than 1% each year due to cost control ofhospitals. In the coming five years, China’s medicine expenditure is expected to increase by about30 billion US dollars, and will exceed 197 billion US dollars by 2028.(II) Industrial development trend
1. Pharmaceutical industry in China
The pharmaceutical industry is a strategic industry related to the national policies, people’slivelihood, economic development, and national security, and an important part of China’snational economy. The medical demands keep increasing as Chinese people’s living standardsimprove, population aging intensifies, urbanization further accelerates, people’s medical careawareness improves, facilitation of medical services increases, and the prevalence of chronicdiseases continuously raises. During the new medical system reform, China further increases
input in medical insurances and the expansion of medical insurances stimulates medical demands,thus driving the continuous development of the pharmaceutical industry in China. Generallyspeaking, the future development of the pharmaceutical industry shows a favorable trend, and theindustry enjoys broad space for development. The pharmaceutical industry in China continuouslysteps toward the high-quality development as its macroeconomic situation improves, the nationalmedical security system is gradually optimized, residents’ health awareness is further enhanced,medicine supply modes become more diversified, and demands for medicines grow.From the perspective of industrial policies, the pharmaceutical industry in China is highlydependent on policies. Under the backdrop of the continuous deepening of the medical systemreform in China, the key of current pharmaceutical industry in China still lies in control ofmedical insurance costs. The scope of volume-based procurement has been continuouslyexpanded and the medicine review system has been further optimized since 2023. Policies areenacted to encourage pharmaceutical enterprises to research and develop new medicines. Thenational insurance drug list has been adjusted and normalized, with commercialization of newmedicines facilitated. All these together advance the innovation-driven transformation and high-quality development of the pharmaceutical industry. In recent years, the medical reform featuringlinkage of medical insurance, medicine and medical treatment has been continuously advanced,further driving the constantly standardized development of the industry. Among them, thepharmaceutical policies are enacted to guide and standardize the industrial development in an all-round way from such dimensions as medicine R&D, marketing review, rational administration,and quality supervision and control considering the actual conditions of the supply side. Moreover,medical anti-corruption policies all raise higher requirements on the standardized development ofthe pharmaceutical industry. The aforesaid policies have advanced the promotion of medicinequality, driven the overall upgrade of the industry, optimized the industrial structure, and providedguidance for the high-quality and high-standard overall development of the pharmaceuticalindustry in China.The trend of innovative R&D shows that emerging bio-pharmaceutical companies in Chinahave constantly advanced the development of clinical trials and Chinese pharmaceuticalcompanies have witnessed vigorous improvement in the level of innovative R&D. According tothe statistics of IQVIA, the participation of China-headquartered pharmaceutical companies in
clinical trials continues to increase, with their shares increased from 1% in 2008 and 3% in 2013to 28% in 2023. In recent five years, the total number of global new medicines launched in Chinahas surpassed that in four European countries (Germany, France, Spain and Italy) and U.K.,second only to the U.S. The significant increase in the number of new active substances (NAS)launched in China means that China has begun to narrow the gap with other major countries andregions, with more new medicines launched in Chinese market at a faster pace.From the perspective of breakthroughs in the field of diseases and new technology platforms,there are ceaseless breakthroughs in the field of diseases represented by GLP-1 and newtechnology platforms represented by ADC. Chinese enterprises enjoy comparative advantages incompetition. The underlying logic driven by innovation in the field of innovative medicines willnot change and breakthroughs in the field of diseases, such as GLP-1, AD and NASH, areexpected to be made in terms of indications in markets in addition to tumors. Breakthroughs ininnovation of technology platforms are represented by ADC, CAR-T, nuclear medicines, geneediting, etc., with global frontier progresses constantly mapped to China.
2. Aesthetic medicine
In 2023, the growth rate of the aesthetic medicine market in China gradually slowed downand the market competition became increasingly fierce as more and more enterprises entered themarket. However, the aesthetic medicine market in China enjoys huge potential of growth in thelong run. According to the statistics of the National Bureau of Statistics, China’s per capitadisposable income was 39,218 yuan in 2023, a nominal increase of 6.3% over the previous year.According to Frost & Sullivan, the size of the aesthetic medicine market in China will reach 638.2billion yuan in 2030, with a compound annual growth rate of 14.5% from 2021 to 2030. Aseducation and training on the aesthetic medicine market in China keep deepening, an increasingnumber of emerging aesthetic medicines enter the market to satisfy patients’ diverse demands.Moreover, consumers raise their demands for anti-wrinkle and anti-aging, and depend more onbrand effect, which are expected to steadily expand the size of the aesthetic medicine market inChina.The proportion of non-surgical projects continues to increase and its market scale expandsgradually. According to the statistics of iResearch, the market share of non-surgical projects isexpected to increase to 55.5% by 2025. Non-surgical aesthetic medicine projects are mainly
comprised of injection-based aesthetic medicine projects and photoelectric aesthetic medicineprojects. Among them, hyaluronic acid and botulinum toxins are mainstream materials forinjection-based projects, followed by collagen injections and regenerative materials. Hyaluronicacids feature higher product homogeneity and increasingly fierce competitions, while botulinumtoxins have lower penetration rate in China and enjoy huge market space restricted by highbarriers and strict approval procedures. Therefore botulinum toxins have attracted increasingnumber of enterprises and there are expected to be more new products launched to fill in themarket gap. According to Frost & Sullivan, the scale of admission price of botulinum toxins inChinese market was 6.5 billion yuan in 2022 and is expected to reach 12.6 billion yuan in 2025,with a CAGR of 25%.
The vigorous development of the aesthetic medicine market went with multiple chaos. Inrecent years, the aesthetic medicine market in China has been under constant, normalized andstrong regulation. On May 4, 2023, eleven ministries and commissions including the StateAdministration for Market Regulation jointly printed and issued the Guiding Opinions on FurtherStrengthening the Regulation of the Aesthetic Medicine Industry (“the Opinions”). The Opinionshighlights and emphasized trans-ministry comprehensive supervision, clearly requires to includeaesthetic medicine diagnosis and treatment activities, business activities related to aestheticmedicine, as well as medicines and medical devices for aesthetic medicine into comprehensivematters under regulation, and clears away “institutions without license”, “physicians withoutlicense” and “medical devices without license”. In addition, Chinese tax authorities have alsoplaced their focus on tax declaration of aesthetic medicine institutions, severely punished thosewithout non-compliances, and strengthened their efforts in regulation, thus ensuring the healthydevelopment of the aesthetic medicine industry. Such measures are conductive to facilitating thereshuffle of the industry, increasing the market concentration, and promoting the compliant andhealthy development of the industry. Leading aesthetic medicine enterprises with strong brandeffects will usher in a new growth space in a fairer competition atmosphere.
(III) Innovative development strategies of various business segments of the Company
1. Development plan of the pharmaceutical industry
Upholding the main theme of development of innovative R&D, the Company takesinnovative medicines as the foundation and orientation for building core competitiveness in the
future, closely track the technological development and R&D dynamics of such frontier fields asbiomedicine, gene therapy, cell therapy and ADC medicines in and out of China, focuses on andgives priority to the development of innovative medicines and high-technical barrier genericmedicines with outstanding clinical values for anti-tumor, endocrine, autoimmunity, and othermajor diseases and chronic diseases, with differentiated and pioneering innovative medicinepipelines formed. In terms of philosophy for development of R&D, the Company will deepen all-round foreign cooperation and product introduction, inject new connotations into the long-termstrategic plan of “digestion and absorption”, and follow the innovative R&D idea of “self-research+ introduction”. The Company will continuously enrich its product lines, improve the medium-and long-term layout of innovative products, keep maintaining the dual-wheel driving andcoordinated development engines of power and innovation for Huadong Medicine, build a globalR&D strategic cooperation ecosystem centered on Zhongmei Huadong. Moreover, the Companywill continue to improve the ability in international operation of products, and do well in externalauthorization of superior products, advanced technologies and patents. During the scientific andtechnological innovation in the future, the Company will benchmark with innovation anddifferentiation and grasp its basic orientation of clinical values, focusing on the project promotionspeed, as well as middle- and long-term pipeline layout.The Company will continue to increase its investment in R&D, continuously enrich andoptimize lines of core innovative products, endeavor to improve the proportion of annual R&Dexpenditure to more than 10% of the sales revenue of the pharmaceutical industry, and constantlyimprove the utilization rate of R&D funds. Moreover, the Company will endeavor to initiate andreserve at least 15 innovation projects (including medicines, medical devices, etc.) throughindependent initiation, external introduction or by other means, so as to provide innovativeproducts that supplement and lead each of the existing product line and ultimately form richproduct lines and favorable product echelons. As a result, there will be a benign developmentrhythm that innovative products are launched annually.More efforts will be made to introduce top-notch talents to create high-level scientificresearch teams. The Company will also create an innovative cultural atmosphere that encouragesinnovation and success and bears failure, and enhance the construction of internal R&D systemand technological platforms. Another action is to build a scientific team with outstanding ability,
open mind, great passion and sense of responsibility that cherishes innovation to facilitate thelanding of the Company’s international innovation strategy. The Company will establish adynamic evaluation mechanism for R&D projects, set up an academic committee of externalexperts to assist the Company in decision-making and management of R&D and productintroduction, thus ensuring scientific, advanced and feasible scientific innovation.
2. Development plan of the pharmaceutical business
Engaged in the pharmaceutical businesses in Zhejiang Province for years, the Company hasbeen rated as Top 10 Pharmaceutical Business Enterprises in China for consecutive years, and hasfour business segments of Chinese & western medicine, medical devices, medicine materials andginseng & antler, and health industry that cover the pharmaceutical wholesale & retailing, third-party medical logistics featuring cold chain, medical e-commerce, hospital value-added services,featured massive health, product agency and market expansion. The Company has formed thewhole industry chain from planting in bases to processing of prepared pieces, automatic decoction,self-owned brand functional products for its traditional Chinese medicine industry. As the leaderof pharmaceutical business in Zhejiang Province, the Company focuses on forming thegovernment affairs, reserve, distribution and marketing abilities, established service platforms,and fostered the competitive advantages of regional enterprises.
In 2024, the Company’s pharmaceutical business segment will continue to exploreinnovation in services, always focus on clients, keep up with upgraded demands of upstream anddownstream clients, and build a differentiated service brand and reputed name card for HuadongMedicine. In the meantime, the segment will consolidate the foundation of traditional distributionbusiness, continue to expand medicinal materials and devices to lower-tier markets, keepimproving the market share in hospitals, actively expand out-of-hospital markets, vigorouslydevelop its retail business, and enhance the profitability of in-hospital and DTP stores. Strictlyfollowing the management philosophy of “Compliance, Empowerment and EfficiencyImprovement”, the segment has always earnestly exercised its management and regulationresponsibilities to comprehensively improve the operation quality.
3. Development plan of the aesthetic medicine
Upholding the domestic and international dual-circulation development strategy, theCompany’s aesthetic medicine business vigorously follows the strategy of “global operation
layout and dual-circulation operating development” by maintaining its good momentum of rapiddevelopment. With its core subsidiary Sinclair as the global operating platform, the Company hasachieved the global layout of its aesthetic medicine and built itself into an international aestheticmedicine enterprise with great space of development in the future. The Company successivelyintroduces “aesthetic medicine + biomedicine” products with great scientific connotation andhuge market potential into China, a special market of the Company’s aesthetic medicinebusinesses, thus expanding its presence in China relying on its great registration and marketingabilities in China. Internationally, the Company empowers the rapid launching andcommercialization of its superior international products relying on the Company’s aestheticmedicine marketing basis in China, as well as the aesthetic medicine industry’s rapid development,thus fostering a new pattern features dual-circulation coordinated development and mutualpromotion of domestic and international businesses.In the future, the Company will continue to focus on the high-end market of global aestheticmedicine to form an international aesthetic medicine business integrating R&D, manufacturingand marketing. The Company will further integrate its R&D resources and competencies, activelyoptimize its product structure, enrich and improve the industrial layout based on its six globalR&D centers in the UK, the Netherlands, France, Switzerland, Spain and Israel. Sinclair’s sixglobal production bases in the Netherlands, France, the U.S., Switzerland, Bulgaria and Israel willsignificantly guarantee the international presence of the Company’s aesthetic medicine productsand better satisfy the demands for future development and diverse market needs.
4. Development plan of the industrial microbiology
Aiming at international development, the industrial microbiology segment will keep up withthe development trend of global industrial microbiology and synthetic biology industry andtechnologies, and endeavors to become an industry leader in the field of industrial microorganismby building an “industrialized, large-scale and international” industrial cluster. The Company keptpracticing the industrial microbiology development strategy, clarifying its strategic layoutfocusing on four major fields of xRNA, featured APIs & intermediates, massive health &biomaterials and animal health. In the meantime, the Company continuously enriched the productlines in four major strategic segments of high innovation, high technology barrier and high added-values and optimized its product structures through R&D.
(IV) Business Plan in 2024Starting from a new point for all business segments, the Company will place the focus onsolving core problems, anchor strategic goals, pool institutional capacities, and consolidate thefoundation for development. In the meantime, the Company will continue to uphold its operationphilosophy of “high quality and efficiency” and “struggling forward for development and puttingmanagement first”, keep in line with its 2030 Vision, vigorously deepened transformation andinnovation in such segments as pharmaceutical industry, pharmaceutical business, aestheticmedicine, and industrial microbiology, and keep pursuing technological, product-based and scaledevelopment.
1. Pharmaceutical industry
Being “Scientific Research-based and Patient-centered”, the Company will continuouslyincrease the R&D input and keep enriching the layout of innovative medicine R&D. In 2024, theCompany’s R&D team will closely focus on “speed and quality”, uphold the dual-wheel drivingof “introduction + self-research” based on the current product and R&D lines, supplement matureproducts with high clinical values, high-tech barriers and that have been launched or can belaunched quickly, and quickly enrich product lines, thus empowering the Company’sdevelopment.With regard to innovative projects, the Innovation R&D Center focuses on the layout ofthree core therapeutic fields of oncology, endocrinology/ metabolism andimmunity/autoimmunity oriented at unmet clinical demands of global patients, while caring aboutthe development of disruptive technologies and other major unmet clinical demands. We willcontinue to strengthen and improve the independent innovation and R&D capabilities, consolidateestablished R&D technology platforms, establish a scientific ideal mechanism and a dynamicevaluation mechanism for R&D lines at various stages, and provide project reserves and scientificsupport for formal R&D projects.In terms of generic medicines, CMC R&D Center continues to foster the industrial chainadvantage featuring “raw materials + preparations” and combination of generic medicines andinnovative medicines, develop generic medicines with high-tech barriers, explore medicinedelivery systems such as complex injections, and deepen the technological improvement and
innovation of external preparations. In the meantime, CMC R&D Center carefully analyzesvarious national laws and policies to promote volume-based procurement, and insists onresearching and developing generic medicines with clinical and market values for smoothlaunching of the first batch of medicines.As for the quality system, we attach great importance to the quality and lifeline, and furtheroptimize domestic and international registration revolving around the Company’s annual workingpolicy of “Integrity, Efficiency, Quality, International Integration, Innovation and Excellence”,thus motivating the market and business development.
2. Pharmaceutical business
In the pharmaceutical business segment, we insist on business innovation (i.e. serviceinnovation), put clients at the center, keep up with the upgraded demands of upstream anddownstream clients, keep improving our service quality, build differentiated service brands of theCompany’s pharmaceutical business, and expand the scale for more profits. It is particularlyemphasized that Huadong Pharmacy and Wulin Pharmacy shall further improve their servicequality and level, foster a reputed name card for Huadong Medicine’s pharmaceutical businessservices. Retail pharmacies shall set up and implement the store management system with storemanager management as the core.The segment will continue to consolidate its traditional delivery business, maintain areasonable scale, keep increasing the ratio of leading hospitals, extend its medicinal materials andmedical devices businesses to low-tier markets, and increase its market shares in various citiesthroughout Zhejiang Province. In the meantime, the segment will vigorously expand its out-of-hospital markets, further develop the Company’s pharmacy retail businesses, and improve theprofitability of pharmacies in hospitals and DTP stores.Strictly following the management philosophy of “Compliance, Empowerment andEfficiency Improvement”, the segment has always earnestly exercised its management andregulation responsibilities to comprehensively improve the operation quality. The business teamshall also foster the operational thinking of lean management, cost reduction and efficiencyimprovement, and take “efficiency improvement and cost reduction” as important indicators forevaluation of main leaders, with the key placed on the improvement of labor efficiency andoperating performance.
3. Aesthetic medicine business
In 2024, the Company’s aesthetic medicine segment will actively promote the R&D andregistration of high-end aesthetic medicine products worldwide, endeavor to ensure the normalprogress of relevant projects, and further enrich product lines vertically and horizontally, thusbenefiting more patients. As for the aesthetic medicine business in China, the Company shallalways target at high-end markets, put patients at the center, improve the service quality,strengthen the market education of Sinclair and the Company’s brands, and increase market sharethrough multiple channels. Moreover, training for physicians is further enhanced and the brandimage is promoted to reach more clients.Efforts are also made to ensure the normal progress of projects as for R&D and registrationof aesthetic medicine products to launch products as early as possible, thus further enrichingproduct lines vertically and horizontally.
4. Industrial microbiology
In 2024, the industrial microbiology segment shall continue to deeply study changes inmarket trend and optimize the layout of core businesses, especially the expansion of internationalmarket and growth of non-associated businesses, focusing on four major fields of xRNA, featuredAPIs & intermediates, massive health & biomaterials and animal health. In this segment, theCompany will strengthen the Industrial Microbiology Division’s ability in marketing andoperation of core businesses in line with its operating philosophy of “Market-oriented and ClientForemost”. Advancing R&D based on for strategic segments, the Company continuously enrichesthe product lines with high innovation, high technology barrier and high added-values, andoptimizes its product structures.
5. Production and supply chain management
In 2024, the production system will continuously promote the transformation of theCompany’s operating mode, keep improving the procurement management and suppliermanagement systems, optimize the engineering construction processes, improve the factorymanagement level, further improve the efficiency and reduce production costs based on the leanmanagement system established and efforts made in cost reduction and efficiency improvement.
(V) Possible Risks and Countermeasures
1. Change of industry policy and risk of product price reduction
The pharmaceutical industry is a strategic industry supported and developed in China, whichis closely related to people’s health and life safety. Being highly competitive and innovative, itneeds to constantly adapt to market changes and policy adjustment. In recent years, thepharmaceutical industry has been gradually standardized, normalized and systematized as suchpolicies as volume-based procurement and medical insurance negotiation are constantly advanced.In the meantime, such external factors as geopolitics and macroeconomic policies also disturbenterprise management and market conditions, posing new challenges to the production cost andprofitability of the pharmaceutical industry. Besides, there is a risk of price reduction of newmedicines.Countermeasures: The Company has always paid great attention to national policies andindustrial development, with corresponding adjustment made when necessary. In terms of R&D,the Company continues to increase its R&D input and improves its competitiveness and potentialfor future development by enriching product lines in core therapeutic fields. In the meantime, theCompany actively expands the aesthetic medicine and industrial microbiology fields to create newgrowth points. In addition, the Company also reduces its production and operation risks throughcost reduction, efficiency improvement, lean management, or by other means.
2. Risk in new medicine R&D
Generally, it takes a long time for a new product to be launched from R&D to pre-clinicalresearch, clinical trials, application for registration, production approval, commercialization andetc. The R&D progress is affected by such factors as national policies, market factors, andregulatory approval. In addition, the R&D of innovative medicines needs excellent R&Dpersonnel with high education level. The investment of manpower and early R&D expenses willput some pressure on the Company to achieve its current business objectives. Meanwhile, newmedicines will be tested by the market demands after launching and may face such risks as pricereduction, which may result in return on R&D investment that is less than expected.
Countermeasures: The Company focuses on its core therapeutic fields, continuouslyimproves its capacity in independent R&D, keeps enriching and optimizing its product lines
through independent R&D + introduction, and fosters the R&D ecology unique to HuadongMedicine, with featured R&D matrices formed in the fields of oncology, endocrinology andautoimmunity. The Company will continue to optimize its innovation mechanism, constantlyimprove scientific research, evaluation and decision-making system for new medicines, andstrengthen close partnership with well-known R&D institutions in and out of China. In themeantime, the Company inputs more to introduce high-level scientific research talents, enhancestraining and incentive for internal core technical staff, and endeavors to foster a high-levelinnovative R&D team that supports the complete cycle of innovative medicine R&D.
3. Risk in investment and merger
Foreign investment is one of important ways of enterprise development. In recent years, theCompany has continued to invest and do mergers and acquisitions in such fields as innovativemedicines, aesthetic medicine and industrial microbiology, so as to form goodwill and realize theinnovation and transformation development strategy. If the company acquired in the future facesthe risk of performance fluctuation, there may be a risk of goodwill impairment, adverselyaffecting the Company’s current operation performance. At the same time, the post-investmentmanagement and business integration of the target company also put forward higher requirementsfor the management of the Company.Countermeasures: The Company will strive to comprehensively improve our capabilities inoverall planning, management structure, financial management, overall operation and governance,and business integration; strengthen the resource sharing and synergy of acquired subsidiaries;regularly test the impairment of goodwill; and enhance comprehensive, scientific and timely post-investment management.
4. Risk in exchange rate fluctuation
The Company has always been devoted to advancing its international development. In recentyears, the Company increasingly develops international cooperation and exchanges, expands thesales network of aesthetic medicine in the world, and accelerates the development of its industrialmicrobiology segment, raising the proportion of foreign currency settlement business. Thefluctuation in exchange rate will affect the price of the Company’s export products, causeexchange gains and losses to the Company, and increase the operating costs, thus affecting the
Company’s assets, liabilities and income, further its operation ability, debt repayment ability andprofitability.
Countermeasures: the Company will pay close attention to the fluctuation in exchange rate,adjust our business countermeasures in time according to its own situation, and resolve theadverse effects; develop the exchange risk awareness, and improve the foreign exchange riskmanagement system; strengthen the training of financial personnel’s professional skills and riskawareness, enhance the awareness of risk avoidance, and make good use of financial means toavoid exchange rate risks.XII. Registration form of receptions, including research, communication and interview,undertaken during the reporting period
? Applicable □ N/A
| Reception date | Reception address | Reception method | Type of visitor | Reception object | Main content of discussion and information provided | Index of basic information of the research |
| January 17, 2023 | Conference Room of the Company | Others | Institution and individual | CICC, TF Securities, Industrial Securities, CSC Financial, etc. | Huadong Medicine & CARsgen Therapeutics Commercialization Project Exchange | Please refer to the Record of Investor Relations Activities on January 17, 2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| February 15 to 16, 2023 | Conference Room of the Company | On-site survey | Institution | China Securities Cooperation, Zheshang Securities, etc. | Investor communication | Please refer to the Record of Investor Relations Activities on February 15 to 16, 2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| March 2 to 3, 2023 | Conference Room of the Company | On-site survey | Institution and individual | Kaiyuan Securities, CCIC, GF Securities, etc. | Investor communication | Please refer to the Record of Investor Relations Activities on March 2 to 3, 2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| April 14, 2023 | Conference Room of the Company | Online meeting | Institution and individu | GF Securities, Haitong | 2022 Annual Performance Exchange | Please refer to the Record of Investor Relations Activities |
| al | International, CCIC, etc. | Meeting of Huadong Medicine | on April 14, 2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. | |||
| April 21,2023 | Conference Room of the Company | Online meeting | Institution and individual | Citic Securities, TF Securities, Haitong Securities, etc. | 2023 Q1 Performance Exchange Meeting of Huadong Medicine | Please refer to the Record of Investor Relations Activities on April 21, 2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| May 8, 2023 | Conference Room of the Company | On-site survey | Institution and individual | CICC, Citic Securities, etc. | Activities of Investors’ Reception Day | Please refer to the Record of Investor Relations Activities on May 8, 2023 (Activities of Investors’ Reception Day) presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| May 12, 2023 | Conference Room of the Company | Online meeting | Institution and individual | Institution and individual investors | 2022 Annual and 2023 Q1 Online Performance Meeting of Huadong Medicine | Please refer to the Record of Investor Relations Activities on May 12, 2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| June 13, June 15 and June 16, 2023 | Conference Room of the Company | On-site survey | Institution | Huatai Securities, China Life Assets, UBS Securities, etc. | Investor communication | Please refer to the Record of Investor Relations Activities on June 13, 15 and 16, 2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| August 16, 2023 | Conference Room of the Company | Online meeting | Institution and individual | China Securities, CICC, Citic Securities, etc. | 2023 Interim Performance Exchange Meeting of Huadong Medicine | Please refer to the Record of Investor Relations Activities on August 16, 2023 presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| October 25, 2023 | Conference Room of the Company | Online meeting | Institution and individual | Huatai Securities, GF Securities, Haitong | 2023 Q3 Performance Exchange Meeting of Huadong | Please refer to the Record of Investor Relations Activities on October 25, 2023 presented on the |
| Securities, etc. | Medicine | websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
XIII. Implementation of the Action Plan of “Improvement of Quality and Return”Whether the Company discloses its Action Plan of “Improvement of Quality and Return”?Yes □NoThe Company has formulated the Action Plan of “Improvement of Quality and Return” in abid to implement the guiding principles of “Activating the capital market and boosting investors’confidence” put forward by the Political Bureau of the CPC Central Committee and “Vigorouslyimproving the quality and investment value of listed companies, taking more powerful and effectivemeasures to stabilize the market and confidence” pointed out at the executive meeting of the StateCouncil, safeguard the interests of all shareholders of the Company, continuously enhance theCompany’s core competitiveness and investment values, and realize high-quality, high-efficiencyand sustainable development. Please refer to the Announcement on Advancing the Implementationof the Action Plan of “Improvement of Quality and Return” (Announcement No.: 2024-011)disclosed by the Company on Cninfo (http://www.cninfo.com.cn) on March 9, 2024 for details.
The Company implements the Action Plan of “Improvement of Quality and Return”, focuseson four business segments of pharmaceutical industry, pharmaceutical business, aesthetic medicineand industrial microbiology, and continues to advance the innovation and transformation strategy,fully stimulates the innovation vitality, improves the operating quality and efficiency, and promotesthe its sustainable and high-quality development.The Company kept increasing its input in R&D. During the reporting period, the Company’sR&D investment in the pharmaceutical industry (excluding investment in equity) was 2.293 billionyuan, up by 23.67% year-on-year, among which the direct R&D expenses were 1.6 billion yuan, up
33.74% year-on-year. The direct R&D expenditure accounted for 13.10% of the operating revenueof the pharmaceutical industry. Over the years, the Company applied for more than 1,420 patents inand out of China, including over 470 authorized invention patents. In 2023, application and renewalof patents of the Company were progressed smoothly, with a total of 224 patent applicationssubmitted by its main subsidiaries, including 167 patents for invention. A total of 104 patents weregranted.
The Company conducted information disclosure and investor exchange activities based on theneeds of investors, enhanced its transparency, listened to and drawn opinions and suggestions ofinvestors, continuously improved corporate governance, strengthened internal control and risk
prevention, and improved the level of standardized operation. The Company further standardizedthe operation of the mechanism comprised of shareholders’ meeting, board of directors, board ofsupervisors and senior managers, gave full play to the roles of special committees, independentdirectors and professional organizations of the board of directors, continuously improved thedecision-making level, and safeguarded the interests of the Company and stakeholders.
The Company has always kept the philosophy of returning investors in mind and operatedstably. In 2023, the Company achieved the operating revenue of 40.624 billion yuan, up 7.71% yearon year. The net profit attributable to shareholders of listed companies was 2.839 billion yuan, up
13.59% year on year.
The Company’s profit distribution plan for 2023 is as follows: based on the Company’sexisting total share capital of 1,754,327,548 shares, the Company allocates 5.8 yuan (including tax)in cash for every 10 shares held by shareholders. No bonus shares will be distributed, and noreserved funds can be converted as the share capital. The total cash dividend will be1,017,509,977.84 yuan (including tax), and the remaining undistributed profits will be carriedforward to future annual distribution. If the total share capital of the Company changes before theimplementation of this profit distribution plan, the distribution ratio per share will be adjusted whilethe total amount to be distributed keeps unchanged.
Section IV. Corporate GovernanceI. Basic situation of corporate governanceDuring the reporting period, the Company strictly complied with the requirements of theregulatory documents on corporate governance issued by the CSRC and the SSE, such as theCompany Law, the Securities Law, the Governance Guidelines for Listed Companies, and the Rulesfor Stock Listing of Shenzhen Stock Exchange. In order to realize its strategic development goalsand safeguard the interests of all shareholders, the Company carried out comprehensive internalcontrol and standardized management, built and polished internal control systems, strengthenedinternal management, standardized information disclosure and improved the corporate governancestructure, thus protecting shareholders’ rights and interests. There is no material difference betweenactual corporate governance and the requirements of the Company Law and the relevant provisionsof the CSRC. According to the regulatory documents on the governance of listed companies issuedby the CSRC, the Company has formed a system that is legally compliant and in line with the actualoperation of the Company. By the end of the reporting period, the actual corporate governance wasbasically consistent with the regulatory documents on corporate governance issued by the CSRCand the Shenzhen Stock Exchange, and there were no outstanding governance issues.Whether the actual corporate governance of the Company is significantly different from laws, administrative regulations, and thenormative documents on corporate governance issued by the CSRC
□Yes ?No
No such case during the reporting period.
II. The Company’s independence in corporate assets, personnel, finance, institutions andbusiness from controlling shareholders and de facto controllerDuring the reporting period, the Company continuously strengthened the corporate governancestructure and implemented standardized operation in accordance with the requirements ofregulatory authorities. The Company and its controlling shareholder realized the separation ofmanagement and independent operation in terms of personnel, assets, finance, institutions andbusiness.
| Category | Independent or not | Note |
| Independence in business | Yes | The Company is mainly engaged in the production and operation of pharmaceutical products, and has its own independent production and sales systems. The Company’s business activities are completely independent from its controlling shareholder. Although the subsidiaries of the Company and the controlling shareholder are engaged in pharmaceutical business, they focus on different medical fields and different customer |
groups. Therefore, there is no competition between the Company, controllingshareholders and related parties.Independence in personnel
| Independence in personnel | Yes | The Company is completely independent in the management of labor, personnel and salaries, and has an independent Human Resources Department and a sound personnel management system. |
| Independence in assets | Yes | The Company has various independent assets, such as independent production systems, auxiliary production systems and supporting facilities; independent purchasing and sales systems; independent industrial property rights, trademarks, non-patented technologies and other intangible assets. |
| Independence in institutions | Yes | The Company has established an independent Board of Directors, management and other internal organizations, and each functional department is independent from controlling shareholders in duty and personnel. There is no superior-subordinate relation between functional departments of controlling shareholders and those of the Company, which would have an impact on the Company’s independent operations. |
| Independence in finance | Yes | The Financial Management Head Office is responsible for the financial accounting and budget management of the Company, and has established independent and sound financial, accounting and budget management systems according to relevant laws and regulations. |
Note: The Company is independent in Businesses, Management, Assets, Institutions and Finance from controlling shareholders.The Company does not have peer competition or related transactions caused by partial restructuring, industry characteristics,national policies or mergers and acquisitions.
III. Horizontal competition
□ Applicable ? N/A
IV. Annual and extraordinary general meetings held during the reporting period
1. Shareholders’ meetings in the reporting period
| Sessions | Meeting type | Proportion of investors present | Convening date | Disclosure date | Meeting resolution |
| 2022 Annual General Meeting | Annual general meeting | 61.65% | May 8, 2023 | May 8, 2023 | On China Securities Journal, Securities Times, Shanghai Securities News, and cninfo (www.cninfo.com.cn). Announcement of Resolutions of 2022 Annual General Meeting (Announcement No.: 2023-033) |
| 2023 First Extraordinary General Meeting | Extraordinary general meeting | 64.24% | July 19, 2023 | July 19, 2023 | On China Securities Journal, Securities Times, Shanghai Securities News, and cninfo (www.cninfo.com.cn). Announcement of the Resolutions of 2023 First Extraordinary General |
| Meeting (Announcement No.: 2023-054) | |||||
| 2023 Second Extraordinary General Meeting | Extraordinary general meeting | 61.27% | December 8, 2023 | December 8, 2023 | On China Securities Journal, Securities Times, Shanghai Securities News, and cninfo (www.cninfo.com.cn). Announcement of the Resolutions of 2023 Second Extraordinary General Meeting (Announcement No.: 2023-093) |
2. Extraordinary general meetings convened at the request of preference shareholders with resumedvoting rights:
□ Applicable ? N/A
V. Directors, supervisors and senior management members
1. Brief information
| Name | Gender | Age | Title | Holding of positions | Commencement of the term | Termination of the term | Shares held at the beginning of the period (shares) | Shares increased during the period (shares) | Shares decreased during the period (shares) | Other changes (shares) | Shares held at the end of the period (shares) | Reasons of changes in shareholding |
| Lv Liang | Male | 50 | Chairman and General Manager | Incumbent | June 1, 2022 | June 1, 2025 | 200,000 | 0 | 0 | 0 | 200,000 | |
| Kang Wei | Female | 56 | Director | Incumbent | December 5, 2016 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Zhu Feipeng | Male | 58 | Director | Incumbent | June 1, 2022 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Ye Bo | Male | 36 | Director | Incumbent | June 1, 2022 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Zhu Liang | Male | 47 | Director | Incumbent | June 6, 2019 | June 1, 2025 | 30,000 | 0 | 0 | 0 | 30,000 | |
| Wang Yang | Male | 48 | Director | Incumbent | July 19, 2023 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Niu Zhanqi | Male | 57 | Director | Retired | June 3, 2016 | June 21,2023 | 0 | 0 | 0 | 0 | 0 | |
| Wang | Male | 57 | Indepe | Incum | June 1, | June 1, | 0 | 0 | 0 | 0 | 0 |
| Ruwei | ndent Director | bent | 2022 | 2025 | ||||||||
| Gao Xiangdong | Female | 61 | Independent Director | Incumbent | June 1, 2022 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Huang Jian | Female | 55 | Independent Director | Incumbent | May 8, 2023 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Yang Lan | Female | 55 | Independent Director | Retired | April 27, 2017 | May 8, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Bai Xinhua | Female | 58 | Supervisor | Incumbent | January 20, 1998 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Zhou Yanwu | Male | 55 | Supervisor | Incumbent | June 1, 2022 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Qin Yun | Female | 54 | Supervisor | Incumbent | May 19, 2006 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Dong Jiqin | Female | 40 | Supervisor | Incumbent | June 1, 2022 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Xu Zhifeng | Male | 49 | Supervisor | Incumbent | June 6, 2019 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Zhu Yinhua | Female | 50 | Supervisor | Incumbent | June 1, 2022 | June 1, 2025 | 0 | 0 | 0 | 0 | 0 | |
| Wu Hui | Male | 55 | Deputy General Manager | Incumbent | June 6, 2019 | June 1, 2025 | 150,000 | 0 | 0 | 0 | 150,000 | |
| Zhu Li | Female | 49 | Deputy General Manager | Incumbent | October 12, 2020 | June 1, 2025 | 180,000 | 0 | 0 | 0 | 180,000 | |
| Zhang Jianfei | Male | 49 | Deputy General Manager | Incumbent | June 1, 2022 | June 1, 2025 | 230,000 | 0 | 0 | 0 | 230,000 | |
| Chen Bo | Male | 52 | Secretary of the Board of Directors | Incumbent | June 30, 2009 | June 1, 2025 | 100,000 | 0 | 0 | 0 | 100,000 | |
| Qiu Renbo | Male | 42 | Person in | Incumbent | November | June 1, 2025 | 100,000 | 0 | 0 | 0 | 100,000 |
| Charge of Finance | 28, 2019 | |||||||||||
| Total | -- | -- | -- | -- | -- | -- | 990,000 | 0 | 0 | 0 | 990,000 | -- |
Whether directors and supervisors left office or senior managers were dismissed during their terms of office during the reportingperiod?Yes □NoMs. Yang Lan, an independent director of the 10th Board of Directors of the Company, hadbeen an independent director of the Company since April 28, 2017. Since she had served as anindependent director for six years, the Board of Directors of the Company received Ms. Yang Lan’sresignation application and completed the procedure for addition of independent directors. SinceMay 7, 2023, Ms. Yang Lan ceased to be an independent director of the Company. On June 21,2023, the Company received a written resignation report from Mr. Niu Zhanqi, a director of theCompany. Mr. Niu Zhanqi ceased to be a director of the Company for personal reasons.Change of directors, supervisors and senior managers of the Company? Applicable □ N/A
| Name | Title | Type | Date | Reasons |
| Wang Yang | Director | Elected | July 19, 2023 | Additional Director |
| Niu Zhanqi | Director | Retired | June 21,2023 | Resignation for personal reasons |
| Huang Jian | Independent Director | Elected | May 8, 2023 | Additional Independent Director |
| Yang Lan | Independent Director | Retirement at expiration of the term | May 7, 2023 | Retirement at expiration of the term |
2. Positions and incumbency
Professional background, main working experiences and main responsibilities of the Company’s incumbent directors, supervisorsand senior managers
(1) Profile of directors
Chairman: Mr. Lv Liang: Born in 1974, holds a master’s degree. He was the Project Manager of Grand Asset Management Co.,Ltd. from July 1997 to July 2001; the Deputy General Manager and the General Manager of Changshu LeiyunshangPharmaceutical Co., Ltd. from July 2001 to March 2010; the Director and the Deputy General Manager of the Company fromApril 2010 to January 2016; the Director and the General Manager of the Company from January 6, 2016 to June 5, 2019. He hasalso been the Chairman of the Board of the Company since June 6, 2019. Besides, he has served as the General Manager of theCompany since October 26, 2021.Director: Ms. Kang Wei: Born in 1968, holds a master’s degree. She has served as Manager of the Trade Division, Manager of theCapital Division and Manager of Financial Management of the Financial Management Department of China Grand Enterprises,Inc.; Chief Financial Officer and Deputy General Manager of Heilongjiang Grand Shopping Center; currently Chief FinancialOfficer of China Grand Enterprises, Inc. and Director of the Company since December 2016.
Director: Mr. Zhu Feipeng: Born in 1966, Doctor of Cytopharmacology. He has served as a reviewer, Director of the Third ReviewOffice and Chief Reviewer of respiratory and tumor indications of the Center for Drug Evaluation of National Medical ProductsAdministration. He was Vice President of Pharmaceutical Management Head Office of China Grand Enterprises, Inc. from March2021 to June 2023. He was the General Manager of Pharmaceutical Management Head Office of China Grand Enterprises, Inc.since July 2023. Besides, he has also served as Director of the Company since June 2022.Director: Mr. Ye Bo: Born in 1988, holds a master’s degree. He has served as Customer Manager of Zhejiang Branch, ChinaDevelopment Bank; Manager of Bonds Investment Bank Headquarters, Zheshang Securities Co., Ltd.; Deputy Head of theDepartment of Investment and Operation, Hangzhou State-owned Capital Investment and Operation Co., Ltd. He has beenExecutive Deputy General Manager of Hangzhou Guoyou Asset Operation Co., Ltd. since March 2020; Deputy Head of theDepartment of Assets Management, Hangzhou State-owned Capital Investment and Operation Co., Ltd. since June 2023. Besides,he has also served as Director of the Company since June 2022.Director: Mr. Zhu Liang: Born in 1977, holds a bachelor’s degree. He has served as Director, Vice Chairman and Chairman of theLabor Union of Hangzhou Huadong Medicine Group Co., Ltd., and is a member of the Party committee and Chairman of theLabor Union of the Company. He has served as the Company’s Supervisor from April 2017 to June 2019; and Director of theCompany since June 2019.Director: Mr. Wang Yang: Born in October 1975, Doctor of Pharmaceutical Chemistry. He joined in work in September 2003. Hewas a postdoctor at Southampton University, Boston College, and Texas A&M University. He was the R&D Director of ShanghaiChemPartner Chemical Research Co., Ltd.; Assistant Director of BioDuro Beijing Co., Ltd.; Senior Reviewer at Center for DrugEvaluation, NMPA; and Senior Director of Beijing Innocare Pharmaceutical Technology Co., Ltd. He has served as the AssistantPresident and R&D Head of the Pharmaceutical Management Head Office of China Grand Enterprises, Inc. since September 2022,and Director of the Company since July 2023.Independent Director: Ms. Gao Xiangdong: Born in July 1963, PhD. She has served as a teaching assistant, a lecturer, an associateprofessor of Biopharmaceutical Teaching and Research Department, and a professor, Vice President, President and Party Secretaryof the School of Life Science and Technology, China Pharmaceutical University. She has served as a professor of the School ofLife Science and Technology, China Pharmaceutical University, since April 2021. She has also been Independent Director of theCompany since June 2022.Independence Director: Ms. Huang Jian: Born in October 1968, holds a master’s degree, certified public accountant, and senioraccountant. She was a Senior Partner of RSM China Certified Public Accountants; Member of the 3rd, 4th and 5th IssuanceExamination Committees of the Growth Enterprise Market of China Securities Regulatory Commission; Partner of RuihuaCertified Public Accountants (Special General Partnership); Partner of ShineWing Certified Public Accountants (Special GeneralPartnership). She is now Non-executive Director of Concord New Energy Group Limited and Independent Director of HygonInformation Technology Co., Ltd. She has also been Independent Director of the Company since May 8, 2023.Independent Director: Mr. Wang Ruwei: Born in 1967, Doctor of Medicine of Shimane University in Japan, a professor-levelsenior engineer and a supervisor of PhD candidates (Zhejiang University, Shenyang Pharmaceutical University, Zhejiang ChineseMedical University). He has served as Business Vice President of No. 6 Hospital affiliated to Wenzhou Medical University,Deputy Chairman and President of Zhejiang Conba Pharmaceutical Co., Ltd. and Genor Biopharma Co. Ltd, and Executive Vice-president of Hangzhou Tigermed Consulting Co., Ltd., and Founding Partner and Managing Director of Hangzhou Tailong VentureCapital Partnership (Limited Partnership). He has been a member of Chinese Pharmacopoeia Commission since 2010, and is nowIndependent Director of Zhejiang Longevity Valley Botanical Co., Ltd. and Zhejiang Sundoc Pharmaceutical Science and TechCo., Ltd. He has also been Independent Director of the Company since June 2022.
(2) Profile of supervisors
The Chairman of Board of Supervisors: Ms. Bai Xinhua: Born in 1966, holds a master’s degree. She has served as AssistantAuditor of Beijing Municipal Bureau of Audit; Accounting Manager of the Financial Management Head Office and Audit Managerof the Supervision and Audit Department of China Grand Enterprises, Inc. She is now Deputy General Manager of the FinancialManagement Head Office of China Grand Enterprises, Inc. She has been the Supervisor of the Company since 1998.Supervisor: Mr. Zhou Yanwu: Born in 1969, holds a master’s degree. He has served as an assistant accountant of the Office ofFinancial Management, China International Trust Investment Corporation, an assistant of General Manager of Beijing GuoqiangTechnology Co., Ltd., and an assistant of Financial Director of Electrolux (China) Home Appliance Co., Ltd. He worked for ChinaGrand Enterprises, Inc. in 2000, served as Accountant Manager and Financial Manager of Financial Management Head Office,Deputy General Manager of the Supervision and Audit Department, and Financial Director of China Grand Enterprises (HK)Limited. He has been General Manager of the Supervision and Audit Department, China Grand Enterprises, Inc. since January2012. Besides, he has also served as Supervisor of the Company since June 2022.Supervisor: Ms. Qin Yun: Born in 1970, holds a bachelor’s degree. She has served as an attending physician in the InternalMedicine Department of Beijing Shougang Hospital; a medical representative in the Beijing Office of Tianjin TakedaPharmaceuticals Co., Ltd., a senior medical representative in the Beijing Office of Lilly Asia; and Head of the Product Departmentin the sales branch of China National Pharmaceutical Foreign Trade Corporation; worked for China Grand Enterprises, Inc. in2002 and was Project Manager of Pharmaceutical Business Division, Business Director of Operation Department ofPharmaceutical Management Head Office. She is now Business Director of Bidding and Procurement Management Center ofChina Grand Enterprises, Inc. She has also been Supervisor of the Company since 2006.Supervisor: Ms. Dong Jiqin: Born in 1984, holds a master’s degree. She has served as a member of the Department of Finance,Zhejiang Ocean University (Xiaoshan College), and a member of the Foreign Trade Department, Xiaoshan Foreign Trade andEconomic Cooperation Bureau, Deputy Chief and Chief of the Financial Audit Department, Xiaoshan Commerce Bureau,Hangzhou. She has been Head of the Risk Control and Legal Department of Hangzhou State-owned Capital Investment andOperation Co., Ltd. since October 2019. Besides, she has also served as Supervisor of the Company since June 2022.Employee Supervisor: Mr. Xu Zhifeng: Born in 1975, holds a bachelor’s degree, economist. He has served as Commissioner of theBusiness Administration Office and Director Assistant of the General Manager Office of Hangzhou Zhongmei HuadongPharmaceutical Co., Ltd. from August 1997 to July 2011; Manager of the Risk Management and Audit Department of theCompany from August 2011 to January 2018; Director of the Risk Management and Audit Department of the Company sinceFebruary 2018; and Employee Supervisor of the Company since June 2019.Employee Supervisor: Ms. Zhu Yinhua: Born in 1974, holds a bachelor’s degree. She joined the Company in August 1995, and hasserved as Head of the Accounting Institution and Senior Head of Finance of the Financial Management Head Office; has beenSenior Head of Finance of the Company’s Medical Business since September 2018. She has been Financial Manager of HuadongMedicine Supply Chain Management (Hangzhou) Co., Ltd. since March 2010, and Employee Supervisor of the Company sinceJune 2022.
(3) Profile of senior managers
Deputy General Manager: Mr. Wu Hui: Born in April 1969, holds a master’s degree, professor-level senior engineer. He worked inthe Company in July 1991, and has served as technician, Workshop Director and Chief Engineer of Hangzhou Zhongmei HuadongPharmaceutical Co., Ltd.; Deputy General Manager of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. since 2015;Deputy General Manager of the Company since June 2019; General Manager of the Industrial Microbiology Division of theCompany since August 2021.Deputy General Manager: Ms. Zhu Li: Born in 1975, holds a master’s degree, and serves as an accountant. She has served as theaccountant, Deputy General Manager, General Manager, Deputy Director, and Director of the Procurement and ManagementDepartment for Chinese and Western Medicine in the Chinese patent medicine branch of Huadong Pharmaceutical Distribution
Company since August 1997. From September 2019 to September 2020, she served as the Deputy General Manager of HuadongPharmaceutical Distribution Company (responsible for the overall work), and from October 2020, she served as the DeputyGeneral Manager (responsible for the commercial matters) of the Company and concurrently the General Manager of HuadongPharmaceutical Distribution Company.Deputy General Manager: Mr. Zhang Jianfei: Born in April 1975, holds a bachelor’s degree. He has served as a salesman/Manager, Manager of Wuhan region, Director of the Second Sales and Management Department of Hangzhou Zhongmei HuadongPharmaceutical Co., Ltd., General Manager and Director of the Second Pharmaceutical Service Management Department of HubeiPharmaceutical Service Co., Ltd., and has been Deputy General Manager of Hangzhou Zhongmei Huadong Pharmaceutical Co.,Ltd. since December 2020. He has also served as Deputy General Manager of the Company since June 2022.Secretary of the Board of Directors: Mr. Chen Bo: Born in 1972, holds a master’s degree, economist. He joined the Company in2002, and has served as investment commissioner and Deputy Manager of the Financing Department and Manager of theInvestment Department; and Secretary of the Board of Directors of the Company since June 2009.Officer in Charge of Financial Affairs: Mr. Qiu Renbo: Born in 1982, holds a master’s degree. He has served as commissioner ofthe Financial Management Head Office and Chief of the Finance Section of the Manufacturing Branch of the Company fromAugust 2004 to July 2010; Manager of the Financial Department of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. fromAugust 2010 to April 2015; Chief Financial Officer of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. since May 2015;and Officer in Charge of Financial Affairs of the Company since December 2019.Positions in shareholders’ entities? Applicable □ N/A
| Name | Shareholders’ entity | Position in shareholders’ entities | Commencement of the term | Termination of the term | Compensation and allowance from the shareholders’ entity |
| Kang Wei | China Grand Enterprises, Inc. | CFO | February 2010 | To date | Yes |
| Wang Yang | China Grand Enterprises, Inc. | Assistant President and R&D Head of the Pharmaceutical Management Head Office | September 2022 | To date | Yes |
| Bai Xinhua | China Grand Enterprises, Inc. | Deputy General Manager of the Financial Management Head Office | September 2003 | To date | Yes |
| Qin Yun | China Grand Enterprises, Inc. | Business Director of the Pharmaceutical Management Head Office | May 2021 | To date | Yes |
| Zhu Feipeng | China Grand Enterprises, Inc. | President of the Pharmaceutical Management Head Office | March 2021 | To date | Yes |
| Ye Bo | Hangzhou Huadong Medicine Group Co., Ltd. | Executive Director | November 3, 2022 | June 27, 2023 | No |
| Zhou Yanwu | China Grand Enterprises, Inc. | General Manager of the Supervision and Audit | January 2012 | To date | Yes |
| Department | |||
| Note on positions in shareholders’ entities | None | ||
Position in other entities? Applicable □ N/A
| Name | Name of other entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the shareholders’ entity |
| Zhu Feipeng | Leiyunshang Pharmaceutical Co., Ltd. | Director | May 2022 | To date | No |
| Kang Wei | Western Securities Co., Ltd. | Supervisor | November 2010 | To date | Yes |
| Kang Wei | Leiyunshang Pharmaceutical Co., Ltd. and other wholly/partially owned subsidiaries of China Grand Enterprises, Inc. | Director | / | To date | No |
| Bai Xinhua | Grand Industrial Holding Co., Ltd. and other wholly/partially owned subsidiaries of China Grand Enterprises, Inc. | Director and Supervisor | / | To date | Yes |
| Qin Yun | Yunnan Leiyunshang Lixiang Pharmaceutical Co., Ltd. | Director | September 2011 | To date | No |
| Zhou Yanwu | Sichuan Yuanda Shuyang Pharmaceutical Co., Ltd. and other wholly/partially owned subsidiaries of China Grand Enterprises, Inc. | Director and Supervisor | / | To date | No |
| Ye Bo | Hangzhou Guoyou Asset Operation Co., Ltd. | Executive Deputy General Manager and Director | March 27, 2020 | To date | No |
| Ye Bo | Hangzhou State-owned Capital Investment and Operation Co., Ltd. | Deputy Head of the Department of Assets Management | June 1, 2023 | To date | Yes |
| Ye Bo | Hangzhou Electric Power Equipment Manufacturing Co., Ltd. | Director | December 31, 2020 | June 9, 2023 | No |
| Ye Bo | Hangzhou | Director | April 28, 2023 | August 11, 2023 | No |
| Kechuang Group Co., Ltd. | |||||
| Ye Bo | Hangzhou Yingde Technology Co., Ltd. | Executive Director | July 31, 2023 | To date | No |
| Dong Jiqin | Hangzhou State-owned Capital Investment and Operation Co., Ltd. | Head of the Risk Control and Legal Department | October 2019 | To date | Yes |
| Dong Jiqin | Hangzhou State-owned Capital Investment and Operation Co., Ltd. | Supervisor | September 2, 2020 | To date | No |
| Dong Jiqin | Hangzhou Oxygen Plant Group Co., Ltd. | Chairman of Board of Supervisors | April 21, 2023 | To date | No |
| Dong Jiqin | Hangzhou Goodwill International Trade Co., Ltd. | Supervisor | August 5, 2020 | To date | No |
| Dong Jiqin | Hangzhou Kechuang Group Co., Ltd. | Supervisor | December 2, 2022 | April 28, 2023 | No |
| Dong Jiqin | Hangzhou Electric Power Equipment Manufacturing Co., Ltd. | Supervisor | December 31, 2020 | June 9, 2023 | No |
| Huang Jian | Concord New Energy Group Limited | Non-executive Director | December 2012 | To date | Yes |
| Huang Jian | Hygon Information Technology Co., Ltd. | Independent Director | September 2020 | To date | Yes |
| Gao Xiangdong | China Pharmaceutical University | Teacher and Professor | August 1983 | To date | Yes |
| Wang Ruwei | Hangzhou Institute of Medicine Chinese Academy of Sciences | Specially-appointed Researcher | February 2023 | To date | No |
| Wang Ruwei | Sichuan Huiyu Pharmaceutical Co., Ltd. | Independent Director | June 2020 | May 2023 | Yes |
| Wang Ruwei | Zhejiang Longevity Valley Botanical Co., Ltd. | Independent Director | May 2021 | To date | Yes |
| Wang Ruwei | Zhejiang Sundoc Pharmaceutical Science and Tech Co., Ltd. | Independent Director | November 2021 | To date | Yes |
| Note on position in other entities | None | ||||
Incumbent and off-office directors, supervisors and senior managers during the reporting period that have been imposedadministrative penalties by the SCRC during the last three years.
□ Applicable ? N/A
3. Remuneration of directors, supervisors and senior managers
The decision-making procedure, determination basis and actual remuneration for directors, supervisors and senior managersThe allowance plan of directors of the 10th Board of Directors and that of supervisors on the10th Board of Supervisors of the Company has become effective since June 1, 2022 after reviewand approval by the Company’s shareholder’s meeting: Non-independent directors who holdmanagement positions or are in charge of business in the Company shall be paid according to thebusiness they are in charge of or position they hold, and shall not receive allowance forindependent directors separately; the annual allowance for independent directors of the Companywas 100,000 yuan (before tax); that for independent directors not in charge of the Company’smanagement or business was 30,000 yuan (before tax); that for non-employee supervisors of theCompany was 30,000 yuan (before tax); employee supervisors shall receive performance-relatedremuneration according to their positions in the Company, and shall not receive allowance forsupervisors separately.Scheme for assessment of remuneration of the Company’s senior managers shall beimplemented upon the resolution of the 7th Meeting of the 10th Board of Directors of theCompany.The Company has paid remunerations for directors, supervisors and senior managers of theCompany.
Remuneration of directors, supervisors and senior managers of the Company during the reporting period
Unit: ten thousand yuan
| Name | Gender | Age | Title | Holding of positions | Total pretax remuneration received from the Company | Receive remuneration from related parties of the Company or not |
| Lv Liang | Male | 50 | Chairman and General Manager | Incumbent | 240.00 | No |
| Niu Zhanqi | Male | 57 | Director | Retired | 1.41 | Yes |
| Kang Wei | Female | 56 | Director | Incumbent | 3.00 | Yes |
| Zhu Feipeng | Male | 58 | Director | Incumbent | 3.00 | No |
| Ye Bo | Male | 36 | Director | Incumbent | 3.00 | No |
| Zhu Liang | Male | 47 | Director | Incumbent | 65.00 | No |
| Wang Yang | Male | 48 | Director | Incumbent | 1.36 | Yes |
| Gao Xiangdong | Female | 61 | Independent Director | Incumbent | 10.00 | No |
| Wang Ruwei | Male | 57 | Independent Director | Incumbent | 10.00 | No |
| Huang Jian | Female | 55 | Independent Director | Incumbent | 6.52 | No |
| Yang Lan | Female | 55 | Independent Director | Retired | 3.51 | No |
| Bai Xinhua | Female | 58 | Supervisor | Incumbent | 3.00 | Yes |
| Zhou Yanwu | Male | 55 | Supervisor | Incumbent | 3.00 | Yes |
| Qin Yun | Female | 54 | Supervisor | Incumbent | 3.00 | Yes |
| Dong Jiqin | Female | 40 | Supervisor | Incumbent | 3.00 | No |
| Xu Zhifeng | Male | 49 | Supervisor | Incumbent | 65.00 | No |
| Zhu Yinhua | Female | 50 | Supervisor | Incumbent | 22.60 | No |
| Wu Hui | Male | 55 | Deputy General Manager | Incumbent | 140.00 | No |
| Zhu Li | Female | 49 | Deputy General Manager | Incumbent | 140.00 | No |
| Zhang Jianfei | Male | 49 | Deputy General Manager | Incumbent | 140.00 | No |
| Chen Bo | Male | 52 | Secretary of the Board of Directors | Incumbent | 130.00 | No |
| Qiu Renbo | Male | 42 | Person in Charge of Finance | Incumbent | 130.00 | No |
| Total | -- | -- | -- | -- | 1,126.41 | -- |
Note on other situations
□ Applicable ? N/A
VI. Performance of duties of directors during the reporting period
1. Board meetings during the reporting period
| Sessions | Convening date | Disclosure date | Meeting resolution |
| The 6th session of the 10th Board of Directors | January 16, 2023 | January 17, 2023 | Announcement of the Resolutions of the 6th Session of the 10th Board of Directors (Announcement No.: 2023-003) on China Securities Journal, Securities Times, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 7th session of the 10th Board of Directors | April 12, 2023 | April 14, 2023 | Announcement of the Resolutions of the 7th Session of the 10th Board of Directors (Announcement No.: 2023-010) on China Securities Journal, Securities Times, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 8th session of the 10th Board of Directors | April 18, 2023 | April 20, 2023 | Announcement of the Resolutions of the 8th Session of the 10th Board of Directors (Announcement No.: 2023-023) on China Securities Journal, Securities Times, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 9th session of the 10th | April 19, 2023 | April 21, 2023 | Announcement of the Resolutions of the 9th |
| Board of Directors | Session of the 10th Board of Directors (Announcement No.: 2023-026) on China Securities Journal, Securities Times, Shanghai Securities News, and cninfo (www.cninfo.com.cn) | ||
| The 10th session of the 10th Board of Directors | May 8, 2023 | May 9, 2023 | Announcement of the Resolutions of the 10th Session of the 10th Board of Directors (Announcement No.: 2023-034) on China Securities Journal, Securities Times, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 11th session of the 10th Board of Directors | June 30, 2023 | July 1, 2023 | Announcement of the Resolutions of the 11th Session of the 10th Board of Directors (Announcement No.: 2023-044) on China Securities Journal, Securities Once, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 12th session of the 10th Board of Directors | July 12, 2023 | July 13, 2023 | Announcement of the Resolutions of the 12th Session of the 10th Board of Directors (Announcement No.: 2023-050) on China Securities Journal, Securities Once, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 13th session of the 10th Board of Directors | July 19, 2023 | July 20, 2023 | Announcement of the Resolutions of the 13th Session of the 10th Board of Directors (Announcement No.: 2023-055) on China Securities Journal, Securities Once, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 14th session of the 10th Board of Directors | August 9, 2023 | August 11, 2023 | Announcement of the Resolutions of the 14th Session of the 10th Board of Directors (Announcement No.: 2023-060) on China Securities Journal, Securities Once, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 15th session of the 10th Board of Directors | August 14, 2023 | August 16, 2023 | Announcement of the Resolutions of the 15th Session of the 10th Board of Directors (Announcement No.: 2023-063) on China Securities Journal, Securities Once, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 16th session of the 10th Board of Directors | October 23, 2023 | October 25, 2023 | Announcement of the Resolutions of the 16th Session of the 10th Board of Directors (Announcement No.: 2023-073) on China Securities Journal, Securities Once, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 17th session of the 10th Board of Directors | November 14, 2023 | November 15, 2023 | Announcement of the Resolutions of the 17th Session of the 10th Board of Directors (Announcement No.: 2023-080) on China Securities Journal, Securities Once, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
| The 18th session of the 10th Board of Directors | November 21, 2023 | November 22, 2023 | Announcement of the Resolutions of the 18th Session of the 10th Board of Directors (Announcement No.: 2023-082) on China Securities Journal, Securities Once, Shanghai |
| Securities News, and cninfo (www.cninfo.com.cn) | |||
| The 19th session of the 10th Board of Directors | December 19, 2023 | December 20, 2023 | Announcement of the Resolutions of the 19th Session of the 10th Board of Directors (Announcement No.: 2023-098) on China Securities Journal, Securities Once, Shanghai Securities News, and cninfo (www.cninfo.com.cn) |
2. Attendance of directors at Board meetings and general meetings
| Attendance of directors at Board meetings and general meetings | |||||||
| Name of directors | Number of Board meetings to be attended during the reporting period | Number of Board meetings attended on site | Number of Board meetings attended virtually | Number of Board meetings attended by proxy | Times of absent from Board meetings | Whether or not attend Board meetings in person for two consecutive times | Times of attendance of general meeting |
| Lv Liang | 14 | 14 | 0 | 0 | 0 | No | 3 |
| Kang Wei | 14 | 1 | 13 | 0 | 0 | No | 3 |
| Niu Zhanqi | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Zhu Feipeng | 14 | 1 | 13 | 0 | 0 | No | 3 |
| Ye Bo | 14 | 1 | 13 | 0 | 0 | No | 3 |
| Zhu Liang | 14 | 12 | 2 | 0 | 0 | No | 3 |
| Wang Yang | 7 | 0 | 7 | 0 | 0 | No | 1 |
| Gao Xiangdong | 14 | 1 | 13 | 0 | 0 | No | 3 |
| Wang Ruwei | 14 | 1 | 13 | 0 | 0 | No | 3 |
| Yang Lan | 4 | 1 | 3 | 0 | 0 | No | 1 |
| Huang Jian | 10 | 0 | 10 | 0 | 0 | No | 2 |
Note on non-attendance of Board meetings in person for two consecutive timesN/A
3. Objections from directors on relevant issues of the Company
Whether the directors have raised any objection to relevant issues of the Company
□Yes ?No
No such case during the reporting period.
4. Other details about the performance of duties by directors
Whether the directors’ suggestions were adopted or not?Yes □NoNote on the adoption or non-adoption of the directors’ suggestions
During the reporting period, in strict accordance with the relevant laws and regulations,normative documents, the Articles of Association, Rules of Procedure of the Board of Directors,and other relevant provisions, all directors of the Company preformed duties and exercise their
functions and power earnestly, strictly implemented the resolution of the general meeting ofshareholders, and actively carried out all works of the Board of Directors. They also conscientiouslyreviewed and approved various proposals of the Board of Directors, exercised right to voteaccording to law, actively participated in corporate governance and decision-making activities, andconstantly standardized corporate governance. With a responsible attitude towards the Companyand all shareholders, the independent directors performed their duties and obligations diligently andfaithfully, and carefully deliberated various proposals of the Board of Directors. In addition, theyexpressed objective opinions on relevant matters under deliberation based on independent position,actively promoted the standardized operation of the Board of Directors and improved corporategovernance, safeguarding the interests of the Company and all investors. All suggestions abovehave been adopted by the Company.VII. Performance of special committees under the Board of Directors during the reportingperiod
| Committee name | Members | Number of meetings | Convening date | Meeting content | Important comments and suggestions | Other performance of duties | Details of objection (if any) |
| Audit Committee of the 10th Board of Directors (annual audit communication - planning phase) | Yang Lan, Wang Ruwei, Lv Liang | 7 | January 31, 2023 | The Audit Committee and some senior managers of the Company communicated with the certified public accountants and project managers in charge of the Company’s audit work on the planning phase of audit, and communicated in advance on the 2022 audit plan, change of signatory certified public accountants, pre-audit concerns and areas of significant risk in annual audit. | The annual audit was carried out as planned and no major problems were found. | None | None |
| Audit Committee of the 10th Board of Directors (annual audit communication - execution phase) | Yang Lan, Wang Ruwei, Lv Liang | 7 | April 7, 2023 | The Audit Committee and some senior managers of the Company communicated with the certified public accountants and project managers in charge of the Company’s audit work on the execution phase of audit, and communicated on the execution of the 2022 audit plan, | The annual audit was carried out as planned and no major problems were found. | None | None |
| preliminary results of audit on financial statements in 2022, key audit matters, comparison of main financial data of listed companies in the same industry, etc. | |||||||
| Audit Committee of the 10th Board of Directors (annual audit communication - completion phase) | Yang Lan, Wang Ruwei, Lv Liang | 7 | April 11, 2023 | The Audit Committee and some senior managers of the Company communicated with the certified public accountants and project managers in charge of the Company’s audit work on the completion phase of audit, and communicated on the execution of the 2022 audit plan, audited financial data in 2022, key audit matters, audit comments on financial statements in 2022, establishment and implementation of internal control related to the financial report as of December 31, 2022. | The annual audit was carried out as planned and no major problems were found. | None | None |
| The 1st session of the Audit Committee of the 10th Board of Directors (regular meeting) in 2023 | Yang Lan, Wang Ruwei, Lv Liang | 7 | April 12, 2023 | The following proposals were reviewed: 1. Proposal on the Company’s 2022 Annual Report; 2. Proposal on Evaluating the Accounting Firm’s Performance in 2022; 3. Proposal on Reappointing the Accounting Firm; 4. Proposal on Evaluating the Company’s Internal Control in 2022; 5. Proposal on the 2022 Work Report of the Company’s Internal Audit Department; 6. Proposal on the 2023 Work Plan of the Company’s Internal Audit Department; 7. Proposal on Changes in Accounting Policies. | The work of the Company’s Internal Audit Department was carried out According planned Implementation no major problems were found; all proposals were approved after review. | None | None |
| The 2nd session of the | Yang Lan, Wang Ruwei, | 7 | April 19, 2023 | 1. Proposal on the Company’s Q1 Report in | The work of the | None | None |
| Audit Committee of the 10th Board of Directors (regular meeting) in 2023 | Lv Liang | 2023; 2. Proposal on the Work Report of the Company’s Internal Audit Department in Q1 of 2023; | Company’s Internal Audit Department was carried out According planned Implementation no major problems were found; all proposals were approved after review. | ||||
| The 3rd session of the Audit Committee of the 10th Board of Directors (regular meeting) in 2023 | Huang Jian, Wang Ruwei, Lv Liang | 7 | August 14, 2023 | 1. Proposal on the Work Report of the Company’s Internal Audit Department in H1 of 2023; 2. Proposal on the Work Report of the Company’s Internal Audit Department in H2 of 2023; 3. Proposal on the Company’s 2023 Semi-annual Report and its Abstract. | The work of the Company’s Internal Audit Department was carried out According planned Implementation no major problems were found; all proposals were approved after review. | None | None |
| The 4th session of the Audit Committee of the 10th Board of Directors (regular meeting) in 2023 | Huang Jian, Wang Ruwei, Lv Liang | 7 | October 23, 2023 | 1. Proposal on the Work Report of the Company’s Internal Audit Department in Q3 of 2023; 2. Proposal on the Work Report of the Company’s Internal Audit Department in Q4 of 2023; 3. Proposal on the Work Report of the Company in Q3 of 2023. | The work of the Company’s Internal Audit Department was carried out According planned Implementation no major problems were found; all proposals were approved after review. | None | None |
| The 1st session of the Nomination Committee of the 10th Board of Directors in 2023 | Kang Wei, Gao Xiangdong, Yang Lan | 2 | April 12, 2023 | 1. Proposal on the Nomination of Independent Director Candidates for the 10th Board of Directors; | The Nomination Committee verified and reviewed the matters under deliberation, and unanimously agreed upon relevant proposals. | None | None |
| The 2nd session of the Nomination Committee of the 10th Board of Directors in 2023 | Kang Wei, Gao Xiangdong, Huang Jian | 2 | June 30, 2023 | 1. Proposal on the Addition of Directors for the 10th Board of Directors; | The Nomination Committee verified and reviewed the matters under deliberation, and unanimously agreed upon relevant proposals. | None | None |
| The 1st session of the Remuneration and Approval Committee of the 10th Board of Directors in 2023 | Lv Liang, Gao Xiangdong, Wang Ruwei | 1 | April 12, 2023 | 1. Proposal on the Company’s 2023 Annual Compensation Assessment Plan for Senior Managers | The Remuneration and Approval Committee verified and reviewed the matters under deliberation, and unanimously agreed on the relevant proposals. | None | None |
| ESG Committee of the 10th Board of Directors | Ye Bo, Zhu Feipeng, Gao Xiangdong | 0 | |||||
| Strategy Committee of the 10th Board of Directors | Lv Liang, Wang Yang, Wang Ruwei | 0 |
VIII. Performance of the Board of SupervisorsWhether the Board of Supervisors found any risks of the Company in the supervision activities during the reporting period
□Yes ?No
No such case during the reporting period.
IX. Employees of the Company
1. Number of employees, expertise structure and educational background
| Number of incumbent employees in the parent company at the end of the reporting period (person) | 931 |
| Number of incumbent employees in major subsidiaries at the end of the reporting period (person) | 16,038 |
| Total number of incumbent employees at the end of the reporting period (person) | 16,969 |
| Total number of employees receiving salaries in the current | 16,969 |
| period (person) | |
| Number of retired employees requiring the parent Company and its subsidiaries to bear costs (person) | 0 |
| Expertise structure | |
| Category | Number (person) |
| Production staff | 1,571 |
| Sales staff | 10,527 |
| Technical staff | 2,693 |
| Financial staff | 308 |
| Administrative staff | 1,483 |
| Storage and transportation staff | 387 |
| Total | 16,969 |
| Educational background | |
| Category | Number (person) |
| Master’s degree or above | 1,252 |
| Bachelor’s degree | 7,161 |
| Junior college (professional training) | 7,060 |
| Other | 800 |
| The undisclosed education background of staff in overseas subsidiaries (Note) | 696 |
| Total | 16,969 |
Note: The data under “educational background” only covers staff of the Company and its subsidiaries inChina, and the information of 696 employees of the Company’s overseas subsidiaries is not included.
2. Staff remuneration policy
Based on strategic development planning and talent strategy, the Company builds a market-oriented differentiating remuneration system, establishes a flexible and diversified incentivemechanism, and makes its talent team younger, professional and international. It upgrades andoptimizes employee structure, encourages employees to stick to innovation and value creation,and enables employees themselves and as a whole to achieve sustainable development andstrategic goals..
3. Training program
Training talents independently is an important foundation for the Company’s sustainabledevelopment. In recent years, the Company has always been committed to fostering a diversifiedand multi-layer talent training system, and put talents first to empower its transformation. In 2024,the Company will continue to advance its pilot program, induction training for new employees,
sailing program, training of talents with high potential and training of professional staff to enablethe Company’s talent development.By providing new employees with professional induction training and full-process probationmanagement, the Company helps them fit in the team quickly.As fresh graduates bring the Company vitality, the Company launches its Sailing Program tohelp them quickly engage in their role, shape healthy professional quality and understand theCompany’s culture. Moreover, the Company quickly trains young talents through collectivetraining, selection, rotation, assessment, practice, etc.In the empowerment of management ability, the Company focuses on the construction oftalent teams, cares about the cultivation and development of core and backbone managementtalents, and improves its internal cultivation and promotion mechanism.In terms of improvement of business abilities, the Company regularly counts and trainsbusiness talents in R&D, quality, production and sales to empower the sustainable development ofthe Company and advance the implementation of its international strategic development.As for improvement of professional abilities, the Company improves employees’ skillsquickly by strengthening post standardization, solidifying on-the-job training and retrainingsystem, combines assessment and training, replaces training with practice to quickly improveemployees’ skills, thus optimizing business processes and efficiency.With regard to the construction of digital training platform, the Company gradually enrichesthe curriculum system regarding each business, devotes to building a systematic and perfectlearning platform, and helps employees participate in training through personalized courses on thedigital platform, thus helping to improve their post competence.
4. Labor outsourcing
□ Applicable ? N/A
X. The Company’s profit distribution and increase of capital stock by capital reserveconversion
Formulation, implementation or adjustment of the profit distribution policy, especially the cash dividend policy, during thereporting period? Applicable □ N/A
During the reporting period, the Company strictly abode by the Articles of Association toreview the relevant distribution policy and implement the profit distribution plan. The criteria andproportion of dividends were specific and clear and the decision-making process and mechanismwere well- established. The profit distribution plan was implemented during specific period afterreview and approval. These efforts guaranteed all shareholders’ interests. During the reportingperiod, the Company did not change the profit distribution policy.The Company convened the 6th session of the 10th Board of Directors on April 12, 2023,reviewed and approved the Proposal on the Company’s 2022 Profit Distribution Scheme, andagreed to submit the proposal to the Company’s general meeting for deliberation. The 2022Annual General Meeting convened on May 8, 2023 deliberated on and approved the proposal. OnDecember 31, 2022, based on the total share capital of 1,753,995,348 of the Company, 2.9 yuan(before tax) of cash dividends per ten common shares were distributed to all shareholders. Nobonus share was issued and no capital reserve was converted to share capital. A Total of508,658,650.92 yuan (before tax) cash dividends were distributed, and the remainingundistributed profits were set to be distributed in future years. The Company’s independentdirectors agreed on the profit distribution plan. On June 13, 2023, the Company implemented theabove profit distribution plan. The criteria and proportion of dividends were specific and clear inthis profit distribution plan with well-established decision-making process, which complied withthe Articles of Association and resolutions of the General Meeting.
| Specific note on the cash dividend policy | |
| Whether it complied with the Articles of Association and resolutions of the General Meeting: | Yes |
| Whether the criteria and proportion of dividends were specific and clear: | Yes |
| Whether the decision-making process and mechanism was well-established: | Yes |
| Whether independent directors performed their duties and roles: | Yes |
| Specific reasons and measures to be taken in the next step to increase investor returns if the Company does not pay cash dividends: | N/A |
| Whether minority shareholders could express their opinions and requirements, and whether their legal rights and interests were fully protected: | Yes |
| Whether conditions and process were conforming and transparent if the cash dividend policy was adjusted or changed: | N/A |
During the reporting period, the Company made profits and the profit available to shareholders of the parent company waspositive, but no cash dividend plan for common shares was proposed.
□ Applicable ? N/A
Profit distribution and share capital increase by capital reserve conversion during the current reporting period? Applicable □ N/A
| Number of bonus shares every 10 shares (share) | 0 |
| Dividends paid every 10 shares (yuan) (tax included) | 5.8 |
| Share capital base of the distribution plan (share) | 1,754,327,548 |
| Cash dividends (yuan) (tax included) | 1,017,509,977.84 |
| Cash dividends by other means (such as share repurchase) (yuan) | 0.00 |
| Total cash dividends (including those by other means) (yuan) | 1,017,509,977.84 |
| Distributable profit (yuan) | 6,629,739,641.30 |
| Proportion of total cash dividends (including those by other means) in the total profit distributed | 100% |
| Current cash dividends | |
| If the Company is in a mature stage of development and has significant capital expenditure arrangements, the proportion of cash dividends in the current profit distribution should be at least 40%. | |
| Details of the profit distribution plan or the plan for capital stock increase by capital reserve conversion | |
XI. Implementation of the Company’s equity incentive plan, employee stock ownership planor other employee incentive measures? Applicable □ N/A
1. Equity incentive
(1) On August 8, 2022, the Company convened the second meeting of the 10th Board ofDirectors and the 2nd meeting of the 10th Board of Supervisors, deliberating on and passing theProposal on the Company’s 2022 Restricted Share Incentive Scheme (Draft) and Its Summary,the Proposal on Management Rules for the Implementation and Assessment of the Company’s2022 Restricted Share Incentive Scheme, the Proposal on the Management Rules of theCompany’s 2022 Restricted Share Incentive Scheme, and the Proposal on Applying to theGeneral Meeting for Authorizing the Board of Directors to Handle Equity Incentive-relatedMatters. Independent directors expressed their independent opinions on whether this incentivescheme is conducive to the sustainable development of the Company and whether there is anysituation that harms the interests of the Company and all shareholders. See the relevantannouncement of the Company published on Cninfo (http://www.cninfo.com.cn) on August 10,2022 for details.
(2) On August 10, the Company disclosed the Announcement on Independent DirectorsPublicly Soliciting Proxy Voting Rights on Cninfo (www.cninfo.com.cn). Mr. Wang Ruwei,Independent Director of the Company, commissioned by other independent directors publiclysolicited proxy voting rights from all shareholders of the Company on proposals related to the2022 Restricted Share Incentive Scheme reviewed on the 1st extraordinary general meeting in2022 that was set to be convened on August 31, 2022.
(3) The Company announced publicly the list of the first batch of employees receiving theincentive from the restricted share incentive scheme on the Company’s intra-net from August 15to 25, 2022, which lasted for 10 days in total. As of the end of the announcement on August 25,2022, the Board of Supervisors did not receive any objection against these employees. On August25, 2022, the Company convened a session of the Board of Supervisors, during which theVerification Opinions and Announcement Note on the List of the First Batch of EmployeesReceiving the Incentive from the Company’s 2022 Restricted Share Incentive Scheme wasreviewed and approved. On the same day, the Company disclosed the Board of Supervisors’Verification Opinions and Announcement Note on the List of the First Batch of EmployeesReceiving the Incentive from the Company’s 2022 Restricted Share Incentive Scheme and arelated announcement on www.cninfo.com.cn.
(4) On August 31, 2022, the Company convened the first extraordinary general meeting in2022. During the meeting, the Proposal on the Company’s 2022 Restricted Share IncentiveScheme (Draft) and Its Summary, the Proposal on Management Rules for the Implementation andAssessment of the Company’s 2022 Restricted Share Incentive Scheme, the Proposal on theManagement Rules of the Company’s 2022 Restricted Share Incentive Scheme, and the Proposalon Applying to the General Meeting for Authorizing the Board of Directors to Handle EquityIncentive-related Matters were deliberated on and approved. On the same day, the Companydisclosed on www.cninfo.com.cn the Self-Inspection Report on Insiders and Incentive Receiversof the 2022 Restricted Share Incentive Scheme Purchasing and Selling the Company’s Shares anda related announcement. The incentive scheme was approved in the Company’s first extraordinarygeneral meeting in 2022, and the Board of Directors was authorized to implement the restrictedshare incentive scheme and handle relevant matters according to laws and regulations.
(5) On October 27, 2022, the Company convened the 4th session of the 10th Board ofDirectors and the 5th session of the 10th Board of Supervisors. During these two sessions, theProposal on Adjustments of the Company’s 2022 Restricted Share Incentive Scheme, and theProposal on Granting Restricted Shares to the First Batch of Employees Receiving Incentive fromthe 2022 Restricted Share Incentive Scheme were deliberated on and approved. The Company’sBoard of Directors believed that conditions of the incentive scheme for granting restricted shareswere fulfilled, and the Board of Supervisors re-verified the list of incentive receivers on the firstgrant date, and expressed opinions on the grant. The Company’s independent directors agreed onthe above proposals. Lawyers and independent financial advisers prepared related reports. OnOctober 28, 2022, the Company disclosed a related announcement on www.cninfo.com.cn.
(6) On November 9, 2022, the Company disclosed the Announcement on Completion ofRegistration of the First Grant of the Restricted Share Incentive Scheme in 2022. The Companycompleted the registration of the first grant of the restricted share incentive scheme in 2022, andthe listing date of the granted restricted shares was November 15, 2022.
(7) On July 12, 2023, the Company convened the 12th session of the 10th Board ofDirectors and the 8th session of the 10th Board of Supervisors. During these two sessions, theProposal on Adjustments of the Granted Price of the Company’s 2022 Restricted Share IncentiveScheme, and the Proposal on Granting Reserved Restricted Shares to the First Batch ofEmployees Receiving Incentive from the 2022 Restricted Share Incentive Scheme were deliberatedon and approved. The Company’s Board of Directors believed that reserved conditions of theincentive scheme for granting restricted shares were fulfilled, and the Board of Supervisors re-verified the list of incentive receivers on the date of granting reserved shares, and expressedopinions on the grant. The Company’s independent directors agreed on the above proposals.Lawyers and independent financial advisers prepared related reports. On the same day, theCompany disclosed a related announcement on www.cninfo.com.cn.
(8) The Company announced publicly the list of this batch of employees receiving theincentive from the restricted share incentive scheme on the Company’s OA system from July 13to 23, 2023, which lasted for 10 days in total. As of the end of the announcement on July 23, 2023,the Board of Supervisors did not receive any objection against these employees. On July 26, 2023,the Company convened a session of the Board of Supervisors, during which the Verification
Opinions and Announcement Note on the List of Employees Receiving the Reserved RestrictedShare Incentive from the Company’s 2022 Restricted Share Incentive Scheme was reviewed andapproved. On the same day, the Company disclosed the Board of Supervisors’ VerificationOpinions and Announcement Note on the List of Employees Receiving the Reserved RestrictedShare Incentive from the Company’s 2022 Restricted Share Incentive Scheme and a relatedannouncement on www.cninfo.com.cn.
(9) On September 27, 2023, the Company disclosed the Announcement on Completion ofRegistration of the Reserved Grant of Restricted Share Incentive Scheme in 2022. The Companycompleted the registration of the reserved grant of the restricted share incentive scheme in 2022,and the listing date of the granted restricted shares was September 28, 2023.
(10) On November 21, 2023, the Company convened the 18th session of the 10th Board ofDirectors and the 12th session of the 10th Board of Supervisors. During these two sessions, theProposal on Achievement of the Release of Restriction Conditions during the First RestrictionPeriod of Restricted Shares Granted for the First Time from the Restricted Share IncentiveScheme in 2022, the Proposal on Adjusting the Repurchase Price of Shares under the RestrictedShare Incentive Scheme in 2022, and the Proposal on Repurchase and Cancellation of SomeRestricted Shares were deliberated on and approved. The Board of Directors believed that theCompany attained conditions for the unlock of restriction conditions during the first restrictionperiod of restricted shares granted for the first time from the Restricted Share Incentive Scheme in2022. According to the authorization of the Company’s first extraordinary general meeting in2022, the Board of Directors agreed that the Company can handle the procedures for releasingrestricted sales of 1,220,940 restricted shares with the restricted sales period for 108 incentivesubjects. The Board of Directors also agreed to repurchase and cancel 97,800 shares of restrictedshares that have been granted but have not been unlocked for four incentive subjects who are nolonger eligible for incentives due to resignation and two incentive subjects who fail to satisfy thestandards due to personal performance during the first restricted sales releasing period. TheCompany’s independent directors issued independent opinions on related matters, and theCompany’s Board of Supervisors issued verification opinions on related matters. Lawyers andindependent financial advisers prepared related reports. On the same day, the Company discloseda related announcement on www.cninfo.com.cn.
(11) On December 8, 2023, the Company convened the second extraordinary generalmeeting in 2023, deliberated on and approved the Proposal on Repurchase and Cancellation ofSome Restricted Shares and the Proposal on Altering the Registered Capital and Amending theArticles of Association. On the same day, the Company disclosed the Announcement onRepurchase and Cancellation of Some Restricted Shares to Reduce Registered Capital and Notifythe Creditors. As of January 24, 2024, the benchmark date for capital verification, i.e. withinforty-five days from the date when the Company announced the reduction of capital, no creditorasked the Company to pay off its debts or provide corresponding guarantees.
(12) On March 27, 2024, the Company disclosed the Announcement on the Completion ofRepurchase and Cancellation of Some Restricted Shares. Upon examination and confirmation byShenzhen Branch of China Securities Depository and Clearing Co., Ltd., the Company completedthe cancellation of 97,800 restricted shares that were granted for the first time under this incentivescheme, i.e. four incentive subjects who were no longer eligible for incentive due to resignation,and two incentive subjects who were no longer eligible for incentive due to failure in satisfyingthe standards due to personal performance during the first restricted sales releasing period.Equity Incentive Received by the Company’s Directors and Senior Managers? Applicable □ N/A
Unit: Share
| Name | Title | Number of share options held at the beginning of the year | Number of newly granted share options during the reporting period | Number of exercisable shares during the reporting period | Number of exercised shares during the reporting period | Exercise price of exercised shares during the reporting period (yuan/share) | Number of share options held at the beginning of the period | Market price at the end of the reporting period (yuan/share) | Number of restricted shares held at the beginning of the period | Number of shares unlocked during the current period | Number of restricted shares newly granted during the reporting period | Grant price of restricted shares (yuan/share) | Number of restricted shares held at the end of the period |
| Lv Liang | Chairman and General Manager | 0 | 0 | 0 | 0 | 0 | 0 | 41.46 | 200,000 | 60,000 | 0 | 25 | 140,000 |
| Wu Hui | Deputy | 0 | 0 | 0 | 0 | 0 | 0 | 41.46 | 150,000 | 45,000 | 0 | 25 | 105,000 |
| General Manager | |||||||||||||
| Zhu Li | Deputy General Manager | 0 | 0 | 0 | 0 | 0 | 0 | 41.46 | 150,000 | 45,000 | 0 | 25 | 105,000 |
| Zhang Jianfei | Deputy General Manager | 0 | 0 | 0 | 0 | 0 | 0 | 41.46 | 150,000 | 45,000 | 0 | 25 | 105,000 |
| Zhu Liang | Director | 0 | 0 | 0 | 0 | 0 | 0 | 41.46 | 30,000 | 9,000 | 0 | 25 | 21,000 |
| Chen Bo | Secretary of the Board of Directors | 0 | 0 | 0 | 0 | 0 | 0 | 41.46 | 100,000 | 30,000 | 0 | 25 | 70,000 |
| Qiu Renbo | Person in Charge of Finance | 0 | 0 | 0 | 0 | 0 | 0 | 41.46 | 100,000 | 30,000 | 0 | 25 | 70,000 |
| Total | -- | 0 | 0 | 0 | 0 | -- | 0 | -- | 880,000 | 264,000 | 0 | -- | 616,000 |
| Note (if any) | The number of restricted shares with restricted sales unlocked granted from the Restricted Share Incentive Scheme in 2022 was 1,220,940. These shares were listed on December 5, 2023. Among them, Chairman and General Manager Lv Liang, Deputy General Manager Wu Hui, Deputy General Manager Zhang Jianfei, Deputy General Manager Zhu Li, Director Zhu Liang, Secretary of the Board of Directors Chen Bo, and Person in Charge of Finance Qiu Renbo unlocked 60,000 shares, 45,000 shares, 45,000 shares, 45,000 shares, 9,000 shares, 30,000 shares and 30,000 shares respectively. The remaining restricted shares of the aforesaid persons are 140,000 shares, 105,000 shares, 105,000 shares, 105,000 shares, 21,000 shares, 70,000 shares and 70,000 shares respectively. | ||||||||||||
Assessment mechanism and incentive for senior managers
1. In order to ensure that the Company’s senior managers can better perform their duties andbe clear about their rights and obligations, the Company has established a sound performanceassessment management system combining the senior managers’ remuneration and performance.During the reporting period, the Company’s senior managers could strictly abide by the CompanyLaw, the Articles of Association and relevant laws and regulations to diligently perform theirduties, actively implement resolutions of the Company’s general meetings and Board of Directors
and continue prudent operations with the Board of Directors’ correct instructions to enhanceinternal management.
2. During the reporting period, the Company launched the 2022 Restricted Share IncentiveScheme based on equal earnings and contributions, given that shareholders’ interests would befully protected, in order to further establish and improve a long-term incentive scheme for theCompany, attract and retain outstanding experts, fully activate the Company’s senior managers,managers and core technicians (business specialists) and effectively combine interests ofshareholders, the Company, core teams and personnel to attract all parties’ attention to focusingon the Company’s long-term growth.
On November 21, 2023, the Company convened the 18th session of the 10th Board ofDirectors and the 12th session of the 10th Board of Supervisors. During these two sessions, theProposal on Achievement of the Release of Restriction Conditions during the First RestrictionPeriod of Restricted Shares Granted for the First Time from the Restricted Share IncentiveScheme in 2022 was deliberated on and approved. The Board of Directors believed that theCompany attained conditions for the unlock of restriction conditions during the first restrictionperiod of restricted shares granted for the first time from the Restricted Share Incentive Scheme in2022. According to the authorization of the Company’s first extraordinary general meeting in2022, the Board of Directors agreed that the Company can handle the procedures for releasingrestricted sales of 1,220,940 restricted shares with the restricted sales period for 108 incentivesubjects, including 255,000 shares involving senior managers.
2. Implementation of the employee stock ownership plan
□ Applicable ? N/A
3. Other employee incentives
□ Applicable ? N/A
XII. Establishment and implementation of an internal control system during the reportingperiod
1. Establishment and implementation of internal control
During the reporting period, the Company constantly promoted the establishment of aninternal control system, improved the corporate governance structure and internal controlregulations, normalized the implementation of such regulations, strengthened the supervision andinspection of internal control, and ensure that the Company’s operation and management levelwas constantly improved, in accordance with the Basic Norms for Enterprise Internal Control,Self-Regulatory Guidelines for Listed Companies on the Shenzhen Stock Exchange No.1 -Standardized Operation of Listed Companies on the Main Board, and other relevant laws,regulations and normative documents. During the reporting period, the Company’s internalcontrol system design is sound and reasonable. It maintained effective internal control in all majoraspects in accordance with the requirements of internal control standard system and relevantregulations, and there is no major omission. Please refer to the Self-evaluation Report on InternalControl published on http://www.cninfo.com.cn/ on April 18, 2024.
2. Details of major internal control deficiencies found during the reporting period
□Yes ?No
XIII. The Company’s management control over subsidiaries during the reporting period
| Company name | Integration plan | Integration progress | Issues encountered during the integration | Solutions adopted | Solution progress | Subsequent solutions |
| Jiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd. | The Company indirectly held 70% of its shares, and integrated its assets, employees, finance and business after acquisition. | N/A | N/A | N/A | N/A | N/A |
| Hangzhou Huayi Pharmacy Co., Ltd. | The Company indirectly held 100% of its shares, and integrated its | N/A | N/A | N/A | N/A | N/A |
| assets, employees, finance and business after acquisition. | ||||||
| Zhejiang Yiqun Biology Medical Instrument Trading Co., Ltd. | The Company held 100% of its shares, and integrated its assets, employees, finance and business after acquisition. | N/A | N/A | N/A | N/A | N/A |
| Huadong Medicine Dongyang Co., Ltd. | The Company indirectly held 51% of its shares, and integrated its assets, employees, finance and business after acquisition. | N/A | N/A | N/A | N/A | N/A |
| Hangzhou Perfect mRNA Biotechnology Co., Ltd. | N/A | N/A | N/A | N/A | N/A | N/A |
| Hibe Technology Co., Ltd. | N/A | N/A | N/A | N/A | N/A | N/A |
XIV. Self-evaluation report on internal control or audit report on internal control
1. Self-evaluation report on internal control
| Disclosure date of the full text of self-evaluation report on internal control | April 18, 2024 | |
| Disclosure index of the full text of self-evaluation report on internal control | Cninfo (www.cninfo.com.cn) | |
| Proportion of assets evaluated in total assets per consolidated financial statement | 95.00% | |
| Proportion of operating revenue evaluated in total operating revenue per consolidated financial statement | 90.00% | |
| Recognition standard of deficiencies | ||
| Category | Financial report | Non-financial report |
| Qualitative criteria | The Company stipulates that internal control deficiencies involving the following fields shall be identified as at least “important deficiencies”: anti-fraud procedure and control; internal control over | The Company stipulates that internal control deficiencies involving the following fields shall be considered as “material deficiencies”: serious violation of laws and regulation; in addition to policy reasons, the Company has been |
| unconventional or unsystematic transactions; internal control over the selection and application of accounting policies in relation to Generally Accepted Accounting Principles (GAAP); internal control over the end-of-period financial reporting process. The Company stipulates that internal control deficiencies involving the following fields shall be identified as at least “important deficiencies”, and has strong indications of “material deficiencies”: restatement of previously published financial statements to reflect correction of misstatements resulting from errors or fraud; the auditor found material misstatement in the Company’s financial statements for the current period that was not initially detected by the Company’s internal control over financial reports; the Audit Committee’s failure to supervise the Company’s financial reports and internal control over financial reports; compliance supervision function is invalid, and the violation of laws and regulations may have a significant impact on the reliability of financial reports; any level of malpractice involving senior managers is founded; Management failed to correct important defects in a reasonable period of time after such reporting to the Management. | losing money for years, and its continuous operation has been challenged; lack of system control or systematic failure in important business; frequent exposure of negative news in the media that causes material adverse effect; internal control evaluation results, especially major or significant deficiencies have not been corrected. The Company stipulates that internal control deficiencies involving the following fields shall be considered as “important deficiencies”: there is much negative news in the major media at provincial level and above, which results in relatively large adverse effect; exodus of middle management or operating personnel; general defects identified last year have not been rectified and there is no reasonable explanation. | |||||||
| Quantitative criteria | (2) Internal control deficiencies | |||||||
| Number of material deficiencies in financial reports | 0 | ||||
| Number of material deficiencies in non-financial reports | 0 | ||||
| Number of important deficiencies in financial reports | 0 | ||||
| Number of important deficiencies in non-financial reports | 0 | ||||
2. Audit report on internal control
? Applicable □ N/A
| Opinions of Internal Control Audit Report | |
| On December 31, 2023, Huadong Medicine maintained effective internal control over financial reports in all major respects in accordance with the Basic Norms for Enterprise Internal Control and relevant regulations. | |
| Disclosure of internal control audit report | Disclosure |
| Disclosure date of the full text of audit report on internal control | April 18, 2024 |
| Disclosure index of the full text of audit report on internal control | Cninfo (www.cninfo.com.cn) |
| Type of opinions in the internal control audit report | Unmodified unqualified opinions |
| Whether there are material deficiencies in non-financial reporting | No |
Whether the accounting firm has issued the audit report on internal control with non-standard opinions
□Yes ?No
Whether the audit report on internal control issued by the accounting firm is consistent with the self-evaluation report of the Boardof Directors?Yes □NoXV. Rectification of self-detected problems through the special campaign to improvegovernance of listed companiesN/A
Section V Environmental and Social Responsibilities
I. Major Environmental Protection IssuesAre the listed company and its subsidiaries belong to the key pollutant discharge units announced by the environmental protectiondepartment?Yes □NoRelevant policies and industry standards for environmental protection
Environmental Protection Law of the People’s Republic of China, Law of the People’s Republic of China onWater Pollution Prevention and Control, Law of the People’s Republic of China on Atmospheric PollutionPrevention and Control, Law of the People’s Republic of China on the Prevention and Control of EnvironmentalPollution by Solid Waste, Law of the People’s Republic of China on the Prevention and Control of Ambient NoisePollution, Law of the People’s Republic of China on the Prevention and Control of Soil Pollution, Regulations onthe Administration of Permitting of Pollutant Discharges, Emission Standard of Air Pollutants for PharmaceuticalIndustry (GB 37823-2019), Emission Standard for Industrial Enterprises Noise at Boundary (GB 12348-2008),Standard for Pollution Control on the Non-hazardous Industrial Solid Waste Storage and Landfill (GB 18599-2020), Standard for Pollution Control on Hazardous Waste Storage (GB 18597-2023), Technical Specification forSetting Identification Signs of Hazardous Waste (HJ 1276-2022), Standard for Fugitive Emission of VolatileOrganic Compounds (GB 37822-2019), Emission Standards for Odor Pollutants (GB 14554-93), WastewaterQuality Standards for Discharge to Municipal Sewers (GB/T 31962-2015), Integrated Wastewater DischargeStandard (GB 8978 1996), Discharge Standard of Water Pollutants for Pharmaceutical Industry - ChemicalSynthesis Products Category (GB 21904-2008), Technical Methods for Making Local Emission Standards of AirPollutants (GB13201-1991), Emission Standard of Air Pollutants for Pharmaceutical Industry (DB34/310005-2021), Emission Standard of Air Pollutants for Pharmaceutical Industry (DB33/310005-2021), DischargeStandard of Pollutants for Bio-pharmaceutical Industry (DB 33/923-2014), Emission Limits of Water and AirPollutants for Bio-pharmaceutical Industry (DB 32/3560-2019), Emission Standard of Air Pollutants forPharmaceutical Industry (DB 32/4042-2021), Integrated Emission Standard of Air Pollutants (DB 32/4041-2021),Discharge Standard of Pollutants for Bio-pharmaceutical Industry (DB 31/373-2010), Emission Control Standardof Volatile organic Compounds (DB61/T 1061-2017), Integrated Wastewater Discharge Standard of Yellow RiverBasin in Shannxi Province (DB 61/224-2018), Emission Standard of Volatile Organic Compounds for ChemicalIndustry (DB 32/3151-2016), etc.Information on environmental protection-related administrative licensing
Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. re-applied for the Pollutant Emission Permit on June20, 2023, which is valid until June 19, 2028.
Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. re-applied for the Pollutant EmissionPermit on March 4, 2023, which is valid until March 3, 2028. In addition, Hangzhou Zhongmei HuadongPharmaceutical (Jiangdong) Co., Ltd. has obtained the EIA approval of Product Transfer and Expansion ofIndobufen Tablets and Clarithromycin Tablets and Expansion and Transformation Project of Acarbose Chewable
Tablets on April 25, 2023, with the approval number of HHQ EIA Batch [2023] No. 28; obtained the EIAapproval of the Acceptance of EIA Registration Form for Pulsecathi VAC2L API Product Construction Project onJuly 18, 2023, with the approval number of HHQ EIA Batch [2023] No. 32; obtained the EIA approval ofHDG1901 Preparation Workshop Construction Project on September 27, 2023, with the approval number of HHQEIA Batch [2023] No. 68.The Pollutant Emission Permit of Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. is valid fromDecember 27, 2020 to December 26, 2025. In addition, Huadong Medicine (Xi’an) Bohua Pharmaceutical Co.,Ltd. has obtained the EIA approval of the Transformation Project of Storage Tank Area of the Second Workshopof APIs within the reporting period, with the approval number of WHYF (2023) No. 34.The Pollutant Emission Jiangsu Joyang Laboratories is valid from February 28, 2022 to February 27, 2027.The Pollutant Emission Permit of Wuhu Huaren Science and Technology Co., Ltd. is valid from February 26,2024 to February 25, 2029.Industrial emission standards and specific situation of pollutant emissions involved in production and business activities
| Designation of Company or Subsidiary | Category of main and particular pollutants | Name of main and particular pollutants | Discharge pattern | Quantity of discharge outlet | Distribution of discharge outlet | Discharge concentration/intensity | Executive pollutant discharge standard | Total discharges | Approved total discharges | Excessive discharge |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Water pollutant | pH value | Intermittent discharge | 1 | Main Entrance to No. 866 Moganshan Road | 6.91 | 6-9 | / | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Water pollutant | COD | Intermittent discharge | 1 | Main Entrance to No. 866 Moganshan Road | 35.74mg/l | 500mg/l | 7.70 tons (discharged to environment) | 33.3 t/a | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Water pollutant | Ammonia-nitrogen | Intermittent discharge | 1 | Main Entrance to No. 866 Moganshan Road | 1.25mg/l | 35mg/l | 0.11 tons (discharged to environment) | 2.38 t/a | None |
| Hangzhou Zhongmei Huadong Pharmac | Solid pollutant | Hazardous solid waste | Compliant disposal by entrusted qualified | 2 | Within the factory at No. 866 Mogans | / | / | 817.99 tons | / | None |
| eutical Co., Ltd. | units | han Road | ||||||||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Solid pollutant | General solid waste | Compliant disposal by entrusted qualified units | 2 | Within the factory at No. 866 Moganshan Road | / | / | 90.2 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Air pollutant | Nitric oxide | Organized discharge | 1 | Roof of Boiler Room at Building 25 | 27.25mg/m3 | 50mg/m3 | 1.84 tons | 17.7 t/a | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Air pollutant | Sulfur dioxide | Organized discharge | 1 | Roof of Boiler Room at Building 25 | 5.5mg/m3 | 20mg/m3 | 0.24 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Air pollutant | Dust and fume | Organized discharge | 1 | Roof of Boiler Room at Building 25 | 3.6mg/m3 | 10mg/m3 | 0.31 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Water pollutant | pH value | Continuous discharge | 1 | Phase II Factory Area | 8.17 | 6-9 | / | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Wastewater | COD | Continuous discharge | 1 | Phase II Factory Area | 100–350mg/l | 500mg/l | 262.0999 tons (Nanotube discharge) | 66.286 tons (discharged to environment) | None |
| Hangzhou Zhongm | Wastewater | Ammonia-nitrogen | Continuous discharg | 1 | Phase II Factory Area | 0–25mg/l | 35mg/l | 3.1906 tons (Nanotu | 10.606 tons (dischar | None |
| ei Huadong Pharmaceutical Jiangdong Co., Ltd. | e | be discharge) | ged to environment) | |||||||
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Wastewater | Total phosphorus | Continuous discharge | 1 | Phase II Factory Area | 0–5mg/l | 8mg/l | 1.705 tons (Nanotube discharge) | 0.663 tons (discharged to environment) | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Exhaust gas | Non-methane hydrocarbon | Organized discharge | 1 | Phase II Factory Area | 0–30mg/l | 60mg/l | 2.5328 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Solid pollutant | Hazardous solid waste | Compliant disposal by entrusted qualified units | 2 | Within the Company | / | / | 947.1423 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Solid pollutant | General solid waste | Compliant disposal by entrusted qualified units | 4 | Within the Company | / | / | 21142.03 tons | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Water pollutant | pH value | Intermittent discharge | 1 | Beside National Highway 310, Liuye River, Huayin City | 7.98 | 6-9 | / | / | None |
| Huadong Medicine (Xi’an) | Water pollutant | COD | Intermittent discharg | 1 | Beside National Highway | 35.63mg/l | 50mg/l | 1.187095 tons | 3 tons | None |
| Bohua Pharmaceutical Co., Ltd. | e | 310, Liuye River, Huayin City | ||||||||
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Water pollutant | Ammonia-nitrogen | Intermittent discharge | 1 | Beside National Highway 310, Liuye River, Huayin City | 0.33mg/l | 8mg/l | 0.010829 tons | 0.48 tons | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Water pollutant | Total nitrogen | Intermittent discharge | 1 | Beside National Highway 310, Liuye River, Huayin City | 9.97mg/l | 15mg/l | 0.319808 tons | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Solid pollutant | Hazardous wastes | Compliant disposal by entrusted qualified units | 3 | Within the Company | / | / | 339.07 tons | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | Volatile organic compound | Organized discharge | 1 | APIs Plant 1 | / | 60mg/m3 | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | Hydrogen chloride | Organized discharge | 1 | APIs Plant 1 | / | 30mg/m3 | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | Ammonia (ammonia gas) | Organized discharge | 1 | APIs Plant 1 | / | 20mg/m3 | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | Sulfuric acid mist | Organized discharge | 1 | APIs Plant 1 | / | 45mg/m3 | / | / | None |
| Huadong | Air | Hydroge | Organize | 1 | APIs | / | 30mg/m | / | / | None |
| Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | pollutant | n chloride | d discharge | Plant 2 | 3 | |||||
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | PM | Organized discharge | 1 | APIs Plant 2 | / | 20mg/m3 | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | Ammonia (ammonia gas) | Organized discharge | 1 | Sewage treatment station | / | 20mg/m3 | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | Hydrogen sulfide | Organized discharge | 1 | Sewage treatment station | / | 5mg/m3 | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | Non-methane hydrocarbon | Organized discharge | 1 | Sewage treatment station | / | 60mg/m3 | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | Odor concentration | Organized discharge | 1 | Sewage treatment station | / | 6000 | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant | PM | Organized discharge | 1 | Solid preparation plant | / | 20mg/m3 | / | / | None |
| Jiangsu Joyang Laboratories | Water pollutant | pH value | Intermittent discharge | 1 | No. 9, Haidu North Road | 8.4 | 6-9 | / | / | None |
| Jiangsu Joyang Laboratories | Water pollutant | COD | Intermittent discharge | 1 | No. 9, Haidu North Road | 100~350mg/l | 500mg/l | 9.38 tons | 22.401 t/a | None |
| Jiangsu | Water | Ammoni | Intermitt | 1 | No. 9, | 0~25mg/ | 35mg/l | 0.057 | 1.156 t/a | None |
| Joyang Laboratories | pollutant | a-nitrogen | ent discharge | Haidu North Road | l | tons | ||||
| Jiangsu Joyang Laboratories | Water pollutant | Total nitrogen | Intermittent discharge | 1 | No. 9, Haidu North Road | 0~35mg/l | 45mg/l | 1.39 tons | 1.486 t/a | None |
| Jiangsu Joyang Laboratories | Water pollutant | Total phosphorus | Intermittent discharge | 1 | No. 9, Haidu North Road | 0~5mg/l | 8mg/l | 0.08 tons | 0.164 t/a | None |
| Jiangsu Joyang Laboratories | Solid pollutant | Hazardous solid waste | Compliant disposal by entrusted qualified units | / | No. 9, Haidu North Road | / | / | 1916 tons | 3,148.7 t/a | None |
| Jiangsu Joyang Laboratories | Air pollutant | PM | Organized discharge | 3 | No. 9, Haidu North Road | 2.28mg/m3 | 60mg/Nm3 | 1.29 tons/ semi-annual | 42.7409 t/a | None |
| Wuhu Huaren Science and Technology Co., Ltd. | Water pollutant | COD | Intermittent discharge | 1 | At the east gate of the factory area | 48.759mg/l | 120mg/l | 0.1646t | 0.2272t | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Water pollutant | Ammonia-nitrogen | Intermittent discharge | 1 | At the east gate of the factory area | 12.17mg/l | 25mg/l | 0.005406t | 0.04735t | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Water pollutant | Suspended solids | Intermittent discharge | 1 | At the east gate of the factory area | 12mg/l | 50mg/l | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Water pollutant | Total nitrogen | Intermittent discharge | 1 | At the east gate of the factory area | 9.95mg/l | 35mg/l | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Water pollutant | Total phosphorus | Intermittent discharge | 1 | At the east gate of the factory area | 0.05 | 1mg/l | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Water pollutant | Dichloromethane | Intermittent discharge | 1 | At the east gate of the factory area | 0.001mg/l | 0.3mg/l | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Water pollutant | PH value | Intermittent discharge | 1 | At the east gate of the factory area | 7.1mg/l | 6~9 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Dichloromethane | Organized discharge | 1 | In the middle of the factory area | 11 | 40mg/Nm3 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Methyl alcohol | Organized discharge | 1 | In the middle of the factory area | 0.6 | 50 mg/Nm3 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | the General Volatile organic compound | Organized discharge | 1 | In the middle of the factory area | / | 100mg/Nm3 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Volatile organic compound | Organized discharge | 1 | In the middle of the factory area | 6.41mg/Nm3 | 60mg/Nm3 | 0.123567t | 9t | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Ethyl acetate | Organized discharge | 1 | In the middle of the factory area | 0.311 | 40mg/Nm3 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Odor concentration | Unorganized discharge | / | Around the factory boundaries | 10 | 20mg/Nm3 | / | / | No |
| Wuhu | Air | Methyl | Unorgan | / | Around | 0.88 | 12mg/N | / | / | No |
| Huaren Science and Technology Co., Ltd. | pollutant | alcohol | ized discharge | the factory boundaries | m3 | |||||
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Dichloromethane | Unorganized discharge | / | Around the factory boundaries | / | 1.5mg/Nm3 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Ethyl acetate | Unorganized discharge | / | Around the factory boundaries | / | 0.5mg/Nm3 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | n-Hexane | Unorganized discharge | / | Around the factory boundaries | / | 0.7 mg/Nm3 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Hydrogen chloride | Unorganized discharge | / | Around the factory boundaries | / | 0.2 mg/Nm3 | / | / | No |
| Wuhu Huaren Science and Technology Co., Ltd. | Air pollutant | Volatile organic compound | Unorganized discharge | / | Around the factory boundaries | / | 6mg/Nm3 | / | / | No |
Pollutant treatment
1. Pollutant treatment of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.
(1) Wastewater
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Wastewater treatment system of old sewage treatment station | Facultative + fluidized bed process | Originally 600 t/d, and 800 t/d after technical improvement | November 1993 Technical improvement in 2007 | Demolished |
| Wastewater treatment system of new sewage treatment station | Facultative + CASS + steam flotation | 2,200 t/d | December 2001 Technical improvement in 2014 (adding IC and steam flotation) IC tower outage for demolition in 2022 | Normal operation |
(2) Exhaust gas
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity (CMH) | Time when put into operation | Operation condition |
| DA002 (16#-1) | Water Spraying + activated carbon | 40,000 | 2023 | Normal operation |
| DA010 (35#-1) | Secondary water spraying + dry filter + activated carbon adsorption and desorption | 30,000 | / | Under construction |
| DA013 (32#-1) | Secondary water spraying + dry filter + activated carbon adsorption and desorption | 35,000 | 2023 | Normal operation |
DA016 (18#-1)
| DA016 (18#-1) | Two-level water spraying + activated carbon + primary spraying | 30,000 | 2022 | Normal operation |
| DA019 (3#-1) | Primary water spraying + photo-oxidation | 20,000+52,000 | 2019 | Normal operation |
| DA020 (36#-2) | Two-level water spraying + condensation + photo-oxidation + activated carbon + inorganic nano-catalysis + water spraying | 10,000 | 2019 | Normal operation |
| DA023 (27#-1) | Condensation + alkaline water spraying + all-in-one machine + alkaline water spraying | 15,000 | 2009 | Outage |
| DA024 (33#-1) | Secondary water spraying + dry filter + activated carbon adsorption and desorption | 1,000 | 2023 | Normal operation |
| DA026 (34#-1) | Secondary water spraying + dry filter + activated carbon adsorption and desorption | 40,000 | 2023 | Normal operation |
| DA027 (7#-1) | Secondary alkaline water spraying (activated carbon) | 26,000 | 2015 | Normal operation |
| DA028 (6#-1) | Primary clean water spraying | 12,200 | 2016 | Normal operation |
| DA030 (18#-3) | Primary clean water spraying + primary alkaline water spraying | 5,000 | 2017 | Normal operation |
| DA031 (25#-1) | Low nitrogen combustion + high altitude emission | 16,000 | 2009 Low nitrogen transformation completed in December 2019 Online monitoring installed for integrated emptying in 2023 | Normal operation |
| DA034 (27#-2) | Two-level water spraying + activated carbon adsorption and desorption | 15,000 | 2011 | Outage |
| DA035 (27#-3) | Photo-oxidation + primary alkaline water spraying | 22,300 | 2016 | Outage |
DA036 (8/13#-1)
| DA036 (8/13#-1) | Secondary water spraying/ two-level spraying + activated carbon adsorption and desorption | 25,000 | 2017 | Normal operation |
| DA042 (10#-1) | Primary clean water spraying | 20,000 | 2016 | Normal operation |
| DA043 (15#-1) | Primary alkaline water spraying + photo oxidation | 25,000 | 2018 | Normal operation |
| DA044 (43#-1) | Primary alkaline water spraying + primary water spraying | 45,000 | 2014 | Normal operation |
DA045 (46#-1)
| DA045 (46#-1) | Primary clean water spraying | 3,000 | 2015 | Normal operation |
| DA046 (46#-2) | Primary clean water spraying | 25,000 | 2015 | Normal operation |
| DA047 (46#-3) | Primary clean water spraying | 30,000 | 2015 | Normal operation |
| DA048 (23#-1) | Secondary water spraying | 7,000 | 2019 | Normal operation |
| DA049 (36#-3) | Secondary water spraying + dry filter + activated carbon adsorption and desorption | 10,000 | / | Under construction |
(3) Solid wastes
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Hazardous waste warehouse | Normative storage | 160 tons | March 2012 | Normative storage, compliant disposal by entrusted qualified units |
| Normative storage | 240 tons | March 2010 | ||
| General solid waste storage yard | Normative storage | 7 tons | March 2010 | Normative storage, compliant disposal by entrusted qualified units |
| Normative storage | 30 tons | June 2004 |
2. Pollutant treatment of Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd.
(1) Wastewater
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Phase I sewage treatment station | Primary sedimentation + EGSB + facultative + aerobic + advanced treatment | 1,500 t/d | March 2016 | Normal operation |
| Phase II sewage treatment station | EGSB + facultative + aerobic + advanced treatment | 8,500 t/d | July 2019 | Normal operation |
(2) Exhaust gas
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity (CMH) | Time when put into operation | Operation condition | |
| DA001 | Exhaust gas from fermenting east section | Two-level alkaline spraying + photo-catalytic oxidation | 45,000 | May 2016 | Normal operation |
DA002
| DA002 | Exhaust gas from fermenting west section | Secondary alkaline spraying + photo-catalytic oxidation | 40,000 | May 2016 | Normal operation |
| DA003 | Exhaust gas from drying north section | Two-level alkaline spraying | 80,000 | May 2016 | Normal operation |
| DA004 | Exhaust gas from sewage treatment station | Secondary alkaline spraying | 50,000 | May 2016 | Normal operation |
| DA006 | Exhaust gas from batching section | Primary alkaline spraying | 10,000 | May 2016 | Normal operation |
| DA007 | Exhaust gas from quality testing and R&D | Primary alkaline spraying + photo-catalytic oxidation | 20,000 | May 2016 | Normal operation |
| DA008 | Exhaust gas from drying south section | Secondary alkaline spraying | 80,000 | May 2016 | Normal operation |
DA010
| DA010 | Exhaust gas from plate-and-frame filter | Secondary alkaline spraying + photo-catalytic oxidation | 40,000 | May 2017 | Normal operation |
| DA011 | Exhaust gas from drying cooling bin | Secondary alkaline spraying | 20,000 | May 2017 | Normal operation |
| DA012 | Exhaust gas from drying 7m | Primary alkaline spraying | 20,000 | May 2016 | Normal operation |
| DA013 | Exhaust gas from drying 18m | Primary alkaline spraying | 20,000 | May 2016 | Normal operation |
| DA014 | Exhaust gas from tank area | Activated carbon + alkaline spraying | Few | June 2019 | Normal operation |
| DA015 | RTO exhaust gas | Water spraying + RTO + alkaline spraying | 100,000 | June 2019 | Normal operation |
| DA016 | Exhaust gas I from Vogely preparation | Bag dust removal | Few | June 2019 | Normal operation |
| DA017 | MP exhaust gas | Photo-catalytic oxidation | 44,000 | June 2019 | Normal operation |
| DA018 | Exhaust gas from super-resistant fermentation | Alkaline spraying + photo-catalytic oxidation + water spraying | 20,000 | June 2019 | Normal operation |
| DA019 | X8 exhaust gas | Acid spraying + water spraying | 6,000 | June 2019 | Normal operation |
| DA021 | Exhaust gas from quality testing | Alkaline spraying + photo-catalytic oxidation + water spraying | 30,000 | June 2019 | Normal operation |
| DA022 | Exhaust gas from AK refining hydrochloric acid | Alkaline spraying + water spraying | 10,000 | June 2019 | Normal operation |
| DA023 | Exhaust gas I from spray drying | Bag dust removal + water spraying | Few | June 2019 | Normal operation |
DA024
| DA024 | Exhaust gas from AK fermenting north section | Alkaline spraying + photo-catalytic oxidation + water spraying | 90,000 | June 2019 | Normal operation |
| DA025 | Exhaust gas from AK fermenting south section | Alkaline spraying + photo-catalytic oxidation + water spraying | 90,000 | June 2019 | Normal operation |
DA026
| DA026 | Exhaust gas from phase II sewage treatment station | Alkaline spraying + water spraying | 58,000 | June 2019 | Normal operation |
| DA027 | Exhaust gas from center control | Alkaline spraying + photo-catalytic oxidation + water spraying | 8,000 | June 2019 | Normal operation |
DA028
| DA028 | YT exhaust gas | Alkaline spraying + water spraying | 4,000 | June 2019 | Normal operation |
| DA029 | Exhaust gas II from spray drying | Bag dust removal + water spraying | Few | June 2019 | Normal operation |
| DA030 | Exhaust gas from AK refining ethyl alcohol | Alkaline spraying + water spraying | 1,000 | June 2019 | Normal operation |
| DA031 | Exhaust gas from Bailing Tablets preparation | Condensation + two-level water spraying | 20,000 | July 2022 | Normal operation |
HDBL-FQ217
| HDBL-FQ217 | HDG solvent-containing exhaust gas | Oxidation spraying + two-level alkaline spraying | 2,000 | September 2022 | Normal operation |
| HDBL-FQ218 | HDG odor exhaust gas | Oxidation spraying + alkaline spraying | 20,000 | September 2022 | Normal operation |
(3) Solid wastes
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Hazardous waste warehouse | Normative storage | 10 tons | March 2017 | Normative storage, compliant disposal by entrusted qualified units |
| Normative storage | 200 tons | May 2021 | ||
| General solid waste storage yard | Normative storage | 20 tons | March 2016 | Normative storage, compliant disposal by entrusted qualified units |
| Normative storage | 15 tons | March 2016 | ||
| Normative storage | 40 tons | July 2019 | ||
| Normative storage | 30 tons | July 2019 |
3. Pollutant treatment of Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd.
(1) Wastewater
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Wastewater treatment system of sewage treatment station | Pretreatment + Fenton system + facultative + aerobic + MBR + carbon filtration | 250 t/d | July 2012 | Normal operation |
(2) Exhaust gas
| Designation of pollution prevention and control facility | Treatment process | Time when put into operation | Operation condition |
| Exhaust gas treatment equipment for APIs Plant 1 | Alkaline solution spraying + dry filter (filter cotton) + UV photolysis + activated carbon adsorption | October 2020 | Normal operation |
| Exhaust gas treatment equipment for APIs Plant 2 | Tertiary alkaline solution spraying + steam-water separator + dry filter + two-level activated carbon | November 2019 | Normal operation |
| Exhaust gas treatment equipment for solid preparation | Bag dust removal | 2018 | Normal operation |
(3) Solid wastes
| Designation of pollution prevention and control facility | Treatment process | Storage capacity | Time when put into operation | Operation condition |
| Hazardous waste repository | Normative storage | 60 tons | January 2012 | Normative storage, compliant transfer and disposal by entrusted qualified units |
4. Pollutant treatment of Jiangsu Joyang Laboratories
(1) Wastewater
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Wastewater treatment system of sewage treatment station | Steam flotation tank + hydrolytic acidification + IC tower + UASB tank + A/O tank + O tank + secondary sedimentation tank | 1,000 t/d | December 2014 | Normal operation |
(2) Exhaust gas
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity (CMH) | Time when put into operation | Operation condition |
| Exhaust gas treatment equipment for extracting section in Plant 101 | Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 20,000 | 2014 | Normal operation |
| Exhaust gas treatment equipment for fermentation section in Plant 101 | Primary water spraying + water-gas separator + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 20,000 | 2019 | Normal operation |
| Exhaust gas treatment equipment for drying section in Plant 101 | Primary water spraying + water-gas separator + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 15,000 | 2017 | Normal operation |
Exhaust gas treatment equipment forbatching section in Plant 101
| Exhaust gas treatment equipment for batching section in Plant 101 | Cyclone separator + primary water spray + 15m exhaust | 2,000 | 2014 | Normal operation |
pipe high altitude emissionExhaust gas treatment equipment for
fermentation sections in Plants
104/107/108
| Exhaust gas treatment equipment for fermentation sections in Plants 104/107/108 | Primary water spraying + water-gas separator + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 75,000 | 2021 | Normal operation |
| Exhaust gas treatment equipment for extracting section in Plant 104 | Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 11,000 | 2015 | Normal operation |
| Exhaust gas treatment equipment for batching sections in Plants 104/107/108 | Cyclone separator + primary water spray + 15m exhaust pipe high altitude emission | 2,000 | 2015 | Normal operation |
| Exhaust gas treatment equipment for drying sections in Plants 104/107/108 | Primary water spraying + water-gas separator + secondary activated carbon adsorption | 10,000 | 2015 | Normal operation |
| Exhaust gas treatment equipment for pretreatment tank and hazardous waste warehouse in Plants 103 and 303 | Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 45,000 | 2019 | Normal operation |
| Exhaust gas treatment equipment for Plant 106 | Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 10,000 | 2015 | Normal operation |
| Exhaust gas treatment equipment for extracting section in Plant 107 | Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 25,000 | 2019 | Normal operation |
| Exhaust gas treatment equipment for extracting section in Plant 108 | Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 40,000 | 2019 | Normal operation |
| Exhaust gas treatment equipment for Plant 109 | Primary water spraying +25m exhaust pipe high altitude emission | 40,000 | 2019 | Normal operation |
| Exhaust gas treatment equipment for sewage treatment station 303 | Primary water spraying + water-gas separator + photo-catalytic + 25m exhaust pipe high altitude emission | 15,000 | 2021 | Normal operation |
| Exhaust gas treatment equipment for Plant 103 | Primary water spraying + water-gas separator + photo-catalytic oxidation + secondary activated carbon adsorption + 25m exhaust pipe high altitude emission | 50,000 | 2022 | Normal operation |
Exhaust gas treatment equipment in
laboratories
| Exhaust gas treatment equipment in laboratories | Spraying + activated carbon adsorption | 25,000 | 2023 | Normal operation |
(3) Solid wastes
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Hazardous waste warehouse | Normative storage | 3,148.7 t/a | October 2020 | Normative storage, compliant disposal by |
entrusted qualified unitsHousehold garbage
dumping site
| Household garbage dumping site | Normative storage | 1,000 t/a | March 2015 | Garbage disposal site in the east of the city |
5. Pollutant treatment by Wuhu Huaren Science and Technology Co., Ltd.
(1) Wastewater
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Wastewater treatment system of new sewage treatment station | Acid-base adjustment + coagulation and sedimentation + biological treatment | 20 t/d | August 2023 | Normal operation |
(2) Exhaust gas
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity (CMH) | Time when put into operation | Operation condition |
| DA001 (Building A) | Activated carbon | 14,100 | 2016 | Normal operation |
| DA002 (Building C) | Secondary water spraying | 6,200 | Under construction | / |
(3) Solid wastes
| Designation of pollution prevention and control facility | Treatment process | Treatment capacity | Time when put into operation | Operation condition |
| Hazardous waste warehouse | Disposal by qualified units | 20 tons | July 15, 2022 | Normal operation |
Environmental self-monitoring programHangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. revised the Pollution Source Self-monitoringProgram on October 31, 2023.
Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. has formulated the entrustedmonitoring plan according to the self-monitoring requirements in the Pollutant Emission Permit, carried out daily,monthly, quarterly or annual entrusted monitoring according to the monitoring plan, and reported all monitoringdata as required.
Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. has formulated the Self-monitoring Program,registered the Program in the environmental protection department, and reported the monitoring data as required.
Jiangsu Joyang Laboratories has formulated the Pollution Source Self-monitoring Program according to therelevant national environmental protection requirements, and reported daily monitoring data as required.
Wuhu Huaren Science and Technology Co., Ltd. has formulated the entrusted monitoring plan according tothe self-inspection requirements in the Pollutant Emission Permit, and carried out daily, monthly, quarterly orannual entrusted monitoring according to the monitoring plan.Emergency plan for sudden environmental events
Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. has formulated, established, regularly modified andperfected the Emergency Plan for Sudden Environmental Events as required, with the record No. of 330105-2021-003-M.
Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. has modified and recorded theEmergency Plan for Sudden Environmental Events in 2022, with the record No. of 330114-2022-069-M.Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. has modified and perfected the Emergency Planfor Sudden Environmental Events as required in 2021, and recorded the Plan in Huayin Sub-bureau of WeinanEcological Environment Bureau, with the record No. of 610582-2021-090-L.
Jiangsu Joyang Laboratories has formulated the Emergency Plan for Sudden Environmental Events, whichhas been approved and recorded in June 2021, with the record No. of 320924–2021-039-M.
Wuhu Huaren Science and Technology Co., Ltd. has formulated and recorded the Emergency Plan forSudden Environmental Events with the record No. 340203-2022-018-L.Investment in environmental governance and protection, and the relevant information on paying environmental protection tax
In 2023, Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. invested 9,760,000 yuan in environmentalgovernance and protection, and paid the environmental protection tax of 1,877.53 yuan.
Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. invested 51,320,300 yuan inenvironmental governance and protection, and did not pay environmental protection tax according to relevantpolicies.
Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. invested 1,337,100 yuan in environmentalgovernance and protection, and paid the environmental protection tax of 1,728.77 yuan.
In 2023, Jiangsu Joyang Laboratories invested 9,949,900 yuan in environmental governance and protection,and paid the environmental protection tax of 56,702.25 yuan.
Wuhu Huaren Science and Technology Co., Ltd. invested about 785,800 yuan in environmental governanceand protection, and paid the environmental protection tax of 179.32 yuan.Measures taken to reduce carbon emissions during the reporting period and corresponding effects? Applicable □ N/A
Hangzhou Zhongmei Huadong Pharmaceutical (Jiangdong) Co., Ltd. continued to use biogas to generateelectricity and supplement RTO natural gas, reducing the emissions of methane, hydrogen sulfide, and otherpollutants, and continuously took lean measures in the plants to reduce pollutant emissions, such as saving waterand reducing consumption.
Jiangsu Joyang Laboratories made technical improvement for air-conditioning units and heat exchanger pipesand reduced direct steam discharge by combing the Company’s steam use points, expecting to save 150 tons ofstandard coal every year. Moreover, it adjusted the actual load and demand load by analyzing the powerconsumption of the Company, which saves the transformer capacity fee of 45,000 kW·h every month.Administrative penalties for environmental issues during the reporting period
| Designation of Company or subsidiary | Reasons | Type of violation | Results | Impacts on the production and operation of listed company | Rectification measures |
| Jiangsu Joyang | On April 14, April | Jiangsu Joyang | A fine of | No | The Company transported back |
| Laboratories | 22 and April 25, 2023, Yancheng Ecological Environment Bureau found that Jiangsu Joyang Laboratories illegally provided hazardous waste recovery solvents to Wu Zhihong, an individual without a hazardous waste treatment license, for disposal in two batches on January 14 and February 1, 2021, illegally obtaining a profit of 30,800 yuan. | violated regulations in Clause 3 of Article 80 of the Law of the People’s Republic of China on Prevention and Control of Soil Contamination. | 750,000 yuan and confiscation of illegal gains of 30,800 yuan. | significant impact | the recovery solvents from the site and entrusted a third-party hazardous waste disposal unit for disposal as hazardous wastes through legal channels. As for compliant use and disposal of recovery solvents, the Company determined to standardize management and reduce compliance risks by the following means after consultation and research: 1. Improve the recycling rate of solvents and reduce the amount of recovery solvents generated. Currently, almost all ethyl ester can be recycled. 2. Ethanol is treated via biochemical degradation of wastewater for complete disposal of recovered ethanol. 3. The third party is entrusted to dispose of solvents that cannot be recycled as hazardous waste (code: HW02) by legal means. |
| Jiangsu Joyang Laboratories | There are two exhaust gas outlets in Plant 104, which is inconsistent with the pollutant discharge quantity stipulated in the Pollutant Emission Permit; the exhaust gas treatment facilities in Plant 101 fail to run normally, and nearly half of the photo-catalytic oxidation UV beams are damaged without any UV light. | Jiangsu Joyang violated regulations in Article 36 of the Regulation on the Administration of Permitting of Pollutant Discharges and Article 99 of the Law of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution. | A fine of 188,600 yuan. | No significant impact | The Company merged two exhaust gas outlets during shutdown for maintenance, changed the frequency for inspection and replacement of photo-catalytic oxidation UV beams from once every three months to once a month, and marked allowable damage rate of UV beams outside the box for better maintenance. |
| Wuhu Huaren Science and Technology Co., Ltd. | On May 24, 2023, Yijiang Sub-bureau of Wuhu Ecological Environment Bureau found that Wuhan Huaren discharged water pollutants by setting up concealed pipes without permission. | Wuhu Huaren violated Article 39 of the Law of the People’s Republic of China on the Prevention and Control of Water Pollution. | A fine of 560,000 yuan. | No significant impact | The Company rectified immediately and treated the water pollutants in sewage treatment station. |
Other environmental information to be disclosed
NoneOther environmental protection related informationNoneII. Social ResponsibilitiesIn the process of strategic transformation, the Company strictly fulfills the socialresponsibilities of corporate citizen, and pays attention to the demands of shareholders,governments and regulatory agencies, employees, customers and patients, suppliers, communities,the public, partners and other stakeholders to: standardize the governance, consolidate thedevelopment cornerstone; adhere to the sustainable development and focus on long-term value;bear the responsibilities in mind and abide by business ethics; insist on quality-oriented and makecontribution to healthy China; care for employees and build a happy home together; protect theearth, save energy, reduce emissions, and adhere to green development; actively participate inpublic welfare and give back to the society.For details of the Company’s social responsibility performance in 2023, please refer to theEnvironmental, Social and Governance (ESG) of Huadong Medicine in 2023.III. Consolidating and Expanding Achievements of Poverty Alleviation and RuralRevitalization
During the reporting period, the Company actively carried out special poverty alleviation andrural revitalization work. For details, please refer to the Environmental, Social and Governance(ESG) of Huadong Medicine in 2023.
Section VI. Important MattersI. Fulfillment of commitments
1. Commitments made by interested parties such as the Company’s de facto controller, shareholders,related parties, acquirer(s), and the Company that are fulfilled during the reporting period or unfulfilledby the end of the reporting period
□ Applicable ? N/A
The Company does not have commitments made by interested parties such as the Company’sde facto controller, shareholders, related parties, acquirer(s), and the Company that are fulfilledduring the reporting period or unfulfilled by the end of the reporting period.
2. If there is a profit forecast for the Company’s assets or projects and the reporting period is in the profitforecast period, the Company should explain the assets or projects that meet the original profit forecastand the reasons for that
□ Applicable ? N/A
II. Controlling shareholders’ and related parties’ occupation of non-operating funds of thelisted companies
□ Applicable ? N/A
No such case during the reporting period.III. External guarantees in violation of provisions
□ Applicable ? N/A
No such case during the reporting period.IV. Explanation by the Board of Directors on the latest “nonstandard audit report”
□ Applicable ? N/A
V. Explanation by the Board of Directors, the Board of Supervisors and the independentdirectors (if any) on the “nonstandard audit report” of the accounting firm during thecurrent reporting period
□ Applicable ? N/A
VI. Explanation of changes in accounting policies and estimation, or the correction ofsignificant accounting errors as compared with the previous financial report
? Applicable □ N/A
1. Important accounting policy changes due to changes in accounting standards for businessenterprises
The Company has implemented the provision on the “accounting treatment for deferredincome taxes relating to assets and liabilities arising from individual transactions that the initialrecognition exemption does not apply” stipulated in the Interpretation No. 16 of the AccountingStandards for Business Enterprises issued by the Ministry of Finance since January 1, 2023,adjusting the single transaction to which this provision applies between the beginning of the earliestfinancial statement presentation period and the first implementation date according to the provision.With regard to taxable temporary differences and deductible temporary differences arising from thelease liabilities and right-to-use assets recognized due to the application of the provisions at thebeginning of the earliest period in the financial statement where the provisions are firstlyimplemented, the financial statements are adjusted by the cumulative impact to present the retainedearnings at the beginning of the earliest period and other related financial statement items inaccordance with this provision and the Accounting Standards for Business Enterprises No. 18 -Income Tax. The Company made no adjustment considering less cumulative impact.VII. Changes in the scope of consolidated statements as compared to the previous financialreport? Applicable □ N/A
Please refer to “IX. Change of consolidation scope” in “Section X. Financial Report” of thisreport for details.VIII. Employment and dismissal of accounting firmsAccounting firm employed by the Company for now
| Name of the domestic accounting firm | Pan-China Certified Public Accountants LLP |
| Remuneration of the domestic accounting firm (ten thousand yuan) | 165 |
| Continuous number of years of audit services provided by the domestic accounting firm | 26 |
| Certified public accountants of the domestic accounting firm | Hu Yanhua and Chen Xiaodong |
| Continuous number of years of audit services provided by certified public accountants of the domestic accounting firm | Hu Yanhua: 1 year; Chen Xiaodong: 2 years |
| Name of the overseas accounting firm (if any) | None |
| Remuneration of the overseas accounting firm (ten thousand yuan) (if any) | 0 |
| Continuous number of years of audit services provided by the overseas accounting firm (if any) | None |
| Certified public accountants of the overseas accounting firm (if any) | None |
| Continuous number of years of audit services provided by certified public accountants of the overseas accounting firm (if any) | None |
Whether the accounting firm employed was replaced in the current period
□Yes ?No
Information about the internal control audit accounting firm, financial consultant or sponsor employed by the Company? Applicable □ N/A
During the reporting period, the Company employed Pan-China Certified Public AccountantsLLP as the audit institution of its annual financial report and internal control audit report; audit feeof the annual financial report and internal control audit report is 1.65 million yuan (before tax).IX. Delisting after annual report disclosure
□ Applicable ? N/A
X. Bankruptcy reorganization
□ Applicable ? N/A
The Company does not have related matters of bankruptcy reorganization during the reporting period.XI. Major litigation and arbitration
? Applicable □ N/A
| Basic of litigations (arbitrations) | Amount involved (ten thousand yuan) | Whether an estimated liability is formed | Litigation (arbitration) progress | Litigation (arbitration) adjudication result and impact | Execution of litigation (arbitration) judgments | Disclosure date | Disclosure index (if any) |
| The summary of the litigation matters that don’t satisfy the criteria for disclosure of major litigations (arbitrations) (China) | 10,195.87 | No | Some cases are under acceptance and some adjudications have come into force (involving 37.9905 million yuan) | The summary of the litigation matters has no significant impact on the Company | Some cases have been executed; some adjudicated cases are being executed. Some cases are not adjudicated. | / | / |
| The summary of the litigation | 278.6 | No | All under trail | This summary of litigation s | Cases are under trails and are to be | / | / |
| matters that don’t satisfy the criteria for disclosure of major litigations (arbitrations) (overseas) | has no significant impact on the Company | adjudicated |
XII. Punishment and rectification
□ Applicable ? N/A
No such case during the reporting period.XIII. Integrity of the Company and its controlling shareholders and de facto controller? Applicable □ N/AThere is no case of the Company, its controlling shareholders and de facto controller failed to comply with the effective judgmentof the court, or failed to repay the due debts of a large amount during the reporting period.XIV. Major related transactions
1. Transactions related to daily operations
? Applicable □ N/A
| Related party | Association | Type of related transaction | Content of related transaction | Pricing principles for related transaction | Price of related transaction | Related transaction amount (ten thousand yuan) | Proportion in the amount of similar transactions | Approved transaction amount (ten thousand yuan) | Whether it exceeds the approved amount | Settlement method of related transaction | Available market prices of similar transactions | Disclosure date | Disclosure index (if any) |
| Hangzhou Jiuyuan Gene Engineering Co., Ltd. | Joint venture of the Company | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 6,526.34 | 0.24% | 7,600 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Grandpharma (China) Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 5,827.33 | 0.21% | 14,110 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Beijing Yuanda Jiuhe Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 3,750.32 | 0.14% | / | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 2,515.13 | 0.09% | 3,200 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Wuhan Grand Pharmaceutical Group | Subsidiary of the Company’s controlling | Drug purchase | Drug purchase | Market price determined by the Company’s | Market price | 2,596.79 | 0.09% | / | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Sales Co., Ltd. | shareholder | related transaction decision-making process | |||||||||||
| Sichuan Yuanda Shuyang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 2,559.67 | 0.09% | 4,000 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Penglai Nuokang Pharmaceutical Co. Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 2,551.71 | 0.09% | 3,300 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Hangzhou Grand Biologic Pharmaceutical Inc. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-makin | Market price | 3,194.53 | 0.12% | 2,800 | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| g process | |||||||||||||
| Yunnan Leiyunshang Lixiang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 2,003.71 | 0.07% | 3,460 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Grand Medical Nutrition Science (Wuhan) Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 1,718.66 | 0.06% | 1,000 | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Grand Life Science (Liaoning) Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 766.74 | 0.03% | 830 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Shenyang Yaoda Leiyu | Subsidiary of the Comp | Drug purchase | Drug purchase | Market price determined | Market price | 523.07 | 0.02% | / | No | Cash, banker’s accept | Market price | April 14, 2023 | Cninfo (http://www |
| nshang Pharmaceutical Co., Ltd. | any’s controlling shareholder | by the Company’s related transaction decision-making process | ance bill | .cninfo.com.cn) | |||||||||
| Xi’an Yuanda Detian Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 298.17 | 0.01% | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) | |
| Grand Life Science (Chongqing) Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 290.55 | 0.01% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Xi’an Yuanda New Beilin Pharmaceutical Co., Ltd | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction | Market price | 253.98 | 0.01% | / | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| decision-making process | |||||||||||||
| Guangdong Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 208.41 | 0.01% | / | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Changchun Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 175.23 | 0.01% | / | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Anhui Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 168.01 | 0.01% | / | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Chang | Subsi | Drug | Drug | Marke | Marke | 137.8 | 0.01% | / | No | Cash, | Marke | April | Cninf |
| shu Leiyunshang Pharmaceutical Co., Ltd. | diary of the Company’s controlling shareholder | purchase | purchase | t price determined by the Company’s related transaction decision-making process | t price | 9 | banker’s acceptance bill | t price | 14, 2023 | o (http://www.cninfo.com.cn) | |||
| Hubei Yuanda Tiantianming Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 70.63 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Hubei Provincial Bafeng Pharmaceuticals & Chemicals Share Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 49.35 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Liaoning Weibang Biopharmaceutical Co., | Subsidiary of the Company’s controlling shareh | Drug purchase | Drug purchase | Market price determined by the Company’s relate | Market price | 40.25 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Ltd. | older | d transaction decision-making process | |||||||||||
| Qingdao Norson Biotechnology Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 37.27 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Wuhan Grand Hoyo Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 14.6 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Grandpharma Huangshi Feiyun Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making | Market price | 11.37 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
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| Cangzhou Huachen Biotechnology Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-making process | Market price | 1.3 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Hangzhou Jiuyuan Gene Engineering Co., Ltd. | Joint venture of the Company | Technical services | Technical services | Market price determined by the Company’s related transaction decision-making process | Market price | 3,873.43 | 0.14% | 8,750 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Hangzhou Jiuyuan Gene Engineering Co., Ltd. | Joint venture of the Company | Entrusted processing and other services | Entrusted processing and other services | Market price determined by the Company’s related transaction decision-making process | Market price | 2,872.4 | 0.10% | / | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Penglai Nuokang Pharm | Subsidiary of the Company’s | Entrusted processing and | Entrusted processing and | Market price determined by the | Market price | 1,194.21 | 0.04% | 481 | Yes | Cash, banker’s acceptance | Market price | April 14, 2023 | Cninfo (http://www.cninf |
| aceutical Co. Ltd. | controlling shareholder | other services | other services | Company’s related transaction decision-making process | bill | o.com.cn) | |||||||
| Penglai Nuokang Pharmaceutical Co. Ltd. | Subsidiary of the Company’s controlling shareholder | Technical services | Technical services | Market price determined by the Company’s related transaction decision-making process | Market price | 59.01 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Beijing Grand Bay Hill Hotel Management Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Conference fee | Conference fee | Market price determined by the Company’s related transaction decision-making process | Market price | 204.39 | 0.01% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Shanghai Grand Industrial and Financial Investment Manageme | Subsidiary of the Company’s controlling shareholder | Investment consulting service fees | Investment consulting service fees | Market price determined by the Company’s related transaction decisi | Market price | 75.47 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| nt Co., Ltd. | on-making process | ||||||||||||
| Shanghai Grand Industrial and Financial Investment Management Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Technical services | Technical services | Market price determined by the Company’s related transaction decision-making process | Market price | 28.3 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Chongqing Peg-Bio Biopharm Co., Ltd. | Joint venture of the Company | Inspection fees | Inspection fees | Market price determined by the Company’s related transaction decision-making process | Market price | 79.15 | 0.00% | 48.5 | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Xi’an Yuanda Detian Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Entrusted processing services | Entrusted processing services | Market price determined by the Company’s related transaction decision-making process | Market price | 75.29 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Grand Bay | Subsidiary | Conference | Conference | Market price | Market price | 72.74 | 0.00% | / | Yes | Cash, banke | Market price | April 14, | Cninfo |
| View Hotel Zhuhai | of the Company’s controlling shareholder | fee | fee | determined by the Company’s related transaction decision-making process | r’s acceptance bill | 2023 | (http://www.cninfo.com.cn) | ||||||
| Beijing Grand Innovation Property Management Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Property management fee | Property management fee | Market price determined by the Company’s related transaction decision-making process | Market price | 62.1 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Grand Bay Hotel View Chengdu Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Conference fee | Conference fee | Market price determined by the Company’s related transaction decision-making process | Market price | 31.5 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Hangzhou Jiuyuan Gene Engineering Co., Ltd. | Joint venture of the Company | Medicine sales | Medicine sales | Market price determined by the Company’s related | Market price | 886.45 | 0.02% | 500 | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| transaction decision-making process | |||||||||||||
| Guangdong Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision-making process | Market price | 405.19 | 0.01% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Hangzhou Grand Biologic Pharmaceutical Inc. | Subsidiary of the Company’s controlling shareholder | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision-making process | Market price | 88.8 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision-making proces | Market price | 54.39 | 0.00% | 600 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| s | |||||||||||||
| Xi’an Grand Technology Innovation Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision-making process | Market price | 42.5 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Kunming Shangxin Real Estate Development Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision-making process | Market price | 4.21 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Wuhan Wuyao Pharmaceutical (Yangxin) International Trade Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision-making process | Market price | 3.4 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Yunnan Leiyunshang Lixian | Subsidiary of the Company’s contro | Medicine sales | Medicine sales | Market price determined by the Comp | Market price | 2.3 | 0.00% | 850 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com |
| g Pharmaceutical Co., Ltd. | lling shareholder | any’s related transaction decision-making process | .cn) | ||||||||||
| Grand (Shanghai) Finance Leasing Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision-making process | Market price | 1.01 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Sichuan Yuanda Shuyang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision-making process | Market price | / | / | 400 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Chongqing Peg-Bio Biopharm Co., Ltd. | Joint venture of the Company | Medicine sales | Medicine sales | Market price determined by the Company’s related transaction decision- | Market price | / | / | 25 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| making process | |||||||||||||
| Xi’an Yuanda Detian Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Agency services | Agency services | Market price determined by the Company’s related transaction decision-making process | Market price | 495.92 | 0.01% | 1,000 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Chongqing Peg-Bio Biopharm Co., Ltd. | Joint venture of the Company | Preparation filling services | Preparation filling services | Market price determined by the Company’s related transaction decision-making process | Market price | 479.37 | 0.01% | 276 | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Beijing Yuanda Jiuhe Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Technical services | Technical services | Market price determined by the Company’s related transaction decision-making process | Market price | 340.46 | 0.01% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Hangzhou Grand | Subsidiary of the | Processing servic | Processing servic | Market price deter | Market price | 8.68 | 0.00% | / | Yes | Cash, banker’s | Market price | April 14, 2023 | Cninfo (http:/ |
| Biologic Pharmaceutical Inc. | Company’s controlling shareholder | es | es | mined by the Company’s related transaction decision-making process | acceptance bill | /www.cninfo.com.cn) | |||||||
| Hangzhou Grand Biologic Pharmaceutical Inc. | Subsidiary of the Company’s controlling shareholder | Technical services | Technical services | Market price determined by the Company’s related transaction decision-making process | Market price | 180.66 | 0.00% | 178 | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Penglai Nuokang Pharmaceutical Co. Ltd. | Subsidiary of the Company’s controlling shareholder | Agency services | Agency services | Market price determined by the Company’s related transaction decision-making process | Market price | 61.92 | 0.00% | 40 | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Fujian KLBIOs Biological Products Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Technical services | Technical services | Market price determined by the Company’s related transa | Market price | 33.02 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| ction decision-making process | |||||||||||||
| Sichuan Yuanda Shuyang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Transportation and warehousing services | Transportation and warehousing services | Market price determined by the Company’s related transaction decision-making process | Market price | 11.44 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Sichuan Yuanda Shuyang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Information services | Information services | Market price determined by the Company’s related transaction decision-making process | Market price | 7.79 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Grandpharma (China) Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Technical services | Technical services | Market price determined by the Company’s related transaction decision-making process | Market price | 3.11 | 0.00% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Hangzhou Jiuyuan Gene Engineering Co., Ltd. | Joint venture of the Company | Rent | Rent | Market price determined by the Company’s related transaction decision-making process | Market price | 6.42 | 0.00% | 6.42 | No | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Beijing Yanhuang Real Estate Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Houses and buildings | Houses and buildings | Market price determined by the Company’s related transaction decision-making process | Market price | 223.31 | 0.01% | / | Yes | Cash, banker’s acceptance bill | Market price | April 14, 2023 | Cninfo (http://www.cninfo.com.cn) |
| Total | -- | -- | 48,259.35 | -- | 53,454.92 | -- | -- | -- | -- | -- | |||
2. Related transactions involving the acquisition or selling assets and equity
□ Applicable ? N/A
No such case during the reporting period.
3. Related transactions of joint external investment
□ Applicable ? N/A
No such case during the reporting period.
4. Associated claim and debt transactions
□ Applicable ? N/A
No such case during the reporting period.
5. Transactions with financial companies that are related parties of the Company
□ Applicable ? N/A
No deposit, loan, credit or other financial business between the Company and the related financial companies
6. Transactions between the financial companies controlled by the Company and the related parties
□ Applicable ? N/A
No deposit, loan, credit or other financial business between the financial companies controlled by the Company and the relatedparties.
7. Other major related transactions
? Applicable □ N/A
On October 7, 2023, Jiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd., a holdingsubsidiary of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd., a wholly-ownedsubsidiary of the Company, signed the Exclusive Sales Agreement with Beijing CELS MedicalTechnology Co., Ltd. (hereinafter referred to as “Beijing CELS”), an animal medicine R&Dcompany. According to the agreement, Nanjing Nongda Animal Pharmaceutical obtained theexclusive selling right and marketing right of Butorphanol Tartrate Injection (trade name:
Baoshining
?), a kind of central analgesic medicine developed by Beijing CELS MedicalTechnology Co., Ltd., in China (including Hong Kong SAR, Macao SAR and Taiwan). As agreed,the Exclusive Sales Agreement shall come into effect on the date when Beijing CELS andHangzhou Fuguang Hongxin Equity Investment Partnership (Limited Partnership) (hereinafterreferred to as “Fuguang Hongxin”) signed the Equity Investment Agreement.
On October 7, 2023, Fuguang Hongxin signed an Investment Agreement with BeijingCELS. Fuguang Hongxin invested 20 million yuan in Beijing CELS for capital increase and willhold 20% equity in Beijing CELS after investment. On the same day, the Exclusive SalesAgreement came into effect formally (hereinafter referred to as “this transaction”).
As Fuguang Hongxin’s executive partner and fund manager Fuguang Chengdu EquityInvestment Management Co., Ltd. (hereinafter referred to as “Fuguang Chengdu”), one of itslimited partners Shanghai Grand Industrial and Financial Investment Management Co., Ltd.(hereinafter referred to as “Grand Chanrong”) and the Company are enterprises controlled by thesame de facto controller, and the Company is a limited partner of Fuguang Hongxin (please referto the Announcement on Participating in the Investment in the Establishment of Pharmaceutical
Industry Investment Funds and Related Transactions issued by the Company on January 7, 2021(Announcement No.: 2021-002 for details). According to the relevant provisions of the Rules forStock Listing of Shenzhen Stock Exchange, Fuguang Hongxin and the Company are related parties,and this transaction is deemed as a related transaction.
Inquiries related to the disclosure website of the interim report on major related transactions.
| Name of provisional announcement | Disclosure date of provisional announcement | Name of disclosure website of provisional announcement |
| Announcement on Signing of Exclusive Product Sales Agreement and Related Transactions by Holding Subsidiaries | October 10, 2023 | Cninfo (http://www.cninfo.com.cn) |
XV. Major contracts and their fulfillment
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable ? N/A
No such case during the reporting period.
(2) Contracting
□ Applicable ? N/A
No such case during the reporting period.
(3) Leasing
? Applicable □ N/ANote on leasingRefer to “8. Others - Leasing - Other material matters in Section X. Financial Report” for details.Projects generating gains and losses to the Company that account for over 10% of the total profits during the reporting period
□ Applicable ? N/A
No such case during the reporting period.
2. Important guarantees
? Applicable □ N/A
Unit: ten thousand yuan
| External guarantees of the Company and its subsidiaries (excluding guarantees for subsidiaries) | ||||||||||
| Guaranteed | Disclosure date | Guarantee cap | Actual date of | Actual guarante | Type of guarante | Collateral (if any) | Counter guaranty | Period of | Fulfilled or not | Guarantee for a |
| party | of the announcement related to the guarantee cap | occurrence | ed amount | e | (if any) | guarantee | related party or not | |||
| / | / | / | / | / | / | / | / | / | / | / |
| Total external guarantees cap approved during the reporting period (A1) | / | Total external guarantee amount actually occurred during the reporting period (A2) | / | |||||||
| Total approved external guarantee cap at the end of the reporting period (A3) | / | Total actual external guarantee balance at the end of the reporting period (A4) | / | |||||||
| Guarantee for subsidiaries | ||||||||||
| Guaranteed party | Disclosure date of the announcement related to the guarantee Cap | Guarantee Cap | Actual date of occurrence | Actual guaranteed amount | Type of guarantee | Collateral (if any) | Counter guaranty (if any) | Period of guarantee | Fulfilled or not | Guarantee for a related party or not |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 14, 2023 | 85,000 | July 26, 2023 | 20,956.78 | Joint and several liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 14, 2023 | 85,000 | August 29, 2023 | 18,396.95 | Joint and several liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 14, 2023 | 85,000 | September 26, 2023 | 4,584.42 | Joint and several liability guarantee | One year | No | No | ||
| Hangzho | April 14, | 85,000 | October | 1,088.16 | Joint and | One year | No | No | ||
| u Zhongmei Huadong Pharmaceutical Co., Ltd. | 2023 | 30, 2023 | several liability guarantee | |||||||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 14, 2023 | 85,000 | December 21, 2023 | 7,178.61 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Supply Chain Management (Jinhua) Co., Ltd. | April 19, 2019 | 20,000 | Joint and several liability guarantee | Ten years | No | No | ||||
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | April 14, 2023 | 5,000 | Joint and several liability guarantee | One year | No | No | ||||
| Huadong Medicine Ningbo Sales Co., Ltd. | April 14, 2023 | 16,000 | October 19, 2023 | 3,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Jinhua Co., Ltd. | April 14, 2023 | 15,000 | October 26, 2023 | 4,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Huzhou Co., Ltd. | April 14, 2023 | 15,000 | October 26, 2023 | 4,500 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Huzhou | April 14, 2023 | 15,000 | December 15, 2023 | 500 | Joint and several liability guarantee | One year | No | No |
| Co., Ltd. | ||||||||||
| Huadong Medicine Shaoxing Co., Ltd. | April 14, 2023 | 19,000 | March 31, 2023 | 7,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine (Hangzhou) Biological Products Co., Ltd. | April 14, 2023 | 3,000 | October 12, 2023 | 16.35 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine (Hangzhou) Biological Products Co., Ltd. | April 14, 2023 | 3,000 | November 17, 2023 | 12.4 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine (Hangzhou) Biological Products Co., Ltd. | April 14, 2023 | 3,000 | December 13, 2023 | 25.65 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine (Hangzhou) Biological Products Co., Ltd. | April 14, 2023 | 3,000 | December 29, 2023 | 63.7 | Joint and several liability guarantee | One year | No | No | ||
| Jiangsu Joyang Laboratories | April 14, 2023 | 7,000 | Joint and several liability guarantee | One year | No | No | ||||
| Huadong Medicine | April 14, 2023 | 24,000 | July 17, 2023 | 1,000 | Joint and several liability guarante | One year | No | No |
| Wenzhou Co., Ltd. | e | |||||||||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | July 17, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | July 19, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | July 20, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | July 21, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | August 4, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | August 7, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | August 8, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzho | April 14, 2023 | 24,000 | August 10, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No |
| u Co., Ltd. | ||||||||||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | September 12, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 14, 2023 | 24,000 | September 14, 2023 | 1,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Lishui Co., Ltd. | April 14, 2023 | 15,000 | April 7, 2023 | 6,000 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Medicine Daishan Co., Ltd. | April 14, 2023 | 2,600 | Joint and several liability guarantee | One year | No | No | ||||
| Huadong Medicine Cunde (Zhoushan) Co., Ltd. | April 14, 2023 | 9,900 | October 20, 2023 | 2,000 | Joint and several liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | April 14, 2023 | 40,000 | March 31, 2023 | 8,000 | Joint and several liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | April 14, 2023 | 40,000 | August 29, 2023 | 470.28 | Joint and several liability guarantee | One year | No | No | ||
| Hangzho | April 14, | 40,000 | Septemb | 480.8 | Joint and | One year | No | No |
| u Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | 2023 | er 19, 2023 | several liability guarantee | |||||||
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | April 14, 2023 | 40,000 | October 26, 2023 | 302.67 | Joint and several liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | April 14, 2023 | 40,000 | December 15, 2023 | 20,000 | Joint and several liability guarantee | One year | No | No | ||
| Hangzhou Huadong Pharmacy Chain Co., Ltd. | April 14, 2023 | 5,000 | May 26, 2023 | Joint and several liability guarantee | One year | No | No | |||
| Anhui Meihua Hi-Tech Pharmaceutical Co., Ltd. | April 14, 2023 | 3,500 | Joint and several liability guarantee | One year | No | No | ||||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | July 12, 2023 | 56.7 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | July 27, 2023 | 238.7 | Joint and several liability guarantee | One year | No | No |
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | August 14, 2023 | 247.47 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | August 29, 2023 | 123.14 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | September 6, 2023 | 803.96 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | September 22, 2023 | 154.63 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | October 12, 2023 | 105.56 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | October 30, 2023 | 250.61 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | November 21, 2023 | 70.28 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | November 29, 2023 | 350 | Joint and several liability guarantee | One year | No | No | ||
| Hubei Magic Health Technology Co., Ltd. | April 14, 2023 | 5,400 | December 25, 2023 | 1,343.8 | Joint and several liability guarantee | One year | No | No | ||
| Huadong Pharmac | April 14, 2023 | 76,000 |
| eutical (Hong Kong) Investment Holding Co., Ltd. | ||||||||||
| Sinclair Pharma Limited | November 23, 2018 | 52,591 | April 1, 2022 | 18,082.2 | Joint and several liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | July 16, 2021 | 38,305.3 | January 13, 2022 | 35,059.37 | Joint and several liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | March 16, 2021 | 14,845.8 | April 8, 2021 | 15,718.4 | Joint and several liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | March 16, 2021 | 14,845.8 | March 17, 2021 | 15,718.4 | Joint and several liability guarantee | December 31, 2024 | No | No | ||
| Sinclair Pharma Limited | March 16, 2021 | 31,695.78 | Three years | |||||||
| Sinclair Pharma Limited | April 28, 2022 | 58,600 | One year | |||||||
| Sinclair Pharma Limited | April 14, 2023 | 65,000 | One year | |||||||
| Total guarantee cap for subsidiaries approved during the reporting period (Bl) | 411,400 | Total guarantee amount for subsidiaries actually occurred during the reporting period (B2) | 123,321.63 | |||||||
| Total approved guarantee cap for subsidiaries at the end of the reporting period (B3) | 627,438.03 | Total actual guarantee balance for subsidiaries at the end of the reporting period (B4) | 207,899.99 | |||||||
| Subsidiaries guarantee for subsidiaries | ||||||||||
| Guaranteed party | Disclosure date of the announcement related to the | Guarantee Cap | Actual date of occurrence | Actual guaranteed amount | Type of guarantee | Collateral (if any) | Counter guaranty (if any) | Period of guarantee | Fulfilled or not | Guarantee for a related party or not |
| guarantee Cap | ||||||||||
| Chongqing Peg-Bio Biopharm Co., Ltd. | April 14, 2023 | 4,800 | November 16, 2023 | Joint and several liability guarantee | Three years | No | Yes | |||
| Total guarantee cap for subsidiaries approved during the reporting period (C1) | 4,800 | Total guarantee amount for subsidiaries actually occurred during the reporting period (C2) | ||||||||
| Total approved guarantee cap for subsidiaries at the end of the reporting period (C3) | 4,800 | Total actual guarantee balance for subsidiaries at the end of the reporting period (C4) | ||||||||
| Total amount of the Company’s guarantees (i.e. the sum of the above-mentioned 3 kinds of guarantees) | ||||||||||
| Total guarantees cap approved during the reporting period (A1+B1+C1) | 416,200 | Total actual guarantee amount during the reporting period (A2+B2+C2) | 123,321.63 | |||||||
| Total approved guarantee cap at the end of the reporting period (A3+B3+C3) | 632,238.03 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 207,899.99 | |||||||
| Proportion of the actual guarantee amount (i.e. A4+B4+C4) in the Company’s net assets | 9.88% | |||||||||
| Among them: | ||||||||||
| Balance of guarantees for shareholders, de facto controllers and their related parties (D) | 0 | |||||||||
| Amount of debt guarantees provided directly or indirectly for the entities with a liability to asset ratio over 70% (E) | 111,578.37 | |||||||||
| The total amount of guarantees exceeds 50% of the net assets (F) | 0 | |||||||||
| Total guarantee amount of the above-mentioned three kinds of guarantees (D+E+F) | 111,578.37 | |||||||||
| Note on the circumstance that guarantee liability has occurred or there may be joint liability for settlement during the reporting period in terms of unexpired guarantee contracts (if any) | N/A | |||||||||
| Note of external guarantees in violation of prescribed procedures (if any) | N/A | |||||||||
Note: The difference between the sum of the above totals and addends in mantissa is due to rounding.Note on the specific circumstance if multiple methods are adopted for guarantees
N/A
3. Entrusted management of cash assets
(1) Entrusted wealth management
□ Applicable ? N/A
No such case during the reporting period.
(2) Entrusted loans
□ Applicable ? N/A
No such case during the reporting period.
4. Other significant contracts
□ Applicable ? N/A
No other significant contract during the reporting period.XVI. Other major events
□ Applicable ? N/A
No such case during the reporting period.XVII. Major events of subsidiaries? Applicable □ N/A
(I) Major medicines (products) newly entering and withdrawing from the Medicines List forMedical InsuranceIn December 2023, the National Healthcare Security Administration and the Ministry ofHuman Resources and Social Security of the People’s Republic of China launched the NationalDrug Catalog for Basic Medical Insurance, Work-Related Injury Insurance, and MaternityInsurance (2023) (hereinafter referred to as the 2023 Drug Catalog), which has been effective sinceJanuary 1, 2024.As of the release of the Report, the Company had a total of 40 core products (12 Category Aand 29 Category B) approved for launching and 15 strategic cooperation products (1 Category Aand 14 Category B) included in the 2023 Drug Catalog. Among them, the launched acarbosechewable tablets, Bailing capsules and empagliflozin and metformin combination (I) as well asstrategic cooperation products Etanercept Injection, Mulberry twig total alkaloids and Icaritin softcapsule of the Company have been included in the negotiated medicines of the 2023 Drug catalog.
The strategic cooperation product Tofacitinib Citrate Sustained-release Tablets has been included incompetitive price medicine of the 2023 Drug catalog.(II) As of the release of the Report, major assets had been disposed in the liquidation ofHuadong Ningbo Medicine Co., Ltd. in the court. Some claims and accounts receivable areremained to be collected.
Section VII. Share Change and ShareholdersI. Changes in shares
1. Table of changes in shares
Unit: Share
| Before the change | Change in the period (+/-) | After the change | |||||||
| Quantity | Ratio | New shares | Bonus shares | Shares converted from capital reserve | Others | Subtotal | Quantity | Ratio | |
| I. Shares subject to conditional restriction | 4,268,300 | 0.24% | 0 | 0 | 0 | -746,940 | -746,940 | 3,521,360 | 0.20% |
| 1. Shares held by the state | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Shares held by state-owned corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Shares held by other domestic investors | 4,068,300 | 0.23% | 0 | 0 | 0 | -695,940 | -695,940 | 3,372,360 | 0.19% |
| Including: Shares held by domestic corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by domestic natural persons | 4,068,300 | 0.23% | 0 | 0 | 0 | -695,940 | -695,940 | 3,372,360 | 0.19% |
| 4. Shares held by overseas | 200,000 | 0.01% | 0 | 0 | 0 | -51,000 | -51,000 | 149,000 | 0.01% |
| investors | |||||||||
| Including: Shares held by overseas corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by overseas natural persons | 200,000 | 0.01% | 0 | 0 | 0 | -51,000 | -51,000 | 149,000 | 0.01% |
| II. Shares without restriction | 1,749,727,048 | 99.76% | 0 | 0 | 0 | 1,176,940 | 1,176,940 | 1,750,903,988 | 99.80% |
| 1. Common shares in yuan | 1,749,727,048 | 99.76% | 0 | 0 | 0 | 1,176,940 | 1,176,940 | 1,750,903,988 | 99.80% |
| 2. Domestically listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Foreign shares listed overseas | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 4. Others | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| III. Total number of shares | 1,753,995,348 | 100.00% | 0 | 0 | 0 | 430,000 | 430,000 | 1,754,425,348 | 100.00% |
Reasons for the changes in share capital? Applicable □ N/A
During the reporting period, the Company completed the reserved grant registration of 430,000shares in the 2022 Restricted Share Incentive Scheme; in the meantime, the Company’s had attainedthe first condition to unlock restricted shares for the first time from the 2022 Restricted ShareIncentive Scheme. The number of restricted shares that can be unlocked this time is 1,220,940. Thetotal number of restricted shares with equity incentives decreased by 790,940 shares in total.During the reporting period, the Company’s locked shares of senior managers increased by44,000 shares.
During the reporting period, the total number of shares increased by 430,000 shares, of whichthe total number of shares with restricted sales conditions decreased by 746,940 shares and the totalnumber of shares with unlimited sale conditions increased by 1,176,940 shares.
Approval for changes in share capital? Applicable □ N/A
1. On July 12, 2023, the Company convened the 12th session of the 10th Board of Directorsand the 8th session of the 10th Board of Supervisors. During these two sessions, the Proposal onGranting Reserved Restricted Shares to the First Batch of Employees Receiving Incentive from the2022 Restricted Share Incentive Scheme was deliberated on and approved. The Company’s Boardof Directors believed that reserved conditions of the incentive scheme for granting restricted shareswere fulfilled, and the Board of Supervisors re-verified the list of incentive receivers on the date ofgranting reserved shares, and expressed opinions on the grant. The Company’s independentdirectors agreed on the above proposals. Lawyers and independent financial advisers preparedrelated reports. On the same day, the Company disclosed a related announcement onwww.cninfo.com.cn.
2. The Company announced publicly the list of this batch of employees receiving the incentivefrom the restricted share incentive scheme on the Company’s OA system from July 13 to 23, 2023,which lasted for 10 days in total. As of the end of the announcement on July 23, 2023, the Board ofSupervisors did not receive any objection against these employees. On July 26, 2023, the Companyconvened a session of the Board of Supervisors, during which the Verification Opinions andAnnouncement Note on the List of Employees Receiving the Reserved Restricted Share Incentivefrom the Company’s 2022 Restricted Share Incentive Scheme was reviewed and approved. On thesame day, the Company disclosed the Board of Supervisors’ Verification Opinions andAnnouncement Note on the List of Employees Receiving the Reserved Restricted Share Incentivefrom the Company’s 2022 Restricted Share Incentive Scheme and a related announcement onwww.cninfo.com.cn.
3. On September 27, 2023, the Company disclosed the Announcement on Completion ofRegistration of the Reserved Grant of Restricted Share Incentive Scheme in 2022. The Companycompleted the registration of the reserved grant of the restricted share incentive scheme in 2022,and the listing date of the granted restricted shares was September 28, 2023.
4. On November 21, 2023, the Company convened the eighteenth session of the 10th Board ofDirectors and the 12th session of the 10th Board of Supervisors. During these two sessions, theProposal on Achievement of the Release of Restriction Conditions during the First RestrictionPeriod of Restricted Shares Granted for the First Time from the Restricted Share Incentive Schemein 2022 was deliberated on and approved. The Board of Directors believed that the Companyattained conditions for the release of restriction conditions during the first restriction period ofrestricted shares granted for the first time from the Restricted Share Incentive Scheme in 2022.
According to the authorization of the Company’s first extraordinary general meeting in 2022, theBoard of Directors agreed that the Company can handle the procedures for releasing restricted salesof 1,220,940 restricted shares with the restricted sales period for 108 incentive subjects. The Boardof Directors also agreed to repurchase and cancel 97,800 shares of restricted shares that have beengranted but have not been released for four incentive subjects who are no longer eligible forincentives due to resignation and two incentive subjects who fail to satisfy the standards due topersonal performance during the first restricted sales releasing period. The Company’s independentdirectors issued independent opinions on related matters, and the Company’s Board of Supervisorsissued verification opinions on related matters. Lawyers and independent financial advisersprepared related reports. On the same day, the Company disclosed a related announcement onwww.cninfo.com.cn.Transfer of shares? Applicable □ N/ADuring the reporting period, 430,000 common shares in yuan reserved for the Company’s 2022Restricted Share Incentive Scheme have been credited to shareholders’ securities accounts byShenzhen Branch of China Securities Depository and Clearing Corporation Limited. 1,220,940common shares in yuan with restriction conditions for the first granting reserved for the Company’s2022 Restricted Share Incentive Scheme have been unlocked and credited to shareholders’securities accounts by Shenzhen Branch of China Securities Depository and Clearing CorporationLimited, and have been listed and circulated since December 5, 2023.Effects of changes in share capital on the basic earnings per share, diluted earnings per share for the most recent year and the mostrecent period, the net assets per share attributable to the Company’s common shareholders and other financial indicators? Applicable □ N/AThe aforesaid changes in share capital led to the Company’s diluted earnings per share in 2023and increase in net assets per share attributable to common shareholders, while the basic earningsper share in 2023 were not affected. If we calculate based on the total number of shares beforechanges in share capital of 1,753,995,348, the Company’s diluted earnings per share in 2023 was
1.6199 yuan/share, and the net assets per share attributable to common shareholders of theCompany was 12.0263 yuan/share. If we calculate based on the total number of shares after changesin share capital of 1,754,425,348 shares, the diluted earnings per share of the Company in 2023 was
1.6200 yuan/share, and the net assets per share attributable to common shareholders of theCompany was 12.0266 yuan/share.
Generally speaking, the aforesaid changes in share capital did not impose material impacts onthe basic earnings per share, diluted earnings per share, and the net assets per share attributable tothe Company’s common shareholders and other financial indicators in 2023.Other disclosures the Company deems necessary or required by securities regulatory authorities
□ Applicable ? N/A
2. Changes in restricted shares
? Applicable □ N/A
Unit: Share
| Name of shareholder | Number of restricted shares at the beginning of the period | Number of newly increased restricted shares during the current period | Number of restricted shares unlocked during the current period | Number of restricted shares at the end of the period | Reasons for restriction | Unlock date |
| Zhang Jianfei | 60,000 | 0 | 0 | 60,000 | Locked-up shares for senior managers | Be unlocked according to relevant rules of the management of shares for senior managers |
| Zhang Jianfei | 0 | 7,500 | 0 | 7,500 | Locked-up shares for senior managers | Be unlocked according to relevant rules of the management of shares for senior managers |
| Zhang Jianfei | 150,000 | 0 | 45,000 | 105,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme |
| Lv Liang | 200,000 | 0 | 60,000 | 140,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme |
| Lv Liang | 0 | 10,000 | 0 | 10,000 | Locked-up shares for senior managers | Be unlocked according to relevant rules of the |
| management of shares for senior managers | ||||||
| Zhu Li | 22,500 | 0 | 0 | 22,500 | Locked-up shares for senior managers | Be unlocked according to relevant rules of the management of shares for senior managers |
| Zhu Li | 0 | 7,500 | 0 | 7,500 | Locked-up shares for senior managers | Be unlocked according to relevant rules of the management of shares for senior managers |
| Zhu Li | 150,000 | 0 | 45,000 | 105,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme |
| Wu Hui | 150,000 | 0 | 45,000 | 105,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme |
| Wu Hui | 0 | 7,500 | 0 | 7,500 | Locked-up shares for senior managers | Be unlocked according to relevant rules of the management of shares for senior managers |
| Xu Junfang | 150,000 | 45,000 | 105,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme | |
| LIU DONGZHOU JEFFERY | 150,000 | 45,000 | 105,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s |
| 2022 Restricted Share Incentive Scheme | ||||||
| Chen Bo | 100,000 | 0 | 30,000 | 70,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme |
| Chen Bo | 0 | 5,000 | 0 | 5,000 | Locked-up shares for senior managers | Be unlocked according to relevant rules of the management of shares for senior managers |
| Qiu Renbo | 100,000 | 0 | 30,000 | 70,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme |
| Qiu Renbo | 0 | 5,000 | 0 | 5,000 | Locked-up shares for senior managers | Be unlocked according to relevant rules of the management of shares for senior managers |
| Zhou Zhaohua | 30,000 | 50,000 | 9,000 | 71,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme |
| Qin Xiangtian | 30,000 | 50,000 | 9,000 | 71,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme |
| Huang Yanshan | 30,000 | 50,000 | 9,000 | 71,000 | Equity incentive and restricted shares | Be unlocked according to relevant rules of the Company’s 2022 Restricted |
| Share Incentive Scheme | ||||||
| Other middle management and core technicians (business specialists) | 2,945,800 | 281,500 | 848,940 | 2,378,360 | Equity incentive, restricted shares, and locked-up shares for senior managers | Be unlocked according to relevant rules of the Company’s 2022 Restricted Share Incentive Scheme and the management of shares for senior managers |
| Total | 4,268,300 | 474,000 | 1,220,940 | 3,521,360 | -- | -- |
II. Issuance and listing of securities
1. Securities (excluding preferred shares) issued during the reporting period
□ Applicable ? N/A
2. Explanation on changes in the total number of shares, the structure of shareholders and the structureof assets and liabilities
? Applicable □ N/A
In September 2023, the Company completed the reserved granting registration for 430,000shares from the Company’s 2022 Restricted Share Incentive Scheme, and the listing date of thegranted restricted shares was September 28, 2023. After the registration of reserved granting ofrestricted shares this time, the total number of shares of the Company increased from1,753,995,348.00 shares to 1,754,425,348.00 shares. Change in shares this time does not result inchanges in controlling right of the Company’s controlling shareholders and de facto controllers,and has no material impacts on the Company’s assets and liabilities structure.
On March 26, 2024, the Company completed the repurchase and cancellation of 97,800restricted shares that have been granted by the 2022 Restricted Stock Incentive Plan but have notyet been unlocked. The repurchase and cancellation of some restricted shares will not havesubstantial impact on the Company’s financial position and operating results, will not result infailure of the Company’s equity distribution in meeting the listing conditions, nor will it lead tochanges in the control rights of the Company’s controlling shareholders and de facto controllers.
3. Existent shares held by internal employees of the Company
□ Applicable ? N/A
III. Particulars about shareholders and the de facto controller
1. Number of shareholders and their shareholdings
Unit: Share
| Total number of common shareholders at the end of the reporting period | 77,151 | Total number of common shareholders at the end of the previous month before the disclosure of the annual report | 93,834 | Total number of preference shareholders with restoration of the voting rights at the end of the reporting period (if any) (see Note 8) | 0 | Total number of preference shareholders with restoration of the voting rights at the end of the previous month before the disclosure of the annual report (if any) (see Note 8) | 0 | |
| Particulars about shareholders with a shareholding ratio of over 5% or the Top 10 shareholders (excluding shares lent through conversions) | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding ratio | Total shares held at the end of the reporting period | Changes in the reporting period | Number of shares with trading restrictions held | Number of shares held without trading restriction | Pledged, marked or locked-up status | |
| Status of shares | Quantity | |||||||
| China Grand Enterprises, Inc. | Domestic non-state-owned corporation | 41.66% | 730,938,157 | 0 | 0 | 730,938,157 | Pledge | 121,130,000 |
| Hangzhou Huadong Medicine Group Co., Ltd. | 2. State-owned corporations | 16.42% | 288,000,000 | 0 | 0 | 288,000,000 | N/A | 0 |
| Hong Kong Securities Clearing Company Ltd. | Overseas corporation | 2.73% | 47,954,932 | -8,053,139 | 0 | 47,954,932 | N/A | 0 |
| Industrial and Commercial Bank of China Limited - China-Europe Healthcare | Others | 1.77% | 31,080,515 | -18,235,726 | 0 | 31,080,515 | N/A | 0 |
| Hybrid Securities Investment Fund | ||||||||
| China Securities Finance Co., Ltd. | Domestic non-state-owned corporation | 1.26% | 22,186,818 | 0 | 0 | 22,186,818 | N/A | 0 |
| China Construction Bank Co., Ltd. - ICBC Credit Suisse Frontier Medical Equity Fund | Others | 1.08% | 19,000,000 | -1,000,078 | 0 | 19,000,000 | N/A | 0 |
| National Social Security Fund - Profile 0 | Others | 0.78% | 13,619,804 | 3,238,962 | 0 | 13,619,804 | N/A | 0 |
| China Construction Bank Corporation - E Fund CSI 300 Healthcare Exchange Traded Fund | Others | 0.74% | 12,896,932 | 5,861,900 | 0 | 12,896,932 | N/A | 0 |
| New China Life Insurance Company, Ltd. - Traditional - General Insurance Products -018L-CT001 SZ | Others | 0.49% | 8,616,047 | 8,616,047 | 0 | 8,616,047 | N/A | 0 |
| Bank of Shanghai Co., Ltd. - Yinhua CSI Innovative Medicine Exchange Traded Fund | Others | 0.46% | 7,991,905 | 4,812,649 | 0 | 7,991,905 | N/A | 0 |
| Strategic investors or general corporations become the top 10 shareholders due to the placement of new shares (if any) (see Note 3) | N/A | |||||||
| Explanation on associated relationships or concerted actions among the above-mentioned shareholders | The Company does not know whether the above-mentioned shareholders are related parties or whether they are acting-in-concert parties with one another. | ||
| Description about above-mentioned shareholders’ entrusting/being entrusted with and waiving voting rights | N/A | ||
| Explanation of special account for repurchase among the top 10 shareholders (if any) (see Note 10) | N/A | ||
| Shareholdings of top 10 shareholders without trading restrictions | |||
| Name of shareholder | Number of shares without restriction held at the end of the reporting period | Type of shares | |
| Type of shares | Quantity | ||
| China Grand Enterprises, Inc. | 730,938,157 | RMB-denominated ordinary share | 730,938,157 |
| Hangzhou Huadong Medicine Group Co., Ltd. | 288,000,000 | RMB-denominated ordinary share | 288,000,000 |
| Hong Kong Securities Clearing Company Ltd. | 47,954,932 | RMB-denominated ordinary share | 47,954,932 |
| Industrial and Commercial Bank of China Limited - China-Europe Healthcare Hybrid Securities Investment Fund | 31,080,515 | RMB-denominated ordinary share | 31,080,515 |
| China Securities Finance Co., Ltd. | 22,186,818 | RMB-denominated ordinary share | 22,186,818 |
| China Construction Bank Co., Ltd. - ICBC Credit Suisse Frontier Medical Equity Fund | 19,000,000 | RMB-denominated ordinary share | 19,000,000 |
| National Social Security Fund - Profile 0 | 13,619,804 | RMB-denominated ordinary share | 13,619,804 |
| China Construction Bank Corporation - E Fund CSI 300 Healthcare Exchange Traded Fund | 12,896,932 | RMB-denominated ordinary share | 12,896,932 |
| New China Life Insurance Company, Ltd. - Traditional - General Insurance Products -018L-CT001 SZ | 8,616,047 | RMB-denominated ordinary share | 8,616,047 |
| Bank of Shanghai Co., Ltd. - Yinhua CSI Innovative Medicine Exchange Traded Fund | 7,991,905 | RMB-denominated ordinary share | 7,991,905 |
| Description for affiliated relationship or concerted action among the top 10 shareholders holding tradable shares without trading restriction conditions and between the top 10 shareholders holding tradable shares without trading restriction conditions and the top 10 shareholders | The Company does not know whether the above-mentioned shareholders are related parties or whether they are acting-in-concert parties with one another. | ||
| Description of the participation in margin trading business of the top 10 common shareholders (if any) (see Note 4) | At the end of the reporting period, the Company had no shareholders holding its shares through margin trading and securities lending accounts among the top 10 common shareholders. | ||
Participation of top 10 shareholders in refinancing lending? Applicable □ N/A
Unit: Share
| Participation of top 10 shareholders in refinancing lending | ||||||||
| Name of shareholder (full name) | Shareholding in common accounts and credit accounts at the beginning of the period | Shares lent and not returned at the beginning of the period | Shareholding in common accounts and credit accounts at the end of the period | Shares lent and not returned at the end of the period | ||||
| Total number | Proportion in total share | Total number | Proportion in total share | Total number | Proportion in share | Total number | Proportion in total share | |
| capital | capital | capital | capital | |||||
| China Grand Enterprises, Inc. | 730,938,157 | 41.67% | 0 | 0.00% | 730,938,157 | 41.66% | 0 | 0.00% |
| Hangzhou Huadong Medicine Group Co., Ltd. | 288,000,000 | 16.42% | 0 | 0.00% | 288,000,000 | 16.42% | 0 | 0.00% |
| Hong Kong Securities Clearing Company Ltd. | 56,008,071 | 3.19% | 0 | 0.00% | 47,954,932 | 2.73% | 0 | 0.00% |
| Industrial and Commercial Bank of China Limited - China-Europe Healthcare Hybrid Securities Investment Fund | 49,316,241 | 2.81% | 0 | 0.00% | 31,080,515 | 1.77% | 0 | 0.00% |
| China Securities Finance Co., Ltd. | 22,186,818 | 1.26% | 0 | 0.00% | 22,186,818 | 1.26% | 0 | 0.00% |
| China Construction Bank Co., Ltd. - ICBC Credit Suisse Frontier Medical Equity Fund | 20,000,078 | 1.14% | 0 | 0.00% | 19,000,000 | 1.08% | 0 | 0.00% |
| National Social Security Fund - Profile 0 | 10,380,842 | 0.59% | 0 | 0.00% | 13,619,804 | 0.78% | 0 | 0.00% |
| China Construction Bank Corporation - E Fund CSI 300 Healthcare Exchange Traded | 7,035,032 | 0.40% | 667,700 | 0.04% | 12,896,932 | 0.74% | 328,500 | 0.02% |
| Fund | ||||||||
| New China Life Insurance Company, Ltd. - Traditional - General Insurance Products -018L-CT001 SZ | / | / | 0 | 0.00% | 8,616,047 | 0.49% | 0 | 0.00% |
| Bank of Shanghai Co., Ltd. - Yinhua CSI Innovative Medicine Exchange Traded Fund | 3,179,256 | 0.18% | 0 | 0.00% | 7,991,905 | 0.46% | 9,400 | 0.00% |
Notes: The shareholding in common accounts and credit accounts at the beginning of the period of New China Life InsuranceCompany, Ltd. - Traditional - General Insurance Products -018L-CT001 SZ does not within top 200 of the Company. TheCompany does not have such data.Change in top 10 shareholders compared with the previous period? Applicable □ N/A
Unit: Share
| Change in top 10 shareholders compared with the end of the previous period | |||||
| Name of shareholder (full name) | Addition/ exit during the reporting period | Number of shares lent through refinancing and not returned at the end of the period | Number of shares lent through refinancing and not returned in common accounts and credit accounts at the end of the period | ||
| Total number | Proportion in total share capital | Total number | Proportion in total share capital | ||
| New China Life Insurance Company, Ltd. - Traditional - General Insurance Products -018L-CT001 SZ | Addition | 0 | 0.00% | 8,616,047 | 0.49% |
| Bank of Shanghai Co., Ltd. - Yinhua CSI Innovative Medicine Exchange Traded Fund | Addition | 9,400 | 0.00% | 8,001,305 | 0.46% |
| Industrial and Commercial Bank of China Limited - China-Europe Healthcare Innovation Stock Investment Fund | Exit | 0 | 0.00% | 612,318 | 0.03% |
| Norges Bank - equity funds | Exit | 0 | 0.00% | 1,439,607 | 0.08% |
Whether the Company’s top 10 common shareholders or the top 10 common shareholders without trading restrictions have carriedout any agreement to repurchase transaction during the reporting period
□Yes ?No
The Company’s top 10 common shareholders or the top 10 common shareholders without trading restrictions have not carried outany agreement to repurchase transaction during the reporting period.
2. Particulars about controlling shareholder of the Company
Nature of controlling shareholder: Natural person holdingType of controlling shareholder: Corporation
| Name of controlling shareholder | Legal representative/person | Date of establishment | Organization code | Main business |
| China Grand Enterprises, Inc. | Hu Kaijun | October 27, 1993 | 91110000101690952K | Investment management |
| Shares held by the controlling shareholder in other listed companies through controlling or holding during the reporting period | The other two listed companies controlled by China Grand Enterprises, Inc. are Grand Industrial Holding Co., Ltd. and Grand Pharmaceutical Group Limited. | |||
Change of the controlling shareholder during the reporting period
□ Applicable ? N/A
No such case during the reporting period.
3. Particulars about the Company’s de facto controller & concerted parties
Nature of de facto controller: Domestic natural person holdingType of de facto controller: Natural person
| Name of de facto controller | Relationship with the de facto controller | Nationality | Whether the de facto controller has obtained the right of abode in another country or region |
| Hu Kaijun | Hu Kaijun | China | Yes |
| Main occupation and position | Chairman of the Board and General Manager of China Grand Enterprises, Inc.; Chairman of the Board and General Manager of Beijing Grand Huachuang Investment Co., Ltd. | ||
| Share held by the de facto controlling shareholder in domestic or overseas listed companies in the past ten years | The three listed companies controlled by de facto controller are Huadong Medicine Co., Ltd., Grand Industrial Holding Co., Ltd., and China Grand Pharmaceutical and Grand Pharmaceutical Group Limited. | ||
Change of the de facto controller during the reporting period
□ Applicable ? N/A
No such case during the reporting period.Block diagram of the property right and control relationship between the Company and the de facto controller
The de facto controller controls the Company through a trust or other way of assets management
□ Applicable ? N/A
4. The amount of shares pledged by the Company’s controlling shareholder or the largest shareholderand its parties acting in concert accounts for 80% of the total shares of the Company held by them
□ Applicable ? N/A
5. Other corporate shareholders with a shareholding ratio over 10%
? Applicable □ N/A
| Name of legal representative | Legal representative/person in charge | Date of establishment | Registered capital | Main business or management activities |
| Hangzhou Huadong Medicine Group Co., Ltd. | Dong Jiabo | December 21, 1992 | 60 million yuan | The production and processing of compound wine, bagged tea, and donkey-hide glue products (the branches can operate only with licenses), and the state-owned asset operation within the authorized scope of the municipal government; industrial investment; wholesale and retail: chemical raw materials and products (except dangerous chemicals and precursor chemicals), package materials, medical intermediates (except dangerous chemicals and precursor chemicals); other legal |
items that need nosubmission forapproval.
6. Reduction of restricted shares held by controlling shareholder, de facto controller, restructuring partiesand other commitment subjects
□ Applicable ? N/A
IV. Progress of share repurchase during the reporting periodProgress of share repurchase? Applicable □ N/A
| Scheme disclosure date | Number of shares to be repurchased (share) | Proportion in total share capital | Proposed repurchase amount (ten thousand yuan) | Proposed repurchase duration | Purpose of repurchase | Number of shares repurchased (share) | Proportion of number of repurchased shares to underlying shares involved in the Equity Incentive Plan (if any) |
| November 21, 2023 | 97800 | 0.006% | 245.81 | 45 days after the Company’s Board of Directors disclosed the notification announcement of creditors | Repurchase and cancellation of some restricted shares | 0 | 0.00% |
Progress of reducing repurchased shares through centralized bidding
□ Applicable ? N/A
Section VIII. Information on Preferred Shares
□ Applicable ? N/A
No such case during the reporting period.
Section IX. Information on Bonds
□ Applicable ? N/A
Section X. Financial Report
I. Audit report
| Audit Opinion | Unmodified unqualified audit opinion |
| Audit Report sign-off Date | April 16, 2024 |
| Audit Institution Name | Pan-China Certified Public Accountants LLP |
| Audit Report Number | T. J. S. (2024) No. 2117 |
| Certified Public Accounts Name | Hu Yanhua and Chen Xiaodong |
Text of the Audit ReportAudit ReportT. J. S. (2024) No. 2117
Shareholders of Huadong Medicine Co., Ltd.:
I. Audit OpinionWe audited the financial statements of Huadong Medicine Co., Ltd. (hereinafter referred toas “Huadong Medicine”), including the consolidated and the parent company’s balance sheets asat December 31, 2023, the consolidated and the parent company’s income statements for the year2023, the consolidated and the parent company’s cash flow statements, the consolidated and theparent company’s statements of changes in owners’ equity, and the notes to relevant financialstatements.In our opinion, the attached financial statements are prepared in accordance with theaccounting standards for business enterprises in all material aspects and fairly reflect theconsolidated and the parent company’s financial condition of Huadong Medicine as at December31, 2023, as well as the consolidated and the parent company’s operating results and cash flows in2023.
II. Basis for Formation of the Audit OpinionWe conducted our audit in accordance with the China Registered Accountants AuditingStandards. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. In accordancewith the code of professional ethics for certified public accountants in China, we are independentof Huadong Medicine and have fulfilled other responsibilities in respect of professional ethics.We believe that the audit evidence we have obtained is sufficient and appropriate, providing abasis for auditor’s opinion.
III. Key audit mattersThe key audit matters are those we consider most important to the audit of the financialstatements for the current period in our professional judgment. The response to these items isbased on an audit of the financial statements as a whole and the formation of auditor’s opinion.We do not comment on these items separately.(I) Revenue recognition
1. Description
The relevant information disclosure is detailed in Notes III (XXV), V (II) 1 and XV (I) to thefinancial statements.The operating revenue of Huadong Medicine mainly comes from the production and sales ofmedicines. The operating revenue of Huadong Medicine in 2023 was 40.624 billion yuan.As the operating revenue is one of the key performance indicators of Huadong Medicine,there may be inherent risks for the management of Huadong Medicine (hereinafter referred to asthe “Management”) to achieve specific goals or expectations through inappropriate revenuerecognition. Therefore, we identified revenue recognition as a key audit matter.
2. Audit response
For revenue recognition, the audit procedures we implemented mainly include:
(1) Understanding the key internal controls related to revenue recognition, evaluating thedesign of these controls, determining whether they are implemented, and testing the operatingeffectiveness of relevant internal controls;
(2) Reviewing the sales contract, understanding the main contract terms or conditions, andevaluating whether the revenue recognition method is appropriate;
(3) Analyzing the operating revenue and gross profit rate by month, product, region, etc.,identifying whether there are significant or abnormal fluctuations, and ascertaining the reasons forthe fluctuations;
(4) For domestic sales revenue, choosing supporting documents for checked items, includingsales contracts, orders, sales invoices, outbound delivery orders, shipping orders, shippingdocuments, customers’ signature form, and payment receipts. For overseas revenue, obtaining e-port information and checking with the accounting records, and checking the sales contracts,export declaration forms, bills of lading, sales invoices and other supporting documents bysampling;
(5) In combination with accounts receivable confirmation, confirming the current sales ofsampled items;
(6) Carrying out a cut-off test and evaluating whether the operating revenue is recognizedwithin an appropriate period;
(7) Acquiring the sales return records after the balance sheet date and checking theunsatisfactoriness of revenue recognition conditions on balance sheet date; and
(8) Checking whether the information relating to operating revenue has been properlypresented in the financial statements.
(II) Impairment of accounts receivable
1. Description
The relevant information disclosure is detailed in Notes III (XI), (XII) and V (I) 4 to thefinancial statements.
As of December 31, 2023, the book balance of accounts receivable of Huadong Medicinewas 7.878 billion yuan, the bad debt reserve was 423 million yuan, and the book value was 7.455billion yuan.
Based on the credit risk characteristics of various accounts receivable and the individualaccount receivable or the combination of accounts receivable, the Management measured its lossreserve according to the expected credit loss equivalent to the entire duration. Due to thesignificant amount of accounts receivable and significant judgment of the Management involved
in the impairment of accounts receivable, we determined the impairment of accounts receivable asa key audit matter.
2. Audit response
For the impairment of accounts receivable, the audit procedures we implemented mainlyinclude:
(1) Understanding the key internal controls related to the impairment of accounts receivable,evaluating the design of these controls, determining whether they are implemented, and testingthe operating effectiveness of relevant internal controls;
(2) With regard to the Management’s forecast on bad debt reserve in previous years,reviewing the results or follow-up forecasts made by the Management;
(3) Reviewing the relevant considerations and objective evidence of the Management’s creditrisk assessment of accounts receivable, and evaluating whether the Management has properlyidentified the credit risk characteristics of various accounts receivable;
(4) For the accounts receivable with expected credit loss measured based on an individualitem, reviewing the Management’s forecast of the expected cash flow received, evaluating therationality, relevance and reliability of the key assumptions used in the forecast, and checkingwith the external evidence obtained;
(5) For the accounts receivable with expected credit loss measured based on the combineditems, evaluating the rationality of the Management’s division of combinations according to thecredit risk characteristics; evaluating the rationality of the expected credit loss rate of accountsreceivable determined by the Management, including the rationality of major assumptions usedand the rationality, relevance and reliability of data; checking the accuracy of the Management’scalculation of bad debt reserve;
(6) Evaluating the rationality of the Management’s bad debt reserve in combination with theconfirmation of accounts receivable and repayment after the period; and
(7) Checking whether the information relating to the impairment of accounts receivable hasbeen properly presented in the financial statements.
(III) Goodwill impairment
1. Description
The relevant information disclosure is detailed in Notes III (VI), III (XX) and V (I) 18 to thefinancial statements.As of December 31, 2023, the original book value of goodwill of Huadong Medicine was
2.603 billion yuan, the impairment reserve was 4 million yuan, and the book value was 2.599billion yuan.
The Management conducted the goodwill impairment test in combination with the relevantasset group or asset portfolio, and the recoverable amount of the relevant asset group or assetportfolio was determined by the present value of the expected future cash flow or the net amountof fair value minus the disposal expenses. Due to the significant amount of goodwill and thesignificant judgment of the Management involved in the goodwill impairment test, we determinedthe goodwill impairment as a key audit matter.
2. Audit response
For the goodwill impairment, the audit procedures we implemented mainly include:
(1) Understanding the key internal controls related to goodwill, evaluating the design ofthese controls, determining whether they are implemented, and testing the operating effectivenessof relevant internal controls;
(2) With regard to the Management’s forecast on present value of the expected future cashflow in previous years, reviewing the results or follow-up forecasts made by the Management;
(3) Understanding and evaluating the competence, professional quality and objectivity ofexternal valuation experts employed by the Management;
(4) Evaluating the rationality and consistency of the Management’s methods in theimpairment test;
(5) Evaluating the rationality of the key assumptions adopted by the Management in theimpairment test, and verifying whether the relevant assumptions are consistent with the overalleconomic environment, industry conditions, operating conditions, historical experience, operatingplans, approved budgets, meeting minutes, and other assumptions used by the Management inrelation to the financial statements;
(6) Testing the accuracy, completeness and relevance of the data used by the Management inthe impairment test, and rechecking the internal consistency of the relevant information in theimpairment test;
(7) Testing whether the Management’s calculation of the present value of expected futurecash flows is accurate;
(8) Checking whether the information relating to the goodwill impairment has been properlypresented in the financial statements.
IV. Other information
The Management is responsible for other information, including information covered in theannual report, but not the financial statements and the auditor report.
The auditor’s opinion on the financial statements does not cover other information, and wedo not publish any form of corroborating conclusions on other information.
In conjunction with our audit of the financial statements, it is our responsibility to read otherinformation and, in doing so, consider whether other information is materially inconsistent withthe financial statements or what we learned during the audit or appears to be materiallymisrepresented.
Based on the work we have performed, if we determine that other information is materiallymisrepresented, we should report that fact. In this connection, we have nothing to report.
V. Responsibility of the Management and governance for the financial statements
The Management is responsible for preparing the financial statements in accordance with theaccounting standards for business enterprises to achieve fair presentation and for designing,implementing and maintaining the necessary internal controls so that the financial statements arefree from material misstatement due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing HuadongMedicine’s competence for continuing operations, disclosing matters relating to continuingoperations (if applicable) and applying the going concern assumption, unless liquidation andtermination are planned or there is no other realistic alternative.
Those charged with governance of Huadong Medicine is responsible for overseeing theCompany’s financial reporting process.
VI. Responsibility of certified public accountants on the audit of the financialstatementsOur objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.
As part of the audit in accordance with the audit standards, we exercise professionaljudgment and maintain professional skepticism throughout the process. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than the risk of not detecting oneresulting from error, as fraud may involve collusion, forgery, omissions, misrepresentations, or theoverride of internal control.
(II) Understand the internal control associated with the audit to design appropriate auditprocedures.
(III) Evaluate the appropriateness of accounting policies used and the rationality ofaccounting estimates and related disclosures made by the Management.
(IV) Conclude on the appropriateness of using the going concern assumption by theManagement, and conclude, based on the audit evidence obtained, whether a material uncertaintyexists related to events or conditions that may cast significant doubt on Huadong Medicine’sability to continue as a going concern. If we conclude that a material uncertainty exists, theauditing standards require us to draw attention to users of the financial statements in our auditor’sreport to the related disclosures in the financial statements or, if such disclosures are inadequate,to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor’s report. However, future events or conditions may cause Huadong Medicine to ceaseto continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements,including whether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
(VI) Obtain sufficient and appropriate audit evidence on the financial information of entitiesor business activities of Huadong Medicine to express auditor’s opinions on the financialstatements. We are responsible for the guidance, supervision and implementation of group auditsand take full responsibility for the auditor’s opinions.
We communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied withthe professional ethical requirements associated with our independence, and communicate tothose charged with governance all relationships and other matters that may reasonably be deemedto affect our independence, as well as relevant precautions (if applicable).
From the matters communicated to those charged with governance, we determine whichmatters are most important to the current financial statement audit and thus constitute key auditmatters. We describe these matters in our auditor report, unless laws and regulations prohibit theirpublic disclosure or, in rare cases, if it is reasonably expected that the negative consequences ofcommunicating a matter in the auditor report outweigh the benefits in the public interest, wedetermine that the matter should not be communicated in the auditor report.
Pan-China Certified Public Accountants LLP Chinese Certified Public Accountant: Hu
Yanhua(Project partner)
Hangzhou, China Chinese Certified Public Accountant: Chen Xiaodong
April 16, 2024
II. Financial statementsThe unit of statements in the financial notes is: yuan.
1. Consolidated balance sheet
Prepared by: Huadong Medicine Co., Ltd.
December 31, 2023
Unit: yuan
| Item | December 31, 2023 | January 01, 2023 |
| Current assets: | ||
| Monetary funds | 4,663,378,011.64 | 3,996,302,178.41 |
| Settlement reserve | ||
| Lending funds | ||
| Trading financial assets | ||
| Derivative financial assets | 16,434,493.97 | 29,907,470.68 |
| Notes receivable | 6,812,089.97 | 8,424,980.99 |
| Accounts receivable | 7,455,250,690.83 | 7,198,746,788.59 |
| Receivables financing | 1,434,366,300.69 | 1,002,511,208.21 |
| Prepayments | 279,207,655.40 | 500,083,953.14 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserve receivable | ||
| Other receivables | 291,135,104.33 | 283,710,955.63 |
| Including: Interests receivable | ||
| Dividend receivable | 2,623,608.84 | 223,747.65 |
| Financial assets purchased for resale | ||
| Inventories | 4,290,214,266.03 | 4,495,483,328.54 |
| Contract assets | ||
| Assets held for sale | ||
| Other non-current assets due within one year | ||
| Other non-current assets | 59,881,757.08 | 52,692,618.78 |
| Total current assets | 18,496,680,369.94 | 17,567,863,482.97 |
| Non-current assets: | ||
| Loans and prepayments issuance | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investment | 1,535,907,809.85 | 1,659,076,538.78 |
| Other equity instrument investments | 565,223,872.68 | 360,910,876.41 |
| Other non-current financial assets |
| Investment real estate | 12,746,181.87 | 13,648,240.14 |
| Fixed Assets | 4,140,144,817.51 | 3,981,653,265.52 |
| Construction in Progress | 913,147,212.17 | 873,159,427.47 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | 151,175,007.16 | 166,505,297.17 |
| Intangible Assets | 2,333,787,357.62 | 2,280,064,207.30 |
| Development expenditure | 992,532,091.86 | 641,354,586.80 |
| Goodwill | 2,598,696,062.31 | 2,441,387,413.59 |
| Long-term Deferred Expenses | 20,053,854.34 | 16,457,278.57 |
| Deferred income tax assets | 187,808,574.44 | 152,842,858.97 |
| Other non-current assets | 1,561,458,605.23 | 1,037,279,933.15 |
| Total non-current assets | 15,012,681,447.04 | 13,624,339,923.87 |
| Total Assets | 33,509,361,816.98 | 31,192,203,406.84 |
| Current liabilities: | ||
| Short-term borrowings | 822,380,292.37 | 947,516,383.37 |
| Borrowing from the central bank | ||
| Borrowing from other banks and other financial institutions | ||
| Trading financial liabilities | 14,841,896.97 | |
| Derivative financial liabilities | ||
| Notes payable | 1,727,420,960.30 | 1,029,409,686.81 |
| Accounts payable | 4,374,832,979.95 | 4,873,029,466.44 |
| Advances from customers | 1,393,551.48 | 1,154,243.42 |
| Contract liabilities | 135,459,275.17 | 146,488,489.07 |
| Financial assets sold for repurchase | ||
| Deposits from customers and due from banks | ||
| Receipts for buying and selling securities as proxy | ||
| Receipts for underwriting securities as proxy | ||
| Employee benefits payable | 359,148,474.25 | 256,883,423.68 |
| Taxes payable | 489,385,055.57 | 429,457,804.81 |
| Other payables | 2,518,621,382.87 | 2,290,407,022.05 |
| Including: Interests payable | ||
| Dividends payable | 143,024,219.60 | 14,924,219.60 |
| Handling fees and commissions payable | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Other non-current liabilities due within one year | 359,342,623.38 | 147,835,514.81 |
| Other current liabilities | 14,621,494.85 | 15,788,164.30 |
| Total current liabilities | 10,802,606,090.19 | 10,152,812,095.73 |
| Non-current liabilities: | ||
| Insurance policy reserve | ||
| Long-term borrowings | 520,759,460.07 | 1,051,457,747.44 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bond | ||
| Lease liabilities | 56,695,158.59 | 84,610,324.98 |
| Long-term payables | 107,251,248.59 | 287,497,209.49 |
| Long-term employee benefits payable | ||
| Estimated Liabilities | 37,184,074.06 | 37,925,549.41 |
| Deferred income | 171,056,435.34 | 126,123,512.71 |
| Deferred income tax liabilities | 184,373,974.04 | 202,084,083.93 |
| Other non-current liabilities | 47,170,650.00 | 73,251,500.00 |
| Total non-current liabilities | 1,124,491,000.69 | 1,862,949,927.96 |
| Total liabilities | 11,927,097,090.88 | 12,015,762,023.69 |
| Owners’ Equity: | ||
| Share capital | 1,754,425,348.00 | 1,753,995,348.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bond | ||
| Capital reserves | 2,446,313,774.82 | 2,377,887,246.39 |
| Less: Treasury stock | 84,519,369.07 | 104,645,000.00 |
| Other comprehensive income | -40,341,544.18 | -88,552,636.42 |
| Special reserves | ||
| Surplus reserves | 1,277,779,972.18 | 1,151,213,039.48 |
| General risk reserve | ||
| Undistributed profit | 15,693,951,574.91 | 13,488,021,239.94 |
| Total owners’ equity attributable to owner of the Company | 21,047,609,756.66 | 18,577,919,237.39 |
| Minority interests | 534,654,969.44 | 598,522,145.76 |
| Total owners’ equity | 21,582,264,726.10 | 19,176,441,383.15 |
| Total liabilities & owners’ equity | 33,509,361,816.98 | 31,192,203,406.84 |
Legal representative: Lv Liang Person in charge of accounting: Lv Liang Person in charge of the Accounting Department:
Qiu Renbo
2. Balance sheet of the parent company
Unit: yuan
| Item | December 31, 2023 | January 01, 2023 |
| Current assets: | ||
| Monetary funds | 3,202,969,593.32 | 2,486,399,844.96 |
| Trading financial assets | ||
| Derivative financial assets | ||
| Notes receivable | 6,812,089.97 | 8,424,980.99 |
| Accounts receivable | 4,232,306,149.56 | 4,224,944,294.54 |
| Receivables financing | 257,987,672.16 | 157,097,728.09 |
| Prepayments | 104,299,584.06 | 271,448,367.52 |
| Other receivables | 1,826,331,443.42 | 1,065,267,397.05 |
| Including: Interests receivable | ||
| Dividend receivable | 95,200,000.00 | |
| Inventories | 2,064,496,012.45 | 2,391,038,707.33 |
| Contract assets | ||
| Assets held for sale | ||
| Other non-current assets due within one year | ||
| Other non-current assets | ||
| Total current assets | 11,695,202,544.94 | 10,604,621,320.48 |
| Non-current assets: | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investment | 5,961,344,825.40 | 5,473,824,934.24 |
| Other equity instrument investments | 10,080,000.00 | 10,100,870.56 |
| Other non-current financial assets | ||
| Investment real estate | 6,734,389.40 | 7,193,111.26 |
| Fixed Assets | 131,994,767.68 | 144,023,222.94 |
| Construction in Progress | 423,088.16 | 824,024.88 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | 9,101,653.07 | 3,631,025.07 |
| Intangible Assets | 160,438,646.19 | 188,198,218.40 |
| Development expenditure | ||
| Goodwill | ||
| Long-term Deferred Expenses | 77,379.81 | |
| Deferred income tax assets | 53,563,924.40 | 49,729,544.62 |
| Other non-current assets | 250,146,911.16 | 346,564,596.26 |
| Total non-current assets | 6,583,828,205.46 | 6,224,166,928.04 |
| Total Assets | 18,279,030,750.40 | 16,828,788,248.52 |
| Current liabilities: | ||
| Short-term borrowings | 425,185,172.23 | 431,081,029.52 |
| Trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 500,551,829.47 | 629,281,486.95 |
| Accounts payable | 3,128,538,765.74 | 3,373,959,848.93 |
| Advances from customers | ||
| Contract liabilities | 56,745,329.30 | 46,097,912.05 |
| Employee benefits payable | 13,664,428.10 | 10,063,669.60 |
| Taxes payable | 67,429,440.31 | 86,458,570.85 |
| Other payables | 1,970,918,606.32 | 949,611,806.93 |
| Including: Interests payable | ||
| Dividends payable | 224,219.60 | 224,219.60 |
| Liabilities held for sale | ||
| Other non-current liabilities due within one year | 41,336,796.82 | 33,427,007.32 |
| Other current liabilities | 6,234,741.10 | 5,830,680.38 |
| Total current liabilities | 6,210,605,109.39 | 5,565,812,012.53 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bond | ||
| Lease liabilities | 3,610,383.31 | 59,030.94 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Estimated Liabilities | ||
| Deferred income | 33,001,286.19 | 35,567,161.11 |
| Deferred income tax liabilities | ||
| Other non-current liabilities | 47,170,650.00 | 73,251,500.00 |
| Total non-current liabilities | 83,782,319.50 | 108,877,692.05 |
| Total liabilities | 6,294,387,428.89 | 5,674,689,704.58 |
| Owners’ Equity: | ||
| Share capital | 1,754,425,348.00 | 1,753,995,348.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bond | ||
| Capital reserves | 2,329,361,969.66 | 2,276,383,543.02 |
| Less: Treasury stock | 84,519,369.07 | 104,645,000.00 |
| Other comprehensive income | -129,129.44 | |
| Special reserves | ||
| Surplus reserves | 1,355,635,731.62 | 1,229,068,798.92 |
| Undistributed profit | 6,629,739,641.30 | 5,999,424,983.44 |
| Total owners’ equity | 11,984,643,321.51 | 11,154,098,543.94 |
| Total liabilities & owners’ equity | 18,279,030,750.40 | 16,828,788,248.52 |
3. Consolidated income statement
Unit: yuan
| Item | 2023 | 2022 |
| I. Total operating revenue | 40,623,782,520.43 | 37,714,587,458.01 |
| Including: Operating revenue | 40,623,782,520.43 | 37,714,587,458.01 |
| Interest income | ||
| Premiums earned | ||
| Handling fees and commissions received | ||
| II. Total operating cost | 37,081,915,122.91 | 34,568,570,175.18 |
| Including: Operating cost | 27,461,731,573.59 | 25,682,497,011.55 |
| Interest expenses | ||
| Handling fees and commissions paid | ||
| Surrender value | ||
| Net payment of insurance claims | ||
| Net appropriation of policy reserve | ||
| Policy dividends paid | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 232,590,269.39 | 208,324,645.61 |
| Sales expenses | 6,645,411,414.21 | 6,334,738,928.05 |
| Administrative expenses | 1,420,188,961.59 | 1,248,781,970.63 |
| R&D expenses | 1,270,803,119.96 | 1,015,971,052.33 |
| Financial expenses | 51,189,784.17 | 78,256,567.01 |
| Including: Interest expenses | 119,514,554.96 | 127,654,612.93 |
| Interest income | 94,045,345.71 | 103,350,838.03 |
| Add: Other income | 172,492,861.66 | 92,781,468.16 |
| Investment income (Losses are indicated by “-”) | -219,713,034.52 | -141,560,034.56 |
| Including: Investment gains (losses) in associated enterprise and joint-venture enterprise | -188,390,620.91 | -115,619,080.98 |
| Gains on the derecognition of financial assets measured at amortized cost | ||
| Gains on exchange (Losses are indicated by “-”) | ||
| Gains on net exposure hedging (Losses are indicated by “-”) | ||
| Gains from changes in fair values (Losses are indicated by “-”) | -13,756,372.80 | 28,469,286.61 |
| Credit impairment losses (Losses are indicated by “-”) | -25,763,586.64 | -68,689,699.09 |
| Impairment gains (losses) of assets (Losses are indicated by “-”) | -6,519,844.03 | -3,821,625.15 |
| Asset disposal income (Losses are indicated by “-”) | 4,319,797.54 | 8,257,595.43 |
| III. Operating profit (Losses are indicated by “-”) | 3,452,927,218.73 | 3,061,454,274.23 |
| Add: Non-operating revenue | 50,548,825.60 | 7,608,417.78 |
| Less: Non-operating expenses | 37,490,279.21 | 37,938,443.03 |
| IV. Total profit (Total losses are indicated by “-”) | 3,465,985,765.12 | 3,031,124,248.98 |
| Less: Income tax expense | 619,588,815.15 | 498,498,547.62 |
| V. Net profit (Net losses are indicated by | 2,846,396,949.97 | 2,532,625,701.36 |
| “-”) | ||
| (I) Classification by business continuity | ||
| 1. Net profit from continuing operations (Net losses are indicated by “-”) | 2,846,396,949.97 | 2,532,625,701.36 |
| 2. Net profit at terminational operation (Net losses are indicated by “-”) | ||
| (II) Classification by attribution of ownership | ||
| 1. Net profit attributable to shareholders of the parent company | 2,838,860,542.80 | 2,499,214,359.57 |
| 2. Profit or loss attributable to minority shareholders | 7,536,407.17 | 33,411,341.79 |
| VI. Other comprehensive income, net of income tax | 50,506,468.03 | -40,784,410.62 |
| Other comprehensive income attributable to owners of the parent company, net of tax | 50,506,468.03 | -40,784,410.62 |
| (I) Other comprehensive income that cannot be reclassified into gains/losses | 3,419,879.00 | -6,804,247.45 |
| 1. Changes in remeasurement on the defined benefit plan | ||
| 2. Other comprehensive income that cannot be reclassified into gains/losses under equity method | ||
| 3. Changes in fair value of other equity instrument investments | 3,419,879.00 | -6,804,247.45 |
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| (II) Other comprehensive income to be reclassified into gains/losses | 47,086,589.03 | -33,980,163.17 |
| 1. Other comprehensive income that can be reclassified into gains/losses under equity method | 5,371,371.90 | -19,404.48 |
| 2. Changes in fair value of other debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive income | ||
| 4. Credit impairment reserve of other debt investments | ||
| 5. Cash flow hedging reserve | ||
| 6. Exchange differences from translation of foreign currency financial statements | 26,873,320.16 | -19,118,861.72 |
| 7. Others | 14,841,896.97 | -14,841,896.97 |
| Net amount after tax of other comprehensive income attributable to minority shareholders | ||
| VII. Total comprehensive income | 2,896,903,418.00 | 2,491,841,290.74 |
| Total comprehensive income attributable to owners of the parent company | 2,889,367,010.83 | 2,458,429,948.95 |
| Total comprehensive income attributable to minority shareholders | 7,536,407.17 | 33,411,341.79 |
| VIII. Earnings per share (EPS) | ||
| (I) Basic EPS | 1.6219 | 1.4283 |
| (II) Diluted EPS | 1.6207 | 1.4283 |
As for business merger under the same control in the current period, the net profit generated by the merged party before the was
0.00 yuan, and that generated during the previous period was 0.00 yuan.
Legal representative: Lv Liang Person in charge of accounting: Lv Liang Person in charge of the Accounting Department:
Qiu Renbo
4. Income statement of the parent company
Unit: yuan
| Item | 2023 | 2022 |
| I. Total operating revenue | 22,045,386,635.53 | 20,630,904,717.76 |
| Less: Total operating cost | 20,820,391,664.50 | 19,368,401,281.90 |
| Taxes and surcharges | 34,048,780.98 | 36,661,029.40 |
| Sales expenses | 650,742,977.03 | 601,932,806.60 |
| Administrative expenses | 225,726,564.80 | 211,999,885.94 |
| R&D expenses | ||
| Financial expenses | -48,770,456.27 | -14,538,929.98 |
| Including: Interest expenses | 46,882,329.40 | 45,824,339.68 |
| Interest income | 75,742,432.47 | 77,307,324.10 |
| Add: Other income | 18,760,191.87 | 16,694,280.62 |
| Investment income (Losses are indicated by “-”) | 1,152,151,267.18 | 1,067,326,046.80 |
| Including: Investment gains (losses) in associated enterprise and joint-venture enterprise | -12,860,749.73 | 981,095.77 |
| Gains on the derecognition of financial assets measured at amortized cost (Losses are indicated by “-”) | ||
| Gains on net exposure hedging (Losses are indicated by “-”) | ||
| Gains from changes in fair values (Losses are indicated by “-”) | ||
| Credit impairment losses (Losses are indicated by “-”) | -146,582,684.69 | -94,827,679.48 |
| Impairment gains (losses) of assets (Losses are indicated by “-”) | ||
| Asset disposal income (Losses are indicated by “-”) | 3,563,127.07 | 8,065,244.06 |
| II. Operating profit (Losses are indicated by “-”) | 1,391,139,005.92 | 1,423,706,535.90 |
| Add: Non-operating revenue | 50,286.42 | 872,151.83 |
| Less: Non-operating expenses | 6,496,080.94 | 7,145,666.36 |
| III. Total profit (Total losses are indicated | 1,384,693,211.40 | 1,417,433,021.37 |
| by “-”) | ||
| Less: Income tax expense | 119,023,884.42 | 122,009,499.72 |
| IV. Net profit (Net losses are indicated by “-”) | 1,265,669,326.98 | 1,295,423,521.65 |
| (I) Net profit from continuous operations (Net losses are indicated by “-”) | 1,265,669,326.98 | 1,295,423,521.65 |
| (II) Net profit from discontinued operations (Net losses are indicated by “-”) | ||
| V. Other comprehensive income, net of income tax | 43.94 | |
| (I) Other comprehensive income that cannot be reclassified into gains/losses | 43.94 | |
| 1. Changes in remeasurement on the defined benefit plan | ||
| 2. Other comprehensive income that cannot be reclassified into gains/losses under equity method | 43.94 | |
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| (II) Other comprehensive income to be reclassified into gains/losses | ||
| 1. Other comprehensive income that can be reclassified into gains/losses under equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive income | ||
| 4. Credit impairment reserve of other debt investments | ||
| 5. Cash flow hedging reserve | ||
| 6. Exchange differences from translation of foreign currency financial statements | ||
| 7. Others | ||
| VI. Total comprehensive income | 1,265,669,370.92 | 1,295,423,521.65 |
| VII. Earnings per share (EPS) | ||
| (I) Basic EPS | ||
| (II) Diluted EPS |
5. Consolidated cash flow statement
Unit: yuan
| Item | 2023 | 2022 |
| I. Cash flows from operating activities: | ||
| Cash received from the sale of goods and the rendering of services | 43,564,701,238.84 | 39,950,662,882.10 |
| Net increase in customer deposits and |
| due from banks | ||
| Net increase in borrowing from the central bank | ||
| Net increase in borrowing from other financial institutions | ||
| Cash from the premium of the original insurance policy | ||
| Net cash from reinsurance | ||
| Net increase in deposits and investment of the insured | ||
| Cash from interests, handling fees and commissions | ||
| Net increase in borrowing from other banks and other financial institutions | ||
| Net increase in funds for repurchase | ||
| Net cash received for buying and selling securities as proxy | ||
| Receipts of tax refund | 60,827,371.05 | 47,556,552.81 |
| Other cash receipts in relation to operating activities | 544,629,208.52 | 639,498,854.94 |
| Subtotal of cash inflows from operating activities | 44,170,157,818.41 | 40,637,718,289.85 |
| Cash payments for goods purchased and services received | 27,689,294,593.31 | 26,418,181,602.79 |
| Net increase in customer loans and prepayments | ||
| Net increase in deposits of central bank and due from banks | ||
| Cash payments for original insurance claims | ||
| Net increase in lending funds to other banks and other financial institutions | ||
| Cash payments for interests, handling fees and commissions | ||
| Cash payments for policy dividends | ||
| Cash payments to and on behalf of employees | 3,912,660,863.10 | 3,126,251,201.80 |
| Payments of various types of taxes | 2,612,807,407.43 | 3,065,133,366.96 |
| Other cash payments in relation to operating activities | 6,026,178,247.87 | 5,646,299,449.70 |
| Subtotal of cash outflows for operating activities | 40,240,941,111.71 | 38,255,865,621.25 |
| Net cash flow from operating activities | 3,929,216,706.70 | 2,381,852,668.60 |
| II. Cash flows from investing activities | ||
| Cash receipts from recovery of investments | 2,085,916.63 | |
| Cash receipts from investment income | 94,516,496.70 | 100,327,200.00 |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 10,850,236.05 | 15,434,935.53 |
| Net cash from disposal of subsidiaries and other business units | ||
| Other cash receipts in relation to | 136,030,146.40 | 5,876,507.64 |
| investing activities | ||
| Subtotal of cash inflows from investing activities | 243,482,795.78 | 121,638,643.17 |
| Cash payments for purchase and construction of fixed assets, intangible assets and other long-term assets | 1,606,618,467.79 | 1,193,238,725.97 |
| Cash payments for investment | 221,474,250.00 | 848,909,498.16 |
| Net increase in pledge loans | ||
| Net cash paid for acquisition of subsidiaries and other business units | 162,367,804.50 | 411,908,915.12 |
| Other cash payments in relation to investing activities | 3,574,216.00 | 103,179,093.50 |
| Subtotal of cash outflows of investment activities | 1,994,034,738.29 | 2,557,236,232.75 |
| Net cash flow from investing activities | -1,750,551,942.51 | -2,435,597,589.58 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | 35,625,300.00 | 174,645,000.00 |
| Including: Cash receipts from capital contributions from minority owners of subsidiaries | 25,000,000.00 | 70,000,000.00 |
| Cash receipts from borrowing | 4,662,018,278.15 | 4,689,802,455.69 |
| Other cash receipts in relation to financing activities | 401,726,192.50 | 284,920,943.37 |
| Subtotal of cash inflows from financing activities | 5,099,369,770.65 | 5,149,368,399.06 |
| Cash repayments of borrowings | 5,353,842,747.11 | 4,290,690,528.23 |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 613,814,534.49 | 578,859,909.67 |
| Including: Dividends and profits paid by subsidiaries to minority shareholders | 19,599,647.35 | 2,366,353.48 |
| Other cash payments in relation to financing activities | 525,073,835.03 | 379,528,334.29 |
| Subtotal of cash outflows for financing activities | 6,492,731,116.63 | 5,249,078,772.19 |
| Net cash flow from financing activities | -1,393,361,345.98 | -99,710,373.13 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | 5,945,890.37 | -9,774,641.73 |
| V. Net increase in cash and cash equivalents | 791,249,308.58 | -163,229,935.84 |
| Add: Opening balance of cash and cash equivalents | 3,416,910,702.33 | 3,580,140,638.17 |
| VI. Closing balance of cash and cash equivalents | 4,208,160,010.91 | 3,416,910,702.33 |
6. Cash flow statement of the parent company
Unit: yuan
| Item | 2023 | 2022 |
| I. Cash flows from operating activities: | ||
| Cash received from the sale of goods and the rendering of services | 23,572,571,460.53 | 21,148,206,043.93 |
| Receipts of tax refund | 3,178,131.15 | |
| Other cash receipts in relation to | 96,137,098.06 | 238,589,265.58 |
| operating activities | ||
| Subtotal of cash inflows from operating activities | 23,671,886,689.74 | 21,386,795,309.51 |
| Cash payments for goods purchased and services received | 22,245,449,767.50 | 19,990,439,841.50 |
| Cash payments to and on behalf of employees | 313,589,350.89 | 267,942,450.21 |
| Payments of various types of taxes | 393,222,221.95 | 510,694,836.67 |
| Other cash payments in relation to operating activities | 529,329,348.56 | 637,104,187.46 |
| Subtotal of cash outflows for operating activities | 23,481,590,688.90 | 21,406,181,315.84 |
| Net cash flow from operating activities | 190,296,000.84 | -19,386,006.33 |
| II. Cash flows from investing activities | ||
| Cash receipts from recovery of investments | 20,914.50 | |
| Cash receipts from investment income | 1,096,472,035.41 | 1,097,509,530.22 |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 4,173,691.06 | 13,460,544.24 |
| Net cash from disposal of subsidiaries and other business units | 50,059,838.75 | |
| Other cash receipts in relation to investing activities | 2,176,393,914.80 | 830,315,580.61 |
| Subtotal of cash inflows from investing activities | 3,277,060,555.77 | 1,991,345,493.82 |
| Cash payments for purchase and construction of fixed assets, intangible assets and other long-term assets | 24,448,648.76 | 56,266,286.12 |
| Cash payments for investment | 468,375,000.00 | 443,169,200.00 |
| Net cash paid for acquisition of subsidiaries and other business units | ||
| Other cash payments in relation to investing activities | 2,793,998,540.00 | 988,641,844.00 |
| Subtotal of cash outflows of investment activities | 3,286,822,188.76 | 1,488,077,330.12 |
| Net cash flow from investing activities | -9,761,632.99 | 503,268,163.70 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | 10,625,300.00 | 104,645,000.00 |
| Cash receipts from borrowing | 3,846,416,549.97 | 2,754,131,709.35 |
| Other cash receipts in relation to financing activities | 4,365,496,086.39 | 2,932,396,166.67 |
| Subtotal of cash inflows from financing activities | 8,222,537,936.36 | 5,791,172,876.02 |
| Cash repayments of borrowings | 3,852,457,799.76 | 2,953,130,999.69 |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 531,097,864.52 | 525,613,233.72 |
| Other cash payments in relation to financing activities | 3,102,315,256.45 | 2,685,609,711.52 |
| Subtotal of cash outflows for financing activities | 7,485,870,920.73 | 6,164,353,944.93 |
| Net cash flow from financing activities | 736,667,015.63 | -373,181,068.91 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | ||
| V. Net increase in cash and cash | 917,201,383.48 | 110,701,088.46 |
| equivalents | ||
| Add: Opening balance of cash and cash equivalents | 2,029,798,269.62 | 1,919,097,181.16 |
| VI. Closing balance of cash and cash equivalents | 2,946,999,653.10 | 2,029,798,269.62 |
7. Consolidated statement of changes in owners’ equity
Amount in the current period
Unit: yuan
| Item | 2023 | ||||||||||||||
| Owners’ equity attributable to the parent company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk reserve | Undistributed profit | Others | Subtotal | |||||
| Preferred shares | Perpetual bond | Others | |||||||||||||
| I. Balance at the end of the period of the prior year | 1,753,995,348.00 | 2,377,887,246.39 | 104,645,000.00 | -88,552,636.42 | 1,151,213,039.48 | 13,488,021,239.94 | 18,577,919,237.39 | 598,522,145.76 | 19,176,441,383.15 | ||||||
| Add: Changes in accounting policies | |||||||||||||||
| Error correction in the prior periods | |||||||||||||||
| O | |||||||||||||||
| thers | |||||||||||||||
| II. Balance at the beginning of the period of the current year | 1,753,995,348.00 | 2,377,887,246.39 | 104,645,000.00 | -88,552,636.42 | 1,151,213,039.48 | 13,488,021,239.94 | 18,577,919,237.39 | 598,522,145.76 | 19,176,441,383.15 | ||||||
| III. Amount of change in the current period (Decreases are indicated by “-”) | 430,000.00 | 68,426,528.43 | -20,125,630.93 | 48,211,092.24 | 126,566,932.70 | 2,205,930,334.97 | 2,469,690,519.27 | -63,867,176.32 | 2,405,823,342.95 | ||||||
| (I) Total comprehensive income | 50,506,468.03 | 2,838,860,542.80 | 2,889,367,010.83 | 7,536,407.17 | 2,896,903,418.00 | ||||||||||
| (II) Capital contributed by owners and capital decreases | 430,000.00 | 52,846,924.39 | -20,125,630.93 | 73,402,555.32 | 28,420,557.81 | 101,823,113.13 | |||||||||
| 1. | 430, | 10,1 | 10,6 | 28,0 | 38,6 |
| Common shares invested by owners | 000.00 | 95,300.00 | 25,300.00 | 60,000.00 | 85,300.00 | ||||||||||
| 2. Capital invested by holders of other equity instruments | |||||||||||||||
| 3. Amount of share-based payment included in owners’ equity | 42,651,624.39 | 42,651,624.39 | 360,557.81 | 43,012,182.20 | |||||||||||
| 4. Others | -20,125,630.93 | 20,125,630.93 | 20,125,630.93 | ||||||||||||
| (III)Profit distribution | 126,566,932.70 | -635,225,583.62 | -508,658,650.92 | -147,689,847.13 | -656,348,498.05 | ||||||||||
| 1. Withdrawal of | 126,566,932.70 | -126,566,932. |
| surplus reserve | 70 | ||||||||||||||
| 2. Provision of general risk reserve | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -508,658,650.92 | -508,658,650.92 | -147,680,000.00 | -656,338,650.92 | |||||||||||
| 4. Others | -9,847.13 | -9,847.13 | |||||||||||||
| (IV) Internal conversion of owners’ equity | -2,295,375.79 | 2,295,375.79 | 0.00 | 0.00 | |||||||||||
| 1. Capital (or share capital) increase from capital reserve conversion | |||||||||||||||
| 2. Capital |
| (or share capital) increase from surplus reserve conversion | |||||||||||||||
| 3. Recovery of losses by surplus reserve | |||||||||||||||
| 4. Retained earnings from transfer of changes in the defined benefit plan | |||||||||||||||
| 5. Retained earnings from transfer of other comprehensive inco | -2,295,375.79 | 2,295,375.79 | 0.00 | 0.00 |
| me | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Withdrawal in the current period | |||||||||||||||
| 2. Use in the current period | |||||||||||||||
| (VI) Others | 15,579,604.04 | 15,579,604.04 | 47,865,705.83 | 63,445,309.87 | |||||||||||
| IV. Balance at the end of the current period | 1,754,425,348.00 | 2,446,313,774.82 | 84,519,369.07 | -40,341,544.18 | 1,277,779,972.18 | 15,693,951,574.91 | 21,047,609,756.66 | 534,654,969.44 | 21,582,264,726.10 |
Amount in previous period
Unit: yuan
| Item | 2022 | ||||||||||||||
| Owners’ equity attributable to the parent company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk reserve | Undistributed profit | Others | Subtotal | |||||
| Preferred shares | Perpetual bond | Others | |||||||||||||
| I. Balance at the end of the period of the prior year | 1,749,809,548.00 | 2,229,868,312.11 | -47,768,225.80 | 1,021,670,687.31 | 11,625,794,001.46 | 16,579,374,323.08 | 361,944,682.60 | 16,941,319,005.68 | |||||||
| Add: Changes in accounting policies | |||||||||||||||
| Error correction in the prior periods | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the period of the current year | 1,749,809,548.00 | 2,229,868,312.11 | -47,768,225.80 | 1,021,670,687.31 | 11,625,794,001.46 | 16,579,374,323.08 | 361,944,682.60 | 16,941,319,005.68 | |||||||
| III. Amount of change in the | 4,185,800.00 | 148,018,934.28 | 104,645,000.00 | -40,784,410.62 | 129,542,352.17 | 1,862,227,238.48 | 1,998,544,914.31 | 236,577,463.16 | 2,235,122,377.47 |
| current period (Decreases are indicated by “-”) | |||||||||||||||
| (I) Total comprehensive income | -40,784,410.62 | 2,499,214,359.57 | 2,458,429,948.95 | 33,411,341.79 | 2,491,841,290.74 | ||||||||||
| Capital contributed by owners and capital decreases | 4,185,800.00 | 107,684,664.01 | 104,645,000.00 | 7,225,464.01 | 70,018,295.44 | 77,243,759.45 | |||||||||
| 1. Common shares invested by owners | 4,185,800.00 | 100,459,200.00 | 104,645,000.00 | 70,000,000.00 | 174,645,000.00 | ||||||||||
| 2. Capital invested by holders of other equity instruments |
| 3. Amount of share-based payment included in owners’ equity | 7,225,464.01 | 7,225,464.01 | 18,295.44 | 7,243,759.45 | |||||||||||
| 4. Others | 104,645,000.00 | -104,645,000.00 | -104,645,000.00 | ||||||||||||
| Profit distribution | 129,542,352.17 | -636,987,121.09 | -507,444,768.92 | -15,106,353.48 | -522,551,122.40 | ||||||||||
| 1. Withdrawal of surplus reserve | 129,542,352.17 | -129,542,352.17 | |||||||||||||
| 2. Provision of general risk reserve | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -507,444,768.92 | -507,444,768.92 | -15,106,353.48 | -522,551,122.40 | |||||||||||
| 4. Othe |
| rs | |||||||||||||||
| Internal conversion of owners’ equity | |||||||||||||||
| 1. Capital (or share capital) increase from capital reserve conversion | |||||||||||||||
| 2. Capital (or share capital) increase from surplus reserve conversion | |||||||||||||||
| 3. Recovery of losses by surplus reserve | |||||||||||||||
| 4. Retai |
| ned earnings from transfer of changes in the defined benefit plan | |||||||||||||||
| 5. Retained earnings from transfer of other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| Special reserve | |||||||||||||||
| 1. Withdrawal in the current period | |||||||||||||||
| 2. Use in the current period |
| (VI) Others | 40,334,270.27 | 40,334,270.27 | 148,254,179.41 | 188,588,449.68 | |||||||||||
| IV. Balance at the end of the current period | 1,753,995,348.00 | 2,377,887,246.39 | 104,645,000.00 | -88,552,636.42 | 1,151,213,039.48 | 13,488,021,239.94 | 18,577,919,237.39 | 598,522,145.76 | 19,176,441,383.15 |
8. Statement of changes in owners’ equity of the parent company
Amount in the current period
Unit: yuan
| Item | 2023 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profit | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bond | Others | ||||||||||
| I. Balance at the end of the period of the prior year | 1,753,995,348.00 | 2,276,383,543.02 | 104,645,000.00 | -129,129.44 | 1,229,068,798.92 | 5,999,424,983.44 | 11,154,098,543.94 | |||||
| Add: Changes in accounting policies | ||||||||||||
| Error correction in the prior periods | ||||||||||||
| O | ||||||||||||
| thers | ||||||||||||
| II. Balance at the beginning of the period of the current year | 1,753,995,348.00 | 2,276,383,543.02 | 104,645,000.00 | -129,129.44 | 1,229,068,798.92 | 5,999,424,983.44 | 11,154,098,543.94 | |||||
| III. Amount of change in the current period (Decreases are indicated by “-”) | 430,000.00 | 52,978,426.64 | -20,125,630.93 | 129,129.44 | 126,566,932.70 | 630,314,657.86 | 830,544,777.57 | |||||
| (I) Total comprehensive income | 43.94 | 1,265,669,326.98 | 1,265,669,370.92 | |||||||||
| (II) Capital contributed by owners and capital decreases | 430,000.00 | 53,207,482.20 | -20,125,630.93 | 73,763,113.13 | ||||||||
| 1. Common shares invested by owners | 430,000.00 | 10,195,300.00 | 10,625,300.00 | |||||||||
| 2. Capital invested by holders of other equity |
| instruments | ||||||||||||
| 3. Amount of share-based payment included in owners’ equity | 43,012,182.20 | 43,012,182.20 | ||||||||||
| 4. Others | -20,125,630.93 | 20,125,630.93 | ||||||||||
| (III) Profit distribution | 126,566,932.70 | -635,225,583.62 | -508,658,650.92 | |||||||||
| 1. Withdrawal of surplus reserve | 126,566,932.70 | -126,566,932.70 | ||||||||||
| 2. Distribution to owners (or shareholders) | -508,658,650.92 | -508,658,650.92 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal conversion of owners’ equity | 129,085.50 | -129,085.50 | ||||||||||
| 1. Capital (or share capital) increase from capital |
| reserve conversion | ||||||||||||
| 2. Capital (or share capital) increase from surplus reserve conversion | ||||||||||||
| 3. Recovery of losses by surplus reserve | ||||||||||||
| 4. Retained earnings from transfer of changes in the defined benefit plan | ||||||||||||
| 5. Retained earnings from transfer of other comprehensive income | 129,085.50 | -129,085.50 | ||||||||||
| 6. Others | ||||||||||||
| (V) Special |
| reserve | ||||||||||||
| 1. Withdrawal in the current period | ||||||||||||
| 2. Use in the current period | ||||||||||||
| (VI) Others | -229,055.56 | -229,055.56 | ||||||||||
| IV. Balance at the end of the current period | 1,754,425,348.00 | 2,329,361,969.66 | 84,519,369.07 | 1,355,635,731.62 | 6,629,739,641.30 | 11,984,643,321.51 |
Amount in previous period
Unit: yuan
| Item | 2022 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profit | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bond | Others | ||||||||||
| I. Balance at the end of the period of the prior year | 1,749,809,548.00 | 2,168,451,528.01 | -129,129.44 | 1,099,526,446.75 | 5,340,988,582.88 | 10,358,646,976.20 | ||||||
| Add: Changes in accounting policies | ||||||||||||
| Error correction in the prior period | ||||||||||||
| s | ||||||||||||
| Others | ||||||||||||
| II. Balance at the beginning of the period of the current year | 1,749,809,548.00 | 2,168,451,528.01 | -129,129.44 | 1,099,526,446.75 | 5,340,988,582.88 | 10,358,646,976.20 | ||||||
| III. Amount of change in the current period (Decreases are indicated by “-”) | 4,185,800.00 | 107,932,015.01 | 104,645,000.00 | 129,542,352.17 | 658,436,400.56 | 795,451,567.74 | ||||||
| (I) Total comprehensive income | 1,295,423,521.65 | 1,295,423,521.65 | ||||||||||
| (II) Capital contributed by owners and capital decreases | 4,185,800.00 | 107,702,959.45 | 104,645,000.00 | 7,243,759.45 | ||||||||
| 1. Common shares invested by owners | 4,185,800.00 | 100,459,200.00 | 104,645,000.00 | |||||||||
| 2. Capital invested by holder |
| s of other equity instruments | ||||||||||||
| 3. Amount of share-based payment included in owners’ equity | 7,243,759.45 | 7,243,759.45 | ||||||||||
| 4. Others | 104,645,000.00 | -104,645,000.00 | ||||||||||
| (III) Profit distribution | 129,542,352.17 | -636,987,121.09 | -507,444,768.92 | |||||||||
| 1. Withdrawal of surplus reserve | 129,542,352.17 | -129,542,352.17 | ||||||||||
| 2. Distribution to owners (or shareholders) | -507,444,768.92 | -507,444,768.92 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal conversion of owners’ equity | ||||||||||||
| 1. Capital (or share capital) |
| increase from capital reserve conversion | ||||||||||||
| 2. Capital (or share capital) increase from surplus reserve conversion | ||||||||||||
| 3. Recovery of losses by surplus reserve | ||||||||||||
| 4. Retained earnings from transfer of changes in the defined benefit plan | ||||||||||||
| 5. Retained earnings from transfer of other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| (V) |
| Special reserve | ||||||||||||
| 1. Withdrawal in the current period | ||||||||||||
| 2. Use in the current period | ||||||||||||
| (VI) Others | 229,055.56 | 229,055.56 | ||||||||||
| IV. Balance at the end of the current period | 1,753,995,348.00 | 2,276,383,543.02 | 104,645,000.00 | -129,129.44 | 1,229,068,798.92 | 5,999,424,983.44 | 11,154,098,543.94 |
Huadong Medicine Co., Ltd.Chairman of the Board: Lv Liang
April 18, 2024