Huadong Medicine Co., Ltd.
Semi-Annual Report 2022
August 2022
Section I. Important Declaration, Contents and Definitions
The Board of Directors, Board of Supervisors, directors, supervisorsand senior management of Huadong Medicine Co., Ltd. (hereinafterreferred to as the “Company”) hereby guarantee that the informationpresented in this half year report is authentic, accurate and complete andfree of any false records, misleading statements or material omissions,and shall undertake individual and joint legal liabilities.
Lv Liang, the Company’s legal representative and the officer incharge of accounting, and Qiu Renbo, head of accounting department(accounting supervisor) hereby declare and guarantee that the financialstatements in this half year report are authentic, accurate and complete.
All directors have attended the Board of Directors meeting to reviewthis half year report.
The future plans, development strategies and other forward-lookingstatements in this half year report shall not be considered as substantialcommitment of the Company to investor. Investors and related partiesshould maintain sufficient risk awareness, and should understand thedifference between plans, forecasts and promises.
The risks the Company faces in operation including industry policyand market operation risk, new drug R&D risk, exchange ratefluctuation risk and goodwill impairment risk , etc. For details, refer to“X. Risks and Countermeasures” in “Section III. Discussion and Analysisof the Management”. We thank all investors for paying attention to theCompany’s operations, and we hope that you can be aware of investmentrisks.
The company does not plan to distribute cash dividends, no bonusshare will be issued; and no capital reserve will be converted to increasethe share capital.
According to “Stock Listing Rules of the Shenzhen Stock Exchange”,if listed companies have both Chinese or other language version of publicnotice, they should ensure the content of both versions are the same. Inthe case of discrepancy, the original version in Chinese shall prevail.
Contents
Section I. Important Declaration, Contents and Definitions ...................................... 2
Contents ...... 3
Definitions ...... 5
Section II. Company Profile and Key Financial Indicators ....................................... 7
Section III. Discussion and Analysis of the Management..........................................10
Section IV. Corporate Governance ..........................................................................................57
Section V. Environmental and Social Responsibility ....................................................60
Section VI. Important Matters ....................................................................................................72
Section VII. Share Change and Shareholders ....................................................................92
Section VIII. Preferred Shares ..................................................................................................100
Section IX. Information about Bonds ..................................................................................101
Section X. Financial Report .......................................................................................................102
Contents of Reference File
I. Financial statements signed and stamped by the legal representative, the person incharge of accounting work and the head of accounting institution (accounting manager).II. 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. |
| Jiuyang Bio | refers to | Jiangsu Jiuyang Biopharm Co., Ltd. |
| 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. |
| Hangzhou Gaotou | refers to | Hangzhou Hi-Tech Venture Capital Management Co., Ltd. |
| Grand Huachuang | refers to | Beijing Grand Huachuang Investment Co., Ltd. |
| Hangzhou Heda | refers to | Hangzhou Heda Industrial Fund Investment Co., Ltd. |
| Pharmaceutical Industry Fund/Fuguang Hongxin | refers to | Hangzhou Fuguang Hongxin Equity Investment Partnership (Limited Partnership) |
| Meihua Hi-Tech | refers to | Anhui Meihua Hi-Tech Pharmaceutical Co., Ltd. |
| Meiqi Health | refers to | Hubei Meiqi Health Technology Co., Ltd. |
| Angel | refers to | Hubei Angel Bioengineering Group Co., Ltd. |
| Takeda | refers to | Takeda Pharmaceuticals Company Ltd. |
| 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 Laboratoires SA |
| High Tech | refers to | High Technology Products, S.L.U. |
| Exscientia | refers to | Exscientia Ltd. |
| Heidelberg Pharma | refers to | Heidelberg Pharma AG |
| Kiniksa | refers to | Kiniksa Pharmaceuticals (UK), Ltd. |
KiOmed
| 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. |
| EMAAesthetics | refers to | EMA Aesthetics Limited |
| Julphar | refers to | Gulf Pharmaceutical Industries PJSC(JULPHAR) |
| GMP | refers to | Good Manufacturing Practice |
| cGMP | refers to | Current Good Manufacture 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 |
| 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 |
| CMO | refers to | Contract Manufacturing Organization |
| CDMO | refers to | Contract Development and Manufacturing Organization |
| QA | refers to | Quality Assurance (department) |
| ADC | refers to | Antibody-Drug Conjugates |
| EBD | refers to | Energy Based Device |
| BD | refers to | Business Development |
| EBITDA | refers to | Earnings Before Interest, Taxes, Depreciation and Amortization |
| EHS | refers to | Environment, Health, Safety |
| MRCT | refers to | International Multi-center Clinical Trial |
| OTC | refers to | Over The Counter |
| Prescription Drugs | refers to | Drugs that require medical prescriptions issued by physicians to be bought and used |
| Catalogue of Drugs for Insurance（2021） | refers to | Catalogue of Drugs for Basic National Medical Insurance/Employment Injury Insurance/Birth Insurance（2021） |
| Reporting Period | refers to | From January 1, 2022 to June 30, 2022 |
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, if any) | 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 | ||
II. Contact persons and contact information
| Secretary of the Board of Directors | Securities Affairs Representative | |
| Name | Chen Bo | / |
| Contact address | 866 Moganshan Road, Hangzhou | / |
| Tel. | 0571-89903300 | / |
| Fax | 0571-89903300 | / |
| Email address | hz000963@126.com | / |
III. Other information
1. Company’s contact information
Whether there is any change in the Company’s registered address, office address, zip code, company website or companyemail address during the reporting period.
□ Applicable √ N/A
There is no change in the Company’s registered address, office address, zip code, company website or company emailaddress during the reporting period. For details, please refer to 2021 Annual Report.
2. Information disclosure and place of the report
Whether there is alteration in information disclosure and place of the report during the reporting period.
□ Applicable √ N/A
The media selected by the Company for information disclosure, the website designated by CSRC for publication of thehalf year report, and the location of preparation of the Company’s half year report have not changed during the reportingperiod. For details, please refer to the 2021 Annual Report.
3.Other information
Changes of other related materials
□Applicable Not applicable?
IV. Key accounting data and financial indicatorsWhether the Company needs to perform a retroactive adjustment or restatement of previous accounting data
□Yes √No
| Current reporting period | Same period last year | Change of the current reporting period over the same period last year(%) | |
| Operating revenue (yuan) | 18,197,963,991.01 | 17,179,437,902.61 | 5.93% |
| Net profit attributable to shareholders of listed companies (yuan) | 1,340,570,484.98 | 1,300,346,324.85 | 3.09% |
| Net profit attributable to shareholders of listed companies after deducting non-recurring gains/losses (yuan) | 1,271,839,179.63 | 1,193,980,887.18 | 6.52% |
| Net cash flow from operating activities (yuan) | 284,234,410.27 | 1,738,512,372.11 | -83.65% |
| Basic earnings per share (yuan/share) | 0.7661 | 0.7431 | 3.10% |
| Diluted earnings per share (yuan/share) | 0.7661 | 0.7431 | 3.10% |
| Weighted average return on equity (ROE) | 7.79% | 8.54% | -0.75% |
| End of the current reporting period | End of last year | Change of the end of the current reporting period over the end of last year(%) | |
| Total assets (yuan) | 28,760,972,695.55 | 26,996,403,366.69 | 6.54% |
| Net assets attributable to shareholders of listed companies (yuan) | 17,348,589,995.88 | 16,579,374,323.08 | 4.64% |
Share capital of the Company as of the trading day before disclosure
| Share capital of the Company as of the trading day before disclosure (share) | 1,749,809,548.00 |
Fully diluted earnings per share calculated on the basis of the latest Share capital
| Dividends paid on preferred shares | 0.00 |
| Perpetual bond interest paid (yuan) | 0.00 |
| Fully diluted earnings per share calculated on the basis of the latest Share capital (yuan/share) | 0.7661 |
V. 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 Chineseaccounting standards.
2. Differences in net profit and net assets disclosed in financial statements under overseas andChinese accounting standards
□ Applicable √ N/A
There are no differences in net profit and net assets disclosed in financial statements under overseas and Chineseaccounting standards.
VI. Items and amounts of non-recurring gains/losses
√ Applicable □ N/A
Unit: RMB yuan
| Item | Amount | Note |
| Gains/losses on disposal of non-current assets (including the written-off part of the accrued assets impairment reserve) | 8,869,764.03 | |
| Tax refund and reduction with ultra vires examination and approval or without official approval documents | 2,460,133.93 | |
| Government grants included in current gains/losses (excluding those closely related to daily business operation and distributed constantly in accordance with certain standard quota or quantity in line with national policies and regulations) | 79,193,296.76 | Mainly due to the confirmation of government grants by subsidiaries in the current period. |
| Other non-operating revenue or expenditure expect above-mentioned items | -4,584,744.04 | |
| Minus: Amount affected by income tax | 15,093,154.00 | |
| Amount affected by rights and interests of minority stakeholders (after tax) | 2,113,991.33 | |
| Total | 68,731,305.35 |
Details of other items of gains/losses meet the definition of non-recurring gains/losses:
□ Applicable √ N/A
There are no other profit and loss items in line with the definition of non-recurring gains and losses in the Company.Explanation for recognizing an item listed as a non-recurring gain/loss in the “Interpretative Announcement No. 1 onInformation Disclosure Criteria for Public Companies – Non-Recurring Profit/Loss” 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 onInformation Disclosure Criteria for Public Companies – Non-Recurring Profit/Loss” as a recurring gain/loss.
Section III. Discussion and Analysis of the Management
I. Main business of the company during the reporting period
1. Main business of the company
Huangdong Medicine Co., Ltd (hereinafter referred to as the “Company”) (StockCode: 000963), founded in 1993, is headquartered in Hangzhou, Zhejiang Province. It waslisted on the Shenzhen Stock Exchange in December 1999. After more than 20 years ofdevelopment, the Company’s business has covered the entire pharmaceutical industrialchain. With dominance in the pharmaceutical sector, the Company also expands itsaesthetic medicine and industrial microbial business, making the Company a large-scalecomprehensive pharmaceutical listed company integrating pharmaceutical R&D,manufacturing and distribution.With the pharmaceutical industry deeply engaged in the R&D, manufacturing andsales of specialty medicine, chronic disease medicine and special medicine, the Companyhas formed a complete pharmaceutical manufacturing and quality research system, as wellas a core product pipeline focusing on the fields of chronic kidney disease, transplantationimmunity, endocrinology and digestive system, and it has a number of first-line clinicalmedicine with market advantages in China. At the same time, the Company focuses on theR&D of innovative medicine and the generic medicine with high-tech barriers in the threecore treatment fields of oncology, endocrine and autoimmunity through independentdevelopment, external introduction and project cooperation. The Company continuouslycarry out international product registration, international certification, and consistencyassessment, and continuously to achieve results. It has established an international-orientedpharmaceutical industry system, and has maintained healthy R&D and product cooperationrelationship with many international innovative and R&D enterprises.The pharmaceutical business of the Company has four business segments, namely,Chinese and Western medicine, medical devices, medicinal ginseng, and health industry,covering general pharmaceutical merchandising, pharmaceutical retail, third-partypharmaceutical goods flow characterized by a cold chain, pharmaceutical e-commerce,hospital value-added services and characteristic large health industry. Besides, the
Company further develops the field of product agency and market expansion. Thetraditional Chinese medicine industry has built a whole industrial chain from base plantingto decoction piece processing, automatic decoction and functional products, so as toprovide customers with comprehensive solutions.Committed to the strategy of "global operation layout and double-cycle operation anddevelopment", the aesthetic medical business of the Company has more than 30 productsin the non-invasive + minimally invasive aesthetic medical fields with a forward-lookinglayout and international vision, including more than 20 products listed at home and abroad,and more than 10 global innovative products under research. The product portfolio coversnon-surgical mainstream aesthetic medical fields such as facial filling, facial cleaning,thread lifting, skin care management, body shaping, hair removal, and private part repair.A comprehensive product cluster has been formed, and the number of products andcoverage areas have been at the forefront of the industry. Sinclair, a wholly ownedsubsidiary, is the Company’s global aesthetic medical operation platform. Headquarteredin the United Kingdom, it has manufacturing bases in the Netherlands, France, the UnitedStates, Switzerland and Bulgaria. Sinclair promotes and sells products such as long-actingmicrospheres for injection, hyaluronic acid and facial lifting in the global market, andexplores and develops the business of energy-based devices for aesthetic medicine in theglobal market through High Tech and Viora, the Company’s wholly owned subsidiaries.The aesthetic medical segment also includes Sinclair (Shanghai) the Company’s whollyowned operation and sales subsidiary in the Chinese market, and R2 in the United Statesand kylane in Switzerland, the Company’s overseas technology R&D subsidiaries.The Company has been deeply engaged in the field of industrial microbial for morethan 40 years. With a profound industrial foundation and transformation capacity, theCompany has successfully developed and produced a variety of microbial medicine andbuilt a key technology system for R&D and manufacturing of microbial products. The scaleand technical level of existing microbial fermentation products features an industry-leadinglevel. The Company has three microbial R&D platforms in Zhongmei Huadong, HuidaBiotech and Huiyi Biotech, five industrial bases of Hangzhou Xiangfu Qiao industrial base,Qiantang New District industrial base, Jiangsu Jiuyang industrial base, Meiqi Healthindustrial base and Meihua Hi-tech industrial base, and the largest fermentation monomer
workshop in Zhejiang Province and the industry-leading capacity in microbial medicinemanufacturing. The R&D capability covers all stages of microbial engineering technology,such as strain cultivation, metabolic control, separation and purification, enzyme catalysis,synthesis and modification, and has established a complete manufacturing system formicrobial project R&D, pilot test, commercial manufacturing, engineering and publicsystem support. At present, the Company has more than 100 R&D projects in the industrialmicrobial field.
2. Overview of the Company’s operations during the reporting periodIn the first half of 2022, under the complex situation of intensified internationalgeopolitical landscape conflicts, rising global stagflation risk and repeated outbreak ofglobal COVID-19 pandemic, China’s economy faces increased risks and uncertainties.Although the uncertainty of the external environment and the partial outbreak of thepandemic have brought obvious pressure on the domestic macro-economic development,through the effective pandemic prevention and control combined with the simultaneousimplementation of a series of practical and effective measures for economic and socialdevelopment, the domestic pandemic prevention and control has achieved positive results,and various economic stabilization policies and measures have made positive progress. Theoverall situation is stable and positive, and China’s economy has further demonstratedstrong development resilience with a very hard-won mid-year report card.During the Reporting Period, in the face of various pressures and challenges such asthe complex and changeable external environment, frequent outbreak of domesticpandemic and declining market demand, the Company actively implemented the spirit ofthe annual work conference, promoted development and stability through fights, andcoordinated the pandemic prevention and control with various transformation andinnovation tasks. Meanwhile, as unswervingly taking the recovery of growth as the coretarget, the Company paid close attention to the work style, and actively promoted the steadyprogress of manufacturing and operation, thus achieving sound operating results, realizinga growth under complex and difficult environment, and successfully completing thebusiness targets of the first half of 2022. During the Reporting Period, the Companyrealized an operating income of RMB18,198 million, a year-on-year increase of 5.93% (ayear-on-year increase of 0.4% in the first quarter); it realized the net profit net of non-
recurring gains and losses attributable to shareholders of the listed company of RMB1,272million, a year-on-year increase of 6.52% (a year-on-year increase of 0.4% in the firstquarter); if the calculation is based on the same standard as charging off the previous year’sannual report of Huadong Ningbo Company, the Company’s holding subsidiary, theCompany’s operating income during the Reporting Period increased by 9.56% year-on-year, and the net profit net of non-recurring gains and losses attributable to shareholders ofthe listed company increased by 8.5% year-on-year. The overall operation of the Companyshows a sustained and steady growth trend. (Note: Huadong Ningbo Company, which hasbeen closed and liquidated in the Reporting Period, realized an operating income ofRMB569 million in the previous Reporting Period, including an operating income ofRMB380 million from aesthetic medical agency business, and a net profit attributable tothe Company’s consolidated statements of RMB25.67 million.)
In the second quarter of 2022, the Company overcame various unfavorable factorsand achieved growth in the pharmaceutical industry, pharmaceutical business, aestheticmedical business and industrial microbial business. The Company realized a total operatingincome of RMB9,265 million, a year-on-year increase of 11.86%; it realized the net profitnet of non-recurring gains and losses attributable to shareholders of the listed company ofRMB573 million, a year-on-year increase of 15.06%.
Specific operation of each business segment during the Reporting Period:
1. The pharmaceutical industry recovered steadily, and the R&D and innovationcontinuously accelerated
During the Reporting Period, closely focused on the Company’s strategic goals andannual business plans, Zhongmei Huadong, the Company’s core subsidiary, carried outvarious tasks, withstood the pressure from all aspects, actively overcome the difficulties inthe Volume-Based Procurement program, the price reduction in medical insurancenegotiation and the pandemic in the first half of 2022, and continuously maintained a stableand positive trend in manufacturing and operation. In the second quarter, the sales of coreproducts kept increasing, becoming the core driving force for the Company’s overallperformance growth. In the Reporting Period, Zhongmei Huadong realized an operatingincome of RMB5.5 billion, a year-on-year increase of 1.4%; it realized the net profit net ofnon-recurring gains and losses of RMB1.06 billion, a year-on-year decrease of 4.3% (a
year-on-year decrease of 13.41% in the first quarter), and the net profit net of non-recurringgains and losses attributable to the parent company of RMB1,064 million, a year-on-yeardecrease of 3.7%, which was significantly narrowed compared with the first quarter.Specifically, the operating income in the second quarter was RMB2.71 billion, a year-on-year increase of 16.2%; the net profit attributable to the parent company was RMB540million, a year-on-year increase of 16.5%, and the net profit net of non-recurring gains andlosses attributable to the parent company was RMB490 million, a year-on-year increase of12%. The downward trend has been reversed, and the performance has begun to graduallyincrease. During the Reporting Period, the Company continuously increased investment,accelerated the promotion of R&D, innovation and clinical registration, achieving positiveprogress. For details, please refer to the corresponding contents of R&D.
During the Reporting Period, the Company’s manufacturing system continuouslycreated new operation modes, developed an open manufacturing system, realized theintegrated management of the manufacturing system, and deeply promoted the extensivelean manufacturing and full cost management of all employees. Besides, the Companycontinuously carried out technological innovation, reduced energy consumption, andimproved manufacturing efficiency and per capita labor efficiency while ensuring marketsupply. In addition, the Company strengthened the of quality compliance management andGMP normalized management, actively promoted the internationalization process, andcontinuously carried out the international registration and certification of products. Duringthe Reporting Period, Zhongmei Huadong’s Pantoprazole Sodium for Injection, which hadbeen approved by the US FDA, was exported to the US market, marking an importantachievement of the Company’s preparation product internationalization.During the Reporting Period, the Pharmaceutical Service Company of ZhongmeiHuadong actively improved the pharmaceutical service capability in an all-round waythrough fine management. On the premise of constantly improving market access andprofessional promotion capability and stabilizing the basic hospital market, the companyactively extended to the outside market, deeply explored the potential of the outside andonline markets, and continuously built multi-dimensional marketing ability. The companyoptimized the talent training mechanism and created a team of pharmaceutical servicetalents. By strengthening talent training and external introduction, the company
continuously strengthened the development of county and grass-roots markets in variousprovinces and cities, paid close attention to the coverage of grass-roots terminals, focusedon the blank market and hospital development, and built a grass-roots benchmark hospital.Besides, the company also launched an academic activity management system, activelycooperated with the Company’s Internet hospitals to promote the digital transformation ofmarketing and optimize the external promotion service system, so as to promote thecontinuous deepening of transformation of the pharmaceutical service company.In June 2022, Acarbose Tablets (50 mg) and Pantoprazole Sodium for Injection (40mg) from Zhongmei Huadong were successfully selected in the renewed contract of 44consecutive varieties of the Volume-Based Procurement program carried out by themedicine alliance consisted of 13 provinces including Henan Province. The results ofcontract renewal of the Volume-Based Procurement program have been implemented inthe provinces of the alliance since July 2022.In July 2022, Zhongmei Huadong and Xi’an Bohua participated in the bidding of theseventh batch of the Volume-Based Procurement program by the Joint Procurement Officeorganized by the state. The Mycophenolate Mofetil Capsules and PioglitazoneHydrochloride Tablets of Zhongmei Huadong and the Ornidazole Tablets of Xi’an Bohuaparticipated in the bidding and were successfully qualified to win the bid. The seventhbatch of the Volume-Based Procurement program results is expected to be implementedfrom November 2022.
2. The industrial microbial business maintained a sound developmentmomentum, continuously injecting new energy of R&D
During the Reporting Period, although the Company’s industrial microbial segmentwas affected by the domestic pandemic, which led to the delay in the performance of somesales contracts, the overall revenue of the segment continuously maintained a sounddevelopment trend, a year-on-year increase of 31%, driven by the rapid growth of theCompany’s anti-infection and pharmaceutical intermediate raw material products inoverseas markets.
As the operation platform of the Company’s large health business in the industrialmicrobial field, the green manufacturing project on functional health products invested byMeiqi is about to start construction. At the same time of the project construction, the
entrusted manufacturing and sales of vitamin K2, Ectoin and other products have beencompleted. In addition, Meiqi’s R&D project with sufficient technical reserves will makefull use of Angel’s domestic and international product registration capabilities in the fieldof food and large health to accelerate the manufacturing layout and the building of businesspromotion system, to accelerate the market development process of Meiqi.Meihua Hi-tech (formerly Huachang High-tech), a wholly-owned acquired subsidiary,was formally put into trial manufacturing at the end of April. Currently, it is undertakingthe manufacturing of nucleoside products and integrating the manufacturing of internalAPI transfer. In the future, Meihua Hi-tech will become a brand-new industrializedplatform in the industrial microbial field. Taking nucleoside products as the core andconsidering the layout of the Company’s upstream and downstream industrial chains, itwill create an industrialized base for special functional chemicals, pharmaceutical API andhigh-end intermediates that meet international standards.As an innovative R&D platform for the Company’s industrial microbial industry, theholding subsidiary Huida Biotech continuously promoted product R&D and made positiveprogress. In terms of the R&D and commercialization of ADC payloads, it has providedCDMO services for ADC payloads, linkers and related products to more than 100customers worldwide. Since its founded in 2020, Huida Biotech has established a goodreputation and brand image in the industry by virtue of its own advantages. Specifically,Exatecan Mesylate and DM1 successively obtained the US DMF registration number inJanuary 2022 and July 2022, respectively.In May 2022, the Company invested in a wholly-owned subsidiary, Huiyi Biotech,which has a strong level of synthetic biology technology. Through the gene constructionand transformation of high-efficiency engineering strains such as yeast, Escherichia coliand Bacillus subtilis, Huida Biotech has realized the wide application of biotechnology inpharmaceutical engineering, fine chemicals, new biological materials and other fields.Huiyi Biotech has a microbial cell plant construction platform, a biological enzymescreening and evolution platform, and a fermentation and product separation andpurification platform. It has built an enzyme library resource including all seven majorenzyme systems. Besides, its business includes the R&D of industrial enzyme preparation,
the R&D of fermentation process optimization technology, and the R&D of bio-basedmaterial technology.
In July 2022, the Company’s wholly-owned subsidiary Zhongmei Huadong, theGongshu Government in Hangzhou and Zhejiang University of technology jointlyestablished the Huadong Institute of Synthetic Biology Industry Technology (hereinafterreferred to as the "Institute"), which will focus on the four fields of nutrition andpharmaceutical chemicals, aesthetic medical biology, biomaterials and health substitutesbased on synthetic biology technology. Meanwhile, the Institute insists on serving thestrategic needs of the national "bio-economy", and takes as breakthroughs the newmechanism of intelligent biological manufacturing and industrial revolutionary technicalissues, while carrying out technological innovation research and industrial transformationresearch around intelligent biological manufacturing with the help of artificial intelligence,big data and intelligent automation equipment. The Institute is in the Huadong MedicalLife Science Industrial Park (the Company’s Xiangfu Qiao plant), and Zheng Yuguo, anacademician of the Chinese Academy of Engineering, is the president. Synthetic biologyis one of the core technologies that the Company relies on for the aesthetic medicaldevelopment. Through linkage, sharing and integration, the pioneer cooperation between"government, industry and university in research and application" will accelerate thetransformation of innovative projects, which is expected to help build a new cluster ofbiological manufacturing industry and give the Company a new impetus for industrialmicrobial innovation.
3. The innovation business of pharmaceutical business was steadily promoted,and all work was expanded smoothly
During the Reporting Period, the Company’s pharmaceutical business continuouslyexplored Zhejiang market, expanded the market outside the hospital market, andaccelerated the development of agency business. During the Reporting Period, theoperating income was RMB12,211 million, a year-on-year increase of 8.95%, and theaccumulated net profit was RMB198 million, a year-on-year increase of 16.52%.
In terms of pharmaceutical business, the Company thoroughly implemented the policyof "everything for creating value". In terms of traditional business, the Company wascontinuously deeply rooted in the Zhejiang market. In terms of innovative business, the
Company focused on such fields as product agency, third-party logistics, pharmaceuticale-commerce, and characteristic large health. The Company adhered to consolidating thehospital market, expanding the market outside the hospital market, strengthening theinnovative business, steadily improving the operation quality, profitability and operationefficiency. The overall business has returned to the normal state before the pandemic.
Adhering to the concept of "providing the best services", the traditional business wona reputation from the industry and customers with good services. The market share in thehospital market continuously maintained a leading position in Zhejiang Province, and themarket outside the hospital market continuously grew rapidly. The hospital market focusedon key indicators such as new product introduction, hospital share, order fulfillment rate,and actively cooperated in reform measures such as the Volume-Based Procurement anddistribution, and medical insurance with dual channels, so as to transform value-addedservices such as policy affairs and pharmaceutical management into productivity; themarket focused on the introduction of new products through the joint procurement andsales, strengthened the assessment on the introduction of new listed innovative medicine,and ensured the account opening rate; the market would rationally undertake the Volume-Based Procurement business and adjust the strategy in time; the market optimized varietystructure and expanded high potential varieties; the market cooperated with upstreammanufacturers to do a good job in new hospital access; with the help of the distributionchannels of the subsidiaries, the medicinal ginseng business improved the sales network ofChinese herbal decoction pieces in the whole province, with the personnel and businessdownward and a reliance on the expanded agent decoction of the automatic assembly line;the traditional distribution of medical devices and product agency were carried outsimultaneously to continuously improve the market share of hospitals in various regions.With a focus on creating new Huadong retail, the market outside the hospital market reliedon the advantages of "platform + product + network", expanded service scope, focused onthe development of stores in hospitals, near hospitals and DTP stores, optimizedcommunity stores, improved the introduction of varieties, and did a good job in undertakingoutflow prescriptions.
In terms of innovative business, the Company developed beyond Zhejiang, reshapedcore competitiveness and brought new income generating opportunities. The Company
integrated internal and external resources, strengthened pharmaceutical e-commerce,upgraded "Huadong Pharmaceutical Business Network" by "B2B + B2C", activelyoperated self-operated flagship stores on various mainstream e-commerce platforms,expanded online sales, and provided a platform for expanding the market outside thehospital market; the Company created a gold brand of "medical cold chain", focused onprofessional medical logistics represented by high-end products such as "growth hormoneand HPV vaccine", and improved the scale of three-party services; the Company focusedon specialty special medicine and devices, enriched agent varieties and pipelines, andconstantly improved profitability.By expanding the value-added service boundary for upstream and downstreamcustomers, the innovative business connected with the Company’s overall strategy of"extending from medical care to aesthetic medicine and large health", explored richbusiness forms, and cultivated new pillars of future profits. In terms of the specializedthree-party pharmaceutical cold chain, the Company had an insight into the market demandfor high-end products such as "growth hormone and HPV vaccine", made layout in advance,faced the challenges and grasped opportunities brought by the pandemic, and paid equalattention to developing innovative business and fulfilling social responsibilities. In the firsthalf of 2022, the number of customers increased from 49 in the same period of last year to56, and the three-party logistics revenue increased by 25.56% year-on-year, of which thecold chain revenue increased by 31.66% year-on-year. The number of customers, businessscale and growth rate were far ahead in the province. The business has built a three-in-onecore competitiveness of high skilled talent team, core assets such as cold storage andrefrigerated vehicles, and applied cold chain technology innovation, creating a gold brandof "Huadong Cold Chain".
The business expanded the boundary of value-added services. First, it activelyfollowed the general trend of the medical collectivization development, provided acomprehensive menu-based pharmaceutical service plan, deepened the integrateddevelopment with medical institutions, and cooperated in the "transformation of oldhospitals and construction of new hospitals" of the medical group, starting from theoptimization of the hospital supply chain. Second, it actively followed the developmentstrategy and product pipeline update of the upstream pharmaceutical industry, and carried
out various types of project cooperation. The business and its upstream and downstreamcustomers focused on their core fields through specialization and scale efficiency, andevolved from the cooperation in the pharmaceutical supply chain to the integration of thepharmaceutical value chain. The business connected with the Company’s overall strategy,empowered the pharmaceutical industry in the fields of regional logistics, policy affairs,and market access, gave play to the overall force to help the Company’s overall businessdevelopment.The business continuously practiced social responsibility, actively overcame theimpact of partial pandemics, fully supported the supply of anti-pandemic drugs andequipment, and guarded the transportation lifeline at critical moments. Through the threepharmaceutical logistics centers of North Zhejiang (Hangzhou), South Zhejiang (Wenzhou)and Central Zhejiang (Jinhua), multi-inventory coordination and multi-warehouse linkagewere realized to share information and further optimize the inventory and distribution ofmedical devices during the pandemic prevention and control period; storage andtransportation resources were integrated, and decentralized management was transformedinto centralized and transparent new operation service mode, achieving the goal ofshortening transportation time and saving storage space. With the normalized of thepandemic situation, the Company, relying on the rapid response and linkage practice ofbusiness and management, and the strong supply chain guarantee system of thepharmaceutical business, has opened a new path to deal with emergencies, which furtherhighlights the advantages of multi warehouse linkage and seamless linkage across regionsand the "coordination" of the provincial business during the pandemic period.
4. The overall operating income of the aesthetic medical business grew rapidly,and the domestic market continuously improvedDuring the Reporting Period, the Company’s domestic and foreign aesthetic medicalbusiness continuously implemented the domestic and international double-cycledevelopment strategy, and maintained rapid development year on year. The Company’saesthetic medical segment realized a total operating income of RMB897 million (chargingoff internal offset factors), a year-on-year increase of 130.25% according to the comparablestandard (charging off Huadong Ningbo Company). Sinclair, a wholly-owned subsidiaryin the UK, firmly leveraged the favorable background of the continuous recovery of the
overseas aesthetic medical consumer market, made efforts to overcome the impact ofadverse factors such as the global high inflation that exceeded expectations, and activelyenabled the business expansion through the integration of injection business and EBDbusiness. The business expansion was smooth, and sales in overseas markets continuouslyachieved good growth. Specifically, the injection business in the Asia Pacific market, andthe EBD business in the American market continuously grew rapidly. During the ReportingPeriod, Sinclair achieved a consolidated operating income of GBP63.25 million(approximately RMB531 million), a year-on-year increase of 104.3%, and realized anEBITDA of GBP11.84 million, both of which set the best level in Sinclair’s history. In thesecond half of the year, it is expected that with the continuous development of the globalmarket, Sinclair will continuously maintain a rapid growth trend as a whole.In addition, in February 2022, Sinclair completed the acquisition of 100% equity ofViora, an energy based medical device company, and formally incorporated it into theCompany’s consolidated statements. Viora has an advanced product portfolio using laser,intense pulsed light, radio frequency, high-pressure jet and microdermabrasiontechnologies. Reaction?, V series (V10, V20 and V30), EnerJet and Pristine?, andInfusion? had been listed overseas. Specifically, Reaction? obtained the registrationcertificate of Class III medical devices from the National Medical Products Administration(NMPA) in 2015. Viora’s products can form effective complementarity with theCompany’s existing energy-based device lines in the aesthetic medical field, realizing thefull layout of the Company’s energy-based device product variety. After the acquisition,High Tech also actively expanded the US market through the channel resourcesaccumulated by Viora. Based on this acquisition, the Company also put forward the productconcept of "V Women Tech" by focusing on women’s professional medical care withleading medical technology.In May 2022, Sinclair signed a product exclusive license agreement with Irish EMAAesthetics to obtain the global distribution rights of Préime DermaFacial, an energy-baseddevice (EBD) with multi-functional intelligent facial skin management, except Germanyand the United Kingdom. Developed by European skin experts, Préime DermaFacial is anew multi-functional facial skin management platform integrating five advancedtechnologies: Spiral vacuum, microdermabrasion, microcurrent, radio frequency and
ultrasound. It can be used for facial cleaning, exfoliation, moisturizing, rejuvenating andnourishing skin to create a smooth and compact skin for beauty seekers. The introductionof this product fills the gap in the Company’s EBD product pipeline for facial cleaning inaesthetic medical field, and further enriches the Company’s EBD product portfolio. PréimeDermaFacial will be commercialized in the third quarter of 2022 in Europe, America andother major global medical Aesthetics markets. At present, with a certain amount ofcustomer intention orders accumulated, it is planned to be listed in China in 2023. At thattime, the product will form an effective synergy with Glacial Spa
?and Reaction? products,which will bring new impetus to the growth of the Company’s domestic aesthetic medicalEBD business.During the Reporting Period, Sinclair (Shanghai), a wholly-owned subsidiary of theCompany in China, insisted on compliance operation and development, continued to carryout brand construction, and constantly improved its competitive advantage. From Januaryto June 2022, Sinclair (Shanghai) realized an operating income of RMB271 million, andits profitability continuously improved, exceeding the income contribution of HuadongNingbo Company’s aesthetic medical business to the Company’s profit in the same periodlast year. Sinclair (Shanghai) has become an important growth engine of the Company’saesthetic medical business. In the second quarter, although the business expansion ofSinclair (Shanghai) was affected by the pandemic in many places in China, SinclairAesthetic constantly expanded its market influence by continuously improving the online+ offline medical education and training service system, creating an efficient directaesthetic medical sales team, and strengthening channel coverage and terminal servicecapabilities. Since May, the operation of Sinclair (Shanghai) has been recovering and risingmonth by month. As a high-end product in the global renewable filling field, since it waslaunched in the Chinese market, the Company’s Ellansé
?
product has steadily occupied thefront-end of the industry with a good reputation of rigorous aesthetic medical academicresearch and training, rich overseas market safety and efficacy verification, and its marketcoverage and brand awareness have been continuously improved. At present, the numberof contracted cooperative hospitals has exceeded 500, the number of trained and certifieddoctors has exceeded 900, and the layout of five designated injection training bases for
domestic certified doctors has been completed. The market development achievementshave been constantly displayed.In addition, Sinclair (Shanghai) took many measures to protect the life, health andsafety of beauty seekers and help the development of industry norms as the top priority ofits work. Since Ellansé
?product was launched in the Chinese market, the Company haveadhered to the professional cold chain transportation of the whole process of the productto fundamentally ensure the product quality. The Company fulfilled its responsibility ofbeing a leader in the regenerative aesthetic medical field, and passed strict professionaltraining and certification to empower institutions and products. The Company has selectedregular aesthetic medical institutions nationwide for cooperation and certification, and heldmany training and certification meetings for injection doctors to ensure that beauty seekersenjoy a formal, professional and reassuring experience in every process. The Companyadhered to the bottom line of compliance, insisted on the purpose of "reassuring experiencein seeking beauty", and actively carried out the action of "protecting the rights of Ellansé
?
products" and launch Ellansé
?official code scanning verification system. The Companyalso cooperated deeply with Chinese Association of Plastics and Aesthetics, and took thelead in responding to and joining the "two certificates and one code" genuine productalliance. Through publishing cooperation blacklists, administrative reports and other forms,the Company cooperated with the industrial and commercial departments with the mostresolute attitude to crack down on illegal business activities in the market, regulate themarket operation order, and fully safeguard the legitimate rights and interests of beautyseekers.In the second half of the year, the Company believes that under the background of thelong-term positive development trend of the aesthetic medical industry in China and thecontinuous growth of the aesthetic medical consumption demand, with the comprehensivecontrol of the partial pandemic in China and the rebound of the consumer market, offlineaesthetic medical institutions will gradually return to normal operation, the aestheticmedical consumption demand delayed by the pandemic will be gradually released, and thenumber of consumption is expected to recover. The aesthetic medical teams of theCompany is confident that they will continue to work hard in the second half of the year,
achieve better results than the first half of the year, and complete the set annualperformance goals.
5. Other matters
During the Reporting Period, the Company and its wholly-owned subsidiariesZhongmei Huadong and Huadong Pharmaceutical (Hong Kong) Investment Holding Co.,Ltd. signed the Equity Investment Agreement and the Product Exclusive LicenseAgreement with Heidelberg Pharma AG (hereinafter referred to as "Heidelberg Pharma"),a German listed company, and its shareholders’ representatives. Up to now, theBundesanstalt für Finanzdienstleistungsaufsicht (BaFin) has approved and exempted theCompany’s acquisition of Heidelberg Pharma through the public offer; the Company hasalso obtained the No Objection Certificate of the Bundesministerium für Wirtschaft undKlimaschutz (BMWK) on this transaction; the relevant overseas investment approval orfiling of this transaction in China has been completed.During the Reporting Period, the Board of Directors and the Board of Supervisors ofthe Company successfully completed the new term and appointed a new SeniorManagement after the deliberation and approval of the General Meeting of Shareholders.The core management team and management backbone of the Company remain basicallystable, and at the same time, the talents suitable for the Company’s development needscontinuously increase. Under the leadership of Lv Liang, Chairman of the Company, thenew leadership team of the Company will make concerted efforts to unswervingly deepenreform and innovation, unswervingly move towards the Company’s established strategictargets and continue to lead the Company’s sustainable, stable and high-qualitydevelopment in the critical period when challenges and opportunities coexist.Since its listing, the Company has actively performed its social responsibilities andreturned to shareholders. In 2022, it has always adhered to the concept of stable, sustainableand scientific dividends. In June 2022, it completed the 2021 equity distribution,distributing cash dividends of RMB2.9 (tax included) to all shareholders for every tenshares, and distributing cash dividends totaling RMB507 million. In the 22 years since itslisting, the Company has distributed dividends 19 times, with a cumulative dividendamount of RMB5,084 million, far exceeding the RMB250 million raised during the IPO,
and bringing sustained and stable investment returns to the majority of shareholderssupporting the Company’s development.iii. R&D
(1) Overall status of R&D
In pursuit of the corporate philosophy of "putting scientific research and patients first",the Company invests more in R&D to enrich the R&D pipeline of innovative drugs. As atthe issuance of this Report, there are 86 pharmaceutical projects under development ofwhich 43 involve innovative products and biosimilars. Specifically, four products are inPhase III clinical trial and another four in Phase II clinical trial. During the ReportingPeriod, the Company’s R&D expenditure in the pharmaceutical industry stood at RMB580million, up 34.1% year on year over the first half of 2021 among which RMB540 millionwas for R&D expenses. The R&D mainly includes the following aspects:
1) By practicing the R&D model of new drugs of "independent R&D + cooperativeand entrusted development + license-in", the Company followed up the latest drugmechanisms, targets and progress of clinical application studies internationally. In addition,it sped up the layout of innovative drugs and license-in of domestic and overseas innovativedrug projects, having initiated numerous potential innovative drugs;
2) With "clinical value, pharmacoeconomic value and commercial value" as thestarting point, innovative products were launched focusing on endocrine, autoimmunityand oncology during the Reporting Period;
3) Focused on clinical superior varieties and special drugs for specialty, the Companyaccelerated the R&D of generic medicine with high-tech barriers and modified new drugs;
4) The Company enhanced its processes and quality of APIs and preparations anddeveloped new preparations for online products, thus cutting cost and raising the marketcompetitiveness;
5) The integrated and dynamic assessment of varieties under development wastoughened. By prioritizing projects under development and allocating R&D resources, theCompany ensured the focus on the R&D pace of varieties under development to the best;
6) Through overall planning for the differentiated, innovative and technologicalplatform for polypeptide and technological platforms for antibodies to immunological
diseases, microbial fermentation cytotoxin and for innovative linkers and conjugate, theCompany sought cooperation and win-win results to build a global ADC R&D ecosystem.
(2) Development and planning for innovative drugs
Focused on existing treatment fields covered, the Company has developed a strategicplan of innovative drugs for future development in the next five years. The plan defines themajor initiation orientation and volumes of innovative projects, and proposes to initiate andreserve innovative varieties (including innovative drugs, modified new drugs andinnovative medical equipment), no less than 15 a year during the planning period. Duringthe Reporting Period, the Company sped up the pace of clinical studies on innovative drugsunder development and major biosimilar varieties to seek early approval for launching. Itexplored and learned the advanced R&D system construction of innovative drugsinternationally to refine and adjust its overall R&D system framework. Through high-levelR&D talent introduction, the Company set up an R&D team covering the R&D lifecycleof innovative drugs, and improved the functional modules for the R&D of innovativeprojects to reach the target for those projects of the strategic plan.In terms of the ADC field particularly, the Company further expanded itsdifferentiated layout. It invested in Qyuns Therapeutics, an antibody R&D and productioncompany, and Nuoling Bio, a company specialized in ADC linkers and conjugatetechniques, incubated Huida Biotech which owns the whole product line of ADC payloads,and controls Doer Biologics, a multi-antibody platform R&D company. It carried outequity investment and product cooperation with Heidelberg Pharma, a global emergingtechnology company in the ADC field. In the future, the Company will support theestablishment of innovative platforms and integrate resources to form a unique global ADCR&D ecosystem and gradually build a differentiated and independent ADC R&D platform.It plans to develop at least ten ADC innovative products and actively promote clinicalregistration and studies within three years.
Also, the R&D center of innovative drugs taking value creation as the core and"advantaged, differentiated and source-oriented innovation" as the major direction will: 1)Transfer the orientation from external M&A to independent innovation + externalintroduction driven by dual engines to create a new innovative R&D ecosystem; 2) Clarifythe mechanism for initiation targets for differentiated innovation, track the information of
competing products during the whole process of items, and initiate at least 15 innovativeR&D projects to foster a cutting-edge, differentiated and innovative pipeline; 3) Establisha global strategic and collaborative R&D ecosystem centering on the Company, produce agroup of PCC/IND results with advantages and high druggability, and declareNDA/Biologics License Application ("BLA") and enable innovative drugs and products togo to the market; and 4) Cultivate a high-level R&D team championing the R&D lifecycleof innovative drugs, strengthen the establishment of a technological platform withindependent intellectual property right and high barriers such as proteolysis targetingchimera (PROTAC), molecular glue, ADC and other new technologies, and incubatemultiple value items on the basis of platforms.
(3) Major efforts in independent R&D innovation
The R&D center of innovative drugs has established a technological platform for non-clinical studies, a platform for computer aided design and a technological platform forchemical synthesis, which provided strong technological support for incubating newprojects. In the early period, the R&D team has selected over 1,000 potentialpharmaceutical molecules with in-vitro activity (including small molecules of chemicalmedicine and large molecules of biological medicine), mainly distributed in the treatmentfields for endocrine, autoimmunity and oncology. To be specific, HDM1002 is aninnovative drug project in the PCC phase through independent R&D by the Company withthe global independent intellectual property right, marking that the Company’sindependent R&D has entered a new phase. As at now, six projects have been initiated inthe early period of 2022. Among the independent R&D items, there are 14 items started inthe early and PCC phases and two pre-clinical items. Specifically, remarkable phasedachievements have been made among those innovative projects including the first-in-class("FIC") and best-in-class ("BIC") ones. In terms of the Company, the R&D center ofinnovative drugs has filed over 60 patent applications in total including more than tenofficial and PCT applications.Moreover, in 2021, the Company clinched the honor of "leading innovative team" bythe Zhejiang Province, and was sponsored by the province’s "leading pioneer" scientificand technological project to espouse the establishment of Huadong Medicine Joint Fundsof the Zhejiang Provincial Natural Science Foundation of China for innovative
development. Meanwhile, the HDM1002 and TTP273 items received rewards fromprovincial and municipal scientific and technological projects.
(4) Progress of clinical studies on major innovative drugs, innovative medicalequipment and biosimilarsAs at the issuance of the Report, the Company’s R&D progress of multiple items ofinnovative drugs, innovative medical equipment and biosimilars is as follows:
Endocrine
HDM1002: The GLP-1 receptor agonist, formed from small molecules which isindependently developed by the Company is projected to be delivered for Pre-INDapplications both in China and the United States in the second half of 2022.
HDM1003 (SCO-094): This product, jointly developed by the Company and Japan’sSCOHIA PHARMA, Inc. is leveraged as the dual agonists at GLP-1R and GIPR targetsfor treating Type-2 diabetes, obesity and nonalcoholic steatohepatitis ("NASH").Furthermore, Phase I clinical trials are carried out for this product in the United Kingdom,and feedback has been procured domestically after the delivered Pre-IND application.
DR10624: The multi-agonist, at the GLP-1R/GCGR/FGF21R targets underdevelopment by the holding subsidiary Doer Biologics can treat Type-2 diabetes, obesityand metabolic syndromes. In April 2022, DR10624 was approved for Phase I clinical trialsin New Zealand and administered for the first subject in June.
Liraglutide Injection: The GLP-1 receptor agonist, the marketing authorizationapplication for diabetes indication was accepted by the NMPA in September 2021. Theinjection is at the stage of supplementary studies, expected to be approved by the end of2022. The marketing authorization application for obesity or overweight indication wasaccepted in July 2022.
Semaglutide Injection: The GLP-1 receptor agonist, received the IND approval inJune 2022.
Insulin Degludec Injection: Its IND application was accepted in July 2022.
Ranibizumab Injection: In terms of Phase III clinical trials, the enrollment of the firstsubject was completed in March 2022.
Oncology
HDM2002 (Mirvetuximab): The ADC drug under development targeting positiveovarian cancer with folate receptor alpha ("FRα") for the first time globally is utilized fortreating the platinum-resistant ovarian cancer with high expression of FRα. In May 2022,ImmunoGen, Inc., the Company’s cooperative party, announced that US FDA had acceptedand filed the BLA of this product. The application has been granted Priority Reviewdesignation and FDA has set a Prescription Drug User Fee Act (PDUFA) action date ofNovember 28, 2022. The BLA is based on the results of pivotal single-arm SORAYAclinical trial. Apart from the SORAYA trial, the multi-regional randomized controlledPhase III study MIRASOL is conducted. ImmunoGen expects to release the top-line dataof this study at the beginning of 2023. In terms of this product’s Phase I clinical trials inChina for Pharmacokinetics, the enrollment of all subjects was completed in July 2022.The Company submitted the Pre-BLA to the CDE in July 2022.Mefatinib tablet: This drug is for advanced non-small-cell lung cancer. The overallenrollment of Phase III clinical subjects was accomplished, and the NDA application willbe conducted after the end of Phase III clinical trials during the second quarter of 2023.DR30303: The product under development by the holding subsidiary Doer Biologicstargets Claudin 18.2 and can treat solid tumors. In January 2022, an IND approval wasreceived and in May 2022, the enrollment and administration of Phase I clinical trial forthe first subject were completed.HDM2003 (AB002): This product is the dual-target fusion protein targeting PD-L1/L2 and IL15, jointly developed by the Company and US AKSO for solid tumors. Pre-clinical studies of this product are currently underway.HDP-101: This product is an ATAC
?(Antibody Targeted Amanitin Conjugate)targeting B-cell maturation antigen (BCMA). Heidelberg Pharma, the Company’scooperative party is performing Phase I/IIa clinical trial overseas for relapsed/refractorymultiple myeloma regarding this product. Additionally, HDP-101 was administered for thefirst subject on February 15, 2022.
HDP-103: This product is an ATAC
?
targeting the prostate-specific membraneantigen (PSMA). Heidelberg Pharma in Germany, the Company’s cooperative party, isconducting pre-clinical studies on this product with the targeted indication as metastaticcastration-resistant prostate cancer (mCRPC).
AutoimmunityARCALYST
?(Rilonacept): The recombinant dimer fusion protein, can block thetransmission of IL-1α and IL-1β signals. In February 2022, the Company signed acooperative agreement with Kiniksa on introducing this product. Continually,ARCALYST
?was approved in the United States in 2008, 2020 and 2021 for treatingcryopyrin-associated periodic syndromes (CAPS), deficiency of IL-1 receptor antagonist(DIRA) and recurrent pericarditis. Also, ARCALYST
?was included by the CDE into theList of Overseas New Drugs for Urgent Clinical Needs (Group 1) for CAPS. The Companyfiled a Pre-BLA to the CDE for the product’s CAPS indication in July 2022, and plans todeliver the BLA application domestically in the second half of 2022.Mavrilimumab: This product is the fully humanized monoclonal antibody targetingGM-CSFRα. Kiniksa, the Company’s cooperative party, is preparing the Phase II clinicaltrial overseas for GM-CSF-related cardiovascular diseases.
HDM3002 (PRV-3279): This product can treat systemic lupus erythematosus (SLE)and prevent or lower the immunogenicity of gene therapy. Provention Bio, the Company’sUS cooperative party, is launching the Phase IIa clinical trial for SLE indication of thisproduct in the United States and Hong Kong, China.HDM5001 (OP-101): This product is under development jointly by the Company andAshvattha Therapeutic, Inc., the joint-stock company in the United States, for treating thehyperinflammation in hospitalized adult patients with severe COVID-19. The product iscurrently undergoing Phase II clinical trial in the United States.HDM3001 (QX001S): As the biosimilar of Stelara
?, this product is underdevelopment jointly by the Company and Qyuns Therapeutics, for treating adult patientswith moderate to severe plaque psoriasis. Its Phase III clinical trial has completed theenrollment of all subjects ahead of schedule in February 2022.
Innovative medical equipment
HD-NP-102 [Transdermal Glomerular Filtration Rate Measurement System andMB102]: This product is jointly developed by the Company and MediBeacon, Inc. in theUnited States. This system based on the changes in fluorescence over time issued byexogenous tracers for non-invasive monitoring, can continuously measure the GFR ofpatients with normal or impaired renal functions. In July 2022, the registration application
for medical equipment of this system was accepted by the NMPA and will enter theaccreditation phase. MB-102 injection (Relmapirazin) which works together with thissystem is the FIC drug, whose application of Phase III MRCT was approved by the NMPAin May 2021 and the trial will be simultaneously conducted in China and the United Statesin the second half of 2022.
R&D Pipeline for Major Innovative Drugs and Biosimilars as at the Date of
Issuance of this Report
(5) Major R&D progress of the varieties of generic medicine
The Company by regular dynamic assessment and sorting for existing genericmedicine under development, specified the varieties that shall be focused and promotedpreferentially. As at the issuance of this Report, the progress of major varieties is as follows:
No.
| No. | Treatment Fields | Project Name | Specification | Latest Progress |
| 1 | Endocrine | Canagliflozin Tablets | 0.1 g, 0.3 g | Supplementary materials were submitted, and is expected to be approved in 2022 |
| 2 | Endocrine | Sitagliptin Phosphate and Metformin Hydrochloride Tablets | 50/850 mg | Review progress is being followed up, and is expected to be approved in 2022 |
| 3 | Endocrine | Pioglitazone Hydrochloride and Metformin Hydrochloride Tablets | 15/850 mg | The application was submitted, and processed in June 2022 |
| 4 | Immunity | Tacrolimus Ointment | 0.03%, 0.1% | The application was submitted, and processed in April 2022 |
| 5 | Immunity | Tacrolimus Granules | 1 mg | The BE trial has been completed, and application is expected to be submitted in 2022 |
| 6 | Oncology | Sorafenib Tosylate Tablets | 0.2 g | Supplementary materials were submitted, and is expected to be approved in 2022 |
| 7 | Oncology | Olaparib Tablets | 150 mg | BE trial stage |
| 8 | Oncology | Ibrutinib Capsules | 140 mg | Pilot scale study stage |
| 9 | Cardiovascular diseases | Macitentan Tablets | 10 mg | Supplementary materials were submitted |
(6) Progress of international registration
During the Reporting Period, the Company conducted proactive internationalregistration with the major progress as follows:
| No. | Fields | Project Name | Notes | Progress during the Reporting Period |
| 1 | Endocrine | Acarbose Tablets | APIs | Supplementary materials were submitted for the registration in India in May 2022 |
| 2 | Immunity | Tacrolimus | APIs | The US DMF application of newly added places was submitted in January 2022 |
| 3 | Immunity | Tacrolimus Capsules | 0.5 mg, 1 mg, 5 mg | Supplementary materials were submitted for the US ANDA application in April 2022 |
| 4 | Oncology | Exatecan Mesylate | Intermediate | The US DMF application was submitted in January 2022 |
| 5 | Anti-infection | Daptomycin | APIs | The US DMF application of newly added places was submitted in January 2022 |
| 6 | Anti-infection | Mupirocin Calcium | APIs | Supplementary materials were submitted for the US DMF application in March 2022 |
| 7 | Anti-infection | Mupirocin | APIs | Supplementary materials were submitted for the registration in India in April 2022 |
| 8 | Anti-infection | Caspofungin Acetate for Injection | 50 mg, 70 mg | Supplementary materials were submitted for the US ANDA application in May 2022 |
(7) Progress of consistency assessment
During the Reporting Period, the progress of the consistency evaluation of genericdrug for the Company is as follows:
| No. | Treatment Fields | Project Name | Specification | Progress during the Reporting Period |
| 1 | Analgesia | Paracetamol and Tramadol Hydrochloride Tablets | 325 mg: 37.5 mg | In January 2022, the application for consistency evaluation were submitted and accepted |
| 2 | Immunity | Tacrolimus capsule | 1 mg | In June 2022, the application for consistency evaluation were submitted and accepted |
| 3 | Digestion | Pantoprazole sodium enteric-coated capsule | 40 mg | In June 2022, the application for consistency evaluation were submitted and accepted |
(8) Progress of Patents
Because the Company has protected its intellectual property right and transferred andapplied the results in recent years, the volumes of patent application and authorization haveclimbed steadily. Over the years, the patent applications both at home and abroad haveamounted to approximately 650 pieces of which 290 are authorized invention patents.Zhongmei Huadong, the wholly owned subsidiary, is a national intellectual propertydemonstration enterprise. In November 2014, it passed the external audit by Zhongzhi(Beijing) Certification Co., Ltd., becoming one of the 147 enterprises as the first groupobtaining the standard implementation certification. In October 2021, it passed the reviewunder supervision of intellectual property right standard implementation for businesses.
During the Reporting Period, the Company’s patent application and maintenance wererolled out. A total of 23 applications were submitted in terms of Zhongmei Huadong, thewholly owned subsidiary. Among them, 18 were invention patents (PCT applied for ninepatents and Taiwan, China for one), and five received the domestic authorization.
(9) R&D and registration of aesthetic medicine products
No.
| No. | Category | Product Name | Purpose | Latest Progress |
| 1 | Injection | Perfectha? | Facial filling | Efforts related to domestic registration are underway |
| 2 | Injection | Maili Extreme | Facial filling | Domestic clinical trials are underway which were approved by the independent R&D institution regarding ethics in July, and the enrollment of the first subject will be completed in August as envisaged |
| 3 | Injection | Ellansé-M | Facial filling | It is predicted that in August, domestic registration inspection will reach the end, and the initiation related to clinical trials is underway |
| 4 | Thread lifting | Silhouette Instalift? | Mid-facial lifting | As for domestic clinical trials, part of the subjects have been enrolled, and the follow-ups at time nodes are in progress |
| 5 | Energy based device | Glacial Rx (F1) | Removal of benign pigmentary lesions of the skin | Domestic registration inspection are underway |
| 6 | Energy based device | Cooltech Define | Fat reduction and body shaping | Domestic registration inspection are underway |
| 7 | Energy based device | Primelase | Hair removal | Domestic registration inspection are underway |
| 8 | Energy based device | V product line (V20, V30) | Skin firming, body and facial shaping, skin rejuvenation and hair removal | It is predicted that in September, domestic registration inspection will be initiated |
| 9 | Energy based device | EnerJet | Scar rehabilitation, facial lifting and dermal thickening | It is predicted that in September, domestic registration inspection will be initiated |
| 10 | Energy based device | Préime DermaFacial | Facial skin management | Equipment classification are underway domestically |
| 11 | Energy based device | Reaction? | Body and facial shaping and skin firming | Registration of changes in domestic agents and foreign factory address is in progress, and the product will re-enter the Chinese market in Q1 2023 as envisaged |
iv. The Company’s BD cooperation
In June 2022, the Company’s wholly owned subsidiary Zhongmei Huadong reachedstrategic collaboration with Julphar. In addition, the Company authorized Julphar todevelop and produce and acquire the commercial rights and interests of LiraglutideInjection for diabetes and weight losses in 17 countries including the UAE, Saudi Arabia,Egypt, Kuwait, Oman, Bahrain and other countries in the Middle East and North Africa.Liraglutide Injection is the Company’s second product authorized overseas after TTP273,which marks the international recognition again for the strength and R&D innovativecapabilities of diabetes. This transaction has represented the Company’s capacity forcommercial cooperation, and marked a milestone in global pharmaceutical R&Dinnovation, both of which lay a solid foundation for expanding the overseas market.In February 2022, the Company’s wholly owned subsidiary Zhongmei Huadongsigned an exclusive license agreement on products with Kiniksa, also a wholly owned oneof Kiniksa Pharmaceuticals, Co., Ltd. (Nasdaq: KNSA). Zhongmei Huadong procured theexclusive license in 24 Asia-Pacific countries and regions including China, South Korea,Australia and New Zealand (excluding Japan) involving the development, registration andcommercial interests and rights of the two global innovative products. The two productsare ARCALYST
?
and Mavrilimumab in autoimmunity of Kiniksa. Continually,ARCALYST
?was approved in the United States in 2008, 2020 and 2021 for treating CAPS,DIRA and recurrent pericarditis, with sound clinical feedback given. Up to now, thisproduct is the first and only drug approved by the US FDA for recurrent pericarditisapplicable to the group aged 12 and above. Also, ARCALYST
?was included by the CDEinto the List of Overseas New Drugs for Urgent Clinical Needs (Group 1) for CAPS. Thislicense-in of FIC biological medicine is expected to accelerate to meet the clinical needsdomestically of patients with autoimmune and rare diseases, and demonstrates the resultsof the Company expediting international innovation and deepening the layout of immuneproducts.In February 2022, the Company signed an exclusive License Agreement on Productsand Equity Investment Agreement with its wholly owned subsidiary Zhongmei Huadong,Huadong Medicine Investment Holding (Hong Kong) Limited and the listing company inGermany Heidelberg Pharma and its shareholders. Through its wholly owned subsidiaryHuadong Medicine Investment Holding (Hong Kong) Limited, the Company subscribed
Heidelberg Pharma’s additional stocks issued publicly, with the ultimate percentage ofequity interest acquired being 35%. For this percentage, the Company becomes the secondlargest shareholder. Zhongmei Huadong received the exclusive license including thedevelopment and commercial interests and rights of HDP-101 and HDP-103 underdevelopment of Heidelberg Pharma in 20 Asian countries and regions, for instance,Chinese mainland, Hong Kong and Macao Special Administrative Regions in China,Taiwan, China, South Korea and Singapore. In addition to that, Zhongmei Huadong willprocure the exclusive Opt-in of Heidelberg Pharma’s another two products underdevelopment namely HDP-102 and HDP-104, as well as the rights of first negotiation(ROFN) for two additional products in development subsequently. With the proprietaryATAC
?technological platform, Heidelberg Pharma is the first to develop Amanitinpayload and its derivatives for treating cancers globally. Amanitin, the only known RNApolymerase II inhibitor in the world, is of a novel mechanism of action. Upon thiscooperation, the Company has integrated its ADC R&D technological accumulations withthe advanced and proprietary ATAC
?technological platform of Heidelberg Pharma toenrich the global ADC R&D ecosystem.In February 2022, the Company’s wholly owned subsidiary Zhongmei Huadongsigned a exclusive strategic collaboration agreement with AKSO on the clinicaldevelopment and commercial interests and rights of AB002 under development in the Asia-Pacific region (excluding Japan). AB002, as the dual-target fusion protein under pre-clinical development targeting PD-L1/L2 and IL15, can inhibit immune checkpoints andactivate natural killer cells (NK cells) for solid tumors. The Company believes that thedistinctive mechanism of AB002 has enormous potential in the immunotherapy of cancerand this cooperation has also enriched the Company’s innovative pipeline for oncologyproducts.
In January 2022, the Company’s wholly owned subsidiary Zhongmei Huadong signedan exclusive marketing agreement with Beijing Shenogen Pharma Group Co., Ltd.’s(hereinafter referred to as "Shenogen") wholly owned subsidiaries Hainan Shenogen andBeijing Shenogen. The purpose is to gain the exclusive right of marketing of the nationalFIC drug, the "Icaritin Soft Capsules", for small-molecule immune regulation for treatingadvanced hepatocellular carcinoma in 27 provinces of Chinese mainland. The Company
has a complete pharmaceutical service system and a wide range of market resources in thepharmaceutical industry, and this cooperation is just an affirmation of the Company'scommercialization ability in the local market, which helps create a win-win andcooperative model for complementary advantages and coordinated development mutually,and is expected to heighten the market competitiveness in the oncology field. The firstgroup of prescriptions for Icaritin Soft Capsules was given at the hospitals of Beijing andShanghai in May 2022. This marks that the Icaritin Soft Capsules, China’s original small-molecule immunomodulator and the global FIC drug with global independent intellectualproperty right, officially benefits the patients with liver cancer in the country.II. Analysis of core competitiveness
1. Open innovative drug R&D System and continuous improvement ofinnovation capabilityThe Company highly values innovation and R&D and maintains a high proportion ofR&D investment. Upholding the "scientific research-based, patient-centered" philosophy,it strives to create clinical value, medicine economics value and commerce value. Afteryears of development, it has established a relatively complete independent innovationsystem for drug R&D covering drug discovery, pharmaceutical research, pre-clinicalresearch, clinical research and industrialization, and established a global new drug R&Dcenter.The Company’s innovation and R&D focuses on three core treatment areas, includingendocrinology, oncology and autoimmunity. By ways of cooperative drug developmentand equity investment, it carried out in-depth strategic cooperation with leadingpharmaceutical companies both in and outside China, and created a global R&D ecosystemthrough introduction, integration and innovation. In particular, in terms of the ADC field,the Company further expanded differential layout. It invested in Qyuns Therapeutics, anantibody R&D and production company, and Nuoling Bio, a company specialized in ADClinker and conjugate techniques, incubated Zhejiang Huida Biotech Co., Ltd. (HuidaBiotech) which owns the whole product line of ADC payloads, and controlled DoerBiologics, a multi-antibody platform R&D company. It carried out equity investment andproduct cooperation with Heidelberg Pharma, a global emerging technology company in
the ADC field, to form a unique ADC global R&D ecosystem, gradually build adifferentiating ADC independent R&D platform, and strengthen and improveantineoplastic product innovation chain and ADC ecological chain. In the next three years,it plans to develop at least 10 ADC innovative products and actively promote theregistration work and clinical studies.Through independent R&D, cooperation, license-in and other measures, the Companycontinuously developed and formed differentiating innovative product pipelines coveringthe lifecycle of R&D. As at the releasing of this report, the Company has nearly 43innovative drugs and biosimilars under research, among which four are in the phase III ofclinical trial and four are in phase II, covering endocrinology, oncology and autoimmunityand other areas, so as to effectively guarantee the positive momentum of the clinical andlaunch progress of innovative products, thereby providing new drivers for medium-andlong-term development.
2. Comprehensive capability in international business developmentThe Company actively promoted the internationalization process. By acquiring 100%equity of Viora, the Company deepened its global aesthetic layout in the energy basedaesthetic device market. Through strategic and equity cooperation with a number ofAmerican companies, including Akso and Kiniksa, and a German company HeidelbergPharma, etc., it supplemented and enriched the rights of commercial development ofinnovative drugs both at home and abroad. It accelerated the international registration ofproducts. All online chemical APIs passed the market certification of FDA, EU and otherauthorities. Daptomycin for Injection, Acarbose Tablets and Pantoprazole Sodium forInjection were all approved by FDA, and some high-end industrial microorganismingredients were empowered with strong competitiveness in the international market. Italso actively developed international logistics and procurement suppliers to make itsprocurement capability keep in line with the international standard. It pushed CMO/CDMObusiness to go global and has been integrated into the global innovative drugs R&Dindustrial chain.
3. Diversified product pipelines for specialty diseases and chronic diseases, andcomprehensive competitive advantage of diabetes treatment
Over the years, the Company has been deeply engaged in specialty medications,chronic disease medications, and medications for special purposes and built a favor brandeffect and strong market base in the treatment of chronic kidney diseases, transplantationand immunity, endocrinology, digestive system and so on. The market share of theseproducts continuously takes the lead in the domestic market. Focusing on the targets ofmainstream clinical treatment of diabetes, the Company has formed a comprehensivelayout of product pipelines of innovative drugs and differentiating generic medicine. Atpresent, it has more than 20 commercialized products and products under development. Inorgan transplantation, it realized the full coverage of clinical first-line immunosuppressiveagents and developed multi-tiered follow-up products. It developed first-in-class drugs inall three core treatment fields of oncology, endocrine and autoimmunity. As forantineoplastic ADC drugs, it has established the layout of multiple global innovative drugsand an R&D ecosystem, forming differentiating advantages. At present, a total of 26 coreproducts on the market were listed in the Catalog of Medicines Covered by National BasicMedical Insurance, Work-Related Injury Insurance and Maternity Insurance (2021).
4. Leading professional pharmaceutical care team and extensive market networkin China
In terms of the pharmaceutical industry, the Company owns a professionalPharmaceutical Care (PC) and market development team consisting of 6000 employees.Centering on clinical value and academic promotion, it promoted a marketing modelintegrating comprehensive hospitals, medical institutions at the primary level, retail, thethird terminal and the Internet, so as to gradually increase the coverage through multiplechannels, thus obtaining good competitive advantages.
Having developed in Zhejiang province for many years, the Company’spharmaceutical commerce owns complete business activities and diversified products, andenjoys comprehensive competitive advantages in market access and network coverage. Itconstantly improves its four core capabilities including logistics, information, finance andoperation, offering high-end value-added services such as policy affairs. In addition, it hasestablished cooperative ties with 90% of mainstream pharmaceutical enterprises at homeand abroad, and realized the full coverage of public medical institutions, major privatehealth care and retail pharmacies in Zhejiang province. Its market share takes the lead in
Zhejiang province, and industry ranking stands at the forefront for many years in a row. Inrecent years, the Company has witnessed a rapid development of its innovative businessessuch as product agency and market expansion, characteristic comprehensive healthindustry, third-party pharmaceutical logistics featured by cold chain, and pharmaceuticale-commerce. It has built a sound service system and professional ability of cold chainlogistics distribution, which takes the lead in China.
5. High-end international aesthetic medicine product pipelines covering mainminimally invasive and non-invasive non-surgeriesThe Company’s strategic plan in aesthetic medicine started in 2018, when it acquiredSinclair, a Britain-based company. Sinclair acquired High Tech and Viora that arespecialized in energy based aesthetic devices in 2021 and 2022, respectively. In May 2022,it obtained the global distribution rights, except in Germany and the UK, for the energybased device of Préime DermaFacial of EMA Aesthetics, an Irish company. Based on theseefforts, the Company has achieved full coverage of non-surgical aesthetic medicineinjection products and energy based devices in medium- and high-end markets. It owns theglobal rights in a number of patented products in the fields of facial filler, body shaping,thread lift, energy based device, etc., and has an international operation and BD team ofaesthetic medicine. Focusing on the global high-end aesthetic medicine market, theCompany has formed an international aesthetic medicine business network covering R&D,manufacturing and marketing, and built a global aesthetic medicine marketing network byfurther integrating R&D resources and capabilities, and relying on four global R&D centers,including Sinclair (UK), High Tech (Spain), R2 (USA) and Kylane (Switzerland), as wellas Sinclair’s five global production bases in the Netherlands, France, the United States,Switzerland and Bulgaria. At present, the Company’s products were sold in more than 80countries and regions around the world. The Company owns 36 high-end minimallyinvasive and non-invasive products of aesthetic medicine, among which 21 are on themarket inside and outside China, and 15 are international innovative products underresearch. The product portfolio covers mainstream non-surgical aesthetic medicine sectorssuch as facial fillers, thread lift, skin management, body shaping, hair removal, andcosmetic gynecology, forming an integrated product cluster with the number and scope ofproducts at the forefront of the industry.
6. Rooted in the strong R&D and industry base and systematically explored thenew blue sea of industrial microbiology
The Company has been engaged in the industrial microbial field for more than 40years with a profound industrial foundation. It has successfully developed andmanufactured a variety of microbial drugs and built a system of key technology formicrobial products R&D and production. The scale and technology of existingmicroorganism fermented products are at the forefront of the industry. It established threemicroorganism R&D bases: Zhongmei Huadong, Huida Biotech and Huiyi Biotech, fiveindustrial bases including Hangzhou Xiangfu Qiao industrial base, Qiantang New Districtindustrial base, Jiangsu Jiuyang industrial base, Meiqi Health industrial base and MeihuaHi-tech industrial base, the largest ferment singleton workshop in Zhejiang province aswell as the leading microbial drugs production capability. Its R&D capability covers thewhole stage of microbial engineering, such as bacteria construction, metabolic control,separation and purification, enzyme catalysis and synthesis and modification. It has formeda complete manufacturing system covering microbiology R&D, pilot test, commercialproduction, engineering and utility system guarantee. The Company has a total of 54 R&Dprojects in the industrial microbial field, including 7 special functional chemicals projects,31 API and high-end medicine intermediate projects, 12 mega health and aestheticmedicine ingredients projects and four biomaterials and other projects. Among them, 5 outof special functional chemicals projects are series projects divided into more than 80 sub-projects, and 3 out of API and high-end medicine intermediate projects are series projectsdivided into more than 10 sub-projects. The total number of all projects exceeded 100. TheCompany established an industrial microbiology department that has organized structureand operates independently. The department is equipped with a first-class industrialmicrobiology technical team including 361 researchers, among which 17 hold Ph.D.degrees, and 21% of the researchers have master’s degrees or doctor’s degrees.
7. Prudent and pragmatic business style and stable shareholder returns
The Company pays attention to management innovation and strives to meet thedemand arising from market competition by improving management quality. High-qualityproducts, excellent commercialization ability, compliance and efficient marketing services,differentiating market positioning, innovative R&D layout, outstanding talent planning are
the engine for the Company’s long-term stable development. Over the 22 years since it waslisted, the Company distributes dividends 19 times with a total amount of RMB5,084million, far exceeding the RMB250 million raised in IPO, and was able to bring sustainedand stable investment returns to shareholders.III. Analysis of main businessPlease refer to the relevant content of "I. Main business of the company during the reporting period".Year-on-year changes in major financial data
Unit: RMB yuan
| Current reporting period | Same period last year | Year-on-year percentage increase/decrease | Cause of changes | |
| Operating revenue | 18,197,963,991.01 | 17,179,437,902.61 | 5.93% | |
| Operating cost | 12,243,374,078.15 | 11,589,419,896.59 | 5.64% | |
| Selling expenses | 3,032,965,177.95 | 2,978,753,751.45 | 1.82% | |
| Administrative expenses | 572,048,249.55 | 534,683,411.33 | 6.99% | |
| Financial expenses | 5,447,966.20 | 9,789,580.87 | -44.35% | Mainly due to the increase in interest income in the current period |
| Income tax expenses | 287,938,727.72 | 240,728,486.55 | 19.61% | |
| R&D investment | 566,596,381.67 | 437,556,684.96 | 29.49% | |
| Net cash flows from operating activities | 284,234,410.27 | 1,738,512,372.11 | -83.65% | Mainly due to the year-on-year decrease in sales receipts and government grants, and the increase in deposits paid and R&D expenses |
| Net cash flows from investing activities | -995,224,437.77 | -1,297,044,289.24 | 23.27% | |
| Net cash flows from financing activities | 277,803,243.85 | -366,906,114.30 | 175.72% | Mainly due to the increase in interest-bearing liabilities in the current period |
| Net increase in cash and cash equivalents | -459,496,727.95 | 74,138,062.91 | -719.79% |
Significant changes in the company's profit composition or source of profit during the reporting period
□ Applicable √ N/A
There was no major change in the company's profit composition or source of profit during the reporting period.Composition of operating revenue
Unit: RMB yuan
| The current reporting period | Same period last year | Year-on-year percentage increase/decrease | |||
| Amount | Proportion in operating revenue | Amount | Proportion in operating revenue | ||
| Total operating | 18,197,963,991.01 | 100% | 17,179,437,902.61 | 100% | 5.93% |
revenue
| revenue | |||||
| By sector | |||||
| Business | 12,227,544,864.77 | 67.19% | 11,765,327,916.99 | 68.48% | 3.93% |
| Manufacturing | 5,728,897,548.63 | 31.48% | 5,599,557,312.42 | 32.59% | 2.31% |
| aesthetic medicine [Note 1] | 897,380,506.25 | 4.93% | 389,749,005.02[Note 2] | 3.29% | 130.25% |
| Including: International aesthetic medicine | 530,599,252.48 | 2.92% | 276,081,206.58 | 1.61% | 92.19% |
| Domestic aesthetic medicine | 413,184,704.69 | 2.27% | 113,667,798.44 | 0.66% | 263.50% |
| Offset (inter-sectoral offset) | -519,490,722.47 | -461,528,533.38 | |||
| By product | |||||
| By region | |||||
| Domestic sales | 17,641,053,155.99 | 96.94% | 16,879,853,037.00 | 98.26% | 4.51% |
| Overseas sales | 556,910,835.02 | 3.06% | 299,584,865.61 | 1.74% | 85.89% |
[Note1] The domestic aesthetic medicine business includes the income from the self-operated products of Sinclair(Shanghai), the income from the aesthetic medicine products of the Company’s pharmaceutical commercial agency andthe income from the OTC weight-loss products of the Company, and excluding the income from the aesthetic medicineproducts of the holding subsidiary, Huadong Ningbo Company. The statistical criteria of 2022 semi-annual report is thesame as that of 2021.[Note 2] In the first half of 2021, the Company’s revenue from aesthetic medicine business (including Huadong Ningbo)totaled RMB565 million
Sectors, products or regions that account for more than 10% of the Company’s operating revenue or operating profit
√ Applicable □ N/A
Unit: RMB 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 sector | ||||||
| Business | 12,227,544,864.77 | 11,381,893,006.31 | 6.92% | 3.93% | 4.45% | -0.46% |
| Manufacturing | 5,728,897,548.63 | 1,215,156,442.07 | 78.79% | 2.31% | 13.62% | -2.11% |
| By product | ||||||
| By region | ||||||
| Domestic sales | 17,641,053,155.99 | 12,067,330,884.87 | 31.60% | 4.51% | 5.07% | -0.36% |
| Overseas sales | 556,910,835.02 | 176,043,193.28 | 68.39% | 85.89% | 69.07% | 3.15% |
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 period should be adjusted according to the specifications at the end ofthe reporting period.
□ Applicable √ N/A
Explanation of the reason why the relevant data has changed by more than 30% year-on-year.
√ Applicable □N/A
Balance Sheet
| Balance Sheet | Amount at the End of This Reporting Period | Amount at the Beginning of This Reporting Period | Change | Reason for Change |
| Accounts receivable for financing | 802,248,535.33 | 509,190,888.54 | 57.55% | Mainly due to the increase in the proportion of bank clearing in the current period |
| Other receivables | 387,568,284.05 | 223,707,267.30 | 73.25% | Mainly due to the increase in receivables and suspense payments in the current period |
| Other non-current assets | 1,301,733,649.28 | 911,062,879.83 | 42.88% | Mainly due to the increase in payments for product introduction in the current period |
| Short-term borrowing | 858,688,755.97 | 1,237,843,228.13 | -30.63% | Mainly due to the repayment of borrowings in the current period |
| Notes payable | 884,312,495.21 | 671,964,504.00 | 31.60% | Mainly due to the increase in notes for payment in the current period |
| Contract liabilities | 59,102,591.78 | 118,341,141.48 | -50.06% | Mainly due to the recognition of revenue from partial opening receipts of goods in advance |
| Taxes payable | 551,787,831.96 | 1,029,610,563.41 | -46.41% | Mainly due to the increase in taxes paid in the current period |
| Long-term borrowing | 1,299,388,765.81 | 139,178,905.04 | 833.61% | Mainly due to the increase in borrowings in the current period |
| Other current liabilities | 6,854,102.03 | 11,386,267.11 | -39.80% | Mainly due to the reduction of contract liabilities with corresponding taxes transferred to other current liabilities |
| Income Statement | Amount of Current Period | Amount of the Previous Period | Change | Reason for Change |
| Financial expenses | 5,447,966.20 | 9,789,580.87 | -44.35% | Mainly due to the increase in interest income in the current period |
| Other income | 81,653,430.69 | 137,364,653.52 | -40.56% | Mainly due to the decrease in government grants obtained in the current period |
| Gains on assets disposal | 8,506,580.12 | 182,307.80 | 4566.05% | Mainly due to the sale of real properties in the current period |
| Non-operating expenses | 8,661,496.73 | 6,126,908.04 | 41.37% | Mainly due to the increase in donation in the current period |
| Profit or loss attributable to minority shareholders | 13,334,907.33 | 42,161,491.00 | -68.37% | Mainly due to Huadong Ningbo Company no longer included in the scope of consolidation in the current period |
| Cash Flow Statement | Amount of Current Period | Amount of the Previous Period | Change | Reason for Change |
| Net cash flows from operating activities | 284,234,410.27 | 1,738,512,372.11 | -83.65% | Mainly due to the year-on-year decrease in sales receipts and government grants, and the increase in deposit payment and R&D expenses in the current period |
| Net cash flows from financing activities | 277,803,243.85 | -366,906,114.30 | 175.72% | Mainly due to the increase in interest-bearing liabilities in the current period |
IV. Analysis of non-main business
√ Applicable □ N/A
Unit: RMB yuan
| Amount | Proportion in total profit | Note on reasons | Sustainable or not |
Investment income
| Investment income | -53,479,017.66 | -3.26% | ||
| Asset impairment losses | -71,965,559.59 | -4.38% | ||
| Non-operating income | 4,341,628.44 | 0.26% | No | |
| Non-operating expenses | 8,661,496.73 | 0.53% | No | |
| Other income | 81,653,430.69 | 4.97% | Mainly due to the confirmation of government grants in the current period | No |
| Gains on asset disposal | 8,506,580.12 | 0.52% |
V. Analysis of assets and liabilities
1. Major changes in asset composition
Unit: RMB yuan
| End of the current reporting period | End of last year | Change of proportion | Note on major changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary funds | 3,682,953,466.77 | 12.81% | 4,032,424,555.22 | 14.94% | -2.13% | Mainly due to the year-on-year decrease in net cash flows from operating activities in the current period |
| Accounts receivable | 7,454,064,290.97 | 25.92% | 6,430,482,175.97 | 23.82% | 2.10% | Mainly due to the increase in accounts receivable within the payment period |
| Contract assets | 0.00 | |||||
| Inventories | 4,004,905,504.14 | 13.92% | 3,974,549,648.96 | 14.72% | -0.80% | |
| Real estate properties for investment | 14,088,049.32 | 0.05% | 14,569,533.94 | 0.05% | 0.00% | |
| Long-term equity investments | 1,005,658,952.83 | 3.50% | 984,927,398.68 | 3.65% | -0.15% | |
| Fixed assets | 3,006,669,793.91 | 10.45% | 3,077,227,759.84 | 11.40% | -0.95% | |
| Constructions in progress | 1,756,500,881.94 | 6.11% | 1,582,125,201.25 | 5.86% | 0.25% | |
| Right-of-use assets | 126,894,326.47 | 0.44% | 153,724,197.81 | 0.57% | -0.13% | |
| Short-term borrowing | 858,688,755.97 | 2.99% | 1,237,843,228.13 | 4.59% | -1.60% | Mainly due to the repayment of borrowings in the current period |
| Contract liabilities | 59,102,591.78 | 0.21% | 118,341,141.48 | 0.44% | -0.23% | |
| Long-term borrowing | 1,299,388,765.81 | 4.52% | 139,178,905.04 | 0.52% | 4.00% | Mainly due to the increase in borrowings in the current period |
| Lease liability | 70,263,650.58 | 0.24% | 80,889,403.39 | 0.30% | -0.06% | |
2. Major overseas assets
√ Applicable □ N/A
| Specific content of assets | Reason for formation | Assets size (Ten thousand yuan) | Location | Operating mode | Control measures to ensure assets safety | Profit or loss | Proportion of overseas assets in the Company’s net assets | Whether there are any significant impairment risks |
| Sinclair Pharma Limited | Acquisition of equity | 197309.82 | UK | Independent accounting | Control of the Board of Directors and examination & approval of major decisions; daily supervision of financial matters; entrusting external intermediaries to conduct audits | Loss during the period | 11.11% | No |
3. Assets and liabilities measured at fair value
√ Applicable □ N/A
Unit: RMB yuan
| Item | Opening balance | Change in fair value for the current period | Cumulative changes in fair value included in equity | Impairment accrued during the current period | Amount purchased in this period | Amount sold in this period | Other Changes | Closing balance |
| Financial Assets | ||||||||
| 4. Investment in other equity instruments | 257,815,844.68 | -7,023,104.32 | 250,792,740.36 | |||||
| Total of the above | 257,815,844.68 | -7,023,104.32 | 250,792,740.36 | |||||
| Financial Liabilities | 0.00 | 0.00 | ||||||
Other changesDuring the reporting period, whether the company’s main asset measurement attributes have changed significantly
□ Yes √ No
4. Limitation of asset rights at the end of the reporting period
| Item | Amount at the end of the period | Reason for limitation |
Cash in bank
| Cash in bank | 530,491,334.21 | Certificate of time deposit, deposit certificate pledge, etc. |
Other monetary funds
| Other monetary funds | 31,818,222.34 | Cash deposit |
| Total | 562,309,556.55 |
VI. 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 |
| 1,128,489,759.34 | 1,485,053,641.17 | -24.01% |
2. Significant equity investments acquired during the reporting period
√ Applicable □ N/A
Unit: RMB yuan
| Name of investee | Main business | Way of investment | Investment amount | Shareholding ratio | Capital source | Partner(s) | 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) |
| Anhui Meihua Hi-tech Pharmaceutical Co., Ltd. | Pharmaceutical and chemical manufacturing | Acquisition | 108,000,000.00 | 100.00% | Equity fund | / | Long-term | Equity interest | Equity investment has been completed | -2,074,959.66 | No | December 29,2021 | cninfo (http://www.cninfo.com.cn) | |
| Heidelberg Pharma AG | R&D of oncologyADC drug | Capital injection + acquisition | 735,882,000.00[Note] | 35.00% | Equity fund/ External financing | / | Long-term | Equity interest | The Equity Investment Agreement has been reached and the investment funds have not been paid | 0.00 | No | February 28,2022 | cninfo (http://www.cninfo.com.cn) | |
| Total | -- | -- | 843,882,000.0 | -- | -- | -- | -- | -- | -- | 0.00 | -2,074,95 | -- | -- | -- |
| 0 | 9.66 |
Note: Conversion is based on the central parity of the Euro to RMB exchange rate on June 30, 2022, which is 7.0084
3. Significant non-equity investments in progress during the reporting period
√Applicable □N/A
Unit: RMB 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 | Capital 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 | 13,642,843.54 | 1,767,208,616.22 | Own funds | 99.00% | 0.00 | 0.00 | N/A | March 9, 2017 | http://www.cninfo.com.cn |
| Huadong Medicine Life Science Industrial Park (on the south side of Xiangfu) | Self-built project | Yes | Pharmaceutical R&D | 57,645,169.13 | 138,488,957.10 | Own funds | 60.00% | 0.00 | 0.00 | N/A | April 21, 2021 | http://www.cninfo.com.cn |
| Total | -- | -- | -- | 71,288,012.67 | 1,905,697,573.32 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Investment in financial assets
(1) Securities Investment
√ Applicable □ N/A
| 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 | Accumulative fair value changes included 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 | Capital source |
| Domestic and overseas stock | RAPT | RAPT | 20,207,400.00 | Fair value measurement | 14,461,751.62 | -7,023,104.32 | 7,438,647.30 | Other equity instrument investment | Own funds | ||||
| Total | 20,207, | -- | 14,461, | - | 0.00 | 0.00 | 0.00 | 0.00 | 7,438,6 | -- | -- | ||
400.00
| 400.00 | 751.62 | 7,023,104.32 | 47.30 | ||||
| Date of announcement of the Board of Directors on securities investment approval | N/A | ||||||
| Date of announcement of the Board of Shareholders on securities investment approval (if any) | N/A | ||||||
Note: In 2018, Huadong Medicine Investment Holding (Hong Kong) Co., Ltd., a subsidiary of the Company, investedUSD 3 million to purchase 218,102 preferred shares of RAPT Therapeutics, Inc. in C-2 series. RAPT Therapeutics, Inc.(stock code: RAPT) was listed on the NASDAQ Stock Exchange on October 30, 2019. Up to now, Huadong MedicineInvestment Holding (Hong Kong) Co., Ltd. holds 60,500 RAPT shares after reducing some of its shares, accounting for
0.204% of the total shares of RAPT Therapeutics, Inc.
(2) Derivatives investment
√Applicable □N/A
Unit: RMB ten thousand yuan
| Name of Derivatives Investment Operators | Relationship of Related Parties | Related-party Transaction or Not | Type of Derivatives Investment | Initial Investment Amount | Start Date | End Date | Beginning Amount | Purchase Amount during the Reporting Period | Selling Amount during the Reporting Period | Amount of Impairment Allowance Withdrawn (If Any) | Ending Amount | Proportion of Investment Amount at the End of the Period to the Company’s Net Assets at the End of the Reporting Period | Amount of Actual Profit or Loss during the Reporting Period |
| Financial institutions | N/A | No | Forward exchange contract | 0.00 | 0.00 | 26,644.10 | 26,644.10 | 0.00 | 0.00% | 149.38 | |||
| Total | 0.00 | -- | -- | 0.00 | 26,644.10 | 26,644.10 | 0.00 | 0.00% | 149.38 | ||||
| Capital source of derivatives | Equity fund | ||||||||||||
investment
| investment | |
| Litigation involved (if applicable) | No |
| Disclosure date of announcement of the Board of Directors for approval of derivatives investment (if any) | July 16,2021 |
| Description of risk analysis and control measures for derivatives positions during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, and legal risk) | 1. The Company has strictly abided by the principle of prudent investment, selected sound investment types and invested within the limits approved by the Board of Directors. 2. The Company has strictly screened counterparties by carrying out derivatives transactions only with banks and other financial institutions that are sound in operation, have good credit standing and are qualified to operate financial derivatives trading business. If necessary, the Company would invite external professional investment and legal affairs services and other institutions to provide consulting services for the Company’s financial derivatives transactions and provide scientific and rigorous investment strategies and recommendations. 3. The Company has formulated the Management System of Securities Investment and Derivatives Trading, which provides the principles, scope, decision-making authority, management and supervision of fund use, information disclosure and other aspects of the company’s financial derivatives trading, to effectively prevent investment risks. Meanwhile, the Company will implement the relevant management system and assign personnel to track the progress of financial derivatives trading. In case of any risk that may affect the safety of the Company’s funds, corresponding measures will be taken in a timely manner to control investment risks. 4. The Company's audit department is responsible for supervising and inspecting the implementation of financial derivatives trading and reporting to the audit committee of the Board of directors of on a regular basis. |
| For changes in market prices or fair value of invested derivatives during the reporting period, and the analysis of the fair value of derivatives, the Company should disclose the specific methods used, relevant assumptions and parameter setting | N/A |
| Statement on whether the accounting policies and specific accounting principles of the Company’s derivatives in the reporting period have changed significantly compared with the previous period | There is no significant change in accounting policies and specific accounting principles of the Company’s derivatives in the reporting period compared with the previous period. |
| Special opinions by independent directors on the Company’s derivatives investment and risk control | The financial derivatives business conducted by the Company and its wholly-owned subsidiaries is conducive to reducing exchange gains or losses, lowering financial costs, improving the ability to cope with interest rate and exchange rate fluctuation risks and enhancing financial soundness, which is in line with the Company’s operation and development needs and overall interests. With the Management System of Securities Investment and Derivatives Trading, investment risks can be effectively controlled. The Board of Directors has fully communicated on this matter, concluding that the decision-making procedures are legal and compliant, the internal control procedures are sound, and there are no cases harming the interests of the Company and all shareholders, especially the minority shareholders. |
5. Use of raised funds
□ Applicable √ N/A
No such case during the reporting period.VII. 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
VIII. Analysis of wholly-partially owned and shareholding companies
√ Applicable □ N/A
Main subsidiaries and the shareholding companies that have an impact on the Company’s net profit of more than 10%
Unit: RMB yuan
| Company name | Company type | Main business | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| 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 | 12,245,405,387.68 | 8,258,452,704.92 | 5,501,967,295.92 | 1,279,673,400.46 | 1,115,287,544.00 |
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ N/A
| Name of company | Methods of acquisition and disposal of subsidiaries during the reporting period | Impact on the overall production, operation and performance |
| Viora limited | Acquisition | International business development of energy source aesthetic medicine products for the Company |
| Anhui Meihua Hi-Tech Pharmaceutical Co., Ltd. | Acquisition | Industrial microbial industrialization platform |
| Hangzhou Huiyi Biotechnology Co., Ltd. | Newly established | Industrial microbial synthetic biology technology platform |
IX. Structured entities controlled by the Company
□ Applicable √ N/A
X. Risks and Countermeasures
1.Industry policies and market operating risk
The national regulation on the pharmaceutical industry has a profound impact on thedevelopment of the domestic industry. In recent years, the reform in the field of health carehas been promoted, and relevant policies have been implemented in a more standardized,regular and systematic way. This, coupled with the impact of the normalization of COVID-19 pandemic, has created uncertainty in the domestic pharmaceutical market. With thefurther advancement of policies such as the Volume-Based Procurement program andmedical insurance negotiations, the pharmaceutical industry is facing challenges in termsof production costs and profitability while new drug products are at the risk of lower prices.
Countermeasures: The Company will pay close attention to the national medicalpolicies and industry development trends, invest more in R&D, combine independent R&Dwith external introduction, accelerate the layout of innovative varieties around the coretreatment field, enrich product lines, so as to improve core competitiveness. At the sametime, production and operational risks can be reduced through lean management, costreduction and efficiency improvement The Company will vigorously expand the basic andself-funded markets to strive for more market share. Apart from that, the Company willfocus on the field of aesthetic medicine and industrial microbiology, to make the brandmore competitive and create new growth points.
2. The risk of R&D for new drug
R&D of innovative drug requires high investment and long-term efforts with highrisks. A new product from R&D to launch, needs to go through pre-clinical research,clinical trials, registration, approved production and other procedures, often taking a longtime, and being affected by national policies, market factors, regulatory approval and otherfactors. In addition, the investment in manpower and preliminary R&D costs will putpressure on the Company to achieve its current operating objectives, and the new drug willalso face market demand testing after its launch, which may result in less than expectedreturn on R&D investment.
Countermeasures: The Company will continue to increase investment in drug R&D,optimize the innovation mechanism, improve the scientific new drug research andevaluation and decision-making system, and strengthen the establishment of close ties with
well-known R&D institutions at home and abroad; it will focus on the core treatment field,continue to enrich and optimize the product line through independent project and externalintroduction, and constantly boost the independent R&D level to create the R&Decosystem; it will continue to intensify efforts to bring in high-level science and technologytalents, and enhance the training and motivation for internal key technicians, to build ascientific research team covering the whole cycle of new drug R&D.
3. Risks of fluctuations in exchange rates
In recent years, the proportion of the Company’s foreign currency settlement businessis increasing as its internationalization process has been continuously promoted,international cooperation and exchanges have been continuously increased, and the salesnetwork of its aesthetic medicine products covers across the world. There are uncertaintiesin exchange difference influenced by the complex international political and economicsituation and factors such as the Russian-Ukraine war. Changes in exchange rates have far-reaching and lasting effects on the Company, which may bring good economic benefits orserious economic risks. Exchange rate fluctuations will affect the prices of the Company’sexports, and will also cause exchange gains or losses, directly affecting its assets, liabilitiesand earnings, and further affecting its operating capacity, solvency and profitability.Countermeasures: The company will pay close attention to changes in exchange rates,adjust its business policies in a timely manner according to its own situation to eliminatethe adverse impact; it will establish awareness of exchange rate risk prevention and refinethe exchange risk management system; at the same time, it will strengthen the training ofprofessional skills and risk awareness of financial personnel, enhance the awareness of riskavoidance and make good use of financial means to avoid exchange rate risks.
4. The risk of goodwill impairment
In recent years, in order to realize the Company’s innovative transformationdevelopment strategy, it has increased investment and M&A activities around innovativedrugs and aesthetic medicine field, resulting in goodwill. The Company has no impairmentof goodwill as assessed in the regular goodwill impairment tests. If the operating conditionsof the Company to be acquired fluctuate in the future, there may be a risk of goodwillimpairment, which will have a negative impact on the its current operating performance.
Countermeasures:
The company will strive to comprehensively improve its overall planning ability inbusiness planning, management structure and financial management, enhance resourcesharing and synergy with overseas subsidiaries such as Sinclair, a global aesthetic medicineoperating platform, to improve its business integration capabilities of integrated operationsand governance.XI. Registration form of receptions, including research, communication andinterview, undertaken during the reporting period
| 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 5,2022 | Company conference room | Online meeting | Institution, individual | Huatai Securities, etc. | Huadong Medicine industrial microbiology topic communication | Please refer to “Huadong Medicine: record of investor relations activities: January 5,2022” presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| January 7.10,2022 | Company conference room | Communication by phone | Institution | Industrial Securities, Horizon Insights, etc. | Investor communication | Please refer to “Huadong Medicine: record of investor relations activities: January 7.10,2022” presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| February 9,2022 | Company conference room | Online meeting | Institution, individual | Zheshang Fund, etc | Huadong Medicine aesthetic medicine topic exchange and interpretation of overseas EBD transaction | Please refer to “Huadong Medicine: record of investor relations activities: February 9,2022” presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| March 1,2022 | Company conference room | Online meeting | Institution, individual | Industrial Securities , etc. | Exchange on the latest innovative BD project | Please refer to “Huadong Medicine: record of investor relations activities: March 1,2022” presented on the |
for Huadong
Medicine
| for Huadong Medicine | websites of irm.cninfo.com.cn and cninfo.com.cn for details. | |||||
| April 28, 2022 | Company conference room | Communication by phone | Institution, individual | Huatai Securities, etc. | Interpretation of results of 2021 Annual Report and First Quater Report of 2022 for Huadong Medicine | Please refer to “Huadong Medicine: record of investor relations activities: April 28, 2022” presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| May 13, 2022 | Company conference room | Online meeting | Institution, individual | Public investors | Explanation of results of 2021 Annual Report and First Quater Report of 2022 for Huadong Medicine | Please refer to “Huadong Medicine: record of investor relations activities: May 13, 2022” presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
| June 1, 2022 | Company conference room | Field research , online meeting | Institution, individual | JP Morgan Group, etc | Activities on investor reception day | Please refer to “Huadong Medicine: record of investor relations activities: June 1, 2022” presented on the websites of irm.cninfo.com.cn and cninfo.com.cn for details. |
Section IV. Corporate Governance
I. Annual General Meeting and Extraordinary General Meetings convened duringthe reporting period
1. Annual General Meeting convened during the current reporting period
| Meeting | Nature | Proportion of participating investors | Convened Date | Disclosure Date | Disclosure Index |
| 2021 Annual General Meeting of Shareholders | Annual General Meeting of Shareholders | 60.99% | June 1, 2022 | June 1, 2022 | No. 2022-041; www.cninfo.com.cn |
2. Extraordinary general meetings convened at the request of preferred shareholders withresumed voting rights
□ Applicable √ N/A
II. Change of directors, supervisors and senior managers
√ Applicable □ N/A
| Name | Title | Category | Date | Reason |
| Lv Liang | Chairman | Election | June 01, 2022 | General election of the Board of Directors |
| Kang Wei | Director | Election | June 01, 2022 | General election of the Board of Directors |
| Niu Zhanqi | Director | Election | June 01, 2022 | General election of the Board of Directors |
| Zhu Feipeng | Director | Election | June 01, 2022 | General election of the Board of Directors |
| Ye Bo | Director | Election | June 01, 2022 | General election of the Board of Directors |
| Zhu Liang | Director | Election | June 01, 2022 | General election of the Board of Directors |
| Jin Xuhu | Director | Resignation after expiration of term | June 01, 2022 | Resignation after expiration of term |
| Gao Xiangdong | Independent Director | Election | June 01, 2022 | General election of the Board of Directors |
| Wang Ruwei | Independent Director | Election | June 01, 2022 | General election of the Board of Directors |
| Yang Lan | Independent Director | Election | June 01, 2022 | General election of the Board of Directors |
| Zhong Xiaoming | Independent Director | Resignation after | June 01, 2022 | Resignation after |
expiration of term
| expiration of term | expiration of term | |||
| Yang Jun | Independent Director | Resignation after expiration of term | June 01, 2022 | Resignation after expiration of term |
| Bai Xinhua | Supervisor | Election | June 01, 2022 | Election of the Board of Supervisors |
| Zhou Yanwu | Supervisor | Election | June 01, 2022 | Election of the Board of Supervisors |
| Qin Yun | Supervisor | Election | June 01, 2022 | Election of the Board of Supervisors |
| Dong Jiqin | Supervisor | Election | June 01, 2022 | Election of the Board of Supervisors |
| Xu Zhifeng | Supervisor | Election | June 01, 2022 | Election of the Board of Supervisors |
| Zhu Yinhua | Supervisor | Election | June 01, 2022 | Election of the Board of Supervisors |
| Liu Chengwei | Supervisor | Resignation after expiration of term | June 01, 2022 | Resignation after expiration of term |
| Hu Baozhen | Supervisor | Resignation after expiration of term | June 01, 2022 | Resignation after expiration of term |
| He Rufen | Supervisor | Resignation after expiration of term | June 01, 2022 | Resignation after expiration of term |
| Lv Liang | General Manager(CEO) | Appointment | June 01, 2022 | Appointment of the Board of Directors |
| Wu Hui | Deputy General Manager | Appointment | June 01, 2022 | Appointment of the Board of Directors |
| Zhu Li | Deputy General Manager | Appointment | June 01, 2022 | Appointment of the Board of Directors |
| Zhang Jianfei | Deputy General Manager | Appointment | June 01, 2022 | Appointment of the Board of Directors |
| Zhou Shunhua | Deputy General Manager | Resignation after expiration of term | June 01, 2022 | Resignation after expiration of term |
| Chen Bo | Board Secretary | Appointment | June 01, 2022 | Appointment of the Board of Directors |
| Qiu Renbo | Person in Charge of Finance | Appointment | June 01, 2022 | Appointment of the Board of Directors |
III. Profit distribution and capitalization of capital reserves plan or proposal for thecurrent reporting period
□ Applicable √ N/A
The Company did not plan to distribute cash dividends, send bonus shares, or convert capital reserve into share capitalduring the first half of the year.
IV. The implementation of Equity Incentive Plan, Employee Stock Incentive Plan, orother incentive plans
□ Applicable √ N/A
No such case during the reporting period.
Section V. Environmental and Social Responsibility
I. Significant environmental problems
Whether the Company and its subsidiaries are the key pollutant discharging units announced by the environmentalprotection authorities
√ Yes □No
| Name of the company or subsidiary | Name of major pollutants | Discharge type | Number of discharge outlets | Distribution of discharge outlets | Concentration of discharge | Discharge standard of pollutants | Total discharge | Approved total discharge | Excessive discharge |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Water pollutant: PH value | Intermittent discharge | 1 | Front gate, 866 Moganshan Road | 7.44 | 6-9 | / | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Water pollutant:: COD | Intermittent discharge | 1 | Front gate, 866 Moganshan Road | 35.79mg/l | 500mg/l | 7.53 tons | 33.3 tons/year | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Water pollutant: ammonia nitrogen | Intermittent discharge | 1 | Front gate, 866 Moganshan Road | 0.56mg/l | 35mg/l | 0.12 tons | 2.38 tons/year | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Solid pollutant: hazardous solid waste | Legal disposal by entrusted qualified units | 2 | In the factory at 866 Moganshan Road | / | / | 464.95 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Solid pollutant: general solid waste | Legal disposal by entrusted qualified units | 2 | In the factory at 866 Moganshan Road | / | / | 541.84 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Air pollutant: nitrogen oxide | Organized emission | 1 | Roof of the boiler room in Building No. 25 | 28.5mg/ m? | 50mg/ m? | 0.467 tons | 17.7 tons/year | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Air pollutant: sulfur dioxide | Organized emission | 1 | Roof of the boiler room in Building No. 25 | 3mg/ m? | 20mg/ m? | 0.049 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | Air pollutant: dust and fume | Organized emission | 1 | Roof of the boiler room in Building No. 25 | 6.9mg/ m? | 10mg/ m? | 0.109 tons | / | None |
| Hangzhou | Water | Continuous | 1 | 7278 Meilin | 8.24 | 6-9 | / | / | None |
ZhongmeiHuadongPharmaceuticalJiangdongCo., Ltd.
| Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | pollutant: pH | emission | Avenue (southwestern side) | ||||||
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Water pollutant: COD | Continuous emission | 1 | 7278 Meilin Avenue (southwestern side) | 294mg/L | 500mg/L | 99.71 tons | 141.369 tons | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Water pollutant: ammonia nitrogen | Continuous emission | 1 | 7278 Meilin Avenue (southwestern side) | 8.99mg/L | 35mg/L | 3.049 tons | 7.069 tons | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Exhaust gas VOCs | Organized emission | 6 | Environmental protection workshop, 7278 Meilin Avenue | 1.94 | 60mg/L | 0.28905 | 5.14 tons | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Exhaust gas Sulfur dioxide | Organized emission | 1 | Environmental protection workshop, 7278 Meilin Avenue | /(None) | 100mg/L | 0 | 0.38 tons | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Exhaust gas Nitrogen oxide | Organized emission | 1 | Environmental protection workshop, 7278 Meilin Avenue | /(None) | 200mg/L | 0 | 7.54 tons | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Solid pollutant: hazardous solid waste | Legal disposal by entrusted qualified units | 2 | Environmental protection workshop, 7278 Meilin Avenue | / | / | 280.56 tons | / | None |
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | Solid pollutants: General solid wastes | Legal disposal by entrusted qualified units | 4 | Environmental protection workshop, 7278 Meilin Avenue | / | / | 7633.4 tons | / | None |
| Huadong Medicine (Xi’an) Bohua | Water pollutant: PH value | Intermittent discharge | 1 | Along National Highway 310, Liuye | 8.1 | 6-9 | / | / | None |
Pharmaceutical Co., Ltd.
| Pharmaceutical Co., Ltd. | River, Huayin City | ||||||||
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Water pollutant: COD | Intermittent discharge | 1 | Along National Highway 310, Liuye River, Huayin City | 36.8mg/l | 50mg/l | 0.498 tons | 3 tons | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Water pollutant: ammonia nitrogen | Intermittent discharge | 1 | Along National Highway 310, Liuye River, Huayin City | 0.37mg/l | 8mg/l | 0.005 tons | 0.48 tons | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Water pollutant: total nitrogen | Intermittent discharge | 1 | Along National Highway 310, Liuye River, Huayin City | 8.8mg/l | 15mg/l | 0.12 tons | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Solid pollutant: hazardous waste | Compliant disposal by entrusted qualified units | 3 | In the company | / | / | 59.73 tons | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant: volatile organic compound | Organized emission | 1 | Raw medicine No.1 workshop | / | 60mg/ m? | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant: hydrogen chloride | Organized emission | 1 | Raw medicine No.1 workshop | / | 30mg/ m? | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant: hydrogen chloride | Organized emission | 1 | Raw medicine No.2 workshop | / | 20mg/ m? | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant: particulate matter | Organized emission | 1 | Raw medicine No.2 workshop | / | 20mg/ m? | / | / | None |
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | Air pollutant: sulfuric acid mist | Organized emission | 1 | Raw medicine No.2 workshop | / | 45mg/ m? | / | / | None |
| Jiangsu Joyang | Water pollutant: | Intermittent | 1 | 9 Haidubei | 8.4 | 6-9 | / | / | None |
Laboratories Co., Ltd.
| Laboratories Co., Ltd. | PH value | discharge | Road | ||||||
| Jiangsu Joyang Laboratories Co., Ltd. | Water pollutant: COD | Intermittent discharge | 1 | 9 Haidubei Road | 119mg/l | 500mg/l | 3.375 tons | 22.401 tons/year | None |
| Jiangsu Joyang Laboratories Co., Ltd. | Water pollutant: ammonia nitrogen | Intermittent discharge | 1 | 9 Haidubei Road | 0.147mg/l | 35mg/l | 0.004 tons | 1.156 tons/year | None |
| Jiangsu Joyang Laboratories Co., Ltd. | Water pollutant: total nitrogen | Intermittent discharge | 1 | 9 Haidubei Road | 10.6mg/l | 45mg/l | 0.301 tons | 1.486 tons/year | None |
| Jiangsu Joyang Laboratories Co., Ltd. | Water pollutant: total phosphorus | Intermittent discharge | 1 | 9 Haidubei Road | 1.71mg/l | 8mg/l | 0.048tons | 0.164 tons/year | None |
| Jiangsu Joyang Laboratories Co., Ltd. | Solid pollutant: hazardous solid waste | Legal disposal by entrusted qualified units | / | In the factory at Haidubei Road | / | / | 586.7 tons | 3148.7tons/year | None |
| Jiangsu Joyang Laboratories Co., Ltd. | Air pollutant: particulate matter | Organized emission | 5 | Dosing section of workshop 101, fermentation section of workshop 101, dosing section of workshop 104 (shared by 107 and 108), fermentation section of workshop 104 (shared by 107 and 108), and drying section of workshop 104 (shared by 107 and 108) | 12.5mg/m? | 60mg/Nm? | 16.93tons/ half year | 42.7409 tons/year | None |
Construction and operation of pollution prevention and control facilities
1. Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.
(1) Waste water
| Name of pollution prevention and control facilities | Treatment process | Processing capacity | Time of operation | Status of operation |
| Waste water treatment system of the old sewage station | Facultative + fluidized bed | Original 600 tons/day; 800 tons/day after technical transformation | November 1993; technical transformation in 2007 | Out of service to be dismantled |
Waste water treatmentsystem of the new
sewage station
| Waste water treatment system of the new sewage station | Facultative +CASS+ air flotation | 2,200 tons/day | December 2001; technical transformation in 2014 (IC and air flotation added) IC tower process dismantled in 2022 | Normal |
(2) Waste gas
| Name of pollution prevention and control facilities | Treatment process | Processing capacity CMH | Time of operation | Status of operation |
DA010（35#-1）
| DA010（35#-1） | Level 2 water spraying + surface cooling + activated carbon adsorption/desorption | 15000 | 2017 | Normal |
| DA011（35#-2） | Level 2 water spraying | 22000 | 2013 | Normal |
DA012（40#-2）
| DA012（40#-2） | Activated carbon + horizontal spraying | 6000 | 2019 | Dismantled |
| DA013（32#-1） | Level 2 alkali liquor spraying | 22000 | 2013 | Dismantled |
DA014（36#-1)
| DA014（36#-1) | Level 2 water spraying + surface cooling + low-temperature plasma + Level 1 water spraying | 27000 | 2017 | Normal |
| DA015（40#-1） | Level 2 water spraying | 24200 | / | Dismantled |
| DA016（18#-1） | Two levels of alkali liquor spraying + all-in-one (photocatalytic oxidation + plasma + activated carbon) + inorganic nano catalytic deodorization equipment + Level 1 water spraying | 16000 | 2019 | Normal |
DA017（19#-1）
| DA017（19#-1） | Combustion tower | / | 2018 | Dismantled |
| DA018（19#-2） | Combustion tower | / | 2018 | Dismantled |
| DA019（3#-1） | Level 1 water spraying + photocatalytic oxidation | 20000+52000 | 2019 | Normal |
| DA020（36#-2） | Two levels of water spraying + condensation+ photocatalytic oxidation + activated carbon + inorganic nano-catalysis + water spraying | 10000 | 2019 | Normal |
DA021（16#-1）
| DA021（16#-1） | Level 1 water spraying + Level 1 alkali liquor spraying | 12000 | 2012 | Stopped |
| DA022（16#-2） | Level 1 water spraying + Level 1 plant oil and water spraying | 30000 | 2014 | Stopped |
DA023（27#-1）
| DA023（27#-1） | Condensation + Level 1 alkali liquor spraying + all-in-one + Level 1 alkali liquor spraying | 15000 | 2009 | Stopped |
| DA024（33#-1） | Level 2 alkali liquor spray + condensate tank + common Level 1 alkali liquor spraying | 48000 | 2019 | Dismantled |
DA025（32#-2）
| DA025（32#-2） | Dust removal with cloth bag + high-efficiency filter | / | 2017 | Dismantled |
| DA026（34#-1） | Level 2 alkali liquor spraying | 54000 | 2008 | Dismantled |
| DA027（7#-1） | Level 2 alkali liquor spraying | 26000 | 2015 | Normal |
DA028（6#-1）
| DA028（6#-1） | Level 1 water spraying | 12200 | 2016 | Normal |
| DA029（18#-2） | Level 2 alkali liquor spraying + photocatalytic oxidation + activated carbon + Level 1 alkali liquor spraying | 16000 | 2018 | Normal |
| DA030（18#-3） | Level 1 water spraying + Level 1 alkali liquor spraying | 5000 | 2017 | Normal |
| DA031（25#-2） | Low-nitrogen combustion + high-altitude | 8000 | 2009 (The low nitrogen | Normal |
emission
| emission | transformation completed in December 2019.) | |||
| DA032（25#-1） | Low-nitrogen combustion + high-altitude emission | 8000 | 2009 (The low nitrogen transformation completed in December 2019.) | Normal |
DA033（1#-1）
| DA033（1#-1） | Oil fume purifier | / | / | Normal |
| DA034（27#-2） | Two levels of water spraying + activated carbon adsorption/desorption | 15000 | 2011 | Stopped |
DA035（27#-3）
| DA035（27#-3） | Photocatalytic oxidation + Level 1 alkali liquor spraying | 22300 | 2016 | Stopped |
| DA036（8#-1） | Level 2 water spraying | 25000 | 2017 | Normal |
DA037（13#-1）
| DA037（13#-1） | Level 2 water spraying + surface cooling + activated carbon adsorption/desorption | 25000 | 2017 | Normal |
| DA038（28#-1） | Level 1 water spraying + photocatalytic oxidation | 22000 | 2011 | Stopped |
| DA039（28#-2） | Level 2 water spraying + common photocatalytic oxidation | 48000 | 2011 | Stopped |
DA040（29#-1）
| DA040（29#-1） | Level 1 water spraying + Level 1 alkali liquor spraying | 22000 | 2011 | Stopped |
| DA041（33#-2） | Level 1 water spraying | 18600 | 2012 | Dismantled |
DA042（10#-1）
| DA042（10#-1） | Level 1 water spraying | 20000 | 2016 | Normal |
| DA043（15#-1） | Level 1 alkali liquor spraying + photocatalytic oxidation | 25000 | 2018 | Normal |
DA044（43#-1）
| DA044（43#-1） | Level 1 alkali liquor spraying + Level 1 water spraying | 45000 | 2014 | Normal |
| DA045（46#-1） | Level 1 water spraying | 3000 | 2015 | Normal |
| DA046（46#-2） | Level 1 water spraying | 25000 | 2015 | Normal |
DA047（46#-3）
| DA047（46#-3） | Level 1 water spraying | 30000 | 2015 | Normal |
| DA048（23#-1） | Two levels of water spraying | 7000 | 2019 | Normal |
(3) Solid waste
| Name of pollution prevention and control facilities | Treatment process | Processing capacity | Time of operation | Status of operation |
| Hazardous waste warehouse | Standardized storage | 160 tons | March 2012 | Standardized storage; legal disposal by qualified units |
| Standardized storage | 240 tons | March 2010 | ||
| General solid waste yard | Standardized storage | 7 tons | March 2010 | Standardized storage; legal disposal by qualified units |
| Standardized storage | 30 tons | June 2004 |
2. Construction and operation of pollution prevention and control facilities of Hangzhou Zhongmei HuadongPharmaceutical Jiangdong Co., Ltd.
(1) Waste water
| Name of pollution | Treatment process | Processing capacity | Time of operation | Status of operation |
prevention and controlfacilities
| prevention and control facilities | ||||
| Phase I sewage treatment station | Primary sedimentation + EGSB + facultative + aerobic + advanced treatmen | 1500tons/day | March 2016 | Normal |
Phase II sewage treatment
station
| Phase II sewage treatment station | EGSB + facultative +aerobic + advanced treatmen | 8500tons/day | July 2019 | Normal |
(2) Waste gas
| Name of pollution prevention and control facilities | Treatment process | Processing capacity CMH | Time of operation | Status of operation | |
| DA001 | East fermentation exhaust | Level 2 alkali spray + Photocatalytic oxidation | 45000 | May 2016 | Normal |
| DA002 | West fermentation exhaust | Level 2 alkali spray + Photocatalytic oxidation | 40000 | May 2016 | Normal |
| DA003 | North dry exhaust gas | Level 2 alkali spray | 80000 | May 2016 | Normal |
| DA004 | Exhaust gas from the wastewater treatment station | Level 2 alkali spray | 50000 | May 2016 | Normal |
DA005
| DA005 | Ingredients and other exhaust gas | Level 2 alkali spray + Photocatalytic oxidation | 20000 | May 2016 | Normal |
| DA006 | Exhaust gas from ingredients | Level 1 alkali spray | 10000 | May 2016 | Normal |
| DA007 | Exhaust gas arising from quality control and R&D | Level 1 alkali spray + Photocatalytic oxidation | 20000 | May 2016 | Normal |
| DA008 | South dry exhaust gas | Level 2 alkali spray | 80000 | May 2016 | Normal |
| DA010 | Frame exhaust gas | Level 2 alkali spray + Photocatalytic oxidation | 40000 | May 2017 | Normal |
| DA011 | Exhaust gas from drying and cooling silo | Level 2 alkali spray | 20000 | May 2017 | Normal |
| DA012 | Dry 7m exhaust gas | Level 1 alkali spray | 20000 | May 2016 | Normal |
| DA013 | Dry 18m exhaust gas | Level 1 alkali spray | 20000 | May 2016 | Normal |
| DA014 | Exhaust gas in tank area | Active carbon+ alkali spray | A small amount | June 2019 | Normal |
| DA015 | RTO exhaust gas | Water spray +RTO+ alkali spray | 100000 | June 2019 | Suspend |
DA016
| DA016 | Vogli preparation exhaust gas 1 | Bag dust collecting | A small amount | June 2019 | Suspend |
| DA017 | MP exhaust gas | Photocatalytic oxidation | 44000 | June 2019 | Suspend |
| DA018 | Super-resistant fermentation exhaust gas | Alkali spray + Photocatalytic oxidation + Water spray | 20000 | June 2019 | Suspend |
| DA019 | X8 exhaust gas | Acid spray + Water spray | 6000 | June 2019 | Suspend |
DA020
| DA020 | Vogli preparation exhaust gas 2 | Bag dust collecting | A small amount | June 2019 | Suspend |
DA021
| DA021 | Quality inspection exhaust gas | Alkali spray + Photocatalytic oxidation + water spray | 30000 | June 2019 | Normal |
DA022
| DA022 | Hydrochloric acid exhaust gas refined from AK | Alkali spray + water spray | 10000 | June 2019 | Suspend |
| DA023 | Spray drying exhaust gas 1 | Bag dust collecting + water spray | A small amount | June 2019 | Suspend |
| DA024 | North exhaust gas fermented from AK | Alkali spray + Photocatalytic oxidation + water spray | 90000 | June 2019 | Suspend |
| DA025 | South exhaust gas fermented from AK | Alkali spray + Photocatalytic oxidation + water spray | 90000 | June 2019 | Suspend |
| DA026 | Exhaust gas from the phase II wastewater treatment station | Alkali spray + water spray | 58000 | June 2019 | Suspend |
| DA027 | Central control exhaust gas | Alkali spray + Photocatalytic oxidation + water spray | 8000 | June 2019 | Suspend |
| DA028 | YT exhaust gas | Alkali spray + water spray | 4000 | June 2019 | Suspend |
DA029
| DA029 | Spray drying exhaust gas 2 | Bag dust collecting + water spray | A small amount | June 2019 | Suspend |
| DA030 | Alcohol exhaust gas refined from AK | Alkali spray + water spray | 1000 | June 2019 | Suspend |
(3) Solid waste
| Name of pollution prevention and control facilities | Treatment process | Processing capacity | Time of operation | Status of operation |
| Hazardous waste warehouse | Standardized storage | 10tons | March 2017 | Standardized storage; legal disposal by entrusted qualified units |
| Standardized storage | 200tons | May 2021 |
General solid waste yard
| General solid waste yard | Standardized storage | 20tons | March 2016 | Standardized storage; legal disposal by entrusted qualified units |
| Standardized storage | 15tons | March 2016 | ||
| Standardized storage | 40tons | July 2019 | ||
| Standardized storage | 30tons | July 2019 |
3. Construction and operation of pollution prevention and control facilities of Huadong Medicine (Xi’an) BohuaPharmaceutical Co., Ltd.:
(1) Waste water
| Name of pollution prevention and control facilities | Treatment process | Processing capacity | Time of operation | Status of operation |
| Waste water treatment system of the sewage station | Fenton oxidation + facultative + aerobic+MBR+ Ozone oxidation | 250 tons/day | July 2012 | Normal |
(2) Waste gas
Name of pollution prevention and control facilities
| Name of pollution prevention and control facilities | Treatment process | Time of operation | Status of operation |
| Waste gas treatment unit of raw medicine No. 1 workshop | Alkali spray + dry filter (filter cotton) +UV photolysis + activated carbon adsorption | October 2020 | Normal |
| Waste gas treatment unit of raw medicine No. 2 workshop | Level 2 alkaline water spray + dry filter +UV photolysis + activated carbon | November 2019 | Normal |
(3) Solid waste
| Name of pollution prevention and control facilities | Treatment process | Storage capacity | Time of operation | Status of operation |
| Hazardous waste warehouse | Standardized storage | 60 tons | January 2012 | Standardize storage; legal disposal by entrusted qualified units |
4. Construction and operation of pollution prevention and control facilities of Jiangsu Joyang Laboratories Co., Ltd.:
(1) Waste water
| Name of pollution prevention and control facilities | Treatment process | Processing capacity | Time of operation | Status of operation |
| Waste water treatment system of the sewage station | Air floatation tank + hydrolysis acidification + IC tower + UASB pool + A/O pool + O pool + secondary sedimentation tank | 300 tons/day | December 2014 | Normal |
(2) Waste gas
| Name of pollution prevention and control facilities | Treatment process | Processing capacity CMH | Time of operation | Status of operation |
| Waste gas treatment unit of the extraction section of workshop 101 | Level 1 water spray + moisture separator + photocatalytic oxidation + level 2 activated carbon adsorption + high-altitude discharge via 25m exhaust pipe | 10,000 | 2014 | Normal |
| Waste gas treatment unit of the fermentation section of workshop 101 | Level 1 water spray + moisture separator + level 2 activated carbon adsorption + high-altitude discharge via 25m exhaust pipe | 2,000 | 2019 | Normal |
| Waste gas treatment unit of the drying section of workshop 101 | Level 1 water spray + moisture separator + level 2 activated carbon adsorption + high-altitude discharge via 25m exhaust pipe | 22,000 | 2017 | Normal |
| Waste gas treatment unit of the dosing section of workshop 101 | Cyclone separator + level 1 water spray + high-altitude discharge via 15m exhaust pipe | 5,000 | 2014 | Normal |
| Waste gas treatment unit of the fermentation section of workshop 104/107/108 | level 1 water spray + moisture separator + level 2 activated carbon adsorption +high-altitude discharge via 25m exhaust pipe | 75000 | 2021 | Normal |
| Waste gas treatment unit of the | Level 1 water spray + moisture separator + photocatalytic | 10,000 | 2015 | Normal |
extraction section of workshop 104
| extraction section of workshop 104 | oxidation + level 2 activated carbon adsorption + high-altitude discharge via 25m exhaust pipe | |||
| Waste gas treatment unit of the dosing section of workshop 104/107/108 | Cyclone separator + level 1 water spray +high-altitude discharge via 15m exhaust pipe | 5000 | 2015 | Normal |
| Waste gas treatment unit of the drying section of workshop 104/107/108 | Level 1 water spray + moisture separator + level 2 activated carbon adsorption | 20000 | 2015 | Normal |
| Waste gas treatment unit of pretreatment basin and domestic waste yard of workshop 103 and 303 | Level 1 water spray + moisture separator + photocatalytic oxidation + level 2 activated carbon adsorption +high-altitude discharge via 25m exhaust pipe | 40000 | 2019 | Normal |
| Waste gas treatment unit of workshop 106 | Level 1 water spray + moisture separator + photocatalytic oxidation + level 2 activated carbon adsorption + high-altitude discharge via 25m exhaust pipe | 10,000 | 2015 | Normal |
| Waste gas treatment unit of the extraction section of workshop 107 | Level 1 water spray + moisture separator +photocatalytic oxidation+ level 2 activated carbon adsorption + high-altitude discharge via 25m exhaust pipe | 20,000 | 2019 | Normal |
| Waste gas treatment unit of the extraction section of workshop 108 | Level 1 water spray + moisture separator + photocatalytic oxidation + level 2 activated carbon adsorption + high-altitude discharge via 25m exhaust pipe | 40,000 | 2019 | Normal |
| Waste gas treatment unit of workshop 109 | Level 1 water spray +high-altitude discharge via 25m exhaust pipe | 20000 | 2019 | Normal |
| Waste gas treatment unit of sewage station 303 | Level 1 water spray + moisture separator + photocatalytic +high-altitude discharge via 25m exhaust pipe | 15000 | 2021 | Normal |
(3) Solid waste
| Name of pollution prevention and control facilities | Treatment process | Processing capacity | Time of operation | Status of operation |
| Hazardous waste warehouse | Standardized storage | 300 tons | October 2020 | Standardized storage; legal disposal by entrusted qualified units |
Domestic waste yard
| Domestic waste yard | Standardized storage | 3 tons | March 2015 | Chengdong Garbage Disposal Station |
Environmental impact assessment of construction projects and other administrative permits for environmental protection
All construction projects of the above four subsidiaries of the Company have be declared, constructed and acceptedin strict accordance with the requirements of “three simultaneous” for environmental protection, have passedenvironmental impact assessment, and met the requirements of environmental impact assessment for constructionprojects. The Company has obtained the pollutant discharge permit and the discharge permit of urban sewage into thedrainage pipe network according to the environmental protection requirements.
Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. obtained the environmental assessmentapproval for the Bering tablet production renovation project on April 22, 2022. Jiangsu Jiuyang Biopharm Co., Ltd.obtained the pollutant discharge permit according to the environmental protection requirements. The valid period isfrom February 28, 2022 to February 27, 2027.Emergency plan for environmental emergencies
The company has established a comprehensive emergency response plan for environmental emergencies,standardizes the emergency handling of environmental emergencies, and minimizes the impact on human health causedby the leakage of environmental risk substances into the air, water or soil due to fire, explosion, leakage or otherunexpected emergencies. And environmental hazards, continue to improve the company's emergency responsecapabilities for sudden environmental pollution incidents. The company has comprehensively established the emergencyplan for environmental emergencies, standardized the emergency treatment of environmental emergencies, minimizedthe harm to human health and environment caused by the leakage of environmental risk substances to air, water or soildue to fire, explosion, leakage or other unexpected emergencies, and continuously improved the emergency responsecapacity of the company for environmental pollution emergencies. The above four subsidiaries of the Company havecompiled and established the mechanism of “Emergency Plan for Environmental Emergencies”, revised and improved itregularly according to the requirements.
Jiangsu Jiuyang Biopharm Co., Ltd. organized an emergency plan drill for fire environmental incidents in May2022.Environmental self-monitoring scheme
The above four subsidiaries of the Company have all established the mechanism of “Self-monitoring Scheme forPollution Sources” which has been put on record in the environmental protection authorities, and all the monitoring dataare reported according to the regulations.Administrative punishment caused by environmental problems during the reporting period
| Company/subsidiary name | Reasons | Violation description | Punishment | Impact on the production and operation of the listed Company | Rectification measures |
| Jiangsu Joyang Laboratories Co., Ltd | The Company fails to re-apply for a discharge permit to discharge pollutants | Types of pollutant emissions are increased | A fine of RMB228,000 | No major impact | The Company need to stop immediately the production of the product and discharge pollutants according to the discharge permit |
Other environmental information that should be made publicNoneCarbon emissions reduction measures and effects during the reporting period
√ Applicable □ N/A
In the first half of 2022, Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd., a wholly-ownedsubsidiary of the Company, continued to use biogas for power generation, reducing the emission of methane, hydrogensulfide and other pollutants, and continuously carried out measures such as water saving and consumption reduction inthe workshop to reduce the emission of pollutants.
In the first half of 2022, Jiangsu Jiuyang Biopharm Co., Ltd., the holding subsidiary of the Company, conductedtechnical transformation of air pipelines to optimize pipeline layout, reduce air resistance, and improve air utilizationrate, which can save 60,000 kWh per month. With the lean project, the power consumption of a single batch ofproducts dropped by 13%, the consumption of tap water by 19%, and the consumption of steam by 8% in the first halfof 2021.
In the first half of 2022, Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd., a wholly-owned subsidiary ofthe Company, carried out frequency conversion transformation on the tap water pressurization system and tail gastreatment system in Xiangfu Qiao plant, which is expected to save 380,000 kwh of electricity annually; it adjusted theservice time of some high-power electrical equipment to avoid peak and fill valley, with estimated annual electricitycost savings of 150,000 yuan; it rectified or banned the use of electricity for non-process steam, which can saveapproximately 1,000 tons of steam per year; it implemented duty mode for air conditioners in the production area toreduce the consumption of energy such as air conditioning steam, chilled water and electricity during non-productionhours; it carried out energy-saving and consumption-reduction technical transformation for the sewage treatmentsystem and optimized the sewage treatment control index to reduce the use of compressed air and save electricity andenergy, which can save more than 10,000 kwh of electricity per month.Other information related to environmental protectionNone
II. Social responsibilities
Since the normalization of the COVID-19 pandemic, the Company, as a provincial and municipal emergencymedicine and equipment storage unit, has actively participated in the fight against the pandemic, performed socialresponsibilities, paid close attention to the epidemic situation, actively coordinated the production enterprises, andoptimized the inventory structure of provincial physical reserves and emergency medical materials; it has scrambled toimplement the organization, mobilization and coordination of pandemic prevention materials, and made every effort tospeed up the transportation of emergency security materials to ensure supply, curbing the spread of the virus with practicalactions.
Section VI. Important Matters
I. Commitments made by interested parties such as the Company’s de facto controller,shareholders, related parties, acquirer(s), and the Company that are fulfilled duringthe reporting period or unfulfilled by the end of the reporting period
□ Applicable √ N/A
The Company does not have 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 unfulfilled bythe end of the reporting period.II. Controlling shareholders’ and related parties’ occupation of non-operating fundsof the listed 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. Employment and dismissal of accounting firmsWhether the half year report was audited
□ Yes √ No
The Company’s half year report was not audited.V. Explanation given by the Board of directors and the Board of Supervisorsregarding the “non-standard auditor’s report” issued by the accounting firm for thecurrent reporting period
□ Applicable √ N/A
VI. Explanation given by the Board of Directors regarding the “non-standardauditor’s report” for the prior year
□ Applicable √ N/A
VII. Bankruptcy reorganization
□ Applicable √ N/A
No such case during the reporting period.
VIII. LitigationsMajor litigation and arbitration
□ Applicable √ N/A
No such case during the reporting period.
Other litigations
√ Applicable □N/A
| Basic litigation (arbitration) information | Amount involved (unit: RMB10,000) | Whether estimated liabilities are formed as a result | Progress of litigation (arbitration) | Litigation (arbitration) result and impact | Litigation (arbitration) judgment execution | Disclosure date | Disclosure index |
| Summary of matters that do not meet the disclosure standards for major litigation (arbitration) (domestic) | 4,153.96 | No | Some cases are being filed, some are under trial, and some have taken effect | The summary of litigation matters has no material impact on the Company | Some judgments have taken effect and are under execution, some have not yet taken effect, some are pending, and some are in progress | Not meet the disclosure standards for major litigation | / |
| Summary of matters that do not meet the disclosure standards for major litigation (arbitration) (overseas) | 143 | No | In trial | The summary of litigation matters has no material impact on the Company | In trial, with no decision made | Not meet the disclosure standards for major litigation | / |
IX. Punishment and rectification
□ Applicable √ N/A
X. Integrity of the Company and its controlling shareholder and actual controller
□ Applicable √ N/A
XI. Major related transactions
1. Transactions related to daily operations
√Applicable □N/A
| Related party | Relationship | 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 | Date of disclosure | Disclosure index |
Grandpharma(China)Co.,Ltd.
| 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 | 2,936.89 | 0.24% | 7,500 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| 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 | 3,351.17 | 0.27% | 4,500 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| 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 | 1,423.87 | 0.12% | 6,500 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Beijing Grand Johamu Pharmaceutical Co., | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transa | Market price | 1,640.06 | 0.13% | 4,000 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
Ltd.
| Ltd. | ction decision-making process | ||||||||||||
| Wuhan Grand Pharmaceutical Group Sales 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 | 1,315.25 | 0.11% | 2,000 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | 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-making process | Market price | 1,551.1 | 0.13% | 2,000 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | 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 | 1,303.97 | 0.11% | 3,000 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Yunnan | Subsidiary | Drug purch | Drug purch | Market price | Market price | 939.29 | 0.08% | 2,000 | No | Cash, banke | Market price | May 12,20 | http://www. |
LeiyunshangLixiangPharmaceuticalCo.,Ltd.
| Leiyunshang Lixiang Pharmaceutical Co., Ltd. | of the Company’s controlling shareholder | ase | ase | determined by the Company’s related transaction decision-making process | r’s acceptance bill | 22 | cninfo.com.cn | ||||||
| Leiyunshang Pharmaceutical Group 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 | 478.83 | 0.04% | 500 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Shenyang Yaoda 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 | 279.97 | 0.02% | 700 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| 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 decisi | Market price | 151.91 | 0.01% | 350 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
on-makingprocess
| on-making process | |||||||||||||
| 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 decision-making process | Market price | 216.68 | 0.02% | 300 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Changshu 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 | 28.93 | 0.00% | 150 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | 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 | 200.7 | 0.02% | 150 | Yes | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Xi'an Yuanda Detia | Subsidiary of the Comp | Drug purchase | Drug purchase | Market price determined | Market price | 109.58 | 0.01% | 550 | No | Cash, banker’s accept | Market price | May 12,2022 | http://www.cninfo.com. |
nPharmaceuticalCo.,Ltd
| n Pharmaceutical Co., Ltd | any’s controlling shareholder | by the Company’s related transaction decision-making process | ance bill | 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 process | Market price | 6.15 | 0.00% | 550 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | 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 | 24.83 | 0.00% | 550 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Grand Biopharmaceutical (Chongqing) Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug purchase | Drug purchase | Market price determined by the Company’s related transaction decision-makin | Market price | 232.27 | 0.02% | 550 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
gprocess
| g process | |||||||||||||
| Hangzhou Junlan Pharmaceutical Trading Co. Ltd. | Shareholding enterprise | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making process | Market price | 4,931 | 0.27% | 13,000 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Leiyunshang Pharmaceutical Group Co. Ltd. | Subsidiary of the Company’s controlling shareholder | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making process | Market price | 341 | 0.02% | 650 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Guangdong Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making process | Market price | 176.84 | 0.01% | 220 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Yunnan Leiyunshang Lixian | Subsidiary of the Company’s contro | Drug sales | Drug sales | Market price determined by the Comp | Market price | 219.99 | 0.01% | 350 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
gPharmaceuticalCo.,Ltd.
| g Pharmaceutical Co., Ltd. | lling shareholder | any’s related transaction decision-making process | |||||||||||
| Changchun Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making process | Market price | 21 | 0.00% | 73 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Changshu Leiyunshang Pharmaceutical Co., Ltd. | Subsidiary of the Company’s controlling shareholder | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making process | Market price | 10.52 | 0.00% | 73 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Hangzhou Jiuyuan Gene Engineering Co., Ltd. | Joint venture of the Company | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making proces | Market price | 358.16 | 0.02% | 1,200 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
s
| s | |||||||||||||
| Hangzhou Tangyangyuan Pharmaceutical Co., Ltd. | Joint venture of the Company | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making process | Market price | 94.06 | 0.00% | 1,100 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Hangzhou Grand Biologic Pharmaceutical Inc. | Subsidiary of the Company’s controlling shareholder | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making process | Market price | 55.17 | 0.00% | 150 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Hangzhou Tangyangyuan TCM Outpatient Department Co., Ltd. | Subsidiary of the Company’s joint venture Hangzhou Tangyangyuan Pharmaceutical Co., Ltd. | Drug sales | Drug sales | Market price determined by the Company’s related transaction decision-making process | Market price | 272.82 | 0.02% | 1100 | No | Cash, banker’s acceptance bill | Market price | May 12,2022 | http://www.cninfo.com.cn |
| Total | -- | -- | 22,672.01 | -- | 50,943 | -- | -- | -- | -- | -- | |||
| Details of bulk sales returns | N/A | ||||||||||||
| Actual performance during the reporting period where the total amount of daily related transactions | N/A | ||||||||||||
is estimated by category for thecurrent period (if any)
| is estimated by category for the current period (if any) | |
| Reasons for the large difference between the transaction price and the market reference price (if applicable) | N/A |
2. Related transactions involving the acquisition or sale of assets and shares
□ 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 who 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 relatedparties
□ Applicable √N/A
No deposit, loan, credit or other financial business between the financial companies controlled by the Company and therelated parties.
7. Other major related transactions
□ Applicable √N/A
No such case during the reporting period.
XII. Major contracts and their fulfilment
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/A
No such case during the reporting period.
2. Important guarantees
√ Applicable □ N/A
Unit: RMB ten thousand yuan
| External guarantees of the Company and its subsidiaries (excluding guarantees 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 |
| The Company’s guarantees for its 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 28, 2020 | 80,000 | May 22, 2020 | 53.66 | Joint liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 28, 2020 | 80,000 | June 9, 2020 | 685.07 | Joint liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei | April 28, 2020 | 80,000 | October 13, 2020 | 14.92 | Joint liability guarantee | One year | No | No | ||
HuadongPharmaceuticalCo., Ltd.
| Huadong Pharmaceutical Co., Ltd. | ||||||||||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 21, 2021 | 80,000 | January 13,2022 | 8,282 | Joint liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 21, 2021 | 80,000 | December 10, 2021 | 61.71 | Joint liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 21, 2021 | 80,000 | March 23,2022 | 4,000 | Joint liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | June 2, 2021 | 10,067.1 | June 1,2021 | 8,053.68 | Joint liability guarantee | No | No | |||
| Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. | April 28, 2022 | 85,000 | May 25,2022 | 7,742 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. | April 28, 2022 | 5,000 | One year | |||||||
| Huadon | April 28, | 16,000 | One year |
gMedicineNingboSalesCo., Ltd.
| g Medicine Ningbo Sales Co., Ltd. | 2022 | |||||||||
| Huadong Medicine Huzhou Co., Ltd. | April 28, 2022 | 15,000 | One year | |||||||
| Huadong Medicine Shaoxing Co., Ltd. | April 21, 2021 | 18,000 | March 25,2022 | 5,000 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Shaoxing Co., Ltd. | April 28, 2022 | 18,500 | One year | |||||||
| Huadong Medicine Supply Chain Management (JinHua) Co., Ltd. | April 19, 2019 | 20,000 | Ten years | |||||||
| Huadong Medicine (Hangzhou) Biological Products Co., Ltd. | April 28, 2022 | 3,000 | One year | |||||||
| Jiangsu Jiuyang Biopharm Co., Ltd. | April 28, 2022 | 7,000 | One year | |||||||
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | September 9,2021 | 2,000 | Joint liability guarantee | One year | No | No |
HuadongMedicineWenzhou Co.,Ltd.
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | September 15,2021 | 2,000 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | October21,2021 | 1,980 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | November 22,2021 | 990 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | November 23,2021 | 990 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | December 14,2021 | 990 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | December 15,2021 | 990 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | December 16,2021 | 990 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Wenzhou Co., Ltd. | April 21, 2021 | 24,000 | December 20,2021 | 990 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicin | April 28, 2022 | 24,000 | One year |
eWenzhou Co.,Ltd.
| e Wenzhou Co., Ltd. | ||||||||||
| Huadong Medicine Lishui Co., Ltd. | April 21, 2021 | 15,000 | March 25,2022 | 6,000 | Joint liability guarantee | One year | No | No | ||
| Huadong Medicine Daishan Co., Ltd. | April 28, 2022 | 15,000 | One year | |||||||
| Huadong Medicine Cunde (Zhoushan) Co., Ltd. | April 28, 2022 | 2,500 | One year | |||||||
| Huadong Medicine Lishui Co., Ltd. | April 28, 2022 | 14,300 | One year | |||||||
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | April 21, 2021 | 70,000 | January 20,2022 | 6,197 | Joint liability guarantee | One year | No | No | ||
| Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. | April 28, 2022 | 70,000 | May 26,2022 | 1,289 | Joint liability guarantee | One year | No | No | ||
| Hangzhou Huadong Pharmacy Chain Co., Ltd. | April 21, 2021 | 5,000 | March 25,2022 | 2,300 | Joint liability guarantee | One year | No | No | ||
| Hangzhou Huadon | April 28, 2022 | 5,000 | One year |
gPharmacy ChainCo., Ltd.
| g Pharmacy Chain Co., Ltd. | ||||||||||
| Huadong Medicine Jinhua Co., Ltd. | April 28, 2022 | 10,000 | One year | |||||||
| Huadong Pharmaceutical Investment Holding (Hong Kong) Limited | July 16, 2021 | 63,758.3 | June 30,2022 | 62,074.32 | Joint liability guarantee | Three years | No | No | ||
| Huadong Pharmaceutical Investment Holding (Hong Kong) Limited | April 28, 2022 | 70,000 | One year | |||||||
| Sinclair Pharma Limited | November 23, 2018 | 40,000 | May 21,2020 | 9,763.8 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | November 23, 2018 | 40,000 | July 30,2020 | 2,440.95 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | November 23, 2018 | 40,000 | November 16,2020 | 1,627.3 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | November 23, 2018 | 40,000 | February 4,2021 | 2,440.95 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | September 17, 2020 | 12,204.75 | March 30,2021 | 2,440.95 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | September 17, 2020 | 12,204.75 | April 19,2021 | 3,254.6 | Joint liability guarante | Three years | No | No |
e
| e | ||||||||||
| Sinclair Pharma Limited | September 17, 2020 | 12,204.75 | May 26,2021 | 3,254.6 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | September 17, 2020 | 12,204.75 | August 11,2021 | 1,627.3 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | September 17, 2020 | 12,204.75 | September 14,2021 | 1,627.3 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | March 16, 2021 | 17,521 | Three years | |||||||
| Sinclair Pharma Limited | March 16, 2021 | 14,016.8 | April 8,2021 | 14,016.8 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | March 16, 2021 | 14,016.8 | March 17,2021 | 14,016.8 | Joint liability guarantee | December 31,2024 | No | No | ||
| Sinclair Pharma Limited | July 16, 2021 | 36,912.7 | January 13,2022 | 36,912.7 | Joint liability guarantee | Three years | No | No | ||
| Sinclair Pharma Limited | April 28, 2022 | 58,600 | One year | |||||||
| Total guarantee cap for subsidiaries approved during the reporting period (B1) | 418,900 | Total actual guarantee amount for subsidiaries during the reporting period (B2) | 139,797 | |||||||
| Total approved guarantee cap for subsidiaries at the end of the reporting period (B3) | 939,397 | Total actual guarantee balance for subsidiaries at the end of the reporting period (B4) | 217,097 | |||||||
| Subsidiaries 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 | April 21, 2021 | 20,000 | January 25,2022 | 3,036 | Joint liability guarantee | One year | No | No | ||
HuadongPharmaceuticalJiangdong Co.,Ltd.
| Huadong Pharmaceutical Jiangdong Co., Ltd. | ||||
| Total guarantee cap for subsidiaries approved during the reporting period (C1) | 20,000 | Total guarantee cap for subsidiaries approved during the reporting period (C1) | 3,036 | |
| Total approved guarantee cap for subsidiaries at the end of the reporting period (C3) | 20,000 | Total approved guarantee cap for subsidiaries at the end of the reporting period (C3) | 3,036 | |
| 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) | 438,900 | Total actual guarantee amount during the reporting period (A2+B2+C2) | 142,833 | |
| Total approved guarantee cap at the end of the reporting period (A3+B3+C3) | 959,397 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 220,133 | |
| Proportion of the actual guarantee amount (i.e. A4+B4+C4) in the Company’s net assets | 12.69% | |||
| Including: | ||||
| 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) | 113,644 | |||
| 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) | 113,644 | |||
| For the unexpired guarantee, a guarantee liability has occurred or there may be a joint liability for satisfaction during the reporting period (if any) | / | |||
| Note of external guarantees in violation of prescribed procedures (if any) | / | |||
Notes on the Guarantee Provided in Multiple Forms
□ Applicable √ N/A
3. Entrusted finances
□ Applicable √N/A
No such case during the reporting period.
4. Other significant contracts
□ Applicable √ N/A
No such case during the reporting period.
XIII. Other major events
□ Applicable √N/A
During the reporting period, the company did not have other major matters that need to be explained.XIV. Major events of subsidiaries
√Applicable □N/A
Huadong Ningbo Medicine Co., Ltd. ("Huadong Ningbo"), a holding subsidiary of the Company,has officially entered into liquidation due to the expiration of its operation. This liquidation is under theauspices of the court. Ningbo Beilun court has selected and designated an intermediary institution to setup a liquidation group according to relevant procedures, which will preside over the liquidation. Duringthe liquidation of Huadong Ningbo, the Company does not have a dominant position in the liquidationand does not have a controlling relationship over Huadong Ningbo. According to the relevant provisionsof the Company Law and Accounting Standards for Business Enterprises, Huadong Ningbo will be nolonger included in the consolidated scope of the Company’s financial statements from December 31,2021. As of the end of the reporting period, the Company has designated personnel to activelyparticipate and cooperate in the subsequent liquidation of Huadong Ningbo, which is not expected tohave a significant influence on the Company’s operating results.
Section VII. Share Change and Shareholders
I. Changes in Share Capital
1. Table of Changes in share capital
Unit: share
| Before the change | Change in the period (+/-) | After the change | |||||||
| Number of shares | Proportion | New shares | Bonus share | Capital reserve conversion | Other | Subtotal | Number of shares | Proportion | |
| I. Shares subject to conditional restriction | 47,745 | 0.00% | 0 | 0 | 0 | 68,415 | 68,415 | 116,160 | 0.01% |
| 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 | 47,745 | 0.00% | 0 | 0 | 0 | 68,415 | 68,415 | 116,160 | 0.01% |
| Including: held by domestic corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| held by domestic natural persons | 47,745 | 0.00% | 0 | 0 | 0 | 68,415 | 68,415 | 116,160 | 0.01% |
| 4. Shares held by overseas investors | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Including: held by overseas corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| held by | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
overseasnaturalpersons
| overseas natural persons | |||||||||
| II. Shares without restriction | 1,749,761,803 | 100.00% | 0 | 0 | 0 | -68,415 | -68,415 | 1,749,693,388 | 99.99% |
| 1. RMB ordinary shares | 1,749,761,803 | 100.00% | 0 | 0 | 0 | -68,415 | -68,415 | 1,749,693,388 | 99.99% |
| 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 | 1,749,809,548 | 100.00% | 0 | 0 | 0 | 0 | 0 | 1,749,809,548 | 100.00% |
Reasons for the changes in share capital
√Applicable □N/A
During the reporting period, the Company held the first meeting of the 10th Board of Directors on June 1, 2022,adopted the Proposal on the Appointment of the Company’s Deputy General Manager, and agreed to appoint Mr. WuHui, Ms. Zhu Li and Mr. Zhang Jianfei as the Company’s deputy general manager. The term of office starts from thedate of deliberation and approval by the Board of Directors and ends on the date of expiration of the term of the 10thboard of directors. Since Mr. Zhang Jianfei holds 80,000 ordinary shares, in accordance with the provisions of theCompany Law, the shares transferred by the Company’s senior managers each year during tenure shall not exceed 25%of the total shares of the Company held by him, and 60,000 shares held by Mr. Zhang Jianfei are restricted shares; asMs. He Rufen no longer serves as the employee supervisor of the Company, the supervisor shall not transfer the sharesof the Company held by him within half a year after his resignation according to the provisions of the Company Law,and the 33,660 ordinary shares held by Ms. He Rufen are restricted shares.Approval for changes in share capital
□ Applicable √N/A
Transfer of shares
□ Applicable √N/A
Progress of share repurchase
□ Applicable √N/A
Progress of reducing repurchased shares through centralized bidding
□ Applicable √N/A
Effects of changes in share capital on the basic earnings per share, diluted earnings per share for the most recent yearand the most recent period, the net assets per share attributable to the Company’s shareholders of common shares andother financial indicators
□ Applicable √N/A
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 Shares Lifted from Restrictions during the Period | Number of New Restricted Shares during the Period | Number of Restricted Shares at the End of the Period | Reasons for Restricted Ssales | Date of Lifting Restrictions |
| Zhu Li | 22,500 | 0 | 0 | 22,500 | Management lock-up shares | In accordance with the provisions on restricted sale by directors, supervisors and senior managers within tenure |
| Zhang Jianfei | 0 | 0 | 60,000 | 60,000 | Management lock-up shares | In accordance with the provisions on restricted sale by directors, supervisors and senior managers within tenure |
| He Rufen | 25,245 | 0 | 8,415 | 33,660 | Management lock-up shares | In accordance with the provisions on restricted sale by directors, supervisors and senior managers within tenure |
| Total | 47,745 | 0 | 68,415 | 116,160 | -- | -- |
II. Issuance and listing of securities
□ Applicable √N/A
III. Total number of shareholders and their shareholdings
Unit: share
| Total number of common shareholderss at the end of the reporting period | 96,073 | Total number of preference shareholders with restoration of the voting rights at the end of the reporting period (if any) (see | 0 |
Note 8)
| Note 8) | ||||||||
| Particulars about shareholders with a shareholding ratio over 5% or the Top 10 shareholders | ||||||||
| Name of shareholder | Nature of shareholder | Share- holding ratio | Total common shares held at the end of the reporting period | Changes in the reporting period | The number of common shares held with trading restrictions | The number of common shares held without trading restriction | Pledged, marked or frozen | |
| Status | Amount | |||||||
| China Grand Enterprises, Inc. | Domestic non-state-owned corporation | 41.77% | 730,938,157 | 0 | 0 | 730,938,157 | Pledged | 171,860,000 |
| Hangzhou Huadong Medicine Group Co., Ltd. | State-owned corporation | 16.46% | 288,000,000 | 0 | 0 | 288,000,000 | ||
| Hong Kong Securities Clearing Company Ltd. | Overseas corporation | 2.76% | 48,323,471 | 15,862,958 | 0 | 48,323,471 | ||
| Industrial and Commercial Bank of China Limited-China-Europe Healthcare Hybrid Securities Investment Fund | Others | 2.07% | 36,180,052 | 32,467,903 | 0 | 36,180,052 | ||
| China Securities Finance Co., | Domestic non-state-owned corporation | 1.27% | 22,186,818 | 0 | 0 | 22,186,818 | ||
| China Construction Bank Co., Ltd. - ICBC Credit Suisse Frontier Medical Equity Fund | Others | 1.03% | 18,000,037 | 7,999,987 | 0 | 18,000,037 | ||
| Shanghai Gao Yi Asset Manageme | Others | 0.48% | 8,378,920 | 8,378,920 | 0 | 8,378,920 | ||
ntPartnership(L.P.) - GaoYiXiaofengNo. 2ZhixinFund
| nt Partnership (L.P.) - Gao Yi Xiaofeng No. 2 Zhixin Fund | ||||||||
| Norges Bank-Equity fund | Overseas corporation | 0.41% | 7,219,991 | 4,443,762 | 0 | 7,219,991 | ||
| China Construction Bank Corporation-Huitianfu Medical and Health Care Mixed Securities Investment Fund | Others | 0.40% | 6,958,369 | 4,885,369 | 0 | 6,958,369 | ||
| China Foreign Economy and Trade Trust Co., Ltd.-Foreign Trade Trust- Gao Yi Xiaofeng Hongyuan Collective Fund Trust Plan | Others | 0.39% | 6,794,200 | 6,794,200 | 0 | 6,794,200 | ||
| 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 | |||||||
| Special instructions for | N/A | |||||||
the existence of specialrepurchase accountsamong the top 10shareholders (if any) (seeNote 11)
| the existence of special repurchase accounts among the top 10 shareholders (if any) (see Note 11) | |||
| Shareholding of the top 10 shareholders without trading restriction conditions | |||
| Name of shareholder | Number of the trading unrestricted stocks held at the end of the Report Period | Type of stocks | |
| Type of stocks | Amount | ||
| China Grand Enterprises, Inc. | 730,938,157 | RMB ordinary stocks | 730,938,157 |
| Hangzhou Huadong Medicine Group Co., Ltd. | 288,000,000 | RMB ordinary stocks | 288,000,000 |
| Hong Kong Securities Clearing Company Ltd. | 48,323,471 | RMB ordinary stocks | 48,323,471 |
| Industrial and Commercial Bank of China Limited-China-Europe Healthcare Hybrid Securities Investment Fund | 36,180,052 | RMB ordinary stocks | 36,180,052 |
| China Securities Finance Co., | 22,186,818 | RMB ordinary stocks | 22,186,818 |
| China Construction Bank Co., Ltd. - ICBC Credit Suisse Frontier Medical Equity Fund | 18,000,037 | RMB ordinary stocks | 18,000,037 |
| Shanghai Gao Yi Asset Management Partnership (L.P.) - Gao Yi Xiaofeng No. 2 Zhixin Fund | 8,378,920 | RMB ordinary stocks | 8,378,920 |
| Norges Bank-Equity fund | 7,219,991 | RMB ordinary stocks | 7,219,991 |
| China Construction Bank Corporation-Huitianfu Medical and Health Care Mixed Securities Investment Fund | 6,958,369 | RMB ordinary stocks | 6,958,369 |
| China Foreign Economy and Trade Trust Co., Ltd.-Foreign Trade Trust- Gao Yi Xiaofeng Hongyuan Collective Fund Trust Plan | 6,794,200 | RMB ordinary stocks | 6,794,200 |
| Description of the related relationship or concerted action between the top 10 common shareholders of unrestricted shares, and between the top 10 | The Company does not know whether the above-mentioned shareholders are related parties or whether they are acting-in-concert parties with one another. | ||
common shareholders ofunrestricted shares and thetop 10 commonshareholders
| common shareholders of unrestricted shares and the top 10 common shareholders | |
| 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, among the top 10 common shareholders of the Company, there were no shareholders holding the Company's shares through the margin trading and securities lending account. |
Whether the Company’s Top 10 common shareholders or the Top 10 common shareholders without trading restrictionhave carried out any agreement to repurchase transaction during the reporting period
□ Yes √ No
No such case during the reporting period.IV. Changes in shareholding of directors, supervisors and senior managers
√Applicable □N/A
| Name | Title | Tenure status | Shares held at the beginning of the period (shares) | Shares increased during the Period(shares) | Shares decreased during the Period(shares) | Shares held at the end of the Period (shares) | Number of restricted shares granted at the beginning of the reporting period (shares) | Number of restricted shares granted during the reporting period (shares) | Number of restricted shares granted at the end of the reporting period (shares) |
| Lv Liang | Chairman, Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Li Bangliang | Honorary Chairman | Departing | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Kang Wei | Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Niu Zhanqi | Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Zhu Feipeng | Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Ye Bo | Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Zhu Liang | Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Jin Xuhu | Director | Departing | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Gao Xiangdong | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Wang Ruwei | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Yang Lan | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
ZhongXiaoming
| Zhong Xiaoming | Independent Director | Departing | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Yang Jun | Independent Director | Departing | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Bai Xinhua | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Zhou Yanwu | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Qin Yun | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Dong Jiqin | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Xu Zhifeng | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Zhu Yinhua | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Liu Chengwei | Supervisor | Departing | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Hu Baozhen | Supervisor | Departing | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| He Rufen | Supervisor | Departing | 33,660 | 0 | 0 | 33,660 | 0 | 0 | 0 |
| Wu Hui | Deputy General Manager | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Zhu li | Deputy General Manager | Incumbent | 30,000 | 0 | 0 | 30,000 | 0 | 0 | 0 |
| Zhang Jianfei | Deputy General Manager | Incumbent | 80,000 | 0 | 0 | 80,000 | 0 | 0 | 0 |
| Zhou Shunhua | Deputy General Manager | Departing | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Chen Bo | Board Secretary | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Qiu Renbo | Person in Charge of Finance | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | 143,660 | 0 | 0 | 143,660 | 0 | 0 | 0 |
V. Changes in controlling shareholders or actual controllers
Change of controlling shareholder during the reporting period
□ Applicable √N/A
No such case during the reporting period.Change of actual controller during the reporting period
□ Applicable √N/A
No such case during the reporting period.
Section VIII. Preferred Shares
□ Applicable √N/A
No such case during the reporting period.
Section IX. Information about Bonds
□ Applicable √N/A
Section X. Financial Report
I. Audit reportWhether the half year report was audited
□ Yes √ No
The Company’s half year report was not audited.II. Financial statements
The currency unit of statements in the financial notes is: RMB yuan.
1. Consolidated balance sheet
Prepared by: Huadong Medicine Co., Ltd.
June 30, 2022
Unit: RMB yuan
| Item | June 30, 2022 | January 1, 2022 |
| Current assets: | ||
| Cahs and bank balances | 3,682,953,466.77 | 4,032,424,555.22 |
| Settlement reserve | ||
| Lending to other banks and other financial institutions | ||
| Financial assets for trade | ||
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 7,454,064,290.97 | 6,430,482,175.97 |
| Accounts receivable for financing | 802,248,535.33 | 509,190,888.54 |
| Prepayments | 229,659,830.03 | 275,353,134.69 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserve receivable | ||
| Other receivables | 387,568,284.05 | 223,707,267.30 |
| Including: Interests receivable | ||
| Dividends receivable | 3,404,934.45 | 877,734.45 |
| Financial assets purchased for resale | ||
| Inventories | 4,004,905,504.14 | 3,974,549,648.96 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 40,835,086.03 | 40,907,922.76 |
| Total current assets | 16,602,234,997.32 | 15,486,615,593.44 |
| Non-current assets: | ||
| Loans and prepayments issuance | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 1,005,658,952.83 | 984,927,398.68 |
| Other equity instrument investments | 250,792,740.36 | 257,815,844.68 |
| Other non-current financial assets | ||
| Real estate properties for investment | 14,088,049.32 | 14,569,533.94 |
| Fixed assets | 3,006,669,793.91 | 3,077,227,759.84 |
| Constructions in progress | 1,756,500,881.94 | 1,582,125,201.25 |
| Biological assets for production | ||
| Oil & gas assets | ||
| Right-of-use assets | 126,894,326.47 | 153,724,197.81 |
| Intangible assets | 2,263,735,452.78 | 2,233,450,369.34 |
| Development expenditures | 35,704,500.05 | |
| Goodwill | 2,228,013,021.51 | 2,138,808,037.01 |
| Long-term unamortized expenses | 11,335,988.97 | 12,425,364.03 |
| Deferred tax assets | 157,610,340.81 | 143,651,186.84 |
| Other non-current assets | 1,301,733,649.28 | 911,062,879.83 |
| Total non-current assets | 12,158,737,698.23 | 11,509,787,773.25 |
| Total assets | 28,760,972,695.55 | 26,996,403,366.69 |
| Current liabilities: | ||
| Short-term borrowing | 858,688,755.97 | 1,237,843,228.13 |
| Borrowing from the central bank | ||
| Borrowing from other banks and |
| other financial institutions | ||
| Financial liabilities for trade | ||
| Derivative financial liabilities | ||
| Notes payable | 884,312,495.21 | 671,964,504.00 |
| Accounts payable | 4,117,862,016.06 | 3,847,719,574.86 |
| Receipts in Advance | 1,948,839.03 | 1,147,425.45 |
| Contract liabilities | 59,102,591.78 | 118,341,141.48 |
| Financial assets sold for repurchase | ||
| Absorbing deposits and due from banks | ||
| Receipts for buying and selling securities as proxy | ||
| Receipts for underwriting securities as proxy | ||
| Payroll payable | 192,932,148.00 | 168,210,088.82 |
| Taxes payable | 551,787,831.96 | 1,029,610,563.41 |
| Other payables | 2,320,887,243.25 | 1,935,116,784.93 |
| Including: Interests payable | ||
| Dividends payable | 224,219.60 | 2,184,219.60 |
| Handling fees and commissions payable | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 56,882,586.66 | 244,256,705.59 |
| Other current liabilities | 6,854,102.03 | 11,386,267.11 |
| Total current liabilities | 9,051,258,609.95 | 9,265,596,283.78 |
| Non-current liabilities: | ||
| Insurance policy reserve | ||
| Long-term borrowing | 1,299,388,765.81 | 139,178,905.04 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 70,263,650.58 | 80,889,403.39 |
| Long-term payables | 260,000,441.56 | 261,903,489.09 |
| Long-term employee benefits |
| payable | ||
| Provisions | 38,220,690.24 | 39,086,238.25 |
| Deferred income | 103,256,922.10 | 83,521,649.96 |
| Deferred tax liabilities | 184,714,029.50 | 184,908,391.50 |
| Other non-current liabilities | ||
| Total non-current liabilities | 1,955,844,499.79 | 789,488,077.23 |
| Total liabilities | 11,007,103,109.74 | 10,055,084,361.01 |
| Owners’ Equity: | ||
| Share capital | 1,749,809,548.00 | 1,749,809,548.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 2,264,211,002.79 | 2,229,868,312.11 |
| Less: Treasury shares | ||
| Other comprehensive income | -146,020,959.74 | -47,768,225.80 |
| Special reserve | ||
| Surplus reserves | 1,021,670,687.31 | 1,021,670,687.31 |
| General risk reserve | ||
| Retained earnings | 12,458,919,717.52 | 11,625,794,001.46 |
| Total owners’ equity attributable to owner of the Company | 17,348,589,995.88 | 16,579,374,323.08 |
| Minority interest | 405,279,589.93 | 361,944,682.60 |
| Total owners’ equity | 17,753,869,585.81 | 16,941,319,005.68 |
| Total liabilities & owners’ equity | 28,760,972,695.55 | 26,996,403,366.69 |
Legal representative: Lv LiangPerson in charge of accounting work: Lv LiangPerson in charge of the Accounting Department: Qiu Renbo
2. Balance sheet of the parent company
Unit: RMB yuan
| Item | June 30, 2022 | January 1, 2022 |
| Current assets: | ||
| Cash and bank balances | 1,539,552,368.34 | 2,280,519,812.31 |
| Financial assets for trade | ||
| Derivative financial assets |
| Notes receivable | ||
| Accounts receivable | 4,230,719,604.60 | 3,369,254,003.85 |
| Accounts receivable for financing | 188,076,139.40 | 196,523,246.00 |
| Prepayments | 72,146,739.36 | 140,828,160.14 |
| Other receivables | 2,026,079,393.91 | 986,757,703.19 |
| Including: Interests receivable | ||
| Dividends receivable | 1,000,000,000.00 | |
| Inventories | 2,080,534,013.80 | 1,946,036,027.82 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 0.00 | 20,289.53 |
| Total current assets | 10,137,108,259.41 | 8,919,939,242.84 |
| Non-current assets: | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 5,064,568,480.23 | 5,079,071,023.37 |
| Other equity instrument investments | 10,100,870.56 | 10,100,870.56 |
| Other non-current financial assets | ||
| Real estate properties for investment | 7,426,227.58 | 7,659,343.90 |
| Fixed assets | 153,399,586.45 | 160,678,584.54 |
| Constructions in progress | 689,460.69 | 211,760.72 |
| Biological assets for production | ||
| Oil & gas assets | ||
| Right-of-use assets | 6,998,988.33 | 11,020,708.66 |
| Intangible assets | 203,375,661.16 | 218,720,898.11 |
| Development expenditures | ||
| Goodwill | ||
| Long-term unamortized expenses | 189,850.98 | 321,067.34 |
| Deferred tax assets | 59,886,457.14 | 47,289,929.98 |
| Other non-current assets | 396,808,095.48 | 406,493,149.98 |
| Total non-current assets | 5,903,443,678.60 | 5,941,567,337.16 |
| Total assets | 16,040,551,938.01 | 14,861,506,580.00 |
| Current liabilities: | ||
| Short-term borrowing | 524,080,831.49 | 630,446,420.72 |
| Financial liabilities for trade | ||
| Derivative financial liabilities | ||
| Notes payable | 547,050,320.54 | 311,085,944.14 |
| Accounts payable | 2,955,614,945.50 | 2,416,471,973.20 |
| Receipts in advance | ||
| Contract liabilities | 34,788,963.17 | 19,690,922.48 |
| Payroll payable | 3,729,940.23 | 9,353,991.58 |
| Taxes payable | 74,926,245.39 | 176,633,138.73 |
| Other payables | 803,449,999.96 | 877,397,177.28 |
| Including: Interests payable | ||
| Dividends payable | 224,219.60 | 224,219.60 |
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 3,860,492.46 | 5,939,175.02 |
| Other current liabilities | 4,492,075.91 | 2,494,822.02 |
| Total current liabilities | 4,951,993,814.65 | 4,449,513,565.17 |
| Non-current liabilities: | ||
| Long-term borrowing | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 21,562.38 | 2,701,526.22 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provision | ||
| Deferred income | 36,850,098.57 | 38,133,036.03 |
| Deferred tax liabilities | 12,511,476.38 | 12,511,476.38 |
| Other non-current liabilities | ||
| Total non-current liabilities | 49,383,137.33 | 53,346,038.63 |
| Total liabilities | 5,001,376,951.98 | 4,502,859,603.80 |
| Owners’ Equity: |
| Share capital | 1,749,809,548.00 | 1,749,809,548.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 2,168,451,528.01 | 2,168,451,528.01 |
| Less: Treasury shares | ||
| Other comprehensive income | -129,129.44 | -129,129.44 |
| Special reserve | ||
| Surplus reserves | 1,099,526,446.75 | 1,099,526,446.75 |
| Retained earnings | 6,021,516,592.71 | 5,340,988,582.88 |
| Total owners’ equity | 11,039,174,986.03 | 10,358,646,976.20 |
| Total liabilities & owners’ equity | 16,040,551,938.01 | 14,861,506,580.00 |
3. Consolidated income statement
Unit: RMB yuan
| Item | Current period in 2022 | Previous period in 2021 |
| I. Total operating income | 18,197,963,991.01 | 17,179,437,902.61 |
| Including: Operating revenue | 18,197,963,991.01 | 17,179,437,902.61 |
| Interests received | ||
| Premiums earned | ||
| Handling fees and commissions received | ||
| II. Total operating cost | 16,516,515,436.25 | 15,638,788,710.40 |
| Including: Operating cost | 12,243,374,078.15 | 11,589,419,896.59 |
| Interests paid | ||
| Handling fees and commissions paid | ||
| Surrender value | ||
| Net payment of insurance claims | ||
| Net appropriation of policy reserve | ||
| Policy dividends paid | ||
| Reinsurance expenses | ||
| Business taxes and | 96,083,582.73 | 88,585,385.20 |
| surcharges | ||
| Selling expenses | 3,032,965,177.95 | 2,978,753,751.45 |
| Administrative expenses | 572,048,249.55 | 534,683,411.33 |
| Research and Development(R&D) expenses | 566,596,381.67 | 437,556,684.96 |
| Financial expenses | 5,447,966.20 | 9,789,580.87 |
| Including: Interests expenses | 39,506,356.40 | 37,214,555.56 |
| Interests income | 49,960,917.39 | 38,453,252.17 |
| Add: Other income | 81,653,430.69 | 137,364,653.52 |
| Investment income (Losses are indicated by “-”) | -53,479,017.66 | -54,458,950.28 |
| Including: Investment gains (losses) in associated enterprise and joint-venture enterprise | -43,145,347.52 | -22,852,478.03 |
| 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 on changes in fair value (Losses are indicated by “-”) | ||
| Credit impairment losses (Losses are indicated by “-”) | -71,965,559.59 | -38,263,673.24 |
| Impairment losses of assets (Losses are indicated by “-”) | 0.00 | 3,054,806.20 |
| Gains on assets disposal (Losses are indicated by “-”) | 8,506,580.12 | 182,307.80 |
| III. Operating profit (Losses are indicated by “-”) | 1,646,163,988.32 | 1,588,528,336.21 |
| Add: Non-operating income | 4,341,628.44 | 834,874.23 |
| Less: Non-operating expenses | 8,661,496.73 | 6,126,908.04 |
| IV. Total profit (Total losses are indicated by “-”) | 1,641,844,120.03 | 1,583,236,302.40 |
| Less: Income tax expenses | 287,938,727.72 | 240,728,486.55 |
| V. Net profit (Net losses are indicated by | 1,353,905,392.31 | 1,342,507,815.85 |
| “-”) | ||
| (I) Classification by continuous operations | ||
| 1. Net profit from continued operations (Net losses are indicated by “-”) | 1,353,905,392.31 | 1,342,507,815.85 |
| 2. Net profit from terminational operations (Net losses are indicated by “-”) | ||
| (II) Classification by attribution of ownership | ||
| 1. Net profit attributable to owners of the parent company | 1,340,570,484.98 | 1,300,346,324.85 |
| 2. Profit or loss attributable to minority shareholders | 13,334,907.33 | 42,161,491.00 |
| VI. Other comprehensive income, net of income tax | -98,252,733.94 | 49,562,711.35 |
| Other comprehensive income attributable to owners of the parent company, net of tax | -98,252,733.94 | 49,562,711.35 |
| (I) Other comprehensive income that cannot be reclassified into gains/losses | -7,023,104.32 | 15,091,655.18 |
| 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 | -7,023,104.32 | 15,091,655.18 |
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| (II) Other comprehensive income to be reclassified into gains/losses | -91,229,629.62 | 34,471,056.17 |
| 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 arising on conversion of financial statements denominated in foreign currencies | -91,229,629.62 | 34,471,056.17 |
| 7. Others | ||
| Net amount after tax of other comprehensive income attributable to minority shareholders | ||
| VII. Total comprehensive income | 1,255,652,658.37 | 1,392,070,527.20 |
| Total comprehensive income attributable to owners of the parent company | 1,242,317,751.04 | 1,349,909,036.20 |
| Total comprehensive income attributable to minority shareholders | 13,334,907.33 | 42,161,491.00 |
| VIII. Earnings per share (EPS): | ||
| (I) Basic EPS | 0.7661 | 0.7431 |
| (II) Diluted EPS | 0.7661 | 0.7431 |
As for enterprise merger under the same control in the current period, the net profit generated by the merged party before the mergeris 0.00 yuan, and that generated during the previous period is 0.00 yuan.Legal representative: Lv LiangPerson in charge of accounting work: Lv LiangPerson in charge of the Accounting Department: Qiu Renbo
4. Income statement of the parent company
Unit: RMB yuan
| Item | Current period in 2022 | Previous period in 2021 |
| I. Total operating income | 9,908,981,203.23 | 8,825,456,287.77 |
| Less: Total operating cost | 9,247,554,807.79 | 8,358,026,557.10 |
| Business taxes and surcharges | 14,000,999.79 | 8,620,356.90 |
| Selling expenses | 227,664,922.41 | 183,609,392.52 |
| Administrative expenses | 82,342,556.23 | 84,417,643.06 |
| Research and Development (R&D) expenses | ||
| Financial expenses | -396,898.80 | 3,945,113.42 |
| Including: Interests expenses | 27,507,061.68 | 28,654,116.50 |
| Interests income | 32,303,808.77 | 25,469,215.21 |
| Add: Other income | 12,314,150.33 | 3,491,044.84 |
| Investment income (Losses are indicated by “-”) | 1,013,355,132.27 | 1,013,064,044.10 |
| Including: Investment gains (losses) in associated enterprise and joint-venture enterprise | -7,439,207.20 | -488,201.29 |
| 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 “-”) | -91,642,566.80 | -37,061,514.45 |
| Impairment gains (losses) of assets (Losses are indicated by “-”) | ||
| Asset disposal income (Losses are indicated by “-”) | 7,341,180.70 | -24,172.29 |
| II. Operating profit (Losses are indicated by “-”) | 1,279,182,712.31 | 1,166,306,626.97 |
| Add: Non-operating income | 669,874.31 | 3,934.06 |
| Less: Non-operating expenses | 3,286,049.77 | 232,283.92 |
| III. Total profit (Total losses are indicated by “-”) | 1,276,566,536.85 | 1,166,078,277.11 |
| Less: Income tax expenses | 88,593,758.11 | 38,782,555.89 |
| IV. Net profit (Net losses are indicated by “-”) | 1,187,972,778.74 | 1,127,295,721.22 |
| (I) Net profit from continuous operations (Net losses are indicated by “-”) | 1,187,972,778.74 | 1,127,295,721.22 |
| (II) Net profit from discontinued operations (Net losses are indicated by “-”) | ||
| V. Other comprehensive income, net of income tax | ||
| (I) Other comprehensive income that cannot be reclassified into gains/losses | ||
| 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 | ||
| 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 | 1,187,972,778.74 | 1,127,295,721.22 |
| VII. Earnings per share (EPS): |
| (I) Basic EPS | ||
| (II) Diluted EPS |
5. Consolidated cash flow statement
Unit: RMB yuan
| Item | Current period in 2022 | Previous period in 2021 |
| I. Cash flows from operating activities： | ||
| Cash received from sale of goods or rendering of services | 18,859,480,723.70 | 19,260,978,489.19 |
| 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 refunds | 11,410,179.66 | 1,862,175.25 |
| Other cash receipts to operating activities | 264,979,395.43 | 320,057,319.74 |
| Sub-total of Cash inflows from operating activities | 19,135,870,298.79 | 19,582,897,984.18 |
| Cash payments for goods purchased and services received | 12,623,103,224.34 | 12,667,873,491.42 |
| 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 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 | 1,600,540,802.72 | 1,324,178,305.24 |
| Payments of various types of taxes | 1,824,842,188.89 | 1,022,924,459.48 |
| Other cash payments in relation to operating activities | 2,803,149,672.57 | 2,829,409,355.93 |
| Sub-total of cash outflows for operating activities | 18,851,635,888.52 | 17,844,385,612.07 |
| Net cash flow from operating activities | 284,234,410.27 | 1,738,512,372.11 |
| II. Cash flows from investing activities | ||
| Cash receipts from recovery of investments | ||
| Cash receipts from investment income | 900,000.00 | 4,281,616.49 |
| Net cash from disposal of fixed assets, intangible assets and other long-term assets | 8,138,807.00 | 407,737.22 |
| Net cash from disposal of subsidiaries and other business units | ||
| Other cash receipts in relation to investing activities | 0.00 | 4,788,636.47 |
| Sub-total of cash inflows from investing activities | 9,038,807.00 | 9,477,990.18 |
| Cash payments for purchase and construction of fixed assets, intangible assets and other long-term assets | 603,911,034.60 | 403,137,637.26 |
| Cash payments for investment | 29,400,000.00 | 120,706,000.00 |
| Net increase in pledge loans | 0.00 | |
| Net cash paid for acquisition of subsidiaries and other business units | 270,952,210.17 | 756,550,801.75 |
| Other cash payments in relation to investing activities | 100,000,000.00 | 26,127,840.41 |
| Sub-total of cash outflows for investing activities | 1,004,263,244.77 | 1,306,522,279.42 |
| Net cash flow from investing activities | -995,224,437.77 | -1,297,044,289.24 |
| III. Cash flows from financing activities: | ||
| Cash receipts from capital contributions | 30,000,000.00 | |
| Including: Cash receipts from capital contributions from minority owners of subsidiaries | 30,000,000.00 | |
| Cash from borrowing | 2,750,601,977.68 | 1,421,047,085.43 |
| Other cash receipts in relation to financing activities | 248,207,838.55 | |
| Sub-total of cash inflows from financing activities | 3,028,809,816.23 | 1,421,047,085.43 |
| Cash repayment of borrowings | 2,144,574,467.10 | 1,309,701,912.43 |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 585,723,656.08 | 472,827,211.26 |
| Including: Dividends and profits paid by subsidiaries to minority shareholders | 1,960,000.00 | |
| Other cash payments in relation to financing activities | 20,708,449.20 | 5,424,076.04 |
| Sub-total of cash outflows from financing activities | 2,751,006,572.38 | 1,787,953,199.73 |
| Net cash flows from financing activities | 277,803,243.85 | -366,906,114.30 |
| IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | -26,309,944.30 | -423,905.66 |
| V. Net increase in cash and cash equivalents | -459,496,727.95 | 74,138,062.91 |
| Add: Opening balance of cash and cash equivalents | 3,580,140,638.17 | 3,157,407,073.26 |
| VI. Closing balance of cash and cash equivalents | 3,120,643,910.22 | 3,231,545,136.17 |
6. Cash flow statement of the parent company
Unit: RMB yuan
| Item | Current period in 2022 | Previous period in 2021 |
| I. Cash flows from operating activities： | ||
| Cash receipts from the sale of goods and the rendering of services | 9,993,053,097.54 | 9,547,450,716.13 |
| Receipts of tax refund | ||
| Other cash receipts in relation to operating activities | 322,420,601.02 | 257,412,395.37 |
| Sub-total of cash inflows from operating activities | 10,315,473,698.56 | 9,804,863,111.50 |
| Cash payments for goods acquired and services received | 9,590,776,506.25 | 9,463,890,457.11 |
| Cash payments to and on behalf of employees | 157,221,560.98 | 131,308,524.66 |
| Payments of various types of taxes | 436,406,580.06 | 199,085,236.17 |
| Other cash payments in relation to operating activities | 257,469,024.63 | 440,569,707.04 |
| Sub-total of cash outflows for operating activities | 10,441,873,671.92 | 10,234,853,924.98 |
| Net cash flow from operating activities | -126,399,973.36 | -429,990,813.48 |
| II. Cash flows from investing activities | ||
| Cash receipts from recovery of investments | 50,059,838.75 | |
| Cash receipts from investment income | 0.00 | 1,003,363,380.00 |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 5,936,300.00 | 237,307.57 |
| Net cash from disposal of subsidiaries and other business units | ||
| Other cash receipts in relation to investing activities | 245,102,300.59 | 289,814,850.52 |
| Sub-total of cash inflows from investing activities | 301,098,439.34 | 1,293,415,538.09 |
| Cash payments for purchase and construction of fixed assets, intangible | 3,052,228.94 | 23,188,911.97 |
| assets and other long-term assets | ||
| Cash payments for investment | 36,400,000.00 | 79,200,000.00 |
| Net cash paid for acquisition of subsidiaries and other business units | ||
| Other cash payments in relation to investing activities | 433,741,844.00 | 360,086,340.00 |
| Sub-total of cash outflows for investing activities | 473,194,072.94 | 462,475,251.97 |
| Net cash flows from investing activities | -172,095,633.60 | 830,940,286.12 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | ||
| Cash receipts from borrowing | 1,146,017,508.00 | 559,345,278.50 |
| Other cash receipts in relation to financing activities | 1,109,442,166.67 | 1,012,500,000.00 |
| Sub-total of cash inflows from financing activities | 2,255,459,674.67 | 1,571,845,278.50 |
| Cash repayments of borrowings | 1,255,017,310.01 | 879,341,384.32 |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 567,035,703.19 | 456,826,281.28 |
| Other cash payments in relation to financing activities | 983,212,333.68 | 1,025,043,198.88 |
| Sub-total of cash outflows fromfinancing activities | 2,805,265,346.88 | 2,361,210,864.48 |
| Net cash flow from financing activities | -549,805,672.21 | -789,365,585.98 |
| IV. Effect of foreign exchange rate changes on Cahs and Cash Equivalents | -37,416.55 | |
| V. Net increase in cash and cash equivalents | -848,301,279.17 | -388,453,529.89 |
| Add: Opening balance of cash and cash equivalents | 1,919,097,181.16 | 1,889,254,142.30 |
| VI. Closing balance of cash and cash equivalents | 1,070,795,901.99 | 1,500,800,612.41 |
7. Consolidated statement of changes in owners’Equity
Amount in the current period
Unit: RMB yuan
| Item | Amount for the first half of 2022 | ||||||||||||||
| Ownership interest attributable to the parent company | Minority interest | Total ownership interest | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Total | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of the period of the prior year | 1,749,809,548.00 | 2,229,868,312.11 | 0.00 | -47,768,225.80 | 1,021,670,687.31 | 0.00 | 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 | |||||||||||||||
| Merger of enterprises under the same control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the period of the current year | 1,749,809,548.00 | 2,229,868,312.11 | 0.00 | -47,768,225.80 | 0.00 | 1,021,670,687.31 | 0.00 | 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 current period (Decreases | 0.00 | 34,342,690.68 | 0.00 | -98,252,733.94 | 0.00 | 0.00 | 0.00 | 833,125,716.06 | 769,215,672.80 | 43,334,907.33 | 812,550,580.13 | ||||
| are indicated by “-”) | |||||||||||||||
| (I) Total comprehensive income | -98,252,733.94 | 1,340,570,484.98 | 1,242,317,751.04 | 13,334,907.33 | 1,255,652,658.37 | ||||||||||
| (II) Capital contributed by owners and capital decreases | 30,000,000.00 | 30,000,000.00 | |||||||||||||
| 1. Common shares invested by owners | 30,000,000.00 | 30,000,000.00 | |||||||||||||
| 2. Capital invested by holders of other equity instruments | |||||||||||||||
| 3. Amount of share-based payment included in ownership interest | |||||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | -507,444,768.92 | -507,444,768.92 | 0.00 | -507,444,768.92 | |||||||||||
| 1. Withdrawal of surplus reserve | 0.00 | 0.00 | |||||||||||||
| 2. Withdrawal of general risk reserve | 0.00 | ||||||||||||||
| 3. Distribution to owners (or | -507,444,768. | -507,444,768. | -507,444,768. |
| shareholders) | 92 | 92 | 92 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal conversion of ownership interest | |||||||||||||||
| 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 | 34,342,690.68 | 34,342,690.68 | 34,342,690.68 | ||||||||||||
| IV. Balance at the end of the current period | 1,749,809,548.00 | 2,264,211,002.79 | 0.00 | -146,020,959.74 | 0.00 | 1,021,670,687.31 | 0.00 | 12,458,919,717.52 | 17,348,589,995.88 | 405,279,589.93 | 17,753,869,585.81 |
Amount in the previous period
Unit: RMB yuan
| Item | Amount for the first half of 2021 | ||||||||||||||
| Ownership interest attributable to the parent company | Minority interest | Total ownership interest | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Total | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of the period of the prior year | 1,749,809,548.00 | 2,158,080,661.07 | -2,191,069.45 | 861,680,578.42 | 9,852,441,590.56 | 14,619,821,308.60 | 559,590,204.87 | 15,179,411,513.47 | |||||||
| Add: Changes in accounting policies | |||||||||||||||
| Error correction in the prior periods | |||||||||||||||
| Merger of enterprises under the same control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the period of the current year | 1,749,809,548.00 | 2,158,080,661.07 | -2,191,069.45 | 861,680,578.42 | 9,852,441,590.56 | 14,619,821,308.60 | 559,590,204.87 | 15,179,411,513.47 | |||||||
| III. Amount of change in the current period (Decreases are indicated by “-”) | 46,442,911.64 | 901,009,928.52 | 947,452,840.16 | 61,207,579.59 | 1,008,660,419.75 | ||||||||||
| (I) Total comprehensive income | 49,562,711.35 | 1,300,346,324.85 | 1,349,909,036.20 | 42,161,491.00 | 1,392,070,527.20 | ||||||||||
| (II) Capital contributed by owners and capital decreases | 19,046,088.59 | 19,046,088.59 | |||||||||||||
| 1. Common shares invested by owners | |||||||||||||||
| 2. Capital invested by holders of other equity instruments | |||||||||||||||
| 3. Amount of share-based payment included in ownership interest | |||||||||||||||
| 4. Others | 19,046,088.59 | 19,046,088.59 | |||||||||||||
| (III) Profit | -402, | -402, | -402, |
| distribution | 456,196.04 | 456,196.04 | 456,196.04 | ||||||||||||
| 1. Withdrawal of surplus reserve | |||||||||||||||
| 2. Withdrawal of general risk reserve | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -402,456,196.04 | -402,456,196.04 | -402,456,196.04 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal conversion of ownership interest | -3,119,799.71 | 3,119,799.71 | |||||||||||||
| 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 | -3,119,799.71 | 3,119,799.71 | |||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Withdrawal in the current period | |||||||||||||||
| 2. Use in the current period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of the current period | 1,749,809,548.00 | 2,158,080,661.07 | 44,251,842.19 | 861,680,578.42 | 10,753,451,519.08 | 15,567,274,148.76 | 620,797,784.46 | 16,188,071,933.22 |
8. Statement of changes in ownership interest of the parent company
Amount in the current period
Unit: RMB yuan
| Item | Amount for the first half of 2022 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total ownership interest | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the end of the period of the prior year | 1,749,809,548.00 | 2,168,451,528.01 | 0.00 | -129,129.44 | 1,099,526,446.75 | 5,340,988,582.88 | 10,358,646,976.20 | |||||
| Add: Changes in accounting policies | 0.00 | |||||||||||
| Error correction in the prior periods | 0.00 | |||||||||||
| Others | 0.00 | |||||||||||
| II. Balance at the beginning of the period of the current year | 1,749,809,548.00 | 2,168,451,528.01 | 0.00 | -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 “-”) | 680,528,009.83 | 680,528,009.83 | ||||||||||
| (I) Total comprehensive income | 1,187,972,778.75 | 1,187,972,778.75 | ||||||||||
| (II) Capital contributed by owners and capital decreases | ||||||||||||
| 1. Common shares invested by owners | ||||||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount of share-based payment included in ownership |
| interest | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | -507,444,768.92 | -507,444,768.92 | ||||||||||
| 1. Withdrawal of surplus reserve | 0.00 | |||||||||||
| 2. Distribution to owners (or shareholders) | -507,444,768.92 | -507,444,768.92 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal conversion of ownership interest | ||||||||||||
| 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 | 0.00 | |||||||||||
| IV. Balance at the end of the current period | 1,749,809,548.00 | 2,168,451,528.01 | -129,129.44 | 1,099,526,446.75 | 6,021,516,592.71 | 11,039,174,986.03 |
Amount in the previous period
Unit: RMB yuan
| Item | Amount for the first half of 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total ownership interest | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the end of the period of the prior year | 1,749,809,548.00 | 2,168,451,528.01 | 3,051,311.29 | 939,536,337.86 | 4,303,533,798.88 | 9,164,382,524.04 | ||||||
| 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 | 2,168,451,528.01 | 3,051,311.29 | 939,536,337.86 | 4,303,533,798.88 | 9,164,382,524.04 | ||||||
| III. Amount of change in the current period (Decreases are indicated by “-”) | 724,839,525.18 | 724,839,525.18 | ||||||||||
| (I) Total comprehensive income | 1,127,295,721.22 | 1,127,295,721.22 | ||||||||||
| (II) Capital contributed by owners and capital decreases | ||||||||||||
| 1. Common shares invested by owners | ||||||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount of share-based payment included in ownership interest | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit | -402,4 | -402,4 |
| distribution | 56,196.04 | 56,196.04 | ||||||||||
| 1. Withdrawal of surplus reserve | ||||||||||||
| 2. Distribution to owners (or shareholders) | -402,456,196.04 | -402,456,196.04 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal conversion of ownership interest | ||||||||||||
| 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 comprehensi |
| ve income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Withdrawal in the current period | ||||||||||||
| 2. Use in the current period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of the current period | 1,749,809,548.00 | 2,168,451,528.01 | 3,051,311.29 | 939,536,337.86 | 5,028,373,324.06 | 9,889,222,049.22 |
Huadong Medicine Co., Ltd.Chairman of the Board: Lv Liang
August 10, 2022