2021-06-08-深交所-华东医药_2020年年度报告_英文版_178页_2mb

Huadong Medicine Co., Ltd. 2020 Annual Report Summary

Core Content and Key Highlights

Company Overview

Huadong Medicine Co., Ltd. (stock code: 000963), headquartered in Hangzhou, Zhejiang Province, was founded in 1993 and listed on the Shenzhen Stock Exchange in 1999. It has grown into a large, comprehensive pharmaceutical company that integrates R&D, production, and sales. The company operates across multiple sectors, including the pharmaceutical industry and the aesthetics industry, and has a workforce of over 10,000 employees.

Financial Performance (2020)

• Total Revenue: 33.68 billion yuan, a -4.97% decrease from 2019.
• Net Profit (after non-recurring items): 2.43 billion yuan, a -5.62% decrease from 2019.
• Net Cash Flow from Operating Activities: 3.41 billion yuan, a 70.43% increase from 2019.
• Basic and Diluted Earnings Per Share: 1.61 yuan/share, a 0.24% increase from 2019.
• ROE (Return on Equity): 20.95%, a -4.34% decrease from 2019.
• Total Assets: 24.20 billion yuan, an 12.75% increase from 2019.
• Net Assets: 14.62 billion yuan, an 18.77% increase from 2019.

Challenges and Achievements

• The company faced significant challenges in 2020, including the impact of the COVID-19 pandemic, unsuccessful GPO participation for Acarbose products, and policy pressures such as the GPO process and National Drug Reimbursement List (NDRL) price negotiations.
• Despite these, it successfully met its full-year operational and business targets.
• The pharmaceutical business maintained growth, with Acarbose tablets retaining market share and expanding in the ex-hospital and retail markets.

R&D Strategy

• The R&D strategy is guided by the corporate philosophy of "Devoted to science, Dedicated to patients", focusing on clinical value, healthcare economical value, and commercial value.
• The company has developed an innovative product pipeline in oncology, immunology, and endocrinology.
• It has strengthened R&D capabilities through the reconstruction of innovative drug R&D functions.
• A licensed ADC product completed its IND application in China within 100 days and received CTA approval from CDE.

Commercial Distribution and E-commerce

• The company has evolved from a basic distributor to an integrated service provider with greater industry expertise.
• It focuses on cold chain logistics for biological specialty drugs, forming a whole life-cycle precision management system.
• The e-commerce business is being expanded to create a new "online-offline interaction" growth model.
• It is also exploring "internet + chronic disease management" healthcare services.

Aesthetics Industry Expansion

• Huadong Medicine has started expanding in the aesthetics industry, which is growing rapidly in China.
• The aesthetics industry is transitioning from a discretionary consumer product to a necessary healthcare service.
• The company is committed to global operational positioning and dual-cycle business development, making China a key market for aesthetics.
• It aims to bring first-in-class, high-end international products to China through its established distribution capabilities and strategic partnerships.
• Sinclair, a UK-based subsidiary, serves as the global operation platform for aesthetics products, with production bases in multiple countries.
• Huadong Ningbo Medicine Co., Ltd. is a comprehensive aesthetic medicine health platform and acts as the general agent for Korean YVOIRE and SanteMuse products in China.

Strategic Vision for 2021

• 2021 is expected to be a critical year for strategic transformation.
• The company anticipates continued pressure from GPO policies and price reductions.
• It emphasizes "don't waste a good crisis", viewing the current challenges as an opportunity for innovation and global expansion.
• The innovative pharmaceutical business remains the main theme of its transformation.
• The aesthetics industry is a core strategic focus, supporting the globalization strategy.

Key Financial Indicators by Quarter (2020)

• Q1 Revenue: 8.60 billion yuan

• Q2 Revenue: 8.06 billion yuan

• Q3 Revenue: 8.84 billion yuan

• Q4 Revenue: 8.18 billion yuan

• Net Profit (after non-recurring items):

  • Q1: 857 million yuan
  • Q2: 550 million yuan
  • Q3: 624 million yuan
  • Q4: 399 million yuan

• Net Cash Flow from Operating Activities:

  • Q1: 219 million yuan
  • Q2: 1.04 billion yuan
  • Q3: 646 million yuan
  • Q4: 1.51 billion yuan

Non-Recurring Gains/Losses (2020)

• Gains/losses on disposal of non-current assets: 319.66 million yuan
• Tax refunds and reductions: 8.42 million yuan
• Government grants: 190.91 million yuan
• Other non-operating revenues/expenses: -20.50 million yuan
• Total non-recurring gains/losses: 390.10 million yuan

Significant Asset Changes

• Equity assets: Increased by 131.66%, mainly due to long-term equity investments.
• Other non-current assets: Increased by 286.7%, driven by prepayments for technology transfer.
• Short-term borrowing: Increased by 116.14%, due to increased repayment of bank financing.
• Deferred tax liability: Increased by 124.06%, also due to repayment of bank financing.

Overseas Assets

• Sinclair Pharma Limited:
  • Investment: 30 million USD (34% shareholding)
  • Location: UK
  • Assets size: 975.94 million yuan
  • Operating mode: Independent accounting
  • Control measures: Board of Directors oversight, financial supervision, and external audits
  • Profit or loss: Profit
  • Proportion in net assets: 6.68%

Future Plans

• The company will continue to strategically position itself in the global pharmaceutical and healthcare value chain.
• It aims to integrate into global pharmaceutical innovation collaborations.
• The aesthetics industry will be a key growth driver, with a dual-cycle model of domestic and international joint growth.
• The company is committed to transforming into an innovative enterprise and delivering excellent results to shareholders.

Important Notes

• The financial statements are authentic, accurate, and complete.
• The profit distribution plan includes a cash dividend of 2.3 yuan per 10 shares.
• The Company's net profit was negative in the last three fiscal years before non-recurring adjustments.
• The annual report is prepared by the Board of Directors and disclosed through China Securities Journal, Securities Times, and Shanghai Securities News.
• The annual report website is http://www.cninfo.com.cn.