2021年华东医药股份有限公司年报

Huadong Medicine Co., Ltd. 2021Annual Report April 2022 To the shareholders Dear shareholders, Time flies. Nearly three years have passed since I served as the Chairman of the Board of Huadong Medicine Co., Ltd, during which I have witnessed the historic changes in the pharmaceutical industry of China. Like most domestic pharmaceutical companies, we are confronted with unprecedented difficulties and dramatic challenges in this ever-changing era. The continued implementation of VBP program and the negotiation on medical insurance put an end to the benefits of generic medicines, moreover，the resurgence of COVID-19 and the instable external environment placed more uncertainties within local pharmaceutical industry. Bearing in mind the major mission of generating business growth, the management team of the Company struggled onward amid the pains that come with changes, reform and transformation. It cannot be denied that the Company’s financial statements over the past three years was not as outstanding as that in the previous time. However, all employees in the Company weathered the test of time and flagging market, achieving innovation-driven results that transcend financial statements by focusing on the transformation and innovation. From2019 to 2021, whilereconsidered its positioningandvalue,theCompanyrecruitedmoretalents, developed product pipelines faster, made greater progress in R&D capability building and achieved more improvements in comprehensive strength than ever before, introducing tremendous changes in and outside the Company. In the past three years, we implemented in nearly 20 BD transactions with leading international pharmaceutical companies to create a global collaboration network and develop diversified and differentiated innovative product pipeline in pharmaceutical and aesthetic medicine fields, speeding up the progress of internationalization. We wasted no time in R&D, and constantly improved our independent R&D system. At present, the Company has established an open and science-based international R&D ecosystem with Zhongmei Huadong new drug R&D center as the core platform and focused on endocrinology, oncology and immunology disease areas. Now the Companyhas nearly40 innovative drugs and biosimilars under development, and proactivelycreated a world-class ADC R&D platform, laying a solid foundation for the development of pharmaceutical industry in the future. It achieved rapid progress in core products development. For instance, we were the first in China to submit the application of domestic Liraglutide injection, which are now under CDE review; the clinical trial of ADC product - Mirvetuximab moved forward in a quick manner; and TGFR system moved to the special review procedure as China’s innovative medical device. In addition, we facilitated the development of innovative business despite pressure and created the unique example of the cold-chain, so as to foster a new business model. Implementing the development strategy of domestic and international circulation, we constantly enriched the product lines of aesthetic medicine and expanded overseas business in this field. At present, we own 35 high- end global aesthetic medicine products featuring minimally invasive and non-invasive approaches, and recorded rapid growth in sales revenue.Moreover,theregistrationofdomesticaestheticmedicine products was promoted orderly, and the blockbuster product Ellansélaunched in domestic market successfully. At the same time, we also proactively explored the new “blue ocean” of industrial microbiology and new business layout, initiated and reserved more than 100 products, drawing a second growth curve. Relaying on our endeavors in core business over the past three years, we are nowmarchingforwardon an innovativepath with thecharacteristicsofHuadongMedicine, gradually forming a new development pattern that is driven by innovation, focusing on global market, and has multiple and diversified business lines. With initial results, we have got attention and appraisal from the industry and market. We owe these progresses to the deep-rooted concept of innovation and value. All employees in the Companystraightlyfaced theweaknesses,vigorouslydiscoverednewvalue andvalorouslyovercame uncertainties and difficulties. Our working philosophyand thought have been changed tremendously, laying a solid foundation for innovation-driven transformation. Inthenextthree years,wewillcontinuetouphold the“scientific-based,patient-centered”philosophy, implement high quality development strategy with R&D, innovation and international development at the core, and aim at creating differentiated development features, striving to become a leading international medicine enterprise driven by scientific research and innovation, and ultimately realizing the established long-range vision and strategy of Huadong Medicine. Innovation and R&D remain the theme of the Company’s future roadmap. Therefore, the Company will invest more in clinical value-oriented R&D of innovative drugs in endocrinology, oncology and immunology by adopting a model featuring independent development, license-in and collaboration development. We will implement a “three-step” R&D strategy. To be specific, we have taken the first step over the past three years in establishing and improving an initial R&D pipeline through introduction, building a R&D management team and creating primary R&D competence. By 2025, we will take the second step, integrating introduced products and projects into the Company’s special R&D ecosystem by learning and absorbing the advantages of them, strengthening independent R&D capability and improving the building of technical platforms. From 2025 to 2030, we will accomplish the third step, achieving internal innovation on the basis of the first two steps, and establish a R&D management system focusing on introduction and independent development, thus serving to realize the long-term strategy and key objectives. Aesthetic medicine is one of the core strategic sectors of the Company’s mega health industry. Upholding the operation philosophy of “facilitating global operation and layout with domestic and international circulation progressing smoothly”, the Company will continue to strengthen the layout of product pipelines and boost the registration and launch process of domestic and international products. With the technological iteration and innovation in the past decade and more, industrial microbiology is developing at a rapid pace. Seeing the promising future of industrial microbiology, the Companyendeavors to create an industrialized, large-scale and international industrial cluster and integrate into global industrial chain of industrial microbial drugs R&D. In the future, we will transform our strategy from introduction to global operation based on products and market, and ultimately achieve coordinated development among multiply business sectors, creating a health industry ecosystem with Huadong Medicine characteristics. We will adopt a forward-looking to tackle with today’s difficulties. The year 2022 remains a year of uncertainties. Against the backdrop of rapid global changes unseen in a century and complex international political and economic landscape, the innovative drug industry in China ushered in a new phase oriented to clinical value. We have set defined goals and clear strategies, and obtained precious experience, but we still face various challenges and risks that come from industry policies, market competition, pandemic and other factors on the way forward as we are in the early stage of innovation and reform. As long as we press ahead with perseverance, a bright future will beckon and emerge. The year 2022 is also a year of possibilities. We will reap rewards by proactive planning. Having faith in the long- term prospects of China’s medical industry, we will seize the opportunity and strive for our best in the path of transformation, continue to establish R&D system with a global view, adhere to the established strategy and plan and focus on refined management and product planning, in a bid to achieve growth against changing environment and a more brilliant future. Over the past three years, we worked extremely hard and forged ahead. We wish to express sincere appreciation to all employees for their hard work, and all shareholders for their understanding and incomparable trust. To extend our sincere gratitude, the Company has distributed nearly RMB4.6 billion dividends to shareholders in 18 times since listing. With great ambition in mind, we will never pause our pursuit of a better future. We hope to have the lasting company of investors who looking for long-term value, constantly challenge and change ourselves, and overcome fluctuation and downward cycle, thereby embracing the refreshing and bright future created by Huadong Medicine. Lv Liang On Behalf Of Huadong Medicine April, 2022 Section I. Important Declaration, Contents and Definitions The Board of Directors, Board of Supervisors, directors, supervisors and senior managementofHuadongMedicineCo.,Ltd.(hereinafterreferred toasthe“Company”)hereby guarantee that the information presented in this annual report is authentic, accurate and complete and free 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 in charge of accounting, and Qiu Renbo, head of accounting department (accounting supervisor) hereby declare and guarantee that the financial statements in this annual report are authentic, accurate and complete. All directors have attended the Board of Directors meeting to review this annu