Financial Performance - The total revenue for the year was approximately RMB 1,860.5 million, a decrease of about 14.7% compared to RMB 2,181.2 million in the previous year[2]. - Revenue from generic drug sales was approximately RMB 1,398.8 million, down 29.0% from RMB 1,970.5 million, primarily due to price reductions and volume declines[3]. - Gross profit for the year was approximately RMB 1,295.6 million, a decrease of 12.9% from RMB 1,487.6 million, with a gross margin of 69.6%, up from 68.2%[3]. - Operating profit for the year was approximately RMB 161.7 million, a significant improvement from an operating loss of RMB 1,830.7 million in the previous year[3]. - The net loss for the year was approximately RMB 257.7 million, a reduction from RMB 2,283.3 million in the previous year[4]. - Cash flow from operating activities was approximately RMB 199.5 million, with cash and cash equivalents totaling approximately RMB 4,610.5 million as of December 31, 2023[4]. - Financial expenses increased by 27.5% to approximately RMB 269.3 million, primarily due to interest expenses related to redeemable liabilities[3]. - The company’s loss attributable to owners was approximately RMB 54.0 million, a decrease of 97.2% from RMB 1,914.9 million in the previous year[4]. Research and Development - Research and development expenses were approximately RMB 577.7 million, down 38.3% from RMB 936.6 million, due to the completion of several clinical trials[3]. - The company has made significant progress in the research and development of innovative drugs, with multiple self-developed products achieving substantial advancements[11]. - The innovative drug Anaprazole Sodium Enteric-Coated Tablets received approval from the National Medical Products Administration in June 2023 and was included in the National Medical Insurance Catalog[11]. - The company has submitted NDA applications for two indications of Pyrotinib, which have been accepted, and the clinical research results were presented at major oncology conferences[12]. - The company has advanced three globally leading innovative drugs into clinical stages, including XZP-KM501, XZP-6877, and XZP-KM602, with the latter receiving FDA approval for clinical trials in September 2023[12]. Market and Business Strategy - The management noted a significant slowdown in the Chinese consumer market, impacting the medical beauty sector and indicating a shift in consumer behavior[5]. - The company is committed to a dual-driven strategy of "innovative drugs + medical aesthetics," which has proven effective in enhancing its market position[8]. - The ongoing medical reform in China continues to drive the pharmaceutical industry, despite challenges such as volume-based procurement and economic downturns[7]. - The company is gradually divesting non-core pharmaceutical and health-related businesses to focus on innovative drug development[14]. - The company aims to improve cash flow generation capabilities while adhering to the dual-driven strategy of "medical aesthetics + innovative drugs" to maximize shareholder value[58]. Medical Aesthetics Segment - The medical aesthetics segment saw a substantial recovery in sales revenue, driven by the successful upgrade of the 3.0 version of the sales platform, resulting in a significant increase in sales[9]. - The medical aesthetics platform, Meiyan Space, expanded its sales channels to cover a total of 4,700 medical beauty institutions across the country, achieving 100% coverage of the top 500 institutions[9]. - The company has launched multiple products in the medical aesthetics sector, including Botulinum Toxin and Hyaluronic Acid, which have received positive recognition from consumers and medical institutions[10]. - The aesthetic medicine segment achieved revenue of approximately RMB 449.9 million, a significant increase of about 200.3% due to the lifting of pandemic restrictions and recovery in consumer demand[16]. - The company aims to build a leading position in the Chinese aesthetic medicine market through a robust product matrix and diverse marketing channels[20]. Awards and Recognition - The company has been recognized with several awards, including the "Outstanding Enterprise Award" at the 2023 China Medical Beauty Industry Awards and the "Annual Botulinum Toxin Brand Award" at the 3rd Light Chasing Awards[10]. - The company has been recognized with multiple awards, including "Forbes China's Unicorn Enterprise" and "Top 10 Most Growth-Oriented Small Molecule Innovative Drug Enterprises" in 2023[12]. Financial Position and Liabilities - The group maintained a stable financial position with cash and cash equivalents totaling approximately RMB 4,610.5 million as of December 31, 2023, after deducting interest-bearing bank loans[18]. - The group's borrowings to equity ratio was 25.6%, indicating a moderate level of leverage[18]. - The total liabilities increased to RMB 4,106,802 thousand from RMB 2,533,000 thousand in the previous year[62]. - The company reported a total impairment loss on non-current assets was RMB (1,291,043) thousand, with significant losses attributed to innovative drugs and other pharmaceuticals[78]. Operational Efficiency - The company has implemented a comprehensive operational transformation, integrating sales, planning, production, and logistics through an online ERP expansion module[49]. - The company has enhanced its production capacity to over 10 million units and improved internal operational efficiency and R&D effectiveness through production line upgrades[49]. - The company is focusing on optimizing its generic drug business while accelerating the divestiture of non-core traditional pharmaceutical assets[51]. Future Outlook - The company aims to achieve better performance in 2024 through a dual model of direct sales and agency management for its new product line, Meiyan Space[34]. - The company is actively pursuing market expansion and new strategies in drug development and commercialization[37]. - The company aims to expand its product portfolio with innovative therapies targeting cardiovascular and chronic kidney diseases[45].

Financial Performance - Sihuan Pharmaceutical reported a strong interim performance with a revenue increase of 15% year-on-year, reaching HKD 1.2 billion[5]. - The company achieved a net profit of HKD 300 million, representing a 20% increase compared to the same period last year[5]. - The management provided an optimistic outlook, projecting a revenue growth of 20% for the full year 2023[5]. - The Group recorded total revenue of approximately RMB1,055.7 million, representing a year-on-year decrease of approximately 27.9% compared to RMB1,464.2 million in the same period of 2022[25]. - The loss before tax for the Period was approximately RMB33.1 million, a decrease of RMB89.1 million from the profit of RMB56.0 million in the same period of 2022[28]. - The loss attributable to owners of the Company amounted to approximately RMB49.6 million, representing a year-on-year decrease of 222.8% in profit[29]. - The Group's loss for the Period amounted to approximately RMB118.9 million, representing a year-on-year increase of 24.0%[99]. Market Expansion and Strategy - Sihuan Pharmaceutical is expanding its market presence in Southeast Asia, targeting a 10% market share by the end of 2024[5]. - The company plans to launch three new products in the next quarter, focusing on innovative biopharmaceutical solutions[5]. - The Group's strategic goal is to become a leading medical aesthetic and biopharmaceutical company in China, supported by its innovative platforms[12]. - The Group aims to implement a "Innovative Pharmaceuticals + Medical Aesthetics" dual-wheel drive strategy to enhance resource utilization efficiency and improve overall profit structure[92]. Research and Development - The company has allocated HKD 200 million for R&D in the upcoming year to enhance its product pipeline[5]. - Domestic Biopharma R&D investment continues to grow rapidly, with the R&D expense rate approaching the level of some multinational corporations (MNCs)[9]. - The Group has over 40 medical aesthetic products and more than 30 innovative biopharmaceutical products in its pipeline, enhancing its core competencies in registration, production, and sales[22]. - The Group's innovative drug platform is focused on critical illness areas, including digestion, oncology, and non-alcoholic steatohepatitis (NASH), aiming to develop class 1 innovative drugs with core independent intellectual property rights[48]. Product Development and Approvals - Xuanzhu Biopharm received approval to initiate clinical trials for XZP-KM501, marking its first antibody-drug conjugate entering clinical development[13]. - The approval of clinical trials for XZP-KM602 and XZP-6877 tablets indicates the Group's ongoing efforts in advancing treatments for advanced solid tumors[13]. - The NDA for Insulin Degludec and Insulin Aspart Injection developed by Huisheng Biopharm was accepted by the NMPA, marking it as the first biosimilar of its kind in China[15]. - The commercialization plan for Anaprazole Sodium has been systematically developed, focusing on marketing organization, team building, and sales forecasting[62]. Financial Health and Cash Flow - As of June 30, 2023, the Group's cash and cash equivalents plus wealth management products amounted to approximately RMB4,510.0 million, with cash and cash equivalents at RMB3,734.0 million[32]. - The Group maintained a net cash inflow of RMB28.3 million in operating cash flow during the period[32]. - The banking borrowings to equity ratio was 28.9%, indicating a low level of debt relative to equity[32]. - The net cash flows from operating activities amounted to approximately RMB28.3 million during the Period[100]. Medical Aesthetics Segment - The medical aesthetics segment achieved revenue of approximately RMB194.0 million, a year-on-year increase of approximately 96.8%, with a gross profit of approximately RMB135.2 million, up 76.0% year-on-year[25]. - The medical aesthetics platform Meiyan Space has successfully upgraded to version 3.0, significantly increasing sales revenue and covering 337 cities and over 4,000 medical aesthetics institutions by August 15, 2023[19]. - Meiyan Space launched the exclusive Hyaluronic acid PersnicaTM product from South Korea's Hugel, forming a "golden combination" with Letybo® botulinum toxin, gaining early recognition from medical aesthetics institutions and consumers[19]. - The medical aesthetics business segment is becoming a new growth driver for the Group, contributing to revenue growth alongside traditional segments[33]. Corporate Governance and Shareholding - The Company has complied with all applicable code provisions as set out in the Corporate Governance Code throughout the Period[151]. - The Company has a significant concentration of ownership, with major shareholders holding over 55% of the total shares[123]. - The total number of Shares held by major shareholders with 5% or more interest includes Mr. Meng Xianhui with 5,133,125,704 Shares, also representing 55.02%[123]. - The Company has adopted share option and share award schemes to recognize and reward employee contributions[112]. Challenges and Industry Trends - The overall profitability of the pharmaceutical industry began to stabilize, with the impact of centralized procurement policies on traditional pharmaceutical companies bottoming out[8]. - The pharmaceutical manufacturing industry is gradually recovering as the impact of the epidemic dissipates and medical reimbursement cost-control policies mature[10]. - The emphasis on research and development of drugs with clinical value and patient benefits is becoming a core focus for pharmaceutical enterprises[8]. - The innovative transformation development is recognized as a necessary path for pharmaceutical enterprises to maintain a favorable development trend[8].

Financial Performance - The revenue for the six months ended June 30, 2023, was approximately RMB 1,055.7 million, a decrease of 27.9% compared to RMB 1,464.2 million for the same period in 2022[2]. - The gross profit for the same period was approximately RMB 747.7 million, down 25.5% from RMB 1,003.7 million in the previous year[2]. - The operating profit for the period was approximately RMB 146.2 million, down 28.1% from RMB 203.2 million for the same period in 2022[3]. - The loss for the period was approximately RMB 118.9 million, compared to a loss of RMB 95.9 million in the previous year[3]. - The company reported a loss attributable to shareholders of approximately RMB 49.6 million, a decline of 222.8% year-on-year[15]. - The company reported a pre-tax loss of RMB 33,054 thousand for the six months ended June 30, 2023, compared to a pre-tax profit of RMB 56,042 thousand for the same period in 2022[60]. - The company reported a basic loss per share of RMB 0.53 for the six months ended June 30, 2023, compared to earnings of RMB 0.43 per share in the same period of 2022[47]. Business Segments - The aesthetic medicine business revenue and segment operating profit were approximately RMB 194.0 million and RMB 62.9 million, respectively, representing year-on-year increases of 96.8% and 51.2%[2]. - The revenue and segment operating profit for the generic drug business were approximately RMB 845.7 million and RMB 356.7 million, respectively, reflecting declines of 31.4% and 47.8% year-on-year[3]. - The innovative drugs and other pharmaceuticals segment generated revenue of approximately RMB 16.0 million, a year-on-year decrease of 87.9%, resulting in a segment loss of approximately RMB 344.0 million[14]. - The medical beauty segment achieved revenue of approximately RMB 194.0 million, a year-on-year increase of about 96.8%, with a gross profit of approximately RMB 135.2 million, up 76.0% year-on-year[14]. Research and Development - Research and development (R&D) expenses for the period were approximately RMB 294.0 million, a decrease of 35.7% from RMB 457.3 million in the same period last year[3]. - The R&D expenditure for the innovative drug and other business segments was RMB 214.2 million, a decrease of 32.5% compared to RMB 317.5 million in the same period last year[25]. - The company has over 25 innovative drugs in development, focusing on breast cancer and other therapeutic areas such as tumors, NASH, and digestive diseases[28]. - The innovative drug pipeline is well-balanced across various stages, ensuring continuous innovation and development[28]. Cash Flow and Financial Position - Cash and cash equivalents as of June 30, 2023, were approximately RMB 3,734.0 million, with additional financial products totaling approximately RMB 776.0 million[3]. - The company reported a net cash flow from operating activities of approximately RMB 28.3 million, with a year-end dividend payment of approximately RMB 298.6 million to shareholders[118]. - The company’s total cash and cash equivalents at the beginning of the period were RMB 3,828,863 thousand, compared to RMB 5,682,425 thousand at the start of the previous year[53]. - The company’s bank borrowings increased to RMB 1,273,430 thousand from RMB 1,135,458 thousand, an increase of approximately 12.2%[49]. Market and Strategic Developments - The company plans to accelerate the commercialization of new innovative drugs as the domestic new drug review and approval process speeds up[5]. - The pharmaceutical industry is expected to recover gradually as the impact of the pandemic diminishes and medical insurance cost control policies mature[5]. - The group is advancing its strategy of dual-driven innovation in pharmaceuticals and medical aesthetics, aiming to become a leading player in the Chinese market[6]. - The company is focusing on expanding its medical beauty product offerings, which have shown resilience despite overall revenue declines[59]. Product Development and Approvals - The group’s subsidiary Xuan Zhu Biotechnology received approval for clinical trials of its first antibody-drug conjugate (ADC) for HER2-positive solid tumors[8]. - The group’s subsidiary Huisheng Biotechnology's application for the dual insulin injection has been accepted by the National Medical Products Administration, marking a significant milestone in its product development[9]. - The company has received approval for three generic drugs related to diabetes complications, marking a significant step into commercialization[34]. - The company aims to cover the entire diabetes and complications treatment spectrum through a comprehensive product pipeline[35]. Operational Efficiency and Cost Management - Administrative expenses decreased by 33.7% year-on-year to approximately RMB 212.2 million, due to cost-cutting measures implemented by the company[110]. - Financial expenses increased by 34.3% year-on-year to approximately RMB 133.5 million, primarily due to interest costs related to share repurchase liabilities from equity financing[113]. - The company is committed to implementing a dual-driven strategy of "Innovative Drugs + Medical Aesthetics" to improve resource allocation efficiency and long-term financial performance[45]. Employee and Shareholder Engagement - The group employed 3,241 employees as of June 30, 2023[135]. - The company has a stock option plan that allows for the issuance of up to 10% of the issued shares at any time, with a maximum of 30% of unexercised options available for issuance[88]. - The company recorded a total expense of RMB 788,000 related to the stock option plan for the six months ending June 30, 2023, compared to RMB 6,187,000 for the same period in 2022[93].

Impairment Losses - The total impairment loss for the year ended December 31, 2022, amounted to RMB 1,727,119,000[1]. - The impairment losses by business segment include RMB 976,588,000 for the generic drugs segment, RMB 314,455,000 for innovative drugs and other products, and RMB 436,076,000 for unallocated amounts[2]. - The impairment in the generic drugs segment was primarily due to the impact of centralized procurement policies and the inclusion of more products in the key drug monitoring catalog[2]. - The company recognized an impairment loss of RMB 3,912,000 related to certain ongoing product development projects that were deemed to have low future returns[3]. - The impairment review and valuation were based on cash flow forecasts approved by management, reflecting specific risks associated with the business[4]. - The company conducts annual asset impairment assessments and will perform more frequent evaluations if events indicate potential impairments[2]. Centralized Procurement Policies - Management adjusted revenue and gross margin forecasts due to the ongoing implementation of centralized procurement policies affecting multiple cash-generating units[5]. - The anticipated full implementation of the seventh batch of centralized procurement policies is expected to have immediate pricing impacts on generic drug products[5]. - The company noted that the inclusion of products in the key drug monitoring catalog negatively affects sales volumes, particularly for generic and raw materials drugs[5]. - Supply chain disruptions and rising raw material and transportation costs due to the pandemic have significantly impacted the cash-generating units in the generic and raw materials drug segments[5].

Business Strategy and Focus - Sihuan Pharmaceutical reported a significant focus on high-growth therapeutic areas including medical aesthetics, oncology, metabolism, diabetes, and cardiovascular diseases[4]. - The company aims to build a leading position in the medical aesthetics and biopharmaceutical sectors in China through its two-wheeled strategy[4]. - The company has a strategic goal of advancing its medical aesthetics and biopharmaceuticals simultaneously, reflecting a dual focus on growth[4]. - The Group intends to divest and dispose of some generic drugs and non-core pharmaceutical businesses to focus on medical aesthetics and biopharmaceuticals, enhancing resource allocation efficiency[17]. - The Group aims to optimize and integrate its generic drug business while gradually spinning off underperforming segments to focus on high-growth medical aesthetics and innovative drugs[103]. - The Group's strategic focus is on the medical aesthetic and biopharmaceutical sectors, optimizing resource allocation to enhance long-term financial performance[127][128]. Innovation and R&D - Sihuan Pharmaceutical emphasizes innovation-driven growth, supported by its independent R&D technology platform[4]. - Sihuan Pharmaceutical's commitment to innovation is evident in its extensive R&D efforts across various therapeutic areas[4]. - The Group's innovative drug platform has seen a significant increase in corporate value and financing capacity due to enhanced R&D capabilities and product pipelines[159]. - The Group's R&D expenditure for the year was approximately RMB936.6 million, an increase of RMB68.5 million compared to RMB868.1 million in the previous year[151]. - Xuanzhu Biopharm has over 25 products in its pipeline, focusing on innovative drug development for breast cancer[92]. - The company has nearly 10 products approved for clinical trials and over 10 drug candidates in preclinical development, indicating a balanced and complete pipeline[138]. Financial Performance - In 2022, the revenue of the company was RMB 2,181,189, a decrease of 28.4% compared to RMB 3,038,391 in 2021[85]. - The gross profit for 2022 was RMB 1,487,581, resulting in a gross profit margin of 68.2%, down from 80.0% in 2021[85]. - Operating loss for 2022 was RMB 1,830,727, compared to an operating profit of RMB 771,945 in 2021[85]. - The loss before tax from continuing operations for the year was approximately RMB2,122.8 million, a shift from a profit of RMB496.0 million in 2021, including non-cash impairment losses of approximately RMB1,727.1 million[160]. - The medical aesthetic business segment generated revenue of RMB149.8 million, representing a year-on-year decrease of 62.5%, with an operating profit of RMB3.6 million[167]. Market Position and Expansion - Sihuan Pharmaceutical has developed a rich global product pipeline and a mature sales system, enhancing its competitive edge in the market[4]. - The company is positioned to capitalize on the growing demand in the medical aesthetics and biopharmaceutical markets, aiming for sustained growth[4]. - The Group's organizational restructuring aims to focus on high-growth segments, enhancing operational efficiency and maximizing shareholder value[124]. - The relaxation of epidemic control measures in early 2023 is expected to drive a V-shaped rebound in the medical aesthetics industry, leading to strong corporate performance recovery[116]. - The medical aesthetics market is projected to recover rapidly in 2023, benefiting from pent-up demand as economic activities resume[116]. Product Development and Approvals - The modified sodium hyaluronate gel for injection (PersnicaTM) received Class III medical device registration, enriching the product matrix and enabling rapid market penetration in the hyaluronic acid filler market[17]. - A total of 20 self-developed products received medical device registration, focusing on wound healing and scar repair, further expanding the medical beauty product portfolio[19]. - The IND application for KM501, a bispecific antibody drug conjugate, has been accepted by the NMPA, further expanding the company's innovative drug portfolio[138]. - The NDA for the fourth generation insulin degludec injection developed by Huisheng Biopharm has been accepted by the NMPA, being the first domestic analogue to achieve this milestone[23]. - Xuanzhu Biopharm's key product, Pyrotinib, has completed enrollment for Phase III clinical trials for breast cancer treatment, with nearly 10 products approved for clinical trials[136]. Strategic Partnerships and Collaborations - MeiYan KongJian signed an exclusive distribution agreement for CELLBOOSTER® series products, obtaining rights in mainland China, Hong Kong, Macau, and Taiwan, demonstrating commitment to the medical aesthetics sector[19]. - A joint venture with Bluepha will focus on developing PHA microspheres and bio-manufacturing-based regenerative medical materials, enhancing the Group's competitiveness in synthetic biology[19]. - Xuanzhu Biopharm has reached an exclusive licensing agreement with Shanghai SPH New Asia Pharmaceutical for two new anti-infection drugs in the Greater China Region[21]. - Xuanzhu Biopharm and WuXi XDC announced a collaboration for the development and manufacturing of the innovative oncology drug KM501, a bispecific antibody drug conjugate[29]. Awards and Recognition - Xuanzhu Biopharm was ranked among the "Top 10 Innovative Biopharmaceutical Companies" in the "Future Healthcare VB 100," showcasing its recognition in the innovative healthcare sector[74]. - Xuanzhu Biopharm was awarded the title of "Beijing Technologically Advanced Small- and Medium-sized Enterprises," highlighting its innovation capability and expertise[76]. - Huisheng Biopharm was awarded the title of "National Intellectual Property Advantage Enterprise" in 2022, reflecting high recognition from the government and market for its intellectual property efforts[84][85]. - The Group received the "Annual Transformation Pioneer Company Award" in recognition of its successful strategic transformation and market positioning[121]. Challenges and Market Conditions - In 2022, the domestic medical aesthetic industry faced challenges due to repeated epidemics, leading to suppressed demand and lower-than-expected product sales[94]. - The pharmaceutical industry experienced a volatile performance in 2022, with profit margins squeezed by centralized procurement price reductions[120]. - The medical aesthetics industry faced challenges in 2022 due to COVID-19 lockdowns, leading to suppressed consumer demand and lower product supply than initially expected[116].

Financial Performance - The group's revenue from continuing operations for the year was approximately RMB 2,181.2 million, a decrease of 28.2% compared to RMB 3,038.4 million for the previous year[2]. - Gross profit from continuing operations was approximately RMB 1,487.6 million, down 38.8% from RMB 2,430.5 million in the previous year[3]. - The company reported a net loss of approximately RMB 2,283.3 million for the year, compared to a profit of RMB 232.8 million in the previous year[4]. - Basic loss per share for the year was RMB 20.52[5]. - The group reported an impairment loss of approximately RMB 1,727.1 million due to policy changes affecting sales prices and volumes in the pharmaceutical industry[15]. - The group experienced a pre-tax loss of approximately RMB 2,122.8 million, a significant decline from a profit of RMB 496.0 million in the previous year[15]. - The net loss attributable to the company’s owners for the year was RMB 1,914,918 thousand, compared to a profit of RMB 416,509 thousand in 2021[35]. - The company reported a significant increase in other expenses, totaling RMB 936,581 thousand in 2022 compared to RMB 868,069 thousand in 2021[34]. Revenue Segmentation - The aesthetic medicine segment's revenue was approximately RMB 149.8 million, a decline of 62.5% from RMB 399.0 million in the previous year[3]. - Revenue from the innovative drugs and other pharmaceuticals segment increased by 47.5% to approximately RMB 60.9 million, compared to RMB 41.3 million in the previous year[3]. - The generics segment reported revenue of approximately RMB 1,970.5 million, down from RMB 2,598.1 million, with an operating loss of approximately RMB 16.0 million[3]. - The medical beauty products segment generated external customer sales of RMB 149,780 thousand in 2022, down from RMB 398,954 thousand in 2021, reflecting a decrease of about 62.5%[52]. - The innovative drugs and other pharmaceuticals segment reported external sales of RMB 60,913 thousand in 2022, compared to RMB 41,296 thousand in 2021, indicating an increase of approximately 47.9%[52]. - The generic drugs segment achieved external sales of RMB 1,970,496 thousand in 2022, down from RMB 2,598,141 thousand in 2021, a decline of around 24.1%[52]. Research and Development - Research and development expenses for the year were approximately RMB 936.6 million, an increase of RMB 68.5 million from RMB 868.1 million in the previous year[3]. - The company reported an operating loss of RMB 1,400.2 million in its innovative drug and other business segments, with R&D expenses rising by 21.3% to RMB 722.7 million compared to the previous year[20]. - XuanZhu Biotech has made significant progress in the development of multiple products, with nearly 10 products approved for clinical trials and over a dozen candidate drugs in preclinical development[11]. - The clinical trial for the first-line treatment of Birociclib (XZP-3287) in combination with aromatase inhibitors is currently in Phase III, showing potential for Best-in-class status[22]. - The IND application for KM501, a bispecific antibody-drug conjugate targeting HER2, has been accepted, marking it as the first patented bispecific ADC in China[22]. Strategic Focus and Transformation - The company has successfully transitioned towards innovative drug development, shedding underperforming generic drug segments, and has been recognized as a "Pioneer in Transformation" in the Greater China region[8]. - The company is focusing on high-growth and high-margin sectors, optimizing its operations by gradually divesting from underperforming generic drug businesses[8]. - The company is transitioning its CDMO business focus away from being a core area, with plans to divest non-core pharmaceutical assets[13]. - The company aims to accelerate its dual-driven strategy in 2023, concentrating on high-growth medical aesthetics and innovative drug sectors while optimizing its generic drug business[32]. - The strategic focus will shift towards high-value innovative drugs and biopharmaceuticals, ensuring rapid advancement of research pipelines and product launches[32]. Financial Position and Cash Flow - As of December 31, 2022, the group's cash and cash equivalents, along with financial products, amounted to approximately RMB 4,791.9 million[5]. - The company's cash and cash equivalents as of December 31, 2022, were RMB 3,828.9 million, a decrease from RMB 5,682.4 million in 2021[153]. - The debt-to-equity ratio was 25.1%, indicating a stable financial position[151]. - Cash flow from operating activities was RMB 46,493 thousand, significantly lower than RMB 665,293 thousand in the previous year[40]. - The company incurred cash outflows of RMB 1,661,121 thousand from investing activities, compared to RMB 337,569 thousand in the prior year[40]. Market and Industry Outlook - The global GDP growth rate is projected to decline from 6.0% in 2021 to 3.2% in 2022, and further to 2.7% in 2023 according to the International Monetary Fund[6]. - The medical beauty industry faced challenges in 2022 due to repeated COVID-19 lockdowns, but is expected to experience a "V" shaped recovery in 2023 as demand rebounds[6]. - The pharmaceutical industry saw significant volatility in 2022, with the implementation of price reductions impacting profit margins, but is anticipated to improve as domestic pandemic policies are optimized[7]. Corporate Governance and Compliance - The financial statements have been prepared in accordance with International Financial Reporting Standards and presented in RMB[44]. - The company complied with all applicable corporate governance codes during the reporting period[174]. - The audit committee reviewed the group's financial reporting and internal control systems for the year ended December 31, 2022[176]. - The company plans to amend its rules to comply with the revised listing rules and Bermuda applicable laws, ensuring shareholder protection through a unified set of 14 "core standards" starting from January 1, 2022[183].

Share Incentive Plan Adoption - The board announced the adoption of the 2022 Share Incentive Plan on October 25, 2022[2]. - The plan was adopted on October 25, 2022, and is governed by the company's organizational bylaws[17]. Securities and Issuance - The total number of securities available for issuance under the plan is 98,776,000 shares, representing approximately 1.06% of the issued shares[2]. - The total number of shares that can be granted under the plan shall not exceed 3% of the company's issued share capital, approximately 250 million shares[7]. - The total number of securities available for issuance under the 2021 share option plan is 98,776,000 shares, accounting for approximately 1.06% of the issued shares[16]. Plan Duration and Termination - The plan will be effective for a period of ten years from the adoption date, unless terminated earlier by the board[4]. - The plan may be terminated by the board of directors, and unvested rewards will immediately become void under certain circumstances, such as regulatory penalties[15]. Granting and Vesting Conditions - Individual grants to participants in any 12-month period shall not exceed 1% of the company's issued share capital[7]. - The rewards under the plan will vest in three equal tranches of 33.33% each, with the first tranche vesting on the first vesting date[12]. - Unvested rewards will automatically expire and be forfeited if certain conditions are not met, including the performance targets set forth in the reward agreement[12]. - The management has the discretion to determine the vesting conditions and may adjust the vesting schedule based on applicable laws[12]. - The plan is subject to adjustments based on the company's performance targets and the performance targets of the participants[12]. Participants and Eligibility - Eligible participants include directors, senior and middle management, and other qualified personnel[6]. - Any rewards granted to directors or major shareholders must be approved by independent non-executive directors[11]. Share Issuance and Rights - The company will not issue new shares for the rewards under the plan, but will purchase existing shares on the stock exchange[9]. - Shareholders' rights, including voting rights and dividend rights, are not conferred upon participants until the rewards are vested and shares are actually transferred[14]. - The management can instruct the trustee to transfer vested shares to the participants or their legal representatives upon the participant's death[13]. Board Approval and Management Discretion - The board will regularly approve grant plans, including the range of shares to be granted and the criteria for selecting participants[10]. - The plan does not involve the issuance of new shares or the granting of options for new securities, thus it does not constitute a share option plan regulated under Chapter 17 of the Listing Rules[16].

Financial Performance - Sihuan Pharmaceutical reported a significant increase in revenue, achieving a total of HKD 1.2 billion for the first half of 2022, representing a year-on-year growth of 15%[6]. - The company’s net profit for the same period was HKD 300 million, reflecting a 10% increase compared to the previous year[6]. - Sihuan Pharmaceutical recorded total revenue of approximately RMB1,464.2 million, a year-on-year decrease of 23.2% compared to RMB1,907.2 million in the same period of 2021, primarily due to the impact of the domestic epidemic[27]. - The medical aesthetic business segment achieved revenue of approximately RMB98.6 million, representing a year-on-year decrease of 61.8% due to reduced consumption from service interruptions caused by the epidemic[27]. - The generic drug business segment generated revenue of approximately RMB1,233.0 million, down 18.3% year-on-year, influenced by the ongoing domestic epidemic and pharmaceutical policy changes[27]. - Operating profit for the period was approximately RMB203.2 million, a significant decrease of 77.1% from RMB886.0 million in the same period of 2021[27]. - Profit before tax for the Period was approximately RMB56.0 million, significantly down from RMB819.5 million in the same period last year[95]. - The Group's loss for the Period amounted to approximately RMB95.9 million, compared to a profit of RMB594.2 million in the same period last year[99]. - Gross profit for the Period amounted to approximately RMB1,003.7 million, down from RMB1,467.1 million, resulting in a gross profit margin decrease from 76.9% to 68.5%[94]. Research and Development - Sihuan Pharmaceutical is investing HKD 200 million in R&D for new biopharmaceutical products, focusing on innovative therapies[6]. - Total R&D expenses amounted to approximately RMB457.3 million, reflecting a 37.1% increase compared to RMB333.6 million in the same period of 2021, aimed at developing over 100 medical aesthetic and biopharmaceutical products[27]. - R&D expenses for innovative drugs and other segments reached RMB317.5 million, an increase of 46.0% compared to the previous period[48]. - The Group's R&D and registration efforts led to the approval of nearly 20 Class II skin care dressing products and the hyaluronic acid product Persnica® by the National Medical Products Administration[20]. - Xuanzhu Biopharm has over 25 innovative drugs under development, focusing on oncology, metabolism, and digestion[23]. - The phase III clinical trials for Birociclib, a CDK4/6 inhibitor, are currently ongoing for both second-line treatment with Fulvestrant and first-line treatment with AI[23]. - The New Drug Application (NDA) for Anaprazole Sodium for the treatment of peptic ulcer has been accepted by the NMPA, and phase II clinical trials for reflux esophagitis in adults have been approved[23]. - The IND application for AXL inhibitor XZB-0004 has been approved for clinical trials in advanced solid tumors and hematologic malignancies, with potential for combination therapies[56]. Market Strategy and Expansion - The company has set a target to achieve a revenue growth of 20% for the full year 2022, driven by new product launches and market expansion strategies[6]. - The company plans to expand its market presence in Southeast Asia, targeting a 15% market share by the end of 2023[6]. - The Group plans to dispose of non-core pharmaceutical assets to concentrate resources on higher growth sectors, enhancing shareholder value and financial performance[18][19]. - The Group's strategic focus on innovative transformation in medical aesthetics and biopharmaceuticals has positioned it for growth amid market changes[18]. - The Group's proactive layout in medical aesthetics and biopharmaceuticals since 2012 has facilitated its transformation and development during market changes[18]. Impact of External Factors - The global economy faced multiple negative factors in the first half of 2022, including high inflation and liquidity tightening, which affected market performance[15]. - The pharmaceutical industry experienced varying degrees of impact due to COVID-19, with a significant decline in hospital medical services and a 48% average price reduction in the seventh batch of centralized procurement[17][18]. - The overall performance of the pharmaceutical industry was under pressure in the first half of 2022, particularly in areas severely affected by COVID-19[17]. Corporate Governance and Financial Position - The Group's debt to capital ratio remained low at 16.5%, indicating a strong financial position[31]. - As of June 30, 2022, the Group's cash and cash equivalents plus wealth management products totaled approximately RMB5,246.0 million, with a net amount of approximately RMB4,049.0 million after deducting interest-bearing borrowings[31]. - The Group's bank borrowings increased to approximately RMB1,120.2 million from RMB1,013.2 million at the end of 2021[102]. - The Group's employee bonuses for the period were approximately RMB14.2 million, compared to RMB9.4 million in the same period of 2021[132]. - The Group has adopted share option and share award schemes to recognize and reward employee contributions, promoting sustainable growth[131]. Product Development and Innovation - A new line of medical aesthetic products is expected to launch in Q4 2022, projected to contribute an additional HKD 100 million in revenue[6]. - The Group's focus on a "Product First" principle has led to the continuous development of its medical aesthetic product matrix, including minimally invasive solutions[39]. - The Group's exclusive product, Persnica®, a modified sodium hyaluronate gel, received Class III medical device certification from the NMPA in April 2022, indicating its compliance with regulatory standards[40]. - The Group introduced the Sylfirm XTM golden microneedle product from VIOL Co., Ltd and acquired 60% equity interest in Shenzhen Yimei Medical Technology during the period[20]. Shareholder Information - Dr. Che Fengsheng holds a total of 5,133,125,704 shares, representing approximately 55.02% of the shareholding[135]. - The company has a total of 5,133,125,704 shares outstanding, with a significant shareholder, Network Victory Limited, holding approximately 55.02% of the shares[147]. - The total number of shares held by major shareholders is recorded in the company's register, indicating significant ownership concentrations[146]. - The Company declared an interim cash dividend of RMB0.1 cents per share and a special cash dividend of RMB3.2 cents per share, payable on or around October 13, 2022[183].

Product Development and Innovation - The Group officially launched and sold its exclusive Korean botulinum toxin product Letybo® 100U, which is the No. 1 botulinum toxin brand in the Korean market[16] - PLLA gel (product name: Karlian) (2ml/unit) has obtained medical device manufacturing license approval from the National Medical Products Administration (NMPA), enhancing the Group's product pipeline in the medical aesthetic field[17] - The acquisition of all equity interests in Genesis Biosystems, Inc. consolidates the Group's layout in non-surgical and surgical medical aesthetics, enhancing its competitiveness[18] - Acquisition of Genesis Biosystems, Inc. enhances the company's capabilities in the non-surgical and surgical aesthetic fields, with the innovative LipiVage® fat collection system now available in the U.S.[20] - The New Drug Application for Anaprazole Sodium Enteric Dissolve Tablets has been accepted by the NMPA, marking Xuanzhu Biopharm's first NDA submission and a significant step towards commercialization[21] - Two indications of Birociclib, an innovative drug for breast cancer, have been approved for phase III clinical trials, enhancing the company's R&D pipeline and market competitiveness[21] - Xuanzhu Biopharm's innovative drug XZP-3621 for non-small cell lung cancer has received approval for clinical trials, further enriching its drug development pipeline[21] - Collaboration with HB Therapeutics to develop three novel molecular glue protein degraders aims to strengthen Xuanzhu Biopharm's R&D capabilities in new drug development[21] - Strategic partnership with WuXi XDC for the development of KM501 bispecific antibody drug conjugate is expected to accelerate its entry into clinical trials[24] - Xuanzhu Biopharm's self-developed drug XZP-6019 has been approved for clinical trials for Nonalcoholic Fatty Liver Disease, marking its 16th Class 1 innovative drug approval[22] - The new PDE-5 inhibitor, Fudanafen, has received clinical trial approval for treating pulmonary arterial hypertension, showing promising efficacy in preclinical studies[22] - Xuanzhu Biopharm and SignalChem have entered a cooperation and licensing agreement for the development of SLC-391, a selective AXL targeting inhibitor, in the Greater China region, enhancing the Group's oncology pipeline[25] - Xuanzhu Biopharm's drug XZP-6019 has been approved for clinical trials for Non-alcoholic Fatty Liver Disease (NAFLD), marking it as the 16th Class I innovative drug approved for clinical trials by the company[26] - Fadanafil, a new PDE-5 inhibitor developed by Xuanzhu Biopharm, has received IND approval for treating Pulmonary Arterial Hypertension (PAH), showing excellent efficacy in pre-clinical studies[26] - The Group's XZP-5955 has received clinical trial approval, targeting multiple solid tumors and expected to be a core product for dual-targeted tyrosine kinase inhibition in China[27] - Xuanzhu Biopharm acquired Beijing Combio Pharmaceutical, valued at over RMB 5 billion, enhancing its innovative drug development capabilities[27] - The self-developed innovative patented drug "Anaprazole Sodium" has commenced Phase III clinical trials in China, and "Huineng®" has been included in the National Reimbursement Drug List, enhancing the product pipeline in digestive system and liver disease treatments[29] - Acquisition of all interests and intellectual property rights of plazomicin, a new generation aminoglycoside antibiotic, is expected to generate significant economic benefits after its launch in the Greater China Region[29] - The official release of large-scale clinical trial results for cinepazide maleate injection is anticipated to reshape the stroke treatment landscape with its verified efficacy[29] - Investment in Ascendum Capital Life Technology Fund Phase I is expected to strengthen the Group's international product pipeline and accelerate the introduction of overseas innovative drugs[29] - The exclusive Korean botulinum toxin product "Letybo®" has been approved for launch in the PRC market, enriching the medical aesthetics platform and reflecting the Group's diversification and internationalization strategy[32] - The first self-developed anti-diabetic drug "janagliflozin" has commenced Phase III clinical trials in China, marking a significant milestone in the Group's product development[33] - Three self-developed innovative drugs commenced Phase I clinical trials in China, including selective CDK4/6 inhibitor birociclib, third-generation irreversible tyrosine kinase inhibitor XZP-3621, and PDE-5 inhibitor fadanafil[35] - The NMPA granted approval for Phase I–III clinical trials for "birociclib", a self-developed innovative patented new drug[35] - The application for clinical trial approval of janagliflozin, a self-developed innovative anti-diabetic drug, was accepted by the NMPA[36] - The Group's self-developed product pipeline includes over ten class III medical device products, with significant progress in the development of liraglutide for obesity entering clinical phase III trials[95] - The Group's self-developed products are expected to enhance the comprehensive strength of its medical aesthetics business as more products enter the mid-to-late clinical stage[95] Financial Performance - Sihuan Pharmaceutical reported a revenue of RMB 3,291,270,000 for 2021, a 33.5% increase from RMB 2,464,226,000 in 2020[48] - The gross profit for 2021 was RMB 2,448,516,000, resulting in a gross profit margin of 74.4%[48] - Research and development expenses increased to RMB 868,069,000 in 2021, up from RMB 729,157,000 in 2020[48] - The operating profit for 2021 was RMB 763,941,000, a decrease from RMB 787,125,000 in 2020[48] - The net profit attributable to owners of the company was RMB 416,509,000 in 2021, down from RMB 502,569,000 in 2020[48] - Total assets increased to RMB 14,495,623,000 in 2021 from RMB 13,043,926,000 in 2020[48] - Cash and cash equivalents rose to RMB 5,682,425,000 in 2021, compared to RMB 4,604,041,000 in 2020[48] - The current ratio remained stable at 3 times in 2021, consistent with previous years[48] - The inventory turnover ratio improved to 259 days in 2021, down from 296 days in 2020[48] - For the year ended 31 December 2021, the Group recorded total revenue of RMB3,291.3 million, representing a year-on-year increase of 33.6% from RMB2,464.2 million in 2020[92] - The medical aesthetics segment achieved revenue of RMB399.0 million, a year-on-year increase of 1,383.3%, primarily due to the launch of botulinum toxin Letybo®[92] - The generic medicine segment generated revenue of RMB2,598.1 million, reflecting an 18.2% year-on-year growth, indicating the performance of the segment has entered an upward channel[92] - Gross profit for the year was RMB2,448.5 million, up 27.9% from RMB1,914.4 million in 2020, driven by significant revenue growth[92] - R&D expenses amounted to RMB868.1 million, a 19.0% increase from RMB729.2 million in 2020, accounting for 26.4% of total revenue[92] - As of 31 December 2021, the Group's cash and cash equivalents plus wealth management products totaled approximately RMB5,791.7 million, with a debt to capital ratio of 12.6%[92] - The medical aesthetic business segment, MeiYan KongJian, accounted for 12.1% of the Group's overall revenue, achieving a profit before tax of RMB248.5 million, a significant increase of 971.1% year-on-year[93] - The annual sales revenue of Letybo® reached RMB 399.0 million, with nearly 2,500 medical aesthetics institutions covered nationwide[94] - The Group's revenue increased by 33.6% to approximately RMB3,291.3 million, with medical aesthetic products revenue rising by 1,383.3% to approximately RMB399.0 million[144] - Cost of sales amounted to approximately RMB842.8 million, accounting for 25.6% of total revenue[144] - Gross profit for the Year was approximately RMB2,448.5 million, with a gross profit margin decline from 77.7% to 74.4% due to centralized procurement[144] - R&D expenses increased by 19.0% to approximately RMB868.1 million, reflecting a focus on innovative R&D activities[145] - Profit before tax from continuing operations was approximately RMB486.0 million, down from RMB765.8 million in the previous year[145] - Income tax expense rose by 15.7% to approximately RMB253.3 million, attributed to higher taxable profits[145] Market Trends and Strategic Positioning - The medical aesthetics market in China is experiencing rapid growth, driven by increased consumer awareness and demand, as well as supportive national policies[57] - The penetration rate of medical aesthetics in China is significantly lower than in developed countries, indicating substantial growth potential[57] - The rise of the "appearance economy" has led to a significant increase in demand for medical aesthetics services, pushing the industry into a high boom period[57] - The centralized procurement policy in China has accelerated the transformation of traditional generic drug companies towards innovative R&D[52] - The medical aesthetic industry in China is undergoing a transformation from extensive to refined development, driven by stricter policy supervision[74] - The medical aesthetic market is driven by four key factors: botulinum toxin, photoelectric technology, medical aesthetic e-commerce, and hyaluronic acid[74] - The Group is transitioning from a traditional generics company to a leading innovative biopharmaceutical and medical aesthetic company[75] - The domestic innovative medicine track has accelerated reshuffling, with independent innovation R&D gaining market attention[74] - The medical aesthetic industry is benefiting from long-term policies aimed at eliminating counterfeit products and illegal operations[74] - The medical aesthetics segment has been upgraded to version 2.0, reflecting a comprehensive approach to meet the full life cycle needs of beauty lovers[87] - The Group's focus on R&D and compliance will facilitate the commercialization of new products in the medical aesthetics sector[98] - The medical aesthetics business has achieved considerable results in product, R&D, registration, production, and sales, with coverage in over 200 cities and nearly 2,500 institutions in China[99] - The pharmaceutical business is focusing on transforming into an independent R&D innovative drug enterprise, with the innovative drug platform nearing its first NDA launch[138] - The Group's CDMO/CMO business will implement an integrated strategy of "API + CDMO" to achieve sustained high business growth[141] - The generic drug business will continue to promote the registration and sales of high-quality generic drugs, serving as a stable cash cow for the Group[141] Corporate Governance and Leadership - The company has independent directors with diverse backgrounds in finance, pharmaceuticals, and governance, enhancing its strategic oversight[170] - The board includes members with significant experience in both local and international markets, contributing to the company's global strategy[170] - The company is focused on expanding its presence in the pharmaceutical sector through strategic leadership and expertise[169] - The board's composition reflects a commitment to strong governance and industry knowledge, which is crucial for navigating market challenges[170] - The Company has appointed three independent non-executive Directors, with at least one holding appropriate professional qualifications as required by Rule 3.10 of the Listing Rules[181] - The Company has arranged liability insurance for Directors, which will be reviewed annually[179] - The roles of the Chairman and CEO are segregated, with Dr. Che Fengsheng serving as Chairman and Dr. Guo Weicheng as CEO[176] - The Company has complied with all applicable code provisions of the Corporate Governance Code during the reporting period[176] - The Board convened eight meetings during the reporting period, with all Directors receiving meeting notices at least 14 days prior to the meetings[176] - All Directors attended 100% of the Board meetings, with the attendance record for executive Directors being 8 out of 8[178] - The Company has established an Audit Committee in compliance with Rule 3.21 of the Listing Rules, comprising three independent non-executive Directors[189] - The Audit Committee's terms of reference are consistent with the provisions set out in the relevant sections of the Code[190] - The attendance record for the Audit Committee members shows full attendance at all meetings held during the year[192] - The Company has implemented sufficient measures to ensure corporate governance practices provide adequate protection for shareholders' interests[183] - The Nomination Committee comprises one executive director and three independent non-executive directors, ensuring a diverse board structure[193] - The Nomination Committee held two meetings during the year to review the board's composition and assess the independence of non-executive directors[194] - The Board Diversity Policy aims to enhance diversity by considering factors such as age, gender, skills, and experience when selecting candidates[193] - The Nomination Committee's recommendations are based on objective criteria, including the candidates' skills and contributions to the board[193] - The attendance record for the Nomination Committee members shows full attendance at both meetings held[195] - The Company adopted a nomination policy on March 18, 2019, outlining the criteria for appointing and re-appointing directors[195] - The nomination criteria include the candidate's commitment to fulfill their duties effectively and potential conflicts of interest[195] - The Nomination Committee will regularly review the Board Diversity Policy to ensure its continued effectiveness[194] - The board is committed to safeguarding the interests of shareholders and the public through a balanced and diverse composition[193] - The Nomination Committee concluded that the board is composed of members with diversified backgrounds and skills[193] Employee and Operational Insights - As of December 31, 2021, the Group employed 4,282 employees, with total salary and related costs amounting to approximately RMB 716.5 million, an increase from RMB 591.5 million in 2020[156] - Employee salaries are determined based on job nature, personal performance, and market trends, with the Group providing basic social insurance and housing accumulation fund as required by PRC law[156] - The sales team of Meiyan Kongjian consists of over 60 members with more than 10 years of experience, enhancing the Group's sales capabilities[99] - The Group collaborates with approximately 40 agents to promote product launches, significantly expanding its market reach[99] - The Group has established a CDMO/CMO platform with approximately 180 projects and around 40 customers, enhancing its competitive position[129] - The Group holds over 100 overseas customers, with significant partnerships in Japan, South Korea, Europe, and India[130] - The Group has nearly 100 products under development in the generic drug platform, including several high-end generic drugs with high technical barriers[132] - The Group's key core product, Kelinao (Cinepazide Maleate Injection), was approved for a new indication through a large-scale clinical study involving 1,301 cases[136] - The Group's subsidiary, Hainan Sihuan Pharmaceutical, has exclusive marketing rights for Metoprolol Succinate Sustained-release Tablets in mainland China[135] - The Group's innovative drug platforms are supported by the strong performance of the generic drug sector, which continues to generate new revenue streams[84]