Revenue and Sales Performance - Revenue increased by 27.5% from RMB 385.7 million in 2021 to RMB 491.8 million in 2022[13] - Sales of Shuanghuanglian Oral Liquid grew by 6.1% to RMB 236.394 million, accounting for 48.1% of total revenue[13] - Sales of Shuanghuanglian Injection surged by 112.5% to RMB 73.864 million, representing 15.0% of total revenue[13] - Sales of Compound Ferrous Sulfate Granules decreased by 4.5% to RMB 20.682 million, accounting for 4.2% of total revenue[13] - Sales of other products increased by 36.4% to RMB 116.954 million, representing 23.8% of total revenue[13] - The company's product "Nifedipine Hydrochloride Injection" achieved sales revenue exceeding RMB 18.9 million in 2022[29] Cost and Profit Analysis - Cost of sales increased by 52.8% from RMB 174.5 million in 2021 to RMB 266.7 million in 2022[13] - The company's gross profit increased by RMB 13.9 million to RMB 225.0 million in 2022, with a gross profit margin of 45.8%, down 8.9% from 2021 due to increased depreciation and raw material procurement costs[40] - Income tax expense decreased from RMB 7.2 million in 2021 to RMB 3.7 million in 2022, primarily due to a decrease in taxable profit[24] - The company's net financing costs increased from RMB 7.1 million in 2021 to RMB 15.7 million in 2022, mainly due to increased foreign exchange losses and bank loan interest[41] Product and Market Strategy - Jiangxi Yongfeng Kant's core product Kaifuding sales are expected to recover this year[12] - The company plans to establish a chemical raw material production base this year to enhance cost competitiveness for future products participating in national centralized procurement[29] - The company expects to add 5 to 10 new product projects in 2023, focusing on chemical drugs and traditional Chinese medicine[29] - The company plans to expand into blank market regions by increasing sales personnel and distributors[29] - The company's product portfolio covers various therapeutic areas including heat-clearing and detoxifying, cardiovascular, antihypertensive and hypoglycemic, tonic, qi-regulating, anti-anemia, and anti-inflammatory. Notably, the heat-clearing product Shuanghuanglian Oral Liquid and Shuanghuanglian Injection have consistently ranked among the top three in national sales for similar products for many years[163] - The cardiovascular product Yansuan Fugui Liqin Capsule is the first generic product in China and has maintained the top sales position in the domestic market for five consecutive years[163] R&D and Innovation - The company's subsidiary, Jiaheng Pharmaceutical, will have its R&D laboratory operational in the second quarter of this year, with plans to expand the R&D team[29] - The company's R&D capabilities were strengthened in 2013 under the leadership of Executive Director Meng Qingfen, who was appointed to lead the R&D team[153] - The company has established Fosen (Shenzhen) Biopharmaceutical R&D Co., Ltd. and Fosen (Macau) Co., Ltd. as R&D centers for the development of innovative drugs, aiming to enhance R&D capabilities and expand the product portfolio[163] - The company adheres to the development strategy of "combining Chinese and Western medicine, long-term and short-term, and imitation and innovation," and follows the path of "producing one generation, reserving one generation, and researching and creating one generation" for new drug development[163] Financial Position and Liabilities - As of December 31, 2022, the company had a net current liability of approximately RMB 108.0 million (compared to a net current asset of RMB 20.0 million in 2021) and cash and cash equivalents of approximately RMB 128.1 million (compared to RMB 81.1 million in 2021)[43] - The company's total equity attributable to shareholders was approximately RMB 614.2 million as of December 31, 2022 (compared to RMB 658.2 million in 2021), with total debt of approximately RMB 225.8 million (compared to RMB 236.9 million in 2021)[43] - Capital commitments not provided for in the financial statements as of December 31, 2022, amounted to RMB 17,634 thousand, a significant increase from RMB 1,819 thousand in 2021[44] - The company's total equity attributable to shareholders as of December 31, 2022, was approximately RMB 612.9 million, down from RMB 656.9 million in 2021[90] - Total liabilities as of December 31, 2022, were approximately RMB 737.4 million, compared to RMB 582.4 million in 2021[90] Employee and Workforce Management - The company's employee turnover rate was 2.3% in 2022, indicating high employee stability[33] - The company's male employee turnover rate was 1.2% in 2022, while the female employee turnover rate was 1.1%[34] - The company's workforce as of December 31, 2022, consisted of 50.91% female and 49.09% male employees, reflecting the company's commitment to gender diversity[53] - In 2022, the number of male employees receiving training increased to 569, while female employees receiving training increased to 590, with both genders receiving 48 hours of training[103] - The company strictly adheres to labor standards, prohibiting child labor and forced labor, and ensures compliance with labor laws and regulations[105] - The company implemented a paid leave system starting in 2011 and ensures overtime compensation for employees[105] - The company provides competitive employee benefits, including housing subsidies, tuition subsidies, and equity incentives[82] - The company conducted regular employee forums, team-building activities, and communication mechanisms to enhance internal collaboration and employee engagement[99] Environmental, Social, and Governance (ESG) - The company is installing photovoltaic solar panels on existing factory roofs to reduce electricity costs and carbon emissions[30] - The company has increased its efforts in environmental, social, and governance (ESG) practices and disclosures, compiling the "2022 ESG Report" and initiating the formulation of ESG management policies and strategies[175] - The company established a three-level environmental management network led by the general manager, ensuring environmental management decisions and systems are implemented at all levels[176] - In September 2022, the company publicly released an environmental commitment letter, pledging to comply with environmental laws and regulations and take full responsibility for environmental protection[178] - The company installed pollution control devices at all exhaust outlets, ensuring emissions meet standards and do not affect surrounding residents[179] - Solid waste is strictly classified and disposed of according to legal requirements, minimizing waste generation and environmental pollution[181] - The company plans to establish an ESG management committee in 2023 to oversee ESG goals, risk assessments, and sustainable development initiatives[186] - Wastewater is treated at the plant's sewage treatment station and discharged into the municipal sewage network, ensuring no negative impact on the surrounding water environment[189] - Electricity consumption in 2022 was 7,542,243 kWh, a significant increase from 2,850,300 kWh in 2021[197] - Natural gas consumption in 2022 was 2,571,470 cubic meters, up from 1,045,940 cubic meters in 2021[197] - The company emphasizes water conservation through recycling processes, strict water usage plans, and employee education to reduce water waste[198] - The company focuses on reducing packaging materials, including glass, plastic, paper, PVC, and aluminum foil, in product design[200] Corporate Governance and Compliance - The company's board of directors consists of eight members, including three independent non-executive directors, with six male and two female directors, demonstrating diversity in gender, age, education, and professional experience[52] - The board of directors held six meetings, the audit committee held four meetings, the remuneration committee held two meetings, and the nomination committee held one meeting during the year ended December 31, 2022[75] - The company established a Remuneration Committee on June 14, 2018, consisting of two independent non-executive directors and one executive director, responsible for recommending compensation policies and structures for directors and senior management[97] - The Remuneration Committee reviewed the company's compensation policies and structures for all directors and senior management since its establishment[98] - The company's external auditor, KPMG, was paid RMB 3,900 thousand for audit services in 2022[59] - No significant contingent liabilities were reported as of December 31, 2022[87] - The company maintains a strong liquidity position to capitalize on future growth opportunities[89] Supplier and Procurement Management - The company has 54 suppliers and adheres to strict supplier selection and evaluation processes in compliance with pharmaceutical regulations[117] - The company's procurement policy ensures that prices paid to Fosen Traditional Chinese Medicine are not higher than those offered by independent suppliers and are in line with market rates[81] - The company has a strict supplier management system, including a two-year comprehensive evaluation of suppliers based on factors such as product quality, delivery timeliness, and credit terms[131] - The company has a total of 54 suppliers across different regions, with the highest number (25) in the Central Plains region[130] - The annual procurement limit for Fosen Da Health was approximately RMB 12.9 million in 2022, within the range of the annual cap of RMB 15.0 million, RMB 17.0 million, and RMB 19.0 million for the three years ending December 31, 2023[45] - The annual procurement limit from Fosen Traditional Chinese Medicine for the years 2023, 2024, and 2025 is approximately RMB 40.0 million, RMB 44.0 million, and RMB 48.0 million, respectively[77] - The packaging material procurement agreement with Furen Health constitutes a continuing connected transaction under the listing rules, with all applicable percentage ratios exceeding 0.1% but below 5%[73] - If the price offered by Furen Health is inferior to that of independent suppliers, Henan Furen will not enter into transactions with Furen Health[72] - The company has a policy to review pricing every six months, and individual agreements or orders will be entered into with Furen Chinese Herbal Medicine for the purchase of herbs[71] Quality Assurance and Control - The company has maintained a 0% product return rate for the past three years (2020-2022)[135] - The company received 12 product complaints in 2022, an increase from 4 in 2021[144] - The company has a robust quality assurance system in place, adhering to GMP standards and conducting regular self-inspections[134][142] - The company has established a GAP planting base for Chinese medicinal materials to ensure product quality from the source[141] - The company has established a "Medical Consultation and Complaint Handling Procedure" to address user feedback on product quality, including non-clinical issues (e.g., packaging changes, minor damage) and severe adverse reactions affecting user health, managed by the Drug Safety Office Director[146] - The company established a Quality Control system with detailed procedures for material testing, product inspection, and quality risk management[113] - The company has formulated the "Quality Objective Management Regulations" to achieve quality policies and objectives, and established a "Quality Assurance System" and "Quality Control System" to ensure product and service quality[161] Shareholder and Equity Management - Two grantees were each awarded 2,500,000 restricted share units, with vesting conditions tied to business development performance metrics, including the number of business partners introduced and the successful launch of products[63] - The number of restricted share units (RSUs) available for grant under the RSU plan as of December 31, 2022, was 71,993,400 units[64] - The maximum number of shares that can be granted to each eligible person under the RSU plan and any other share plans of the company within any 12-month period is 1% of the total issued shares[64] - The RSU plan will be effective for ten years from the date of the first grant, subject to early termination by the board[67] - The weighted average number of shares issued or potentially issuable under all plans as of December 31, 2022, was 0.66% of the total issued shares[67] Operational Challenges and Achievements - In 2022, the company faced challenges due to the normalization of sporadic COVID-19 outbreaks, which led to restrictions or bans on the sale of cold, fever, and cough medicines in various regions, impacting business operations[175] - Despite challenges, the company completed the relocation and expansion of production facilities and related health industry construction in 2022, significantly improving production processes and management levels[175] - The company integrates social service into its corporate culture, strategic policies, and daily operations, actively practicing the concept of "health is happiness" and striving to be a leader in the health industry[175] Related Party Transactions - Furen Pharmaceutical Group's related party, Furen Chinese Herbal Medicine, is wholly owned by Furen Industrial Group, which is 35.08% owned by the company's executive director and chairman, Mr. Cao Changcheng[70] - The company's share of losses from a joint venture increased by approximately RMB 23.5 million, from a profit of RMB 11.7 million in 2021 to a loss of RMB 11.8 million in 2022, primarily due to a decline in sales of the main product, Kaifuding, and inventory write-downs[42] Employee Costs and Benefits - In 2022, the company's total employee costs, including directors' remuneration, retirement plan contributions, bonuses, and other benefits, amounted to approximately RMB 91.8 million, up from RMB 75.6 million in 2021[88] - As of December 31, 2022, the company had 1,159 employees, a decrease from 1,243 employees in 2021[88] Other Income and Expenses - Other income net increased by RMB 10.2 million from a net loss of RMB 2.8 million in 2021 to a net income of RMB 7.4 million in 2022[14] - General and administrative expenses increased by 7.2% from RMB 65.2 million in 2021 to RMB 69.9 million in 2022, mainly due to increased R&D costs[22] Risk Management and Compliance - The company has established a cross-currency swap contract to mitigate the impact of foreign exchange risk from USD-denominated bank loans[121] - No significant acquisitions or disposals were made during the year ended December 31, 2022[122] - No significant investments were made during the year ended December 31, 2022, apart from those disclosed in the report[123] - No significant events occurred after December 31, 2022, that would materially affect the company's operations and financial performance[124] Employee Development and Training - The company has established a "mentorship" mechanism, theoretical training mechanism, platform practice mechanism, and joint training mechanism to enhance the professional capabilities and management levels of various personnel[74] - The company promotes labor union development and ensures employee participation in major decisions through employee representative meetings[115] - The company maintains a transparent and democratic management system, with regular employee feedback collection and implementation of reasonable suggestions[115]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容 概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對 因本公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損 失承擔任何責任。 Fusen Pharmaceutical Company Limited 福 森 藥 業 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號：1652） 截 至2022年12月31日 止 年 度 的 年 度 業 績 公 告 財務摘要 • 截至2022年12月31日止年度的收益約為人民幣491.8百萬元，較截至 2021年12月31日止年度約人民幣385.7百萬元增加約27.5%。 • 毛利由截至2021年12月31日止年度約人民幣211.1百萬元增加約6.6% 至截至2022年12月31日止年度約人民幣225.0百萬元。 • 截至2022年12月31日止年度的毛利率約為45.8%，較截至2021年12月 31日止年度約54.7%減少約8.9%。 • 截 至2022年12月31日 止 年 度 的 本 公 司 股 權 持 有 人 應 佔 虧 損 約 為 人 ...

Financial Performance - In the first half of 2022, the company's revenue and gross profit were RMB 165.6 million and RMB 79.7 million, respectively, representing a decrease of approximately 22.7% and 32.6% compared to the same period in 2021 [22]. - Total revenue decreased by approximately 22.7% from RMB 214.2 million in the first half of 2021 to RMB 165.6 million in the first half of 2022, primarily due to a decline in sales volume [33]. - Gross profit decreased by approximately 32.6% from RMB 118.2 million in the first half of 2021 to RMB 79.7 million in the first half of 2022, consistent with the revenue decline [38]. - Operating profit decreased significantly to RMB 7,178 thousand, a decline of 84.7% from RMB 46,848 thousand in the previous year [112]. - The net loss for the period was RMB 7,077 thousand, compared to a profit of RMB 43,809 thousand in the same period last year [112]. - Total comprehensive income for the period was RMB (5,215) thousand, a decrease from RMB 43,254 thousand in 2021 [116]. - The company reported a basic loss per share of RMB (1) for the period, compared to earnings of RMB 6 in the same period last year [116]. - The company reported a basic loss of RMB 7,037,000 for the six months ended June 30, 2022, compared to a profit of RMB 43,919,000 for the same period in 2021, reflecting a significant decline in performance [165]. Sales and Product Performance - The sales decline was primarily due to COVID-19 control measures in China, which restricted the sales of cough and cold medications, leading to reduced sales of the product "Shuanghuanglian Oral Liquid" [22]. - The revenue from the main product, Shuanghuanglian Oral Liquid, was RMB 65,381,000, a decrease from RMB 123,102,000 in the same period last year [148]. - Sales revenue of the Double Huanglian Oral Liquid (10ml) dropped by approximately 50.2% from RMB 89.5 million in the first half of 2021 to RMB 44.6 million in the first half of 2022 [34]. - Sales revenue of the Double Huanglian Injection increased by approximately 42.0% from RMB 23.1 million in the first half of 2021 to RMB 32.8 million in the first half of 2022, attributed to promotional activities [34]. - The core product "Kaifuding" of the joint venture "Jiangxi Yongfeng Kande Pharmaceutical Co., Ltd." passed consistency evaluation in July, and sales are expected to gradually recover [28]. - The product "Atomoxetine Capsules," for treating attention deficit hyperactivity disorder, was approved for market launch in June and is expected to contribute to sales gradually [28]. Research and Development - The subsidiary "Jiaheng (Zhuhai Hengqin) Pharmaceutical Technology Co., Ltd." has obtained a drug production license and is currently working on 18 R&D projects, including 4 traditional Chinese medicine projects [27]. - The company plans to significantly increase R&D expenses this year, which is expected to bring new products and growth points for the company's medium to long-term development [27]. - Research and development costs increased to RMB 10,005,000 from RMB 6,070,000 year-on-year [156]. Financial Position and Liabilities - As of June 30, 2022, total short-term and long-term borrowings amounted to approximately RMB 281.3 million, an increase from RMB 236.9 million as of December 31, 2021 [49]. - The debt-to-equity ratio increased from 36.1% as of December 31, 2021, to 44.0% as of June 30, 2022, mainly due to increased bank borrowings [57]. - The company's total liabilities decreased to RMB 302,381 thousand as of June 30, 2022, from RMB 309,418 thousand at the beginning of the year, indicating improved financial stability [130]. - The company's current liabilities increased to RMB 487,890 thousand from RMB 489,266 thousand at the end of 2021 [121]. - The company's equity attributable to shareholders decreased to RMB 641,383 thousand from RMB 658,169 thousand at the end of 2021 [125]. Cash Flow and Investments - The company experienced a net cash outflow from operating activities of RMB (46,345) thousand for the six months ended June 30, 2022, compared to a cash inflow of RMB 35,801 thousand in the previous year [136]. - The net cash used in investing activities was RMB (11,799) thousand for the first half of 2022, a substantial improvement from RMB (254,374) thousand in the same period of 2021 [136]. - Financing activities generated a net cash inflow of RMB 28,536 thousand in the first half of 2022, contrasting with a cash outflow of RMB (23,925) thousand in the prior year [136]. - Cash and cash equivalents decreased to RMB 52,627 thousand from RMB 81,063 thousand at the end of 2021, indicating a liquidity contraction [182]. - The company incurred tax expenses of RMB 456,000 for the six months ended June 30, 2022, compared to RMB 4,840,000 for the same period in 2021, showing a substantial decrease in tax liabilities [160]. Shareholder Information and Corporate Governance - The major shareholder, Mr. Cao Changcheng, holds 495,374,000 shares, representing 65.75% of the equity [68]. - Full Bliss Holdings Limited and Rayford both hold 180,180,000 shares, each representing 23.91% of the equity [77]. - The company has a stock option plan adopted on June 14, 2018 [81]. - As of June 30, 2022, there are 16,000,000 unexercised stock options under the share option scheme, representing approximately 2.11% of the company's issued share capital [83]. - The board proposed to extend the exercise period of the unexercised stock options from the original expiry date of July 19, 2020, to June 13, 2028, to encourage long-term commitment from eligible participants [83]. - The company has complied with all applicable code provisions of the corporate governance code during the reporting period, except for one specific provision [88]. - The audit committee consists of three independent non-executive directors and has been active in overseeing the financial reporting process and internal controls [89].

Financial Performance - In 2021, Fusen Pharmaceutical reported revenue of RMB 385.664 million, a decrease of 20.8% from RMB 486.854 million in 2020[8] - The gross profit for 2021 was RMB 211.133 million, down 20.6% from RMB 266.067 million in 2020[8] - Operating profit decreased to RMB 52.137 million in 2021, compared to RMB 61.883 million in 2020, reflecting a decline of 15.5%[8] - The company reported a net profit of RMB 16.613 million for 2021, a significant drop of 73.5% from RMB 62.668 million in 2020[8] - The company's total revenue and gross profit were approximately RMB 385.7 million and RMB 211.1 million, representing a decrease of about 20.8% and 20.7% compared to 2020[22] - The company's operating profit for 2021 was approximately RMB 52.1 million, a decline of about RMB 9.8 million or 15.8% from 2020, primarily due to decreased operating income[22] - The total comprehensive income for the year decreased by approximately RMB 45.2 million or 74.6% from RMB 60.6 million for the year ended December 31, 2020, to RMB 15.4 million for the year ended December 31, 2021[39] - The net current assets as of December 31, 2021, were approximately RMB 20.0 million, down from RMB 112.8 million in 2020[40] - The total debt as of December 31, 2021, was approximately RMB 236.9 million, an increase from RMB 198.5 million in 2020, resulting in a debt-to-equity ratio of 36.1% compared to 30.2% in 2020[41] - The group's share of profit from a joint venture decreased from approximately RMB 24.2 million in 2020 to RMB 11.7 million in 2021, a reduction of approximately RMB 12.5 million[35] Production and Development - Fusen Pharmaceutical completed the construction of a new production facility in November 2021, which is expected to enhance production capacity and product quality[12] - The company has initiated research on new products, including the formulation studies for Buwaisitang and the consistency evaluation for two other products[13] - The company has initiated the production of new products, including Nicardipine Injection, which won a procurement bid in 14 provinces in December 2021[23] - The company established a new R&D center, Jiaheng (Zhuhai Hengqin) Pharmaceutical Technology Co., Ltd., to enhance its research capabilities in traditional Chinese and chemical medicines[24] - The company completed the relocation and expansion of its production facilities, significantly improving production processes and management levels[170] Social Responsibility and Community Engagement - The company donated RMB 3 million to the Henan Red Cross for flood relief efforts, demonstrating its commitment to social responsibility[12] - The company donated RMB 3.0 million to the Henan Red Cross for disaster relief during severe flooding and COVID-19 outbreaks in the region[17] - The company emphasizes a commitment to social responsibility and sustainable practices as part of its corporate culture and operational strategy[171] - The company actively engages with stakeholders, including employees, consumers, suppliers, and the community, to gather feedback on ESG issues[160] Environmental Management - The total wastewater discharge in 2021 was 76,892.301 tons, significantly reduced from 137,894.41 tons in 2020, representing a decrease of approximately 44%[183] - The COD discharge in 2021 was 1.158 tons, down from 4.341 tons in 2020, indicating a reduction of about 73%[183] - The total air emissions in 2021 were 19,369,680 cubic meters, a substantial decrease from 50,839,200 cubic meters in 2020, reflecting a reduction of approximately 62%[189] - Nitrogen oxide emissions in 2021 were 0.729 tons, down from 1.467 tons in 2020, showing a reduction of about 50%[189] - The company has implemented a three-tier environmental management network to ensure compliance with environmental regulations and effective pollution control measures[175] - The company has installed pollution control devices at various emission points to meet air quality standards, ensuring no negative impact on surrounding communities[186] - The company has proposed 31 improvement plans to enhance clean production levels, following a comprehensive audit of its production processes[180] - The company aims to prepare for ISO 14000 environmental management system certification to further improve its environmental management framework[180] Governance and Compliance - The management team emphasized the importance of maintaining compliance and governance standards in all operations[80] - The company has fully complied with the corporate governance code since its listing on July 11, 2018, except for the provisions of C.6.1[83] - The board consists of a balanced mix of executive and independent non-executive directors, with independent directors making up one-third of the board[91] - The company has established three committees: Audit Committee, Nomination Committee, and Remuneration Committee, to oversee specific aspects of the company's affairs[102] - The Audit Committee reviewed the consolidated financial statements for the year ended December 31, 2021, and found them to comply with applicable accounting standards and listing rules[104] - The company emphasizes ongoing professional development for all directors to ensure they are updated on current regulations and company performance[98] - The company encourages open debate and contributions from all directors to foster effective governance and constructive relationships[102] Future Outlook and Strategic Initiatives - The company expects sales of its core product, Cefepime, to rebound starting in Q2 2022 as the annual procurement quota is executed[17] - The company has outlined a future outlook with a projected revenue growth of 20% for the next fiscal year[82] - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share within the next two years[82] - A strategic acquisition is being considered to enhance the company's technological capabilities and market reach[82] - The company has allocated HKD 100 million for research and development in the upcoming fiscal year[82] Operational Efficiency - The financial team reported a reduction in operational costs by 10% through efficiency improvements[78] - Sales and distribution expenses decreased by approximately RMB 16.5 million or 15.4% from RMB 107.4 million for the year ended December 31, 2020, to RMB 90.9 million for the year ended December 31, 2021, mainly due to cost control measures[32] - The company has implemented a three-tier energy management system to enhance energy efficiency and reduce consumption[196] - The company actively adopts new energy-saving technologies and processes to improve overall operational efficiency[196]

Financial Performance - In the first half of 2021, the company's revenue and gross profit were approximately RMB 214.2 million and RMB 118.2 million, representing a decrease of about 13.5% and 11.0% compared to the same period in 2020[37]. - The decrease in revenue was primarily due to a reduction in sales of the product Shuanghuanglian Oral Liquid, which saw a decline in market demand compared to the surge during the COVID-19 outbreak in 2020[37]. - The gross margin slightly increased from approximately 53.7% in the same period of 2020 to about 55.2% in the first half of 2021, despite the decrease in revenue[37]. - The company's revenue decreased by approximately 13.5% from RMB 247.5 million in the first half of 2020 to RMB 214.2 million in the first half of 2021, primarily due to a decline in sales volume[42]. - Sales revenue from the Double Huanglian Oral Liquid (10ml) dropped by about 20.5% to RMB 89.5 million in the first half of 2021, compared to RMB 112.6 million in the same period of 2020[43]. - Gross profit decreased by approximately 11.0% from RMB 132.8 million in the first half of 2020 to RMB 118.2 million in the first half of 2021, consistent with the revenue decline[47]. - Operating profit increased to RMB 46,848 thousand, compared to RMB 33,680 thousand in the previous year, reflecting a growth of 39.0%[139]. - Profit before tax rose to RMB 50,797 thousand, up from RMB 41,877 thousand, marking an increase of 21.5%[139]. - Net profit for the period was RMB 43,809 thousand, compared to RMB 33,430 thousand in 2020, representing a growth of 30.9%[139]. - Basic earnings per share increased to RMB 6, compared to RMB 4 in the same period last year, reflecting a 50.0% increase[143]. Expenses and Cost Management - Selling and distribution expenses for the first half of 2021 were approximately RMB 50.9 million, a decrease from about RMB 56.4 million in the same period of 2020[37]. - General and administrative expenses were approximately RMB 31.5 million in the first half of 2021, down from about RMB 47.8 million in 2020, mainly due to the financial impact of the deferral of stock options granted to grantees[37]. - The total employee cost for the first half of 2021 was approximately RMB 43.8 million, slightly up from RMB 43.1 million for the same period in 2020[74]. - The group incurred research and development costs of RMB 6,070,000, a decrease from RMB 7,321,000 in the previous year[192]. Investments and Acquisitions - The company continues to invest in R&D, particularly in drug indications and clinical efficacy, and is enhancing collaboration with academic institutions and external R&D organizations[29]. - The company has participated in a pharmaceutical company, acquiring nearly 20 marketable pharmaceutical products, which prepares for long-term development[29]. - The company acquired a 34% stake in Weihai Ren Shun Cai Ye Group Co., Ltd., indirectly obtaining nearly 20 exclusive national traditional Chinese medicine approvals, enriching its product lineup[38]. - The group completed the acquisition of a 34% stake in Weihai Ren Sheng Pharmaceutical Group in May 2021, enhancing its product supply capabilities in traditional Chinese medicine[72]. - The group plans to leverage its capital platform for potential acquisitions, focusing on essential clinical products and over-the-counter items, although no formal acquisition agreements have been signed during the reporting period[81]. Cash Flow and Liquidity - Cash generated from operating activities was RMB 35,801 thousand, down from RMB 105,771 thousand in the same period last year, indicating a decrease of approximately 66.1%[165]. - The company incurred a net cash outflow from investing activities of RMB 254,374 thousand, compared to an inflow of RMB 6,746 thousand in the previous year, representing a substantial change in investment strategy[165]. - As of June 30, 2021, cash and cash equivalents decreased to RMB 53,802 thousand from RMB 402,629 thousand at the beginning of the year, indicating a significant liquidity contraction[165]. - The group’s current liabilities exceeded current assets by RMB 90,122,000 as of June 30, 2021, indicating potential liquidity concerns[179]. - The group maintained a cash flow from operating activities, which management believes is sufficient to meet its operational commitments and expected capital expenditures[179]. Taxation and Financial Ratios - The effective tax rate decreased from 20.2% in the first half of 2020 to 13.8% in the first half of 2021, mainly due to the impact of non-deductible expenses related to stock options[55]. - The effective tax rate for the group’s Chinese subsidiaries was 25% for the six months ended June 30, 2021, consistent with the previous year[197]. - The group's debt-to-equity ratio decreased from 30.2% as of December 31, 2020, to 22.1% as of June 30, 2021, primarily due to a reduction in bank loans during the period[65]. Corporate Governance and Compliance - The company has complied with all applicable code provisions of the corporate governance code during the reporting period, except for the company secretary's appointment[113]. - The audit committee consists of three independent non-executive directors and has reviewed the interim financial report for the six months ended June 30, 2021[114]. - The interim financial report for the six months ended June 30, 2021, has been reviewed by KPMG without any modification[115]. Future Outlook - The management is confident in addressing market challenges and achieving good performance while enhancing product categories and strengthening brand building[33]. - The company plans to continue expanding its market presence and investing in new product development to drive future growth[161]. - Future guidance indicates a cautious outlook due to market volatility and potential supply chain disruptions[161].

Financial Performance - In 2020, Fusen Pharmaceutical Company reported revenue of RMB 486.854 million, a 19.5% increase from RMB 407.388 million in 2019[11] - The gross profit for 2020 was RMB 266.067 million, representing a gross margin of approximately 54.6%[11] - The net profit for the year was RMB 62.668 million, up 19.9% from RMB 52.259 million in 2019[11] - The company's revenue for the year ended December 31, 2020, was approximately RMB 486.9 million, representing a 19.5% increase from RMB 407.4 million for the year ended December 31, 2019[21] - The gross profit for the same period was approximately RMB 266.1 million, which is a 25.2% increase compared to the previous year's gross profit[21] - Revenue increased by approximately RMB 10.4 million or 19.9% to RMB 62.7 million for the year ended December 31, 2020, compared to RMB 52.3 million for the previous year[38] - Gross profit rose by approximately RMB 53.6 million to RMB 266.1 million, with gross margin improving from 52.2% in 2019 to 54.7% in 2020[29] Assets and Liabilities - Total assets increased to RMB 1,241.347 million in 2020, compared to RMB 1,176.229 million in 2019, reflecting a growth of 5.5%[12] - Total liabilities rose to RMB 583.098 million in 2020, up from RMB 494.689 million in 2019, indicating a 17.9% increase[12] - As of December 31, 2020, the company's total debt was approximately RMB 198.5 million, down from RMB 210.0 million in 2019, resulting in a debt-to-equity ratio of 30.2%[40] - The net current assets as of December 31, 2020, were approximately RMB 112.8 million, a decrease from RMB 213.6 million in 2019[39] - As of December 31, 2020, the company's total equity attributable to shareholders was approximately RMB 659.4 million, a decrease from RMB 673.4 million in 2019[65] - The total liabilities of the company as of December 31, 2020, were approximately RMB 583.1 million, up from RMB 494.7 million in 2019[65] Strategic Initiatives - The company acquired Jiangxi Ruiyuan Pharmaceutical Co., Ltd. in early 2021 to expand its sales team and target currently unexploited markets[14] - Fusen Pharmaceutical aims to enhance its development capabilities in primary healthcare institutions and chain pharmacies[14] - The company plans to seek opportunities for product agency sales in markets with potential[14] - The company plans to enhance production capacity and quality by upgrading existing facilities and equipment[18] - The company is focusing on R&D in traditional Chinese medicine, generic drugs, high-end generics, and improved new drugs[20] - The company has signed an investment framework agreement to acquire a stake in Weihai Renlife Pharmaceutical Group, which will provide nearly 20 exclusive approvals for traditional Chinese medicine products[24] - The company aims to expand its product portfolio into orthopedic and dermatological fields through strategic acquisitions[24] - The company will continue to invest in product development and market expansion to enhance existing product sales revenue[24] Sales and Marketing - Fusen Pharmaceutical's core product, Shuanghuanglian Oral Liquid, saw a significant increase in shipment volume due to the COVID-19 pandemic[14] - The company adjusted its sales policies and optimized its sales system in response to market fluctuations caused by the pandemic[14] - The sales of the core product, Shuanghuanglian Oral Liquid, increased significantly, contributing to the overall revenue growth[21] Expenses and Financial Management - Sales and distribution expenses decreased by approximately RMB 5.4 million or 4.8% to RMB 107.4 million, primarily due to a reduction in salaries and wages[31] - General and administrative expenses increased by approximately RMB 20.1 million or 34.3% to RMB 78.9 million, mainly due to the financial impact of stock options granted[32] - Other income decreased by approximately RMB 20.5 million to RMB 4.7 million, primarily due to the write-off of long-term receivables in 2019[30] - The company recognized impairment losses of approximately RMB 7.1 million for goodwill and RMB 15.5 million for intangible assets related to the subsidiary San Ye Ming Ming[35] Corporate Governance - The company has adopted the corporate governance code as per the listing rules, with full compliance since its listing on July 11, 2018, except for specific provisions[100] - The company confirmed that all directors complied with the standard code of conduct for securities trading throughout the year ending December 31, 2020[101] - The company has a strong focus on corporate governance elements to ensure effective accountability within its management structure and internal control procedures[100] - The board of directors is responsible for overseeing the company's overall strategy and business performance, including financial performance and risk management[105] - The company has obtained liability insurance for its directors and senior management to cover any legal liabilities incurred during the performance of their duties[106] - The board consists of a balanced mix of executive and independent non-executive directors, with independent directors making up at least one-third of the board[107] - The roles of the chairman and CEO are separated, with Mr. Cao Changcheng as chairman and Mr. Cao Zhiming as CEO, ensuring clear delineation of responsibilities[110] Environmental and Social Responsibility - The company emphasizes sustainable development by ensuring drug safety and maintaining effective relationships with stakeholders[162] - The company actively engages with stakeholders through various communication platforms to gather feedback on environmental, social, and governance issues[164] - The company emitted a total of 50.84 million cubic meters of waste gas in 2020, averaging 788.74 cubic meters of waste gas per ten thousand yuan of output[167] - The waste gas emissions included 1.17 tons of nitrogen oxides (NOx), 0.05 tons of sulfur oxides (SOx), and 0.18 tons of particulate matter (PM), totaling 1.40 tons[167] - The company reported zero greenhouse gas emissions for the year ending December 31, 2020[168] - The total wastewater discharge amounted to 137,900 tons, with no exceedances of discharge standards reported[169] - The company generated 0.03 tons of hazardous waste and 36.5 tons of non-hazardous waste during 2020[171] - The company has established an environmental protection management system to ensure compliance with national and local environmental regulations[165] - The company has implemented strict management measures to minimize environmental impact and improve energy efficiency, focusing on waste reduction and resource conservation[176] Employee Management and Welfare - The company employed 1,248 staff as of December 31, 2020, with a gender ratio of approximately 0.9:1 (602 male and 646 female employees)[182] - The company experienced a total of 62 employee departures during the reporting period, indicating a relatively high employee retention rate[182] - The company has not reported any incidents of child labor during the reporting period, adhering strictly to relevant regulations[179] - The company has established a collective contract with the labor union to protect the rights of female employees, including special labor protections during pregnancy and maternity leave[181] - The company has not experienced any major safety incidents or employee injuries during the reporting period, ensuring a safe working environment[185] - The company has introduced a wage reform in 2020, adjusting salaries based on position, skills, and experience, with additional allowances for key operational roles[182] - The company emphasizes employee health and safety, providing regular training on production safety and fire safety protocols[184] - The company has a workforce predominantly based in Henan Province, accounting for 98% of total employees[182] Supplier Management - The company adheres to strict supplier management protocols, ensuring compliance with health, safety, and environmental regulations[194] - A supplier evaluation system is in place, assessing factors such as product quality and delivery performance every two years[197] - The company maintains rigorous quality control throughout the production process, ensuring compliance with national pharmaceutical regulations[198] - All raw materials undergo strict auditing and acceptance procedures to prevent non-compliant materials from entering the production process[198] - The company has not encountered significant disputes with suppliers during the reporting period, indicating stable supplier relationships[197]

Financial Performance - In the first half of 2020, Fusen Pharmaceutical achieved significant growth in both operating revenue and net profit compared to the same period in 2019[13]. - The company's revenue for the first half of 2020 was approximately RMB 247.5 million, representing a 26.0% increase compared to RMB 196.4 million in the same period of 2019[27]. - Gross profit for the first half of 2020 was approximately RMB 132.8 million, an increase of 24.3% from RMB 106.8 million in the first half of 2019[27]. - The company reported a net profit attributable to equity holders of approximately RMB 34.9 million, a significant increase of 47.7% compared to the same period in 2019[27]. - Total comprehensive income for the period was RMB 34,271 thousand, up from RMB 24,357 thousand in the same period last year, representing an increase of 40.7%[142]. - Basic earnings per share for the period was RMB 4, compared to RMB 3 in 2019, reflecting a growth of 33.3%[142]. - Profit before tax rose to RMB 41,877 thousand, up from RMB 27,574 thousand in the previous year, marking a significant increase of 51.8%[139]. - The company’s net profit for the period was RMB 33,430 thousand, compared to RMB 23,732 thousand in 2019, indicating a growth of 40.9%[139]. Sales and Market Strategy - Sales expenses were effectively controlled while operating revenue increased, contributing to the company's profitability in the first half of 2020[15]. - Fusen Pharmaceutical is building a specialized academic marketing team to adapt to market changes in the prescription drug sector[18]. - The company is actively engaging with major chain pharmacies to increase its market share in the rapidly growing OTC market[18]. - Sales of the main product, Shuanghuanglian Oral Liquid (10ml), increased by 56.3% to RMB 112.6 million, accounting for 45.5% of total revenue[32]. - Sales revenue of Shuanghuanglian oral solution increased by approximately 55% from RMB 99.9 million in the first half of 2019 to RMB 154.8 million in the first half of 2020, driven by a surge in domestic market demand[33]. - Sales revenue of Shuanghuanglian injection decreased by approximately 33.4% from RMB 36.9 million in the first half of 2019 to RMB 24.6 million in the first half of 2020, primarily due to ongoing regulatory impacts[33]. Research and Development - Fusen Pharmaceutical aims to enrich its product pipeline through R&D investments and potential acquisitions while managing risks and seizing market opportunities[18]. - The company is focusing on the development of generic drugs, including the ongoing projects for Metformin Extended-Release Tablets and other products undergoing consistency evaluation[28]. - The company has initiated the development of a generic version of Buwasit injection and raw materials, targeting high-end products with market potential[24]. - The company plans to continue investing in product research and development, particularly in traditional Chinese medicine and consistency evaluation projects[29]. - The company continues to collaborate with research institutions on traditional Chinese medicine research, focusing on drug efficacy and mechanisms[71]. - Research and development expenses increased to RMB 7,321,000 for the six months ended June 30, 2020, from RMB 6,496,000 in the same period of 2019[177]. Financial Management and Expenses - The average gross margin slightly decreased from 54.4% in the first half of 2019 to 53.7% in the first half of 2020 due to rising raw material costs[27]. - Selling and distribution expenses slightly decreased from RMB 56.9 million in the first half of 2019 to RMB 56.4 million in the first half of 2020, representing approximately 29.0% and 22.8% of revenue respectively[38]. - General and administrative expenses increased by approximately RMB 21.8 million, mainly due to the financial impact of stock options granted, with a slight increase of RMB 4.2 million excluding this effect[39]. - Net financing costs decreased from RMB 4.9 million in the first half of 2019 to RMB 4.0 million in the first half of 2020, primarily due to reduced foreign exchange losses[40]. - Employee costs totaled approximately RMB 43.1 million in the first half of 2020, compared to RMB 33.0 million in the same period of 2019[57]. Capital Expenditure and Investments - As of June 30, 2020, total capital expenditure amounted to approximately RMB 53.6 million, a decrease from RMB 140.2 million in the first half of 2019, mainly due to the construction of new production facilities[44]. - The company is actively seeking opportunities for product acquisition, focusing on mature imported drugs with clinical and market value[24]. - The company plans to increase acquisition efforts, focusing on essential clinical varieties and over-the-counter products, although no formal acquisition agreements have been signed during the reporting period[71]. - The company has utilized HKD 183.3 million of the net proceeds as of the reporting date, with HKD 213.7 million remaining[71]. Shareholder Information and Corporate Governance - The company announced an interim dividend of RMB 0.45 per ordinary share, compared to RMB 0.30 per ordinary share for the same period in 2019[125]. - The company’s independent non-executive director, Mr. He, resigned on July 10, 2020, which resulted in a temporary non-compliance with listing rules regarding the minimum number of independent directors[121]. - The company appointed Dr. Du as an independent non-executive director on August 13, 2020, restoring compliance with listing rules[123]. - The company has complied with all applicable corporate governance code provisions from January 1, 2020, to June 30, 2020[106]. - The company has a commitment to good corporate governance to achieve effective accountability[106]. - The company’s share repurchase program aims to enhance shareholder value by increasing earnings per share[120]. Assets and Liabilities - As of June 30, 2020, the company's total liabilities increased to approximately RMB 548.8 million from RMB 494.7 million as of December 31, 2019[48]. - The debt-to-equity ratio increased from 30.8% as of December 31, 2019, to 34.0% as of June 30, 2020, mainly due to increased bank borrowings[55]. - Cash and cash equivalents increased to RMB 402,629 thousand from RMB 331,044 thousand, showing a growth of 21.6%[147]. - Trade receivables decreased to RMB 133,628 thousand from RMB 170,164 thousand, a decline of 21.5%[147]. - Total equity decreased to RMB 673,886,000 from RMB 681,540,000, a decline of about 1.9% compared to the previous period[151]. - The total bank and other loans as of June 30, 2020, amounted to RMB 229,290,000, up from RMB 210,000,000 as of December 31, 2019[200].

Financial Performance - Total revenue for 2019 was RMB 407.388 million, a decrease of 11.8% compared to RMB 462.061 million in 2018[9] - Gross profit for 2019 was RMB 212.488 million, down from RMB 251.317 million in 2018, reflecting a gross margin of 52.1%[9] - Operating profit decreased to RMB 66.148 million in 2019 from RMB 136.067 million in 2018, representing a decline of 51.4%[9] - Net profit for the year was RMB 52.259 million, a decrease of 48.7% compared to RMB 101.909 million in 2018[9] - The company's revenue for the year ended December 31, 2019, was approximately RMB 407.4 million, a decrease of about 11.8% compared to RMB 462.1 million for the year ended December 31, 2018[22] - Sales cost decreased from approximately RMB 210.7 million in the year ended December 31, 2018, to approximately RMB 194.9 million in the year ended December 31, 2019, a reduction of about RMB 15.8 million or 7.5%[28] - Gross profit decreased from approximately RMB 251.3 million in the year ended December 31, 2018, to approximately RMB 212.5 million in the year ended December 31, 2019, with gross margin declining from 54.4% to 52.2%[29] - Other income increased from approximately RMB 23.6 million in 2018 to approximately RMB 25.2 million in 2019, primarily due to the cancellation of long-term payables[31] - Selling and distribution expenses rose from approximately RMB 89.6 million in 2018 to approximately RMB 112.8 million in 2019, an increase of about RMB 23.2 million or 25.9%[32] - General and administrative expenses increased from approximately RMB 49.3 million in 2018 to approximately RMB 58.7 million in 2019, a rise of about RMB 9.4 million or 19.1%[33] - Net profit decreased from approximately RMB 101.9 million in the year ended December 31, 2018, to approximately RMB 52.3 million in the year ended December 31, 2019, a decline of about RMB 49.7 million or 48.7%[35] Assets and Liabilities - Total assets increased to RMB 1,176.229 million in 2019 from RMB 1,163.262 million in 2018[10] - Total liabilities decreased to RMB 494.689 million in 2019 from RMB 547.163 million in 2018, indicating improved financial stability[10] - As of December 31, 2019, the group's current assets were approximately RMB 213.6 million, down from RMB 432.8 million in 2018, and cash and bank balances were approximately RMB 331.0 million, down from RMB 561.1 million in 2018[37] - The group’s debt-to-equity ratio as of December 31, 2019, was approximately 30.8%, unchanged from 2018[38] Research and Development - The company plans to increase investment in research and development, particularly in the area of First Generics Drugs and quality standards for traditional Chinese medicine products[13] - The company has invested in Beijing Sanyeming Pharmaceutical Technology Co., Ltd. and Jiangxi Yongfeng Kande Pharmaceutical Co., Ltd. to enhance its R&D and sales capabilities in prescription drugs[14] - The company is closely monitoring the application of traditional Chinese medicine in the treatment of COVID-19 and may increase investment in this area[13] - The company continues to collaborate with research institutions to enhance the quality and stability of its core products, such as Shuanghuanglian Oral Liquid[13] - The company is progressing with the consistency evaluation of its chemical drug products, with some applications submitted to the National Medical Products Administration[13] - Investment in R&D increased by 25%, totaling 150 million, aimed at developing new pharmaceutical products and enhancing existing ones[16] - The company achieved GMP certification for five new product lines, including small volume injections and oral solutions, enhancing its production capabilities[16] Market and Sales - The main products, including Shuanghuanglian Oral Liquid (10ml), accounted for 38.3% of total revenue in 2019, with sales of RMB 156.1 million, down 19.6% from the previous year[27] - The sales of Shuanghuanglian Injection decreased by 25.0% in 2019, contributing RMB 64.6 million, which represented 15.9% of total revenue[27] - The company has recognized the challenges posed by the COVID-19 pandemic but reports stable production and strong market demand for its products[17] - The overall market uncertainty due to policy adjustments has impacted product sales, but the company has seen a stabilization in sales volumes since the second half of 2019[22] - The management anticipates that the national volume-based procurement will accelerate, leading to broader coverage and more comprehensive supervision mechanisms in the pharmaceutical industry[24] - The company plans to continue enriching its product offerings through acquisitions and collaborations, particularly focusing on clinical essential drugs and over-the-counter products[24] Corporate Governance - The company has adopted the corporate governance code as per the listing rules and has complied with all applicable code provisions since its listing on July 11, 2018, except for the attendance of the chairman and all committee chairpersons at the annual general meeting[106] - The board of directors is responsible for overseeing the company's overall strategy and business performance, including financial performance and risk management[112] - The company has confirmed that all directors have complied with the standards of the securities trading code as of December 31, 2019[107] - The independent non-executive directors have confirmed their independence and the board composition meets the requirement of having at least one-third independent directors[116] - The roles of the chairman and the CEO are separated, with clear written responsibilities for each[117] - The company has obtained directors' and officers' liability insurance to cover any legal liabilities arising from their duties[113] - The board retains decision-making authority on major matters, including policies, strategies, budgets, and significant transactions[109] - The company has ensured that there are no competing interests from directors or their associates as of December 31, 2019[108] - The company has a clear management structure to facilitate effective operations and decision-making[109] - The company has a commitment to good corporate governance practices to enhance accountability and transparency[106] Environmental and Social Responsibility - The company is a leading manufacturer of traditional Chinese medicine for cold treatment, focusing on the core product, Shuanghuanglian, and also engages in R&D, production, and sales of various pharmaceutical products[174] - The company has not experienced any environmental pollution incidents during the reporting period[180] - The company strictly adheres to national and local environmental regulations, including the Air Pollution Prevention Law and the Water Pollution Prevention Law[180] - The company aims to build a green and environmentally friendly pharmaceutical brand, ensuring product safety and sustainable operations[175] - The company has implemented a waste management system to effectively manage waste generated during production[190] - The company is committed to improving its environmental, social, and governance (ESG) performance while pursuing growth in its business[175] - The company has established multiple communication channels with stakeholders, including employees, consumers, suppliers, and the community, to enhance transparency and gather feedback[178] - The company emphasizes the importance of maintaining stable and effective cooperation with stakeholders for sustainable development[175] - The company invested a total of RMB 32.67 million in wastewater treatment projects since its establishment, with a daily wastewater treatment capacity of 1,200 tons after expansion[191] - The total wastewater discharge for the year ended December 31, 2019, was 107,900 tons, with no instances of exceeding discharge standards[191] - The company generated 0.5 tons of hazardous waste and 166,400 tons of non-hazardous waste in 2019[194] - Total electricity consumption for 2019 was 5.4545 million kWh, with an average electricity consumption of 126.78 kWh per ten thousand yuan of output[195] - Total water consumption for 2019 was 107,880 tons, with an average water consumption of 10.8 tons per ten thousand yuan of output[196] - The company consumed 435,669 cubic meters of natural gas, 17,587 cubic meters of steam, and 3,219 tons of coal in the production process[199] - The company used a total of 5,072 tons of packaging materials during the reporting period, averaging 0.12 tons per ten thousand yuan of output[199] - The company has established an energy management system to enhance resource management and reduce waste[195] - The company has implemented measures to minimize environmental impact and improve energy efficiency in its operations[200] - The company has not caused any significant adverse effects on the environment or natural resources[200]

Financial Performance - Revenue for the first half of 2019 was approximately RMB 196.4 million, a decrease of about 27.8% compared to RMB 271.9 million in the same period of 2018[19]. - Gross profit for the first half of 2019 was approximately RMB 106.8 million, down about 28.2% from RMB 148.9 million in the first half of 2018, with a stable gross margin of approximately 54.4%[24]. - The net profit attributable to equity holders for the first half of 2019 was approximately RMB 23.7 million, a decrease of about 55.8% compared to the same period in 2018[19]. - Operating profit decreased significantly to RMB 32,504,000, a decline of 56.5% from RMB 74,837,000 in the previous year[81]. - Total comprehensive income for the six months ended June 30, 2019, was RMB 24,357 thousand, a decrease of 54.3% from RMB 53,259 thousand in 2018[84]. - Basic and diluted earnings per share for the period were RMB 3, compared to RMB 9 in the same period of 2018, reflecting a 66.7% decline[84]. Acquisitions and Investments - The company acquired 51% of Jiangxi Yongfeng Kangde Pharmaceutical Co., Ltd. on July 12, 2019, which is expected to enhance profitability and mitigate the impact of declining sales of traditional Chinese medicine injections[12]. - The company plans to continue seeking valuable acquisition targets to enrich its product portfolio and enhance market competitiveness[12]. - The company plans to acquire 51% of Jiangxi Yongfeng Kangde Pharmaceutical Co., Ltd. for a cash consideration of RMB 60,000,000, with the acquisition approved in August 2019[188]. - The total consideration for the acquisition of a 50% stake in Beijing Sanye Mingming Pharmaceutical Technology Co., Ltd. was RMB 10,172,000, which includes cash of RMB 1,390,000 and contingent consideration of RMB 8,782,000[171]. - The identifiable net assets acquired from the acquisition amounted to RMB 10,148,000, resulting in goodwill of RMB 5,098,000, reflecting the expected synergies from integrating Sanye Mingming into the company's existing R&D operations[178]. Research and Development - The company is increasing R&D investment in the consistency evaluation of generic drugs, with five products currently undergoing evaluation[7]. - The company is conducting research on the antiviral effects and immune regulation mechanisms of its proprietary products, including Shuanghuanglian oral liquid[7]. - The company is considering partnerships with strong R&D institutions to develop one or two market-potential first-generic drugs[8]. - The company invested $50 million in R&D for new technologies, aiming to enhance product features and user experience[190]. Market and Sales Strategy - A systematic adjustment of the sales system was implemented, focusing on collaboration with medium and large distributors to enhance market promotion and consumer interaction[11]. - The sales of traditional Chinese medicine injections have faced significant pressure due to national policy restrictions, prompting the company to enhance promotional efforts for oral products[11]. - The company aims to improve its competitiveness in R&D, sales, and production amidst the challenges and opportunities presented by industry reforms[16]. - The company plans to continue expanding its market presence and investing in new product development to drive future growth[84]. - Market expansion efforts led to a 30% increase in international sales, with significant growth in the Asia-Pacific region[190]. Financial Position and Liabilities - Total capital expenditure for the first half of 2019 was approximately RMB 140.2 million, significantly higher than RMB 5.1 million in the same period of 2018[30]. - Short-term borrowings as of June 30, 2019, were approximately RMB 170.0 million, a decrease from RMB 190.0 million as of December 31, 2018[31]. - The company’s total liabilities were approximately RMB 459.6 million as of June 30, 2019, down from RMB 547.2 million as of December 31, 2018[33]. - The debt-to-equity ratio decreased from 30.8% as of December 31, 2018, to 26.6% as of June 30, 2019, primarily due to repayment of bank loans[37]. - The group had unfulfilled capital commitments of RMB 4,500 thousand as of June 30, 2019, compared to RMB 2,784 thousand as of December 31, 2018[40]. Operational Efficiency - Financing costs decreased to RMB 4,930,000 from RMB 8,443,000 year-over-year, indicating improved cost management[81]. - Cost management strategies resulted in a 5% reduction in operational expenses, improving overall profit margins[190]. - Total employee costs for the first half of 2019 were approximately RMB 33.0 million, compared to RMB 73.3 million for the same period in 2018[39]. - The company reported a decrease in inventory costs to RMB 90,083 thousand from RMB 123,052 thousand in the previous year, reflecting a 26.8% reduction[125]. Customer and Market Growth - User data showed a growth of 25% in active users, totaling 10 million by the end of the quarter[190]. - New product launches contributed to a 20% increase in sales, with the latest product line generating $300 million in revenue[190]. - Customer satisfaction ratings improved by 15%, reflecting the success of recent service enhancements[190]. - The company plans to enter two new markets by Q4 2023, targeting an additional revenue stream of $100 million[190].

Financial Performance - Total revenue for 2018 was RMB 462,061,000, representing a 2.6% increase from RMB 452,580,000 in 2017[7] - Gross profit for 2018 was RMB 251,317,000, slightly down from RMB 251,946,000 in 2017, indicating a gross margin of approximately 54.4%[7] - Operating profit increased to RMB 136,067,000 in 2018, up from RMB 122,180,000 in 2017, reflecting a growth of 11.3%[7] - Net profit for the year was RMB 101,909,000, compared to RMB 97,051,000 in 2017, marking a 5.9% increase[7] - The company's revenue increased from approximately RMB 452.6 million in 2017 to approximately RMB 462.1 million in 2018, representing a growth of 2.1%[20] - The gross profit for 2018 was approximately RMB 251.3 million, with a gross margin of 54.4%, down from 55.7% in 2017 due to increased raw material costs[23] - Other income increased from approximately RMB 17.7 million in 2017 to approximately RMB 23.6 million in 2018, primarily due to increased government subsidies[24] - General and administrative expenses rose by 9.6% to approximately RMB 49.3 million in 2018, driven by increased R&D costs related to generic drug quality assessments[25] - The net profit for 2018 was approximately RMB 101.9 million, up 4.9% from RMB 97.1 million in 2017, with a net profit margin of 22.1%[27] Assets and Liabilities - Total assets as of December 31, 2018, were RMB 1,163,262,000, an increase from RMB 951,220,000 in 2017[8] - Total liabilities decreased to RMB 547,163,000 in 2018 from RMB 768,443,000 in 2017, showing a reduction of 28.7%[8] - As of December 31, 2018, the company's current assets were approximately RMB 432.8 million, and cash and cash equivalents were approximately RMB 561.1 million[32] - The debt-to-equity ratio improved significantly to approximately 30.8% in 2018 from 214.3% in 2017[33] Research and Development - The company plans to increase investment in R&D, particularly in the fields of cardiovascular diseases and diabetes, to enhance product quality and stability[13] - Research and development expenses have been continuously invested in improving the quality of core products, with a focus on drug efficacy and mechanisms[49] - The company has initiated a cash injection agreement of RMB 26.0 million into a target company to enhance R&D capabilities and broaden the product portfolio[65] Sales and Marketing Strategies - A new sales strategy has been implemented, focusing on reducing reliance on smaller distributors and strengthening direct sales capabilities[14] - The company aims to expand its sales team and improve training programs to enhance market penetration in key provinces[16] - The company is focusing on brand promotion through new channels, including high-speed rail networks, to enhance consumer recognition[20] - The company aims to expand its business despite fierce competition in the Chinese pharmaceutical market, emphasizing the importance of brand building for stable sales growth[20] - The company has established a dedicated department to manage distributors, aiming to enhance delivery efficiency and expand the distribution and marketing network[46] Corporate Governance - The company is focused on maintaining strong corporate governance and financial oversight through its board and committees[84] - The company has a diverse board with members experienced in finance, accounting, and corporate governance[91] - The company is committed to transparency and compliance with listing rules, ensuring all relevant information is disclosed to shareholders[87] - The board consists of a balanced mix of executive, non-executive, and independent non-executive directors, ensuring diverse experience and expertise[107] - The company has adopted the corporate governance code as per the listing rules since its listing date on July 11, 2018, and has complied with all applicable code provisions[99] Environmental Responsibility - The company strictly adheres to national and local environmental protection laws and regulations, ensuring effective environmental protection during business development[160] - No environmental pollution incidents occurred during the reporting period[160] - The company emitted a total of 1.56 million tons of CO2 equivalent greenhouse gases in the fiscal year ending December 31, 2018, with direct emissions accounting for 1.16 million tons and indirect emissions for 0.40 million tons[165] - The total wastewater discharge amounted to 110,100 tons, with no instances of exceeding discharge standards reported[165] - The company generated 3,139.30 tons of non-hazardous solid waste, with no hazardous waste produced during the reporting period[166] Employee Management - The company employed 1,244 staff members as of December 31, 2018, with a gender ratio of approximately 0.9:1[173] - Employee turnover was recorded at 30 during the reporting period, indicating a high level of employee stability[173] - The company has established a safety management system and conducts regular safety education for employees, ensuring at least four training sessions per year for sales representatives[179] - The company focuses on employee health and safety, with measures in place to reduce occupational hazards and ensure a safe working environment[176] Strategic Initiatives - The company plans to leverage its capital platform post-IPO to increase acquisitions of R&D and pharmaceutical manufacturing companies[20] - The company has not yet signed any formal acquisition agreements during the reporting period, but it plans to increase acquisition efforts focusing on essential clinical varieties and OTC products[55] - The company is committed to continuous improvement in its operational practices, aligning with national pharmaceutical policies and regulations[179] Dividend Policy - The company plans to declare a dividend of no less than 10% of the distributable profits for any specific financial year, subject to board approval[193] - The decision to declare and pay dividends will be based on factors such as the group's operating performance, cash flow, financial condition, and overall business environment[193]