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]

Industry Trends - In the first half of 2021, the pharmaceutical industry continued to adjust due to policies such as the adjustment of the National Reimbursement Drug List and centralized procurement of generic drugs [19]. - The medical aesthetics industry has seen increased attention from the capital market, leading to a rise in mergers and acquisitions, indicating a booming market [21]. - Regulatory bodies are increasing supervision in the medical aesthetics industry, promoting formalization and standardization, which benefits leading companies in the long run [21]. - The medical aesthetics market in China reached nearly RMB200 billion in 2020, with a growing demand for minimally invasive procedures like botulinum toxin [35]. - The rapid development of non- or minimally-invasive medical aesthetics in China is expected to align with global trends, indicating significant market potential [38]. Company Transformation and Strategy - Sihuan Pharmaceutical has successfully transformed into a medical aesthetics and high-quality pharmaceutical company, overcoming challenges in its traditional main business [22]. - The company focuses on high-growth therapeutic areas including oncology, metabolic diseases, and medical aesthetics, supported by a robust R&D technology platform [4]. - Sihuan Pharmaceutical's strategic focus on independent innovation and incubation has positioned it as a leader in the medical aesthetics and biopharmaceutical sectors in China [4]. - The Group aims to build a leading position in the medical aesthetics and biopharmaceutical sectors through its dual-drive strategy [99]. - The overall strategy focuses on a dual-driven approach of medical aesthetics and biopharmaceuticals, with significant investments in R&D and product introduction [27]. Financial Performance - The Group recorded total revenue of RMB1,907.2 million for the six months ended June 30, 2021, representing an increase of 80.9% compared to RMB1,054.5 million for the same period in 2020 [28]. - The medical aesthetics segment generated revenue of RMB257.9 million during the period, significantly contributing to the overall results [28]. - Revenue from non-Key Monitoring List Products in the generic medicine segment reached RMB1,190.7 million, a year-on-year increase of 122.0%, accounting for 78.9% of the total revenue of the generic medicine segment [28]. - The gross profit for the period was RMB1,467.1 million, an increase of 86.6% from RMB786.1 million in the corresponding period in 2020, primarily due to significant revenue growth [29]. - The Group achieved a profit from continuing operations of RMB594.2 million, a 252.2% increase compared to RMB168.7 million in the same period of 2020, with a net profit margin of 31.2%, up from 16.0% in 2020 [31]. Research and Development - R&D expenses amounted to RMB333.6 million, a 10.9% increase from RMB300.9 million in 2020, driven by multiple products entering phase II and III clinical trials [32]. - The innovative drug platform Xuanzhu Biopharmaceutical Co., Ltd. experienced explosive growth, contributing to the Group's strategic goal of becoming a leading medical aesthetics and biopharmaceutical enterprise in China [24]. - Xuanzhu Biopharm has over 25 products under development, focusing on oncology, metabolism, anti-infection, and digestion, with 2 products soon to file for NDA and 11 products in clinical phases I to III [49]. - The flagship product Birociclib is a CDK4/6 inhibitor for advanced breast cancer, expected to be the only effective single agent for hormone receptor-positive end-line patients in China after launch [50]. - The company has invested nearly RMB700 million to build advanced biological facilities, with phase II capacity expected to be fully operational by 2024, achieving an annual production capacity of 150 million units, supporting an output value of RMB15 billion [68]. Market Expansion and Product Development - The Group aims to cover 3,000 medical aesthetics institutions and capture 30% market share of the botulinum toxin market in China within three years [35]. - The Group plans to develop a product line focused on anti-aging non- or minimally-invasive medical aesthetic products, including hyaluronic acid and lipolysis drugs [41]. - The Group is developing over 10 independent medical aesthetic products, including PLLA injections and collagen-based products, expected to be approved in the next 3 to 4 years [45]. - The Group has established a medical aesthetic product research institute in Southern California to overcome high technical barriers and enhance its product pipeline [45]. - The Group's marketing projects and reasonable pricing strategies are expected to enhance market recognition of its products and brands [42]. Shareholder Structure and Governance - Dr. Che Fengsheng holds 6,007,936,704 shares (63.56%) as a beneficial owner [126]. - The total number of shares held by directors and their interests indicates significant ownership concentration within the company [126][127][128]. - The company has a diverse range of beneficial owners among its directors, reflecting a broad base of influence and potential decision-making power [126][127][128]. - The company is required to maintain a register of substantial shareholders as per Section 336 of the SFO, which includes those with 5% or more interests [136]. - The significant shareholding by Mr. Meng Xianhui and associated entities suggests potential for future strategic initiatives and market expansion [142]. Corporate Governance and Compliance - The Company complied with all applicable code provisions of the Corporate Governance Code during the Period [199]. - The Company has maintained at least three independent non-executive directors, meeting the minimum requirements for professional qualifications [200]. - The Share Option Scheme aims to encourage contributions from eligible individuals and retain key personnel beneficial to the company's performance and growth [157]. - The Company must assess and determine the eligibility of Grantees based on their contributions to the Group [162]. - The Group has implemented share option and share award schemes to recognize and reward employee contributions [122].

Financial Performance - Sihuan Pharmaceutical reported a revenue of HKD 1.2 billion for the fiscal year, representing a year-over-year increase of 15%[4]. - The company achieved a net profit of HKD 300 million, which is a 10% increase compared to the previous year[4]. - Future guidance estimates a revenue growth of 12-15% for the next fiscal year, driven by new product launches and market expansion[4]. - Sihuan Pharmaceutical reported a revenue of RMB 2,464,226,000 for 2020, a decrease of 14.4% compared to RMB 2,878,318,000 in 2019[35]. - The gross profit for 2020 was RMB 1,914,449,000, resulting in a gross profit margin of 77.7%, down from 79.5% in 2019[35]. - The operating profit for 2020 was RMB 787,125,000, a significant recovery from an operating loss of RMB 2,406,225,000 in 2019[35]. - Profit attributable to owners of the Company for 2020 was RMB 502,569,000, compared to a loss of RMB 2,717,515,000 in 2019[35]. - The Group's profit for the Year amounted to approximately RMB 511.9 million, a significant recovery from a loss of RMB 2,757.3 million in 2019[123]. - Profit attributable to owners of the Company for the Year was approximately RMB 473.4 million, compared to a loss of RMB 2,753.3 million in 2019[123]. Market Expansion and Product Development - User data indicates a growth in the customer base by 20%, reaching a total of 1.5 million active users[4]. - Sihuan Pharmaceutical plans to launch three new products in the oncology sector by Q3 2024, aiming to capture a 5% market share in this segment[4]. - The company is expanding its market presence in Southeast Asia, targeting a revenue contribution of 10% from this region by 2025[4]. - The company has established partnerships with three international pharmaceutical firms to enhance its R&D capabilities and market reach[4]. - The Group's exclusive Korean botulinum toxin product "Letybo®" received approval for launch in the PRC market, expanding the medical aesthetics platform's product portfolio[21]. - The company plans to launch additional medical aesthetic products, including those currently under R&D, to enhance its product line[94]. - The company aims to enhance its international and professional development through strategic investments and acquisitions, including Xuanzhu Biopharm[52]. Research and Development - Sihuan Pharmaceutical has invested HKD 200 million in R&D for new drug development, focusing on metabolic diseases and anti-infectives[4]. - The company commenced Phase III clinical trials in China for its self-developed anti-diabetic drug janagliflozin[22]. - The company received approval for Phase I-III clinical trials for its innovative drug birociclib[25]. - The NMPA granted approval for clinical trials of self-developed innovative drugs, including janagliflozin for diabetes and fadanafil for erectile dysfunction, across multiple phases[27]. - The Group's R&D investment in new business incubations increased nearly 65% compared to 2019, indicating strong future growth potential[63]. - Xuanzhu Biopharm has 14 innovative product projects under R&D, covering oncology, metabolic diseases, and anti-infection, with several in late-stage clinical trials[64]. - The core product Birociclib is in phase II clinical trials, targeting advanced breast cancer, with plans for registration based on trial results[64]. Strategic Acquisitions and Partnerships - The company has completed two strategic acquisitions in the past year, enhancing its product pipeline and distribution network[4]. - The Group acquired all interests and intellectual property rights of plazomicin in the Greater China Region, expecting significant economic benefits post-launch[18]. - The company established a joint venture with Strides Pharma Global Pte Limited to supply and distribute three drugs in China[22]. - The company acquired 100% equity interest in Ambest Pharmaceutical (China), which holds drug production approvals for several products[25]. - The Group completed the acquisition of Combio Pharmaceutical, focusing on innovative bispecific antibodies and ADCs, enhancing its R&D capabilities in both small and large molecules[68]. Corporate Governance - The board held seven meetings during the year, ensuring active participation and oversight of strategic decisions[166]. - The attendance rate of directors at board meetings was 90%, demonstrating strong governance practices[167]. - The company complied with all applicable code provisions of the Corporate Governance Code during the reporting period[165]. - The company has appointed one non-executive director and three independent non-executive directors, with one-third of the board being independent[171]. - The Audit Committee held three meetings during the year to review the Group's financial reporting matters and internal control systems, submitting improvement proposals to the Board[182]. - The Nomination Committee held two meetings during the year to review the structure, size, and composition of the Board[185]. Financial Position and Assets - Total assets increased to RMB 13,043,926,000 in 2020 from RMB 12,571,436,000 in 2019[35]. - Cash and cash equivalents stood at RMB 4,604,041,000 in 2020, a decrease from RMB 5,117,143,000 in 2019[35]. - The current ratio remained stable at 3 times for both 2019 and 2020, indicating consistent liquidity management[35]. - The debt-to-equity ratio was 8.2%, indicating a stable financial situation for the Group[63]. - The Group's total trade and other receivables increased to approximately RMB 971.5 million from RMB 630.1 million in 2019, primarily due to receivables from third parties[130]. Market Trends and Future Outlook - The medical aesthetics business is expected to serve as a super accelerator for future business growth and corporate value enhancement[43]. - The market potential for Letybo® is significant, with few competitors and high barriers to entry, leading to a positive sales growth trend[50]. - The medical aesthetics market is projected to grow explosively, with the Group planning to introduce hyaluronic acid and other products to enhance its market position[110]. - The Group aims to become the leading company in the antibiotic double-chamber bag sector in the coming year[85]. - The Group's CDMO market is expected to reach USD 52.6 billion by 2024, with potential growth to USD 100 billion in the future[102].

Research and Development - Sihuan Pharmaceutical has a R&D team of over 1,000 researchers working on more than 110 pharmaceutical projects[4] - The company has been granted over 300 patents for innovative drugs, with more than 80 of these being overseas patents[4] - Key therapeutic areas in the current pipeline include diabetes, oncology, anti-infectives, and non-alcoholic steatohepatitis[4] - The company continues to increase its investment in R&D every year, reflecting its commitment to innovation[4] - R&D expenditure increased by 43.9% to approximately RMB392.7 million, accounting for 37.2% of total revenue[10] - The Group is advancing its oncology drug pipeline, with over 10 projects for generic oncology drugs and a CDK4/6 product in clinical trials[29][30] - The Group is focusing on product segmentation in the anti-infective drug market, which is highly competitive, to enhance product competitiveness[31][32] - The Group aims to enhance its R&D capabilities by diversifying methods such as joint ventures and collaborations to accelerate product development[44] - The Group's investment in R&D capital expenditure was approximately RMB96.8 million, including RMB9.1 million on property, plant, and equipment, and RMB87.7 million on intangible assets[86] Financial Performance - For the six months ended June 30, 2020, the Group recorded revenue of approximately RMB1,054.5 million, representing a year-on-year decrease of 36.4%[9] - Gross profit for the same period was approximately RMB786.1 million, a decrease of 42.4% year-on-year, with gross profit margin declining from 82.4% to 74.5%[10] - The Group's profit attributable to owners from continuing operations for the period was approximately RMB170.5 million, a significant improvement from a loss of RMB2,001.5 million in the same period last year[9] - The company reported a basic and diluted earnings per share of RMB 1.58 for the period, compared to a loss of RMB 21.33 in the prior year[165] - Total comprehensive income for the period was RMB 144,257,000, compared to a loss of RMB 1,964,097,000 in the previous period[166] - Profit for the period was approximately RMB144.3 million, a significant recovery from a loss of RMB1,964.1 million for the same period last year[59] - The company reported a significant decrease in cash flows from investing activities, totaling RMB (669,098,000) compared to RMB 541,704,000 in the previous year[170] Market Position and Strategy - Sihuan Pharmaceutical is one of the largest suppliers of cardio-cerebral vascular prescription drugs in China[3] - The diversified product portfolio has significant market potential, supported by a nationwide distribution network[3] - The company has a strong marketing model that enhances its market presence[3] - The Group's strategy includes focusing on core businesses and key therapeutic areas to enhance market competitiveness and share[17] - The Group aims to leverage its R&D capabilities to develop new products and technologies for market expansion[4] - The Group plans to intensify organizational changes, R&D changes, and talent incentive programs to drive growth[17] - The Group aims to streamline its operations by divesting non-core business assets to focus on its core pharmaceutical business, enhancing strategic development[19][20] Regulatory and Compliance - Compliance with PRC environmental and safety regulations is critical, as violations may lead to substantial fines and operational disruptions[15] - The promulgation of the Key Monitoring Drug List (KMDL) in July 2019 has significantly pressured the sales of several major products[10] - The Group believes that the pharmaceutical sector will continue to receive policy support, leading to increased industry concentration in the post-pandemic era[9] - Centralized procurement has been normalized, encouraging enterprises to gain market share at lower prices, thus promoting economies of scale[9] Shareholder Information - Dr. Che Fengsheng holds a long position of 5,950,495,699 shares, representing approximately 62.86% of the shareholding[96] - The total number of shares issued by the company is 5,950,495,699 shares, with a consistent percentage of 62.86% held by major shareholders[106] - The company has disclosed that as of June 30, 2020, no other directors or executives had interests or short positions in the shares[101] - The company has not reported any changes in the beneficial interests of its Directors or key executives during the period[102] Dividends and Share Options - An interim cash dividend of RMB0.1 cents per share and a special cash dividend of RMB3.0 cents per share have been declared for the period[146] - The Share Option Scheme aims to motivate and retain significant contributors to the Group's performance and growth[121] - The total number of Shares that may be allotted under the Share Option Scheme is 947,108,220 Shares, representing approximately 10% of the total Shares in issue[127] - As of June 30, 2020, no share options had been granted, exercised, cancelled, or lapsed under the Share Option Scheme[135] Assets and Liabilities - As of June 30, 2020, total assets amounted to RMB 13,117,431,000, an increase from RMB 12,571,436,000 as of December 31, 2019[159] - Total liabilities increased to RMB 4,176,378 as of June 30, 2020, up from RMB 2,629,242 at the end of 2019[161] - The carrying amount of property, plant, and equipment was approximately RMB2,823.0 million, an increase from RMB2,731.0 million as of December 31, 2019, mainly due to expansion and new equipment purchases[68] - Trade and other payables rose significantly to approximately RMB2,942.1 million as of June 30, 2020, up from RMB1,905.8 million as of December 31, 2019, with an increase of approximately RMB1,036.3 million attributed to special cash dividends payable[78] Employee Information - The Group had 3,851 employees as of June 30, 2020, reflecting its commitment to competitive remuneration packages[92] - The total salary and related costs for the Group during the period were approximately RMB309.5 million, compared to RMB296.7 million for the six months ended June 30, 2019[92] Operational Challenges - The sales decline in the prescription drug market was attributed to decreased patient flow in hospitals during the pandemic[9] - There is a risk that products may be excluded from the National Reimbursement Drug List, adversely affecting sales[16] - The Group's revenue and profitability are dependent on winning drug tenders at desirable prices across various provinces in China[12]