中国生物制药(01177) - 2021 - 中期财报

Corporate Information Directors and Committees The report lists the company's executive directors, independent non-executive directors, and members of key committees - The Board of Directors comprises nine executive and five independent non-executive directors, with four core committees established: Audit, Remuneration, Nomination, and ESG[7] Key Business Partners The report discloses key partners including principal bankers, share registrars, legal advisors, and the auditor - The company's principal bankers include The Hongkong and Shanghai Banking Corporation Limited, Bank of China (Hong Kong) Limited, and Agricultural Bank of China, Lianyungang Branch[9] - The company's auditor is Ernst & Young[13] Financial and Business Summary Financial Highlights The company achieved strong growth in H1 2021, driven by a 13.5% revenue increase and a 583.6% surge in net profit Financial Highlights for H1 2021 (as of June 30) | Indicator | H1 2021 (RMB in thousands) | H1 2020 (RMB in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 14,353,781 | 12,647,775 | +13.5% | | Gross Profit | 11,600,660 | 9,855,731 | +17.7% | | Profit for the Period | 9,641,604 | 2,064,127 | +367.1% | | Profit attributable to owners of the parent | 8,480,340 | 1,240,612 | +583.6% | | Adjusted profit attributable to owners* | 1,574,765 | 1,281,800 | +22.9% | | New Product Sales | 6,300,563 | 4,405,867 | +43.0% | | Oncology Drug Sales | 5,025,351 | 4,017,557 | +25.1% | - The Board declared a quarterly dividend of 2 HK cents per share for the three months ended June 30, 2021, bringing the total H1 dividend to 4 HK cents per share[16] Company Profile and Main Products The company is a leading innovative R&D-driven pharmaceutical group with a fully integrated business chain - The company is positioned as an R&D-driven pharmaceutical group with a fully integrated value chain covering R&D, intelligent manufacturing, and a strong sales system[19] Main Products by Therapeutic Area | Therapeutic Area | Key Product Examples | | :--- | :--- | | Oncology | Qingkeshu (Abiraterone Acetate), Qianping (Bortezomib for Injection), Anxian (Lenalidomide) | | Liver Disease | Tianqing Ganmei (Magnesium Isoglycyrrhizinate Injection), Tianqing Ganping (Dianmonium Glycyrrhizinate Enteric-coated Capsules) | | Cardiovascular | Yilunping (Irbesartan/Hydrochlorothiazide), Kaina (Beraprost Sodium) | | Orthopedics | Gaisanchun (Calcitriol), Yigu (Zoledronic Acid) | | Respiratory | Tianqingsuchang (Budesonide Suspension for Inhalation) | Company Milestones The company has achieved leading positions in drug consistency evaluations and has been included in major stock indices - The company's subsidiary, CTTQ, was the first in China to pass the generic drug consistency evaluation and launched its Class 1 innovative anti-tumor drug Focus V (Anlotinib) in 2018[22][24] - The company was included as a constituent stock of the Hang Seng Index in September 2018 and the Hang Seng China Enterprises Index in December 2019[24] Management Discussion and Analysis Industry Review The normalization of volume-based procurement and healthcare reforms created new opportunities for leading pharmaceutical firms - The normalization of national volume-based procurement allows high-quality new products to achieve rapid market penetration and sales volume with lower promotion costs, benefiting R&D-focused companies[26] - Inter-provincial settlement of medical insurance and "dual-channel" policies have improved drug accessibility through both medical institutions and pharmacies[26] - "Internet + Healthcare" policies have made online drug sales and promotion a key supplement to traditional channels[26] Business Review The company delivered strong business performance with significant contributions from new products and a continuously optimized R&D pipeline Core Products and Marketing Performance Core products like Anlotinib maintained rapid growth while new marketing channels were successfully expanded - Over 60 new products launched since 2018 contributed over 80% of sales growth and now account for over 40% of sales revenue[29] - The core oncology drug Focus V (Anlotinib Hydrochloride Capsules) maintained rapid growth, while the first-to-market generic respiratory drug Tianqingsuchang (Budesonide Suspension for Inhalation) became a new growth driver[29] - The company actively expanded into new channels like chain pharmacies and primary care hospitals, achieving strong results for multiple product lines[30] - The company had 11 products selected in the fifth round of national volume-based procurement, expecting rapid volume growth[28] R&D Progress The company's R&D pipeline yielded significant results, with numerous approvals and a patent portfolio exceeding 1,000 R&D Achievements in H1 2021 | Item | Q2 | H1 Cumulative | | :--- | :--- | :--- | | Marketing Authorizations | 10 | 17 | | Clinical Trial Approvals | 17 | 24 | | Consistency Evaluation Approvals | 22 | 34 | | New Drug Applications Submitted | 8 | 12 | | Invention Patents Granted | 55 | 94 | - As of the period end, New Drug Applications had been submitted for four major biologics, including Penpulimab and Adalimumab[28] - The cumulative number of granted invention patents reached 1,018 by the end of the period[28] Financial Performance Analysis The company's financial performance was outstanding, with net profit soaring 583.6% due to significant contributions from associate Sinovac Overall Financial Performance The company recorded revenue of RMB 14.35 billion and net profit attributable to the parent of RMB 8.48 billion Core Financial Data for H1 2021 | Indicator | Amount (RMB) | Y-o-Y Growth | | :--- | :--- | :--- | | Revenue | 14.35 billion | +13.5% | | Net Profit Attributable to Parent | 8.48 billion | +583.6% | | Earnings Per Share | 45.15 cents | +584.1% | | Adjusted Net Profit Attributable to Parent | 1.57 billion | +22.9% | - Sales revenue from new products increased its share of total revenue to 43.9% from 34.8% in the prior year period[34] Revenue by Therapeutic Area Oncology drugs were the largest revenue source, accounting for 35.0% of total revenue in a diversified portfolio Sales and Revenue Share by Therapeutic Area for H1 2021 | Therapeutic Area | Sales (RMB in millions) | Share of Total Revenue (%) | | :--- | :--- | :--- | | Oncology | 5,025.4 | 35.0% | | Liver Disease | 1,991.9 | 13.9% | | Cardiovascular | 1,495.4 | 10.4% | | Orthopedics | 1,245.4 | 8.7% | | Respiratory | 1,062.9 | 7.4% | | Parenteral Nutrition | 594.6 | 4.1% | | Others | 2,938.1 | 20.5% | Investments in Associates and Joint Ventures Associates and joint ventures, particularly Sinovac, contributed significantly to the Group's profit during the period - Associates and joint ventures contributed a total profit of approximately RMB 7.58 billion, resulting in a net after-tax contribution of approximately RMB 6.91 billion[40] - The investment in Sinovac was a primary profit driver, with its COVID-19 vaccine CoronaVac approved in over 50 countries and an annual production capacity exceeding 2 billion doses[40] Financial Asset Investments The Group held a diversified portfolio of equity investments and financial assets to generate favorable returns - As of the period end, the Group held non-current equity investments at FVTOCI of approximately RMB 2.14 billion and current equity investments at FVTPL of approximately RMB 0.42 billion[41] - The Group invested approximately RMB 9.41 billion in wealth management products, accounting for about 16.7% of total assets[41] R&D, Liquidity and Capital Structure The company maintained strong R&D investment, robust liquidity, and a healthy capital structure R&D Investment and Intellectual Property The company invested heavily in R&D, with total expenditure reaching RMB 1.88 billion, or 13.1% of revenue - For the six months ended June 30, 2021, total R&D expenditure was approximately RMB 1.88 billion, representing about 13.1% of the Group's revenue[43] - The R&D pipeline included 393 products, with a focus on oncology (185), liver disease (39), and respiratory (25)[43] - During H1, the company filed 161 new patent applications and accumulated a total of 1,018 granted invention patents[43] Liquidity and Capital Structure The Group maintained a healthy capital structure with RMB 8.03 billion in cash and bank balances as of June 30, 2021 Capital Structure Overview (June 30, 2021) | Item | Amount (RMB in millions) | | :--- | :--- | | Cash and bank balances | 8,028.3 | | Short-term loans | 1,824.7 | | Long-term loans | 6,273.3 | | Convertible bonds (debt component) | 5,242.6 | Operations and Risk Management The Group employed over 24,000 people, maintained a healthy gearing ratio, and actively managed foreign exchange risk - As of June 30, 2021, the Group's total assets were approximately RMB 56.21 billion and total liabilities were RMB 25.10 billion, with a gearing ratio of 44.7%, down from 52.5% at the end of 2020[47] Employees and Remuneration Policy The Group had 24,443 employees and maintained share option and award schemes to incentivize key talent - As of June 30, 2021, the Group had 24,443 employees, with total staff costs for the period amounting to approximately RMB 2.31 billion[48] - The company has a 2013 Share Option Scheme and a 2018 Share Award Scheme, though no options or shares were granted during the period[48] Foreign Exchange Risk The Group closely monitors its net exposure to foreign exchange risk to mitigate the impact of currency fluctuations - Most of the Group's assets and liabilities are denominated in RMB, USD, EUR, and HKD, and the Group closely monitors its foreign exchange risk[50] Outlook The Group will focus on developing new marketing channels and prioritizing high-potential innovative products in its R&D pipeline - In the future, more resources will be allocated to new marketing channels and methods to gradually increase their revenue contribution[50] - The R&D pipeline has been optimized to focus on products with high innovation and market potential, increasing the future proportion of innovative drugs and high-barrier biologics[50] Condensed Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2021, the Group reported revenue of RMB 14.35 billion and a net profit of RMB 8.48 billion Consolidated Income Statement Summary (For the six months ended June 30, 2021) | Item (RMB in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 14,353,781 | 12,647,775 | | Gross Profit | 11,600,660 | 9,855,731 | | Share of profits and losses of associates and joint ventures | 7,584,980 | (41,188) | | Profit before tax | 10,978,515 | 2,610,452 | | Profit for the period | 9,641,604 | 2,064,127 | | Profit attributable to owners of the parent | 8,480,340 | 1,240,612 | Consolidated Statement of Financial Position As of June 30, 2021, the Group's total assets were RMB 56.21 billion and net assets were RMB 31.11 billion Consolidated Statement of Financial Position Summary | Item (RMB in thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | 56,206,729 | 47,210,438 | | Total Liabilities | 25,097,657 | 24,790,880 | | Net Assets | 31,109,072 | 22,419,558 | | Equity attributable to owners of the parent | 24,575,623 | 16,747,160 | | Cash and bank balances | 8,028,326 | 11,259,084 | Consolidated Statement of Changes in Equity Equity attributable to owners of the parent increased from RMB 16.75 billion to RMB 24.58 billion, driven by net profit - Equity attributable to owners of the parent increased from RMB 16.75 billion at year-end 2020 to RMB 24.58 billion as of June 30, 2021, primarily driven by profit for the period[59] Condensed Consolidated Statement of Cash Flows The Group generated net cash from operating activities of RMB 2.34 billion, while cash and cash equivalents decreased by RMB 2.48 billion Condensed Consolidated Statement of Cash Flows Summary (For the six months ended June 30) | Item (RMB in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Cash flows from operating activities | 2,335,554 | 1,555,549 | | Cash flows from investing activities | (4,055,967) | (1,533,585) | | Cash flows from financing activities | (761,689) | 5,110,430 | | Net decrease in cash and cash equivalents | (2,482,102) | 5,132,394 | | Cash and cash equivalents at end of period | 8,028,326 | 15,666,602 | Notes to the Financial Statements Basis of Preparation and Operating Segments The Group's business is divided into three reportable segments, with Western and biological pharmaceuticals being the primary source of revenue Segment Results for H1 2021 | Segment (RMB in thousands) | External Revenue | Segment Results | | :--- | :--- | :--- | | Western and biological pharmaceuticals | 14,062,845 | 3,615,278 | | Investment | 1,362 | (7,764) | | Others | 289,574 | (9,933) | | Total | 14,353,781 | 3,597,581 | - Over 90% of the Group's revenue is derived from customers in Mainland China[71] Revenue and Profit Analysis The Group's profit before tax was calculated after deducting R&D expenses of RMB 1.78 billion - During the reporting period, R&D expenses were RMB 1.78 billion and total staff costs were RMB 2.31 billion[77] - Key subsidiaries of the Group, such as CTTQ and Beijing Tide, are recognized as "High and New Technology Enterprises" and benefit from a preferential corporate income tax rate of 15%[79] Dividends and Earnings Per Share The Board declared a Q2 2021 dividend of 2 HK cents per share, with basic EPS for the period at RMB 45.15 cents - The Board of Directors declared a quarterly dividend of 2 HK cents per share for the three months ended June 30, 2021[82] Earnings Per Share Calculation | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Basic Earnings Per Share | RMB 45.15 cents | RMB 6.60 cents | | Diluted Earnings Per Share | RMB 43.38 cents | RMB 6.60 cents | Key Asset and Liability Items Trade and bills receivables totaled RMB 5.06 billion with a healthy aging profile, while trade and bills payables were RMB 1.62 billion - As of June 30, 2021, trade and bills receivables amounted to approximately RMB 5.06 billion, with about RMB 4.70 billion (approx. 93%) aged within 90 days[88][89] - As of June 30, 2021, trade and bills payables amounted to approximately RMB 1.62 billion[91] Other Information Directors' and Chief Executive's Interests in Shares The Tse family holds a significant combined stake in the company, reflecting strong family control - Mr Tse, Shing Yuk is the largest shareholder, holding a total interest of approximately 21.47% in the company's shares[97] - Ms Tse, Theresa Y Y (Chairwoman) holds approximately 12.08% of the shares, and Mr Tse Ping (Senior Vice Chairman) holds approximately 8.40%[97] Share Incentive Schemes The company has two share incentive schemes in place, but no options or shares were granted during the period - The company has a 2013 Share Option Scheme with a ten-year validity, but no options have been granted since its adoption[106][108] - The company adopted a Share Award Scheme in 2018, allowing the trustee to purchase up to 3% of issued share capital for awards, but no shares have been granted since adoption[109] Investor Relations and Corporate Governance The Group is committed to high standards of corporate governance and actively engages with the investment community - The Group actively conducts investor relations activities and was honored as a "Most Honored Company" in the Institutional Investor "2021 All-Asia Executive Team" rankings[111] - The company complied with most provisions of the Corporate Governance Code but noted the absence of the Chairwoman and three independent directors from the Annual General Meeting[114] - The company established a new Environment, Social and Governance (ESG) Committee on August 31, 2021, to enhance its focus in this area[122]