康哲药业(00867) - 2022 - 年度业绩

Financial and Business Summary Financial Summary The Group achieved robust financial growth in 2022, with revenue increasing by 9.8% year-on-year to RMB 9.15 billion and profit for the year growing by 8.3% to RMB 3.28 billion; basic earnings per share increased by 8.6%, and the company proposed a final dividend of RMB 0.2414 per share with ample cash and bank balances at year-end Key Financial Indicators for 2022 | Indicator | 2022 (RMB Million) | 2021 (RMB Million) | YoY Growth | | :--- | :--- | :--- | :--- | | Revenue | 9,150.3 | 8,337.2 | +9.8% | | Gross Profit | 7,035.8 | 6,246.9 | +12.6% | | Profit for the Year | 3,276.2 | 3,025.3 | +8.3% | | Basic Earnings Per Share | 1.3281 (RMB Yuan) | 1.2228 (RMB Yuan) | +8.6% | | Bank Balances and Cash | 4,376.4 | - | - | | Proposed Final Dividend | 0.2414 (RMB Yuan per share) | - | - | Business Summary During the reporting period, the Group achieved robust performance driven by strong product competitiveness and commercialization capabilities, continuously expanding its innovative product pipeline, accelerating clinical and registration processes for multiple innovative drugs in China, and steadily developing independent businesses such as dermatology and medical aesthetics, ophthalmology, and Southeast Asia - Continuously expanded innovative product reserves, with 30 differentiated innovative products primarily focused on FIC (First-in-Class) and BIC (Best-in-Class) categories[4] - Partnered with Incyte Corporation (US) for exclusive development and commercialization rights of ruxolitinib cream in China and Southeast Asia, the first FDA-approved drug for vitiligo repigmentation[4] - Significant progress in the development of multiple innovative products in China: diazepam nasal spray, teriparatide injection, and methotrexate injection (for psoriasis) are all under NDA review[5] - Dermatology and medical aesthetics business (CM Aesthetics) has achieved initial scale, covering dermatological therapeutics, dermo-cosmetics, and light medical aesthetics[6] - Ophthalmology business (CM Vision) expanded into ophthalmic devices and consumables, securing exclusive licensing rights for the EyeOP1® glaucoma treatment device[7] - Southeast Asia business (CM Health) steadily advanced, obtaining rights for multiple innovative products in the region and partnering with Gan & Lee Pharmaceuticals to introduce insulin series products[8] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2022, the Group's revenue was RMB 9.15 billion, a 9.8% year-on-year increase; gross profit rose 12.6% to RMB 7.04 billion, while selling and administrative expenses increased, profit before tax was RMB 3.76 billion, and profit for the year reached RMB 3.28 billion, up 8.3%, with basic earnings per share at RMB 1.3281 Consolidated Statement of Profit or Loss Summary for 2022 | Item (RMB Thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | 9,150,347 | 8,337,221 | | Gross Profit | 7,035,847 | 6,246,938 | | Selling Expenses | (2,721,312) | (2,540,147) | | Administrative Expenses | (636,612) | (440,995) | | Research and Development Expenses | (125,431) | (114,761) | | Profit Before Tax | 3,762,850 | 3,456,589 | | Profit for the Year | 3,276,195 | 3,025,264 | | Profit for the Year Attributable to Owners of the Company | 3,258,992 | 3,017,402 | Consolidated Statement of Financial Position As of December 31, 2022, the Group's total assets increased to RMB 17.75 billion, with non-current assets at RMB 8.92 billion and current assets at RMB 8.83 billion; total liabilities were RMB 3.02 billion, and equity attributable to owners of the company rose to RMB 14.59 billion, maintaining a robust financial position Consolidated Statement of Financial Position Summary as of Year-End 2022 | Item (RMB Thousand) | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 8,924,163 | 8,428,161 | | Current Assets | 8,829,376 | 7,379,718 | | Total Assets | 17,753,539 | 15,807,879 | | Equity and Liabilities | | | | Equity Attributable to Owners of the Company | 14,589,067 | 12,752,444 | | Current Liabilities | 2,877,103 | 2,081,254 | | Non-current Liabilities | 139,359 | 879,638 | | Total Equity and Liabilities | 17,753,539 | 15,807,879 | Notes to the Consolidated Financial Statements General Information and Accounting Policies This section outlines the company's basic information and principal activities, details the initial application and impact of IFRS amendments for the current year, and lists new and revised standards issued but not yet effective, assessing their potential impact, particularly on liability classification and accounting policy disclosures - The Company is an investment holding company, with subsidiaries primarily engaged in the manufacturing, marketing, promotion, and sale of pharmaceutical products, and its functional currency is RMB[12] - Several amendments to International Financial Reporting Standards were first applied this year, but they did not have a significant impact on the Group's financial position or performance[13][14] - The Group disclosed several new standards issued but not yet effective, such as amendments to IAS 1 regarding classification of liabilities, which are not expected to result in reclassification of liabilities upon application[17][18][19] Revenue and Segment Information The Group's revenue primarily derives from the sale of pharmaceutical products and the provision of promotion services, with RMB 7.06 billion from product sales and RMB 2.09 billion from promotion services in 2022; the Group operates in a single reportable operating segment, the marketing, promotion, sale, and manufacturing of pharmaceutical products, primarily within China Revenue Breakdown (RMB Thousand) | Revenue Source | 2022 | 2021 | | :--- | :--- | :--- | | Sale of Pharmaceutical Products | 7,055,729 | 6,655,017 | | Promotion Income | 2,094,618 | 1,682,204 | | Total Revenue | 9,150,347 | 8,337,221 | - The Group has only one reportable operating segment, which is the marketing, promotion, sale, and manufacturing of pharmaceutical products, primarily operating within China[25] - In 2022, the largest customer accounted for 14.4% of the Group's revenue, with no other single customer contributing more than 10%[25] Key Profit or Loss Items This section details key profit or loss items, with other income at RMB 199 million in 2022, mainly from interest and government grants; other gains and losses recorded a net loss of RMB 4.2 million, primarily due to exchange losses; finance costs increased to RMB 49.09 million due to higher bank borrowing interest, and income tax expense was RMB 487 million, with the effective tax rate influenced by tax incentives in different regions - Other income primarily consists of interest income (RMB 106 million) and government grants (RMB 93 million)[26] - Other gains and losses recorded a net loss of RMB 4.2 million, mainly due to a net exchange loss of RMB 126 million, partially offset by fair value changes in financial assets of RMB 150 million[27] - Finance costs increased year-on-year, primarily due to bank borrowing interest rising from RMB 15.4 million to RMB 35.46 million[28] - Certain Chinese subsidiaries of the Group enjoy preferential corporate income tax rates of 15% or 9%[30] Dividends and Earnings Per Share For the year 2022, the company recognized total dividends of approximately RMB 1.276 billion, including the 2022 interim dividend and 2021 final dividend; the Board proposed a 2022 final dividend of RMB 0.2414 per share, and basic earnings per share were RMB 1.3281, calculated based on profit attributable to owners of the company of RMB 3.259 billion and weighted average ordinary shares of approximately 2.454 billion Annual Dividend Distribution (RMB Thousand) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Dividends declared for the year | 1,276,239 | 1,154,834 | | Proposed final dividend for the year | 591,910 | 557,594 | - Basic earnings per share are calculated based on profit attributable to owners of the company of RMB 3,258,992 thousand and a weighted average of 2,453,940,224 ordinary shares[37] Key Statement of Financial Position Items At the end of 2022, trade receivables amounted to RMB 1.44 billion, with most aged within 90 days; bank balances and cash were ample at RMB 4.38 billion; trade payables were RMB 178 million; total bank borrowings were RMB 1.78 billion, all unsecured floating-rate loans; regarding share capital, the company repurchased and cancelled 5.455 million shares during the year - Trade receivables (net of allowance) amounted to RMB 1.442 billion, with 94.6% aged within 90 days[38][40] - Bank balances and cash totaled RMB 4.376 billion, and bills receivable were RMB 270 million[38][42] - Total bank borrowings were RMB 1.783 billion, all unsecured floating-rate borrowings due within one year[45][46] - During the year, the company repurchased and cancelled 5,455,000 ordinary shares[52][53] Management Discussion and Analysis Business Review During the reporting period, the Group achieved robust performance, with sales revenue increasing by 9.8% year-on-year to RMB 9.15 billion, or 13.7% to RMB 10.50 billion if calculated solely on pharmaceutical product sales; profit for the year grew by 8.3% to RMB 3.28 billion, primarily driven by continuous investment in innovative product pipelines, accelerated clinical development and registration, and strengthened brand influence of existing products Performance Overview for 2022 | Indicator | Amount | YoY Growth | | :--- | :--- | :--- | | Sales Revenue | RMB 9,150.3 Million | +9.8% | | Pharmaceutical Product Sales Revenue (Alternative Calculation) | RMB 10,497.5 Million | +13.7% | | Profit for the Year | RMB 3,276.2 Million | +8.3% | Innovation and R&D The Group continuously expands its differentiated innovative product pipeline through a "joint R&D and investment" strategy, adding four new innovative products during the reporting period, bringing the total to 30; key introductions include ruxolitinib cream and EyeOP1® glaucoma treatment device, while multiple products made significant progress in clinical development in China, with three products under NDA review, including methotrexate injection granted priority review status and methylene blue enteric-coated sustained-release tablets' NDA accepted Continuous Expansion of Innovative Product Pipeline - The innovative pipeline added 4 new products, bringing the total to 30, primarily FIC and BIC products[62] - Introduced ruxolitinib cream, the first FDA-approved topical JAK inhibitor for vitiligo repigmentation[63] - Obtained exclusive licensing rights for the EyeOP1® glaucoma treatment device, expanding the ophthalmic product matrix from pharmaceuticals to devices and consumables[64] - Acquired global assets for a VEGF+ANG2 tetravalent bispecific antibody for the treatment of neovascular eye diseases[65] Continuous Advancement of Clinical Development in China - Diazepam nasal spray, teriparatide injection, and methotrexate injection (for psoriasis) are undergoing CDE review for NDA in China[67][68][70] - The NDA for methotrexate injection (for psoriasis) was granted priority review status by the CDE[70] - Methylene blue enteric-coated sustained-release tablets achieved positive results in Phase III clinical trials, and its NDA was accepted by the NMPA in February 2023[72] - Teriparatide injection was approved for marketing in Hong Kong, China, in April 2022[68] Commercialization System The Group possesses strong commercialization capabilities, focusing on specialized areas such as cardiovascular, digestive, dermatology and medical aesthetics, and ophthalmology; as of the end of 2022, it had over 4,300 professional promotion personnel, covering over 50,000 hospitals and medical institutions and over 200,000 retail pharmacies in China; key products like BoYiding, XinHuoSu, Deanxit, and Ursofalk hold leading market positions in their respective therapeutic areas, with sales growth across all product lines, particularly in digestive and ophthalmology segments - As of December 31, 2022, the Group had over 4,300 professional marketing and promotion personnel, with a network covering over 50,000 hospitals and medical institutions and over 200,000 retail pharmacies in China[78] Sales Performance by Product Line for 2022 (Calculated solely on pharmaceutical product sales) | Product Line | Revenue (RMB Million) | YoY Growth | Proportion | | :--- | :--- | :--- | :--- | | Cardiovascular | 5,516.4 | +13.6% | 52.5% | | Digestive | 3,611.6 | +11.9% | 34.4% | | Ophthalmology | 440.2 | +14.1% | 4.2% | | Dermatology | 344.3 | +10.1% | 3.3% | | Other Products | 585.0 | +30.4% | 5.6% | Specialty Business Segments The Group's three specialty business segments have all made significant progress: the dermatology and medical aesthetics business "CM Aesthetics" has established a complete operating system, strengthening its portfolio by introducing ruxolitinib cream and botulinum toxin type A products; the ophthalmology business "CM Vision" expanded into drug-device combinations, introducing the EyeOP1® glaucoma treatment device; and the Southeast Asia business "CM Health" rapidly introduced multiple innovative products and partnered with Gan & Lee Pharmaceuticals to introduce insulin series, setting a precedent for mainland Chinese insulin products entering the Southeast Asian market - Dermatology and medical aesthetics business "CM Aesthetics" has a team of over 600 people, covering nearly 10,000 hospitals and medical institutions, added ruxolitinib cream, acquired 60% equity in Heling Pharmaceutical, and obtained exclusive licensing rights for a Korean botulinum toxin type A product[83][84][85][87] - Ophthalmology business "CM Vision" has a team of over 300 people, covering nearly 9,000 hospitals and medical institutions, added EyeOP1® glaucoma treatment device and a VEGF+ANG2 tetravalent bispecific antibody, strengthening its drug-device combination commercialization capabilities[91][92] - Southeast Asia business "CM Health" obtained Southeast Asia rights for multiple innovative products including ruxolitinib cream and EyeOP1®, and partnered with Gan & Lee Pharmaceuticals to introduce mainland Chinese insulin products into the Southeast Asian market for the first time[93] Impact of Industry Policies and Future Outlook National Volume-Based Procurement (VBP) is the most significant industry policy affecting the Group's business, with Deanxit not selected in the seventh round of VBP, and BoYiding and Ursofalk included in the eighth round; the Group will respond by strengthening academic brand building and deepening retail market penetration, while future strategies focus on upgrading the commercialization platform, driving innovative product launches, and expanding internationalization starting with Southeast Asia to achieve sustainable growth - National Volume-Based Procurement (VBP) is the most influential industry policy; Deanxit was not selected in the seventh round of VBP, while BoYiding and Ursofalk were included in the eighth round of VBP[95] - Strategies to address VBP include: strengthening academic brand building, deepening retail market penetration, expanding differentiated innovative pipelines, and developing "VBP-immune" businesses such as dermatology and medical aesthetics, ophthalmology, and Southeast Asia[95] - Future development strategies focus on upgrading the commercialization platform, driving the commercialization of innovative products, and expanding international business starting with Southeast Asia[96] Financial Review The Group's financial performance was robust this year, with revenue growing 9.8% to RMB 9.15 billion and gross profit margin improving from 74.9% to 76.9%; selling expense ratio decreased, while administrative expenses increased due to higher personnel costs; total R&D expenditure was RMB 730 million; profit for the year increased 8.3% to RMB 3.28 billion; net cash from operating activities significantly rose 42.5% to RMB 3.55 billion, and the debt-to-asset ratio (bank borrowings/total assets) decreased from 10.6% to 10.0%, indicating a sound financial structure Financial Performance Summary for 2022 | Indicator | 2022 | Change | | :--- | :--- | :--- | | Revenue | RMB 9,150.3 Million | +9.8% | | Gross Profit Margin | 76.9% | Up 2.0 percentage points | | Selling Expenses as % of Revenue | 29.7% | Down 0.8 percentage points | | Administrative Expenses as % of Revenue | 7.0% | Up 1.7 percentage points | | Profit for the Year | RMB 3,276.2 Million | +8.3% | Cash Flow Summary for 2022 (RMB Thousand) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Net cash generated from operating activities | 3,553,243 | 2,493,852 | | Net cash used in investing activities | (1,178,202) | (1,519,525) | | Net cash used in financing activities | (1,399,914) | (258,392) | - The debt-to-asset ratio (bank borrowings divided by total assets) was 10.0%, a decrease from 10.6% in the prior year[120] Corporate Governance and Other Information Share Repurchases For the year ended December 31, 2022, the company repurchased a total of 5,455,000 ordinary shares on the Stock Exchange for a total consideration of HKD 59,415,400, and all repurchased shares were cancelled Share Repurchase Details for 2022 | Month of Repurchase | Number of Shares Repurchased | Total Consideration Paid (HKD) | | :--- | :--- | :--- | | March 2022 | 130,000 | 1,447,520 | | April 2022 | 3,600,000 | 40,227,820 | | May 2022 | 1,000,000 | 10,976,200 | | September 2022 | 545,000 | 5,147,640 | | October 2022 | 180,000 | 1,616,220 | | Total | 5,455,000 | 59,415,400 | Dividends and Closure of Register of Members The company has paid an interim dividend of RMB 0.2930 per share for 2022; the Board proposed a final dividend of RMB 0.2414 per share for the year ended December 31, 2022, which, subject to approval at the Annual General Meeting, is planned for distribution on May 12, 2023 - A final dividend of RMB 0.2414 per share (equivalent to HKD 0.274) is proposed[131] - To qualify for the final dividend, shareholders must complete share transfer registration by 4:30 p.m. on May 4, 2023[133] Proposed Amendments to Memorandum and Articles of Association The Board proposes to amend the existing Memorandum and Articles of Association and adopt new ones to comply with the latest amendments to the HKEX Listing Rules (regarding core shareholder protection standards) and applicable Cayman Islands laws, and to increase flexibility in convening general meetings; this proposal is subject to approval by shareholders via a special resolution at the Annual General Meeting - The proposed amendments to the Articles of Association aim to comply with a set of uniform core shareholder protection standards set out in Appendix 3 to the Listing Rules[136] - The amendments also include provisions to allow the company flexibility in convening general meetings and certain housekeeping amendments[136] - This proposal is subject to approval by shareholders via a special resolution at the Annual General Meeting to be held on April 28, 2023[136]