Summary of the Conference Call for Guangdong Zhongsheng Pharmaceutical Co., Ltd. Company Overview - Guangdong Zhongsheng Pharmaceutical Co., Ltd. was established in 1979 and is recognized as one of the top 100 pharmaceutical companies in China, listed on the A-share market. The company focuses on various therapeutic areas including ophthalmology, cardiovascular, respiratory, and digestive diseases, with a core business in pharmaceutical manufacturing. [3] Key Points Discussed 1. Collaboration with Qilu Pharmaceutical - On January 16, 2026, Zhongsheng Pharmaceutical signed a licensing agreement with Qilu Pharmaceutical for the production and commercialization of RAY1225 injection in China. The company retains all intellectual property rights and will be the marketing authorization holder (MAH) after regulatory approval. The initial payment is RMB 200 million, with potential milestone payments up to RMB 800 million based on development and sales progress. [6][7] 2. Focus on Overseas Markets - The collaboration with Qilu Pharmaceutical will not hinder Zhongsheng's exploration of overseas markets, as the company retains all rights for RAY1225 injection outside of China. [8] 3. Innovation Drug Pipeline - The company is focused on self-initiated research and integrating internal and external resources to meet unmet clinical needs. The innovation drug pipeline primarily targets metabolic diseases and respiratory diseases, with two innovative drugs already approved and several in clinical trials. [10] a. Metabolic Disease Pipeline - ZSP1601 tablets, targeting metabolic dysfunction-related fatty liver disease (MASH), are a major new drug project and have shown promising results in clinical trials. RAY1225 injection, a dual agonist for GLP-1 and GIP receptors, is in advanced clinical trials for treating type 2 diabetes and obesity. [11][12][20] b. Respiratory Disease Pipeline - The company has developed innovative drugs like Lai Ru Te Wei tablets for COVID-19 and Angra De Wei tablets for influenza, both of which have shown significant efficacy and safety in clinical trials. [14][15] 4. New Indications for RAY1225 Injection - RAY1225 injection has received approval for a new indication to treat MASH, addressing a significant unmet clinical need in China. The drug has shown potential in improving liver inflammation and fibrosis in preclinical studies. [21][23][24] 5. Strategic Focus - Zhongsheng Pharmaceutical emphasizes innovation in drug development, particularly in metabolic and respiratory diseases, and aims to accelerate clinical trials while adhering to high-quality standards. The company is committed to overcoming technical barriers and enhancing project implementation. [22] Additional Important Information - The company has established a robust product line, including traditional Chinese medicine and chemical generic drugs, with a focus on chronic disease management and digital marketing strategies. [3] - The collaboration with Qilu Pharmaceutical is seen as a strategic move to enhance commercialization efficiency and reduce operational costs, thereby optimizing cash flow and supporting ongoing research and development. [7] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting the company's commitment to innovation and market expansion.

Group 1: Partnership and Financial Aspects - The collaboration between Zhongsheng Ruichuang and Qilu Pharmaceutical involves a licensing agreement for the RAY1225 injection, allowing Qilu to produce and commercialize the product in China, while Zhongsheng retains all intellectual property rights [1][3]. - Zhongsheng will receive an upfront payment of RMB 200 million and may earn up to RMB 800 million in milestone payments based on development and sales achievements [3]. - After the first commercial sale of the licensed product, Zhongsheng is entitled to a double-digit percentage of net sales in the licensed regions [3]. Group 2: Innovation and Drug Development - Zhongsheng focuses on innovative drug development, particularly in metabolic diseases and respiratory diseases, with two projects already approved for market and several others in clinical trials [6][8]. - The RAY1225 injection is a novel dual-agonist peptide drug with potential for bi-weekly administration, targeting type 2 diabetes and obesity, currently undergoing multiple Phase III clinical trials [10][11]. - The company is also developing ZSP1601, a treatment for metabolic dysfunction-related fatty liver disease (MASH), which has shown promising results in early clinical trials [6][12]. Group 3: Market Strategy and Future Outlook - The partnership aims to leverage both companies' strengths to enhance commercialization efficiency and market reach, while reducing operational costs related to production and marketing [3]. - Zhongsheng remains committed to exploring overseas markets and does not intend to limit its international expansion despite the current focus on the Chinese market [4]. - The company is actively pursuing innovative solutions to meet unmet clinical needs, particularly in the treatment of MASH, which currently lacks approved therapies in China [12].

Group 1: Innovative Drug Development - The company focuses on independent research and development, integrating internal and external resources to address unmet clinical needs, particularly in metabolic and respiratory diseases [1] - As of now, two innovative drug projects have been approved for market launch, with several others in clinical trial stages [1] - The innovative drug ZSP1601, targeting metabolic dysfunction-related fatty liver disease (MASH), has completed Phase Ib/IIa clinical trials, showing significant reductions in liver inflammation markers [3] Group 2: Clinical Trials and Research Progress - RAY1225 injection, a dual agonist for GLP-1 and GIP receptors, is currently undergoing multiple Phase III clinical trials for obesity and type 2 diabetes, with positive results reported in Phase II trials [6][7] - The company is advancing RAY1225 for the treatment of MASH, with preclinical studies indicating improvements in liver inflammation and fibrosis in animal models [9] - The innovative drug Anlavi (昂拉地韦) has been approved for use in treating influenza and is undergoing Phase III trials for children and adolescents [4][6] Group 3: Strategic Investments and Corporate Governance - The company has increased its shareholding in its subsidiary, Zhongseng Ruichuang, to enhance operational control and efficiency in drug development [10] - The focus on innovation is seen as a core driver for the pharmaceutical industry, with the company committed to building a complete industrial layout from research to commercialization [12]

Group 1: Innovative Drug Development - The company focuses on independent research and development, integrating internal and external resources to address unmet clinical needs, particularly in metabolic and respiratory diseases [1] - As of now, two innovative drug projects have been approved for market, with several others in clinical trial stages [1] - ZSP1601, an innovative drug for treating metabolic dysfunction-related fatty liver disease (MASH), has shown significant efficacy in reducing liver inflammation markers in clinical trials [2] Group 2: Clinical Trials and Results - RAY1225 injection, a dual agonist for GLP-1 and GIP receptors, is currently undergoing multiple Phase III clinical trials for obesity and type 2 diabetes, with positive results reported in Phase II trials [2][12] - The company is advancing RAY1225's clinical trials for treating MASH, with the drug showing potential in improving liver conditions in animal models [13][15] - The company is also conducting Phase III trials for the innovative drug Anlavi (昂拉地韦) for treating influenza, with successful results in previous phases [3][5] Group 3: Market Access and Insurance Inclusion - Anlavi has been included in the 2025 National Medical Insurance Directory, enhancing patient access to this innovative treatment [7][9] - The company’s core products, including Lai Rui Te Wei (来瑞特韦) and other formulations, continue to be part of the updated medical insurance directory, ensuring broader patient coverage [9] Group 4: Future Directions and Research Focus - The company is exploring new drug development avenues in metabolic diseases, focusing on multi-target therapies and long-acting formulations [6] - There is a strategic emphasis on addressing unmet clinical needs in respiratory diseases, particularly with new antiviral agents targeting RSV [5][6]

Group 1: Investor Relations Activity - The investor relations activity involved a meeting with analysts from Morgan Fund Management, Guolian Minsheng Securities, and Shenzhen Yide Global Fund Management on December 8, 2025 [1] - The meeting was held in the company conference room and included discussions on the company's new drug inclusion in the national medical insurance directory [1] Group 2: New Drug Inclusion - The innovative drug, Olanavir Tablets (brand name: Anruiwei®), was included in the National Medical Insurance Directory on December 7, 2025, following negotiations with the National Healthcare Security Administration [1][3] - Other core products such as Liraglutide Tablets and various capsules were also included in this directory, enhancing their market accessibility [1] Group 3: Drug Characteristics - Olanavir Tablets are the world's first oral drug targeting the PB2 subunit of the RNA polymerase of the influenza A virus, approved for adult patients with uncomplicated influenza [3][4] - The drug demonstrates rapid symptom relief, strong antiviral effects, and low resistance rates, with positive results from clinical trials [4][5] Group 4: Sales and Marketing Strategy - The company plans to enhance marketing through three dimensions: building an academic ecosystem, upgrading data services, and implementing key project practices [8] - The inclusion of Olanavir Tablets in the National Medical Insurance Directory is expected to positively impact market promotion and long-term business development [8] Group 5: Pediatric Development Plans - The company is developing Olanavir Granules for children and adolescents, with ongoing Phase III clinical trials for both adolescents (ages 12-17) and children (ages 2-11) [9][11] - The trials aim to establish a comprehensive treatment matrix for influenza across all age groups [11] Group 6: Other Drug Developments - RAY1225 injection, an innovative dual-agonist drug for type 2 diabetes and obesity, has shown positive results in Phase II clinical trials and is progressing to Phase III trials [12][13] - ZSP1601 tablets, targeting metabolic dysfunction-related fatty liver disease, have completed early clinical trials with promising results and are moving into Phase IIb trials [15][16] Group 7: Research and Development Pipeline - The company is focusing on innovative drug development in respiratory and metabolic diseases, with projects targeting unmet clinical needs [16][18] - Ongoing research includes a new drug for respiratory syncytial virus (RSV) and various GLP-1 receptor agonists, with clinical candidates identified and preclinical studies underway [16][18]

Core Viewpoint - The company is actively advancing the commercialization of its antiviral drug, Olanidovir tablets, which shows strong efficacy against various strains of influenza, including those resistant to other treatments [2]. Group 1: Product Development - The company is progressing with the commercialization of Olanidovir tablets (brand name: Anruwei®) for the treatment of adult patients with uncomplicated influenza A [2]. - Preclinical studies indicate that Olanidovir has strong inhibitory activity against multiple influenza virus strains, including those resistant to Oseltamivir and Baloxavir [2]. - The Phase III clinical trial results comparing Olanidovir tablets with Oseltamivir capsules and placebo for treating adult influenza A have shown positive outcomes, achieving the predefined primary efficacy endpoint with good safety [2]. Group 2: Clinical Efficacy - Subgroup analysis from the Phase III trial suggests that Olanidovir significantly shortens the time to relief from influenza symptoms compared to placebo for H1 and H3 subtype strains [2].

Core Viewpoint - The company is developing innovative small molecule drugs for the treatment of Respiratory Syncytial Virus (RSV) infections, as there are currently no specific treatment options available in the domestic market [1] Group 1: Company Developments - The company has initiated a project focused on small molecule drugs targeting RSV, demonstrating strong antiviral activity against multiple RSV strains, excellent pharmacokinetic properties, and low toxicity [1] - The RSV project is currently in the preclinical research stage, with plans for orderly advancement in development [1] Group 2: Product Information - The company's drug, Angladiwei Tablets (brand name: Anruiwei®), is indicated for the treatment of uncomplicated influenza A in adults, with a recommendation for professional medical guidance on usage [1]

Investment Rating - The report assigns a "Buy" rating for the company, indicating a strong performance relative to the benchmark index [14]. Core Insights - The company has a stable traditional business foundation, primarily based on traditional Chinese medicine, with significant contributions from its innovative drug transformation efforts [2][3]. - The company reported a revenue of 1.3 billion yuan in H1 2025, a year-on-year decline of 4.74%, while the net profit attributable to the parent company reached 188 million yuan, marking a substantial increase of 114.96% [1][2]. Summary by Sections Traditional Business Stability - The company continues to expand its traditional Chinese medicine sales market, maintaining a stable revenue structure with a focus on proprietary product lines. In H1 2025, sales from traditional Chinese medicine reached 689 million yuan, down 10.14%, but with a gross margin of 69.57%, an increase of 0.46 percentage points [2]. - The core product, the compound thrombus-dissolving series, has successfully participated in national procurement, allowing the company to offset price impacts through volume growth and cost optimization strategies [2]. Innovative Drug Development - The company is actively pursuing innovative drug transformation, focusing on metabolic and respiratory diseases. As of the mid-year report, two innovative drug projects have been approved for market entry, with several others in clinical trials [3][4]. - Notable products include: 1. **Lai Ru Te Wei Tablets**: The first peptide-based 3CL inhibitor for COVID-19, approved in March 2023 and included in the national medical insurance directory [3]. 2. **Angra De Wei Tablets**: The first targeted influenza drug approved in May 2025, with ongoing development for pediatric formulations [3][4]. 3. **RAY1225 Injection**: A dual-target GLP-1 and GIP agonist with promising clinical trial results, gaining attention at international conferences [4][5]. Financial Projections - The company is projected to achieve revenues of 2.646 billion yuan in 2025, with net profits of 323 million yuan, and an EPS of 0.38 yuan, reflecting a positive growth trajectory [6][7].

Core Viewpoint - Guangdong Zhongsheng Pharmaceutical Co., Ltd. reported a slight decline in revenue but a significant increase in net profit for the first half of 2025, indicating a strong performance in profitability despite challenging market conditions [1][2]. Financial Performance - The company achieved a revenue of 1.3 billion yuan in the first half of 2025, representing a year-on-year decrease of 4.74% [1]. - The net profit attributable to shareholders reached 188 million yuan, showing a substantial year-on-year growth of 114.96% [1][2]. Strategic Initiatives - The company has developed a mid-term strategic plan focusing on "traditional Chinese medicine as the foundation, innovation leading, and concentrating on specialty pharmaceutical health" in response to anticipated changes in policy and market environment [2]. - Strategic adjustments across the entire value chain include accelerating innovative research and development, optimizing supply chains to reduce costs, and diversifying sales channels while enhancing academic promotion and brand building [2]. Product Development - Traditional Chinese medicine remains the core business and a significant source of revenue growth, with key products like the Compound Xue Shuan Tong series and Nao Shuan Tong capsules expanding in chronic disease treatment [3]. - The company is focusing on deepening market penetration for selected products and enhancing retail business foundations to gradually improve operational performance [3]. Innovation and Market Expansion - The commercialization of innovative drugs and the market expansion of existing chemical drugs are key drivers of revenue growth, with notable products including the first Chinese oral antiviral drug for COVID-19 and a novel flu treatment [4]. - The company has made significant progress in the consistency evaluation of generic drugs, with 31 products passing the evaluation and 6 selected in national drug procurement, enhancing the market value of its chemical drugs [4].

R&D Pipeline and Innovations - The company has established a multi-modal, positive cycle R&D ecosystem focusing on metabolic diseases and respiratory diseases, with 2 innovative drug projects approved for market and several in clinical trials [1][2] - ZSP1601 tablets, targeting metabolic dysfunction-related fatty liver disease (MASH), are the first domestic innovative drug project to complete clinical trials for safety and pharmacokinetics, showing significant potential in reducing liver inflammation markers [1][2] - RAY1225 injection, a long-acting GLP-1 analog, has shown promising results in Phase II trials for obesity and Type 2 diabetes, achieving primary endpoints in both REBUILDING-1 and SHINING-1 trials [2][5] Clinical Trial Results - In the REBUILDING-1 trial, RAY1225 injection demonstrated a dose-dependent weight loss: 3mg, 6mg, and 9mg groups showed weight reductions of -10.05%, -12.98%, and -15.05% respectively, compared to -3.55% in the placebo group [5][7] - The SHINING-1 trial indicated significant reductions in HbA1c levels: -1.68%, -2.06%, and -2.16% for the 3mg, 6mg, and 9mg groups respectively, with the placebo group at -0.33% [8][10] - RAY1225 injection also showed superior results in cardiovascular and metabolic indicators, with significant reductions in uric acid levels compared to the placebo [8] Product Approvals and Market Strategy - The oral antiviral drug, Lai Ruitewei tablets (乐睿灵®), received conditional approval in March 2023 and is included in the national medical insurance directory, enhancing patient access [3] - The company’s innovative drug Angladiwei tablets (安睿威®) was approved in May 2025, showing significant efficacy in alleviating flu symptoms compared to the placebo [4][11] - The company is focusing on building an academic ecosystem and enhancing digital services to improve healthcare delivery and patient trust [14][15] Investment and Future Directions - The company has consistently invested over 10% of its revenue in R&D over the past three years, emphasizing the importance of innovation in its growth strategy [15] - Plans for international collaboration on innovative drugs are underway to expand market opportunities and enhance global brand influence [16][18]