Core Viewpoint - The company, Zhejiang Shapuaisi Pharmaceutical Co., Ltd., has responded to the Shanghai Stock Exchange's inquiry regarding its 2024 annual report, particularly focusing on its investment in Shanghai Xinhong Pharmaceutical Co., Ltd. and the acquisition of shares in Yunnan Biological Valley Pharmaceutical Co., Ltd. [1][2] Investment in Shanghai Xinhong - The company, along with partners, invested a total of 460 million yuan in Shanghai Xinhong, with the company contributing 160 million yuan for a 34.7% stake [1][2] - The investment aims to leverage synergies between the company and Yunnan Biological Valley, which specializes in traditional Chinese medicine, particularly in cardiovascular disease treatments [2][4] Financial Performance of Yunnan Biological Valley - Yunnan Biological Valley reported revenues of 587 million yuan, 622 million yuan, and 516 million yuan over the last three years, with net losses of 49 million yuan, 12 million yuan, and 74 million yuan respectively [1][2] - The company recognized an investment loss of 7.22 million yuan related to its stake in Shanghai Xinhong due to Yunnan Biological Valley's losses in 2024 [1][2] Market Context - The increasing prevalence of cardiovascular diseases in China, with 330 million patients reported, highlights a growing market for related pharmaceuticals, particularly traditional Chinese medicine [4][3] - The company anticipates significant growth in the market for cardiovascular traditional Chinese medicine products, driven by an aging population and rising health awareness [4][3] Internal Decision-Making and Compliance - The company asserts that its investment decisions followed internal procedures compliant with the Company Law and relevant regulations, and the investment amount did not exceed 10% of its audited net assets [11][12] - Independent directors have confirmed that the investment process was conducted properly and did not harm the interests of the company or its minority shareholders [11][12] Other Investments - As of the end of 2024, the company reported long-term equity investments totaling 307 million yuan and other non-current financial assets of 20.4 million yuan, with additional investments in various pharmaceutical companies [12][15] - The company has engaged in risk investments, purchasing stocks worth 1.079 billion yuan and selling stocks worth 940 million yuan, resulting in a loss of 25 million yuan [12][15]