Summary of Key Points from the Conference Call Industry Overview: Hong Kong Biotech Sector - The Hong Kong biotech sector has shown significant growth, achieving a revenue increase of approximately 10% in the first half of the year, aligning with A-share innovative drug companies [3] - The sector has achieved its first half-year profitability, with a turnaround of nearly 150%, resulting in a net profit margin of 3.5% [1][3] - The sector's sales expense ratio peaked at around 25% in 2023 but has since been optimized, focusing on core pipelines and reducing non-core projects [4] Financial Performance and Trends - The cash and cash equivalents of the sector have shown double-digit growth in the first half of the year, despite a slight decline from over 40 billion RMB in 2022 [4] - Monthly financing activities have seen double-digit growth, reversing last year's downward trend, which has strengthened the innovative drug pipeline [5] - The sector is expected to maintain a positive growth trajectory over the next 3-5 years, driven by increased business volume and active financing activities [6] Competitive Landscape - China holds a significant position in the global oncology drug innovation field, with its oncology pipeline accounting for 35% of the global total [7] - Chinese companies have improved their delivery ratios in large business development (BD) transactions, with several projects exceeding 50 million USD [8] - The Hong Kong biotech industry has seen a mix of button and direct licensing transactions, with notable large deals such as a nearly 4.7 billion USD transaction between Heber and AZ [9] Company Highlights - **HaploMed**: Achieved a revenue of 100 million USD and a net profit of 70 million USD in the first half of the year, with a long-term partnership with AZ that highlights its MICE platform advantages [2][12] - **Deqi Pharma**: Experienced a nearly tenfold increase in market value, focusing on two core pipeline platforms, with promising data from clinical trials [10] - **Overall Market Sentiment**: Companies like Rongchang and Basestone have shown strong performance post-financing, receiving positive feedback from the capital market [5] Future Outlook - The Hong Kong biotech sector is expected to continue its growth, with increased financing activities and enhanced research efficiency anticipated to contribute positively to performance [6] - The competitive advantages of Chinese innovative drug companies in the international market include a large number of oncology pipelines, enhanced delivery capabilities in large BD projects, and the ability to refresh transaction limits in emerging fields like small nucleic acid drugs [13]

Core Viewpoint - Health元药业集团 reported a stable overall business performance in the first half of 2025, with core business segments working collaboratively to adapt to market changes and maintain resilience [3][4]. Financial Performance - Total assets at the end of the reporting period were CNY 35,552.22 million, a decrease of 0.46% from the previous year [1]. - Operating revenue was CNY 7,898.33 million, down 4.08% year-on-year [1]. - Total profit reached CNY 2,072.74 million, an increase of 4.58% compared to the previous year [1]. - Net profit attributable to shareholders was CNY 769.81 million, showing a slight increase of 1.04% from the previous year [1]. Business Segments - The respiratory product segment faced sales declines due to continued centralized procurement policies and intensified market competition, but the company managed to grow sales of its existing products, such as tobramycin inhalation solution, by 112% year-on-year [4]. - The health products segment performed well, achieving a growth of 35% year-on-year, highlighting the positive effects of diversified business strategies [4]. - The raw materials segment maintained strong competitiveness, with key products like 7-ACA sustaining good pricing [4]. R&D and Innovation - The company has made significant progress in R&D across various therapeutic areas, with over 10 innovative drugs in the respiratory field, including a new treatment for influenza that has entered the production application stage [5][6]. - In the autoimmune field, a humanized monoclonal antibody for moderate to severe psoriasis has completed Phase III clinical trials, showing superior efficacy compared to existing treatments [6]. - The company is also advancing in the pain management area with a non-opioid innovative drug that has completed Phase I clinical trials [7]. International Expansion - The company has commenced construction of its first overseas raw material drug factory in Jakarta, Indonesia, aimed at enhancing its global supply chain and market responsiveness [8]. - Regulatory approvals for production and import in the Philippines and Malaysia have been achieved, facilitating market entry in Southeast Asia [8]. - The company is pursuing a strategic acquisition of a Vietnamese company to enhance its market penetration in the region [8].

Core Viewpoint - The company reported a decline in revenue and net profit for the fiscal year 2024, with total revenue at 15.619 billion yuan, down 6.17% year-on-year, and net profit attributable to shareholders at 1.387 billion yuan, down 3.90% year-on-year, which is in line with expectations [1] Group 1: Business Performance - The anti-infection segment showed signs of recovery with a year-on-year growth of 9.69%, while the respiratory business faced a significant decline of 36.98% due to the impact of centralized procurement and high base effects from 2023 [2] - The health food and OTC segment experienced rapid growth, achieving revenue of 0.697 billion yuan, a year-on-year increase of 53.91% [2] - The raw materials and intermediates segment remained relatively stable, generating revenue of 2.025 billion yuan, down 2.63% year-on-year, with stable price growth for 7-ACA but a decline in revenue for meropenem raw materials due to price drops and increased market competition [2] Group 2: R&D and Innovation - The company increased R&D investment by 30% in 2024, focusing on a rich product pipeline, with the first flu drug, Marpapsavir, having submitted an NDA application in August 2024 [4] - The gross margin for pharmaceutical manufacturing remained stable at 63.08%, with a slight increase of 0.64 percentage points year-on-year, and overall expenses decreased due to refined management and reduced costs from centralized procurement [4] - The company’s R&D expenses were 1.43 billion yuan, down 13.62% year-on-year, indicating a focus on innovation and improved R&D efficiency [4] Group 3: Future Outlook - The company is entering a new phase of accelerated innovation transformation, with new products expected to drive future growth [5] - Revenue forecasts for 2025-2027 have been slightly adjusted downwards, with expected revenues of 16.04 billion, 17.00 billion, and 18.02 billion yuan, reflecting a year-on-year growth of 2.7%, 6.0%, and 6.0% respectively [5] - The projected net profit for the same period is 1.46 billion, 1.56 billion, and 1.68 billion yuan, with corresponding EPS of 0.80, 0.85, and 0.92 yuan [5]