[年报]华东医药(000963):2022年年度报告（英文版）
原标题:华东医药:2022年年度报告（英文版） Huadong Medicine Co., Ltd. 2022 Annual Report April 2023 A Letter to the Shareholders Distinguished shareholders, As the year ends, we usher in a new year with endless possibilities. The year of 2022 brought more challenges that forced the pharmaceutical industry to accelerate its transform, reshuffle and reshaping in response to the gloomy situation, numerous uncertainties, and downward pressure, which raises more challenges for pharmaceutical enterprises’ emergency response abilities and resilience. For Huadong Medicine Co., Ltd. (“We” or “the Company”), the year of 2022 witnessed our unremitting efforts and remarkable achievements, which is the first year for us to implement our seventh three-year planning, step forward to a new stage of innovative transformation and development, and pull off our visions by 2030. By continuously strengthening the strategic guidance, focusing on the primary business of pharmaceuticals, taking active actions and seeking progress while maintaining stability, we have accelerated our businesses quarter by quarter and successfully achieved continuous growth against changes in the pharmaceutical industry under complicated internal and external environments in the new era. Over the past four years, we have kept improving our capacities, embracing more cooperation opportunities in an open manner, and endeavoring to seek sustained development, with the focus on four major business segments of pharmaceutical industry, pharmaceutical business, aesthetic medicine and industrial microbiology. Taking targeted steps from multiple aspects, we have made look-forwarding and international layout to adapt to cutting-edge innovative technology platforms and unsatisfied market demands. The strategic reshaping empowers qualitative changes of development paths. To date, the Company has stepped into a new stage in both scale of operation & development and quality of intrinsic growth. In 2022, we made breakthrough in our operating revenue as the net profit after deducting non-recurring profit and loss was still comparable with the highest level in history in spite of up to 2 billion yuan of annual R&D and BD input. The Company’s pharmaceutical industry segment has now broken through bottlenecks of growth, witnessed stable recovery, and fostered strong resilience after gradually getting out of the influence of multiple external factors. Remarkable achievements in strategic transformation and positive figures further strengthen our confidence to unswervingly seek the high-quality development driven by technological innovation. We also launched our equity incentive plan since we were listed to motivate excellent staff creating values for us. In 2022, we have brought new connotations for our R&D ecology with the focus on “advantaged, differentiated and source-based innovation” to create a new ecology of innovative R&D. As for reform in R&D, we have successfully incubated our internal wholly-owned subsidiary - Hangzhou VicrobX Biotech Co., Ltd., established two core technology platforms of Micro-restructuring and Micro-delivery, and set up the ADC R&D Center to gradually create a differentiated ADC independent R&D platform. In terms of external collaboration, we strategically held the equity of Heidelberg Pharma, a global emerging technology enterprise based in Germany that specializes in ADC, and established cooperation in product development to empower the oncology products chain and ADC ecological chain, and further enhance our R&D ecology that features cooperation and sharing. In 2022, we also achieved successive milestones in R&D. ELAHERE?, a global pioneering ADC medicine for platinum-resistant ovarian cancer co-developed with ImmunoGen from the U.S., was the only ADC medicine approved by FDA in 2022. Its clinical work in China is progressed smoothly and it is planned to submit for BLA by late 2023. HDM1002 (micromolecule GLP-1 receptor stimulant), an innovative medicine for type 1 diabetic mellitus that is developed by us independently with global intellectual property rights, has been successfully submitted for approval in the U.S. and China. ARCALYST?, an overseas new medicine in urgent need for clinical purpose introduced from Kiniksa and included in the list of priority review varieties, will be submitted for BLA this year and is expected to put in commercialized production in China to benefit Chinese patients. To date, the Company has launched ongoing development programs for over 50 types of innovative and biosimilar medicines. The Liraglutide Injection, the Company’s first biological medicine for diabetes mellitus indications, was approved for sale in March 2023, being the first domestic of its kind in China. It is also under normal review for weight loss indications and is expected to be approved in 2023, which will facilitate the successful overseas authorizations for both indications. The strategic transformation of the Company is now gradually rewarded and new products are ready for commercialized sales, further empowering the attainment of its visions. In 2022, we made new strides in our other business segments. As for pharmaceutical business, the Company has never stopped its pace in expanding the Zhejiang market and enriching innovative businesses, with significant progress made in operation and development of self-developed and agent products. The international aesthetic medicine and industrial microbiology, two strategic business tracks of the Company, witnessed rapid development. Moreover, the Company has launched about 40 high-end medical aesthetic products and over 100 ongoing industrial microbiology programs, which dramatically empower the sustained development of the Company. As for the industrial microbiology segment, the Company has strategically held the equity of Wuhu Huaren Science and Technology Co., Ltd., established Hangzhou Hizyme Biotech Co., Ltd., and co-built the HIT Institute of Synthetic Biology, fostering the pattern that features three major R&D and innovation platforms and six industrial bases. Meanwhile, the Company has insisted on optimizing its product structures, accelerated the transformation of scientific research achievements, actively expanded its international businesses, and endeavored to explore new growth points. In terms of aesthetic medicine, the Company set a record high in both global operating revenue and profitability, with the Chinese market as an important engine for growth. Ellansé, the Company’s star product, has witnessed continuous improvement in market attention and penetration rate, occupying a leading position in the high-end market of medical beauty regenerative filling in China. Now, we have fostered more specific goals, clearer mind, and firmer confidence after several years of transformation, upgrading, exploration and practice. In the pharmaceutical industry segment, we always stand at the forefront of innovation, endeavor to satisfy clinical needs, stick to the innovative R&D philosophy of “Independent R&D + Introduction”, and keep strengthening the ability in independent innovation and R&D, with “innovation” at the core. Focusing on three core product categories of oncology, immunity and endocrinology, we give priority to dominant varieties that rapidly benefit the Company, further optimize product lines, and support the Company’s strategical development. As for pharmaceutical business, we insist on the operation principle of “Value Creation” and “Service Foremost” and endeavor to become an excellent pharmaceutical service provider in China by revolving around the philosophy of “steadiness”. With regard to the industrial microbiology segment, we keep optimizing the core business layout, facilitate the synergy of internal resources, strengthen the input in market promotion, allocate proper resources and make breakthrough in key business to leverage more support for the transformation and upgrading, thus attaining our goal of “overall success”. In the aesthetic medicine segment, we attach great importance to the innovation in aesthetic technologies, keep practicing the operation concept of “hi-tech R&D, high-quality positioning and global products”, continuously increase the input in innovative technologies of massive aesthetic medicine, keep enriching innovative product lines, facilitate the launching of high-quality products in and out of China, and enhance our core competitiveness in aesthetic medicine, thus making the Company the “leader” of the aesthetic medicine industry. We should be inclusive and far-sighted despite diverse challenges and difficulties. It is a great yet glory ambition to become a powerful international pharmaceutical enterprise driven by scientific research innovation. Looking into the future, we will keep forging ahead steadily toward the established strategic direction and make unremitting endeavor to empower the high-quality and efficient development of the Company. It is also our aspiration to maintain the healthy growth in both scale and profits, and to continuously improve the comprehensive profitability! Unremitting efforts bring great success and collaboration enables win-win results. In 2023, we will keep marching forward along the Company’s reform strategy, endeavor to conquer new heights of development, satisfactorily accomplish the Company’s operation and development goals of the year, and make unremitting efforts to implement the seventh three-year planning and attain the long-term visions. We will take practical and solid actions to make our aspiration a reality. Dear shareholders, thank you for your trust and support. Let's join hands to co-build the Company an excellent player with great intrinsic values and market values and embrace a brighter future! Lv Liang, Chairman Huadong Medicine Co., Ltd. April 2023 2022 Annual Report Section I. Important Declaration, Contents and Definitions The Board of Directors, Board of Supervisors, directors, supervisors and senior managers of Huadong Medicine Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the information presented in this annual report is authentic, accurate and complete and free of any false records, misleading statements or material omissions, and shall undertake individual and joint legal liabilities. Lv Liang, the Company’s legal representative and the officer in charge of accounting, and Qiu Renbo, head of accounting department (accounting supervisor) hereby declare and guarantee that the financial statements in this annual report are authentic, accurate and complete. All directors have attended the Board of Directors meeting to review this annual report. The future plans, development strategies and other forward-looking statements in this annual report shall not be considered as substantial commitment of the Company to investor. Investors and related parties should be fully aware of the risks, and understand the differences between plans, forecasts and commitments. The risks the Company faces in operation including industry policy and product price reduction risk, new drug R&D risk, investment and M&A risk and exchange rate fluctuation risk. For details, please refer to “v. Potential risks and responses” under “XI. Prospect of the Company’s future development” in “Section III. Management Discussion and Analysis”. Therefore, investors are kindly reminded to pay attention to possible investment risks. The dividend distribution scheme approved at the 7th meeting of the 10th Board of Directors is as follows: On the basis of 1,753,995,348 ordinary shares of the total share capital of the Company, RMB2.90 (before tax) of cash dividends per ten ordinary shares will be distributed to all shareholders; a total of 0 bonus share (before tax) will be issued; and no capital reserve will be converted to increase the capital stock. In case the Company’s total share capital changes before the dividend distribution scheme is put in place, the proportion of distribution per share will be adjusted with the shares base unchanged. The aforesaid dividend distribution scheme is subject to the approval at the Annual General Meeting. According to “Stock Listing Rules of the Shenzhen Stock Exchange”, if listed companies have both Chinese and other language version of public notice, they should ensure the content of both versions are the same. In the case of discrepancy, the original version in Chinese shall prevail. Contents To the Shareholders ........................................................................................................................... 2 Section I. Important Declaration, Contents and Definitions ......................................................... 7 Section II. Company Profile and Key Financial Indicators ......................................................... 14 Section III. Management Discussion and Analysis ....................................................................... 18 Section IV. Corporate Governance ................................................................................................. 83 Section V. Environment and Social Responsibility ..................................................................... 106 Section VI. Important Matters ..................................................................................................... 124 Section VII. Share Change and Shareholders ............................................................................. 137 Section VIII. Information on Preferred Shares ........................................................................... 146 Section IX. Information on Bonds ................................................................................................ 147 Section X. Financial Report .......................................................................................................... 148 Contents of Reference File I. Financial statements signed and stamped by the legal representative, the person in charge of accounting work and the head of accounting institution (accounting manager). II. Original audit report stamped by public accountants, and signed and stamped by certified public accountant. III. The original of all Company’s documents publicly disclosed in the press designated by CSRC during the reporting period and the original of announcements. Definitions
Section II. Company Profile and Key Financial Indicators I. Company information
Certified public accountants
Financial consultant for continuous supervision and guidance during the reporting period □ Applicable √ N/A VI. Key accounting data and financial indicators Whether the Company needs to perform a retroactive adjustment or restatement of previous accounting data □Yes √No
all negative, and the audit report of last year shows doubt about the Company’s ability to continue as a going concern. □Yes √No The Company’s net profit before and after deducting non-recurring gains/losses in the last three fiscal years is negative. □Yes √No
accounting standards □ Applicable √ N/A There are no differences in net profit and net assets disclosed in financial statements under international and Chinese accounting standards during the reporting period. 2. Differences in net profit and net assets disclosed in financial statements under overseas and Chinese accounting standards □ Applicable √ N/A There are no differences in net profit and net assets disclosed in financial statements under overseas and Chinese accounting standards during the reporting period. VIII. Key financial indicators by quarter Unit: RMB yuan
and semiannual reports by the Company □Yes √No IX. Items and amounts of non-recurring gains/losses √ Applicable □ N/A Unit: RMB yuan
Details of other items of gains/losses meet the definition of non-recurring gains/losses. Explanation for recognizing an item listed as a non-recurring gain/loss in the Interpretative Announcement No. 1 on Information Disclosure Criteria for Public Companies – Non-Recurring Profit/Loss as a recurring gain/loss □ Applicable √ N/A Explanation for recognizing an item listed as a non-recurring gain/loss in the Interpretative Announcement No. 1 on Information Disclosure Criteria for Public Companies – Non-Recurring Profit/Loss as a recurring gain/loss Section III Discussion and Analysis of the Management I. Industry Situation during the Reporting Period The year of 2022 is the second year of the implementation of China’s 14th five-year plan and an important year for deepening the reform of the medical and health sectors. Party and state leaders have taken active measures to empower the socioeconomic development despite increasingly complex and uncertain external environment, as well as triple pressures of shrinking domestic demands, disrupted supply and weakening expectations. Thanks to all these efforts, China has successfully tided over such an extraordinary course and continuously improved its economic strength, comprehensive national strength and people's living standards, writing a new chapter in promoting the Chinese-style modernization. The pharmaceutical industry in China faces the structural adjustment as a whole affected by China’s policies on facilitating the reform of medical insurance, volume-based procurement of medicines and medical insurance payment methods, and space for overall revenue and profit growth of the industry has been squeezed coupled with the downward economy. Nevertheless, the pharmaceutical industry in China still boasts huge potential market space. In the long term run, pharmaceutical enterprises in China will keep transforming toward innovation and drive the overall optimization and upgrading of the industry empowered by favorable policies. In 2022, China’s policies on reform of medical insurance were further deepened, multiple reform measures were launched and optimized, the country’s volume-based procurement of medicines and medical insurance negotiation were normalized, the industry ecology was evolved at a rapid speed, and the overall tone of cost control and price reduction kept unchanged. From 2018 to June 2022, the pharmaceutical industry in China launched 7 times of national volume-based procurement of medicines, 3 times of national volume-based procurement of high-value consumables, 6 times of medical insurance negotiations, and dozens of local volume-based procurement that cover 294 medicines and involve about 324.6 billion yuan by price before volume-based procurement, accounting for 35% of annual purchase amount of pharmaceutical chemicals and biological medicines by public medical institutions. The pharmaceutical industry in China witnessed decline in overall growth rate in 2022 affected by volume-based procurement and multiple internal and external factors. According to the data of the National Bureau of Statistics, industrial enterprises above designated size throughout China achieved the total profits of 8.40385 trillion yuan in 2022, down 4.0% from the previous year (on comparable basis). Among them, the medicine manufacturing industry achieved the cumulative operating revenue of 2.91114 trillion yuan, down 1.6% year on year, and its operating costs were 1.69846 trillion yuan, up 7.8% year on year. The total cumulative profits were 428.87 billion yuan, down 31.8% year on year. II. Main Businesses of the Company during the Reporting Period Founded in 1993 and headquartered in Hangzhou, Zhejiang Province, Huadong Medicine Co., Ltd. (stock code: 000963) was listed on Shenzhen Stock Exchange in December 1999. With its businesses covering the entire pharmaceutical industry chain thanks to over 20 years of vigorous development, the Company has now fostered four major business segments of pharmaceutical industry, pharmaceutical business, aesthetic medicine and industrial microbiology, and has been a large comprehensive listed pharmaceutical enterprise specialized in pharmaceutical R&D, production and marketing. Moreover, the Company has won diverse awards and honors, including Fortune China 500 by Fortune China for 13 consecutive years, 2021 China Top 100 Enterprises of Pharmaceutical Industry, and 2021 China Top 100 Enterprises in Pharmaceutical Businesses by All-China Federation of Industry and Commerce. Specialized in the R&D, production and marketing of specialized and chronic diseases, as well as special medicines for years, the Company has established complete pharmaceutical production and quality research systems, and fostered core product lines focusing on chronic nephrosis, transplantation immunity, internal secretion, digestive system and other fields. With multiple first- line clinical medicines with market advantages in China, the Company has made layout in R&D of innovative and high technology barrier generic medicines in three core therapeutic fields of oncology, endocrinology and autoimmunity through independent development, external introduction, project cooperation and by other means. The Company has continued to engage in international registration, international certification, consistency evaluation, etc. of products, with successive results achieved. Moreover, the Company has fostered the internationally-oriented pharmaceutical industry system, established and maintained R&D and project cooperation with multiple international innovative R&D enterprises. With regard to the pharmaceutical business, the Company has vigorously consolidated its foundation in Zhejiang Province and has been ranked top 10 pharmaceutical business enterprises in China for consecutive years. To date, the Company has established 11 regional subsidiaries in Zhejiang Province, with its customers distributed in 11 cities and 90 districts, counties and county-（未完）  |